caterpillar, better than expected earnings, boosted by the tax reform i felt that was okay if you have better instances of tax reform, you are supposed to back it out -- i don't know. make sure you join us tomorrow, "squawk on the street" is next >> all right, thank you. ♪ good wednesday morning, i am carl quintanilla with jim cramer and david faber. coming up the first record closing high since september future is relatively high here caterpillar off its guidance occi is in a bidding work for anadarko and more. oil is steady as the saudi say there is no need for an

immediate supply boost our road map begins with occi bidding petroleum. and trouble for boeing the maker is pulling its crafts. >> stocks at record highs but what has changed since that december's lows. david is going to kick us up on occidental >> 7:00 a.m. this morning, the company did make public to acquire anadarko a company that sought for years but was prevented from buying, or at least buying successfully when it was in a bidding process against chevron a number of weeks ago. of course our viewers know anadarko agreed to be acquired by chevron and a deal is signed back on the 12th of april.

stock and cash, $60 a share. this morning, the bid from occidental is $76 a share. 50% of it is in cash and $38 per share. .609 per share of occi that's your composition. occidental stock is going to be down that's always one of the key concerns that's mentioned by people close to anadarko who was involved in the process by which chevron is 65 was better than occi 76 when it did make its offer as apart of the process. it was 40% cash and now it is 60%. shareholders may wonder really, you said no to 65, we like 76 and at least 50/50, perhaps. anadarko gets a shareholder vote completing the chevron deal.

does it mean an contador adark to sell? >> yes you come back in four days and make a higher bid otherwise we'll accept this one. not necessarily a lot to come here we did speak to the company this morning and ask why are you doing this particularly when you are up against one of the majors that can pay more or less whatever it wants. >> we are the right acquire for anadarko petroleum, we can get the most out of the sale we have a lot of experience there and we are performing really well. what has not been talked about very much is the upside of this bill is the shell play 75% of anadarko is in the shell. we are the best company to develop this shell occidental says it will be able to sustain from buying anadarko.

this morning, bmo puts out a quick note and it lends at least some questioning whether those numbers are real, we are surprised to see occi using substantially larger synergies how much cost do you take out? well, here is hall on those synergies. >> the $2 billion are things that we have done on the operation and taking it and combining of what we can do of the assets we have been able to establish a premium and make work. we are going to apply that to the anadarko assets. we have some drilling, software and modelling that we do

basically we can do this for lower cost and others and we have done it now we can apply to anadarko >> have not heard from anadarko yet this morning expectations, putting some release and we are reviewing this chevron is going to report earnings on friday we may hear from the ceo during the conference call and ask what their point of view is they're not under any pressure at this point to do anything other than to wait to see what anadarko chooses to do >> well, we do have a little bit of mike worth who was the ceo. the excellent ceo of chevron let's take a listen to this. >> did you know occidental was in the verge of making the same debt >> we didn't know anything other than our negotiations and discussions with anadarko. >> were you surprised to know

that vickie hollub was about to make a move? >> i can't comment on that it is a certain offer and we intend to close. >> so your money is on chevron >> oh no i am going to take bets right now, right here that vickie hollub does not get this >> chevron is like ft. knox. it is a well run company with a good balance occi is not dead and chevron is not dead let's just end this. >> they're not going to do that. >> you know what it mean >> it is only 5 million shares out. even ten bucks a share is only another $5 billion to them what i don't know at this point is they're willing to go up at all. maybe it is not important to them david, it is really occi

>> it is very important to chevron. >> important enough to pay more? eventually they may be forced to that's down the road if you are anadarko and concerned of occidental ability to get the vote, you may want to wait before you consider terminating cheining chevron. anadarko had a couple of really bad quarters vickie is a great operator i think mike is a good operator, but vickie is great. i totally get it pioneer is really well run she can't make it better that's the key here, right >> they make this point about drilling 4%. getting 23 of the 100 top performing wells to the point of their technology and ability operating properly is better

>> when the numbers came out >> which ones? >> anadarko. >> it can't be this bad. just give me the real one. well, give me the number that's in the back end of what was wrong and give me the one time only you can take out what was said and no jim, the number is still really bad. >> it is bad it is anadarko this is not apache anadarko is really bad also, they have this initiative and colorado is going to vote no drill and after the oil company won the stock, it barely went up apache and pioneer is up almost 2% >> apache is really gassy. >> that's not what we want we want gas act. >> we prefer less gas. >> that's why anadarko go got got -- >> she talks about it, it is

really only 15% and there is so much focus on it that's where the focus should be 75% is the premium wirth thinks it is really big. >> oh, you are talking about gurr >> by the way, let's keep an eye on occidental share price. if it is able to maintain a loss of 4% or something along those lines, that's far better than i would have argued or anticipated. that'll argue against anadarko saying we have no sense that your share of price is going to

be a holdup. >> you don't think the shareholder are furious right now? >> about what? >> that their stocks keep ongoing lower. >> what about? >> what are you born free? >> 4% is not bad >> born free as free as occidental going down. >> pollub is smart >> got to be tough to do something like this. >> you sure do, it is a gutsy move gutsy move fails it is okay, got to dare to be great. >> one more exciting element to this market right now. boeing shares are higher in the premarket, despite the dow component. boeing suspending their shares by that. >> this thing won't go down. when i heard suspended, all right, let's take it down ten, the road map is clear they're

going to be back caterpillar has a great number no numbers are bad china, share loss. oh, come on. this market is nuts. the four year guide is on a tax benefit. >> it is not clean the rolling three months sales, north america of 14 and aipac have six relative to the rest of world, china is last. >> china has been a tremendous source among the rest of the country. one of the things that was overlooked was united technology they had a really strong china >> otis. >> otis is great these things -- >> meanwhile, we should mention while we are in that part of the world, texan, unlike some other semimakers like taiwan semid did

not call the bottom. >> so it goes up six points. people are stupid and -- madison incorporated that. they were idiots as the call goes on, you realize they're all saying is a continuation of not great. it is not enough quarters, you have to go through five quarters i felt that every short was into me see, i told you. i am looking at stocks, they're not quitting qualcomm >> qualcomm does not go down anymore. >> autois still bad. when does auto -- i don't know when auto turns but it is not any time soon. maybe after elon musk -- >> that made some headline yesterday, cramer called elon

musk pt musmusk >> he called me a hologram >> he said you are a simulation. >> 50% chance of simulation. autos remained i am going to go on the record saying forge is good i have got to tell you there are stocks that are up that should not be i thought it was fine. apple has the audacity of being down that's wrong you are never going to persevere, david >> i will. >> we'll get to snap and at&t, when we come back, the s&p and nasdaq did set some records closing highs. will today be the days they're taking out those highs the market is relatively flat

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markets looking to hit some

hits interesting numbers today since the christmas eve lows, s&p is up 25. semi is up 46. the best s&p is up 85% since christmas eve. >> oil had a good run. hes never get talked about >> their control is not. >> they obviously -- >> it did not go particularly well >> but semis are really remarkable because we are now talking 5-g. there are signs of the turn, this could affect instrument if you got left behind by these zr wa and waiting for the term, you can't do that.

that's not the way the semis trade. texan is going to be another three to buy you can't wait for them to say it is really good now. it does not work like that >> you mentioned some of the european bell weathers, we got good number out of sap and volv volvo. >> novaris >> sap looks hilike eliot was nt happy. >> eliot taken a little bit of a victory lapse there. technology i can't remembe remember -- well, they have done a lot, samsung comes to mind >> yeah, saying they're there and they're happy of the valuation model they put in place. >> jim, given the fact that we

are having the best year sin since '91 on the nasdaq. when are we talking about consolidating gains? >> there won't be anything, there is no real mild stone about this this is the earnings period of social media >> snap quarter was really good. they did a really good job >> even though daily year on year relatively flat and quarter on quarter i see jp morgan finally went and they took their sales off. >> the conference call was like a real conference call it was a crisis. it was really well-run the twitter call is really good. >> more than double this year

when you listen to these, they're kind of like done with advertisements they are advertising so heavily on the web snap is in the mix is what i am saying twitter, the whole call is about we got rid of patrols and it works. >> would i see my kids in particular, my 16-year-old, is how they communicate, they don't text, they use snap. i don't check my texts, dad. you got to snap me >> i can't join snap >> spiegel last night said they're reaching more 18 to 24 >> we are not going for the people who are 30 or 40. we are going to go with our core group. i would not say that all my commentary for spiegel has been optimal but i do feel -- >> you have been fair. >> i have been fair. this is a good quarter and i

invited him on the show and he seems like a real gent it was the other guys. >> we'll get cramer's "mad dash" and count down to the opening bell in just about nine minutes. don't go anywhere. i'm working to keep the fire going for another 150 years.

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welcome back to "squawk on the street," time for our "mad dash," we want to talk about at&t earnings this morning, it

is not well received of the investor based >> i am a cash flow afficionada. this looks like cash flow improvement. is it something i am missing, new subs >> yes, there is you are right, entertainment ibita was a bit ahead of the forecast the analysts forecast typically the company guides them to that. >> they don't do it themselves >> oh, some them >> jim, you know what the numbers were on direct tv. >> they lost 544,000 of subscribers in court >> you know how hard it is >> 544,000 subs. they have to work at that.

>> now what did they say about it i got it in here we lost them due to encreaincreg customers rolling off discounts and competition. focusing on long-term value base >> ltv >> they'll be left with a lot fewer customers and better value. >> would randall stevenson would say david, you are missing the big picture. >> would be what >> "game of thrones" and entertainment. >> how about "game of thrones. >> hbo is an incredibly important asset. >> they have a lot of cash flow. ibita is not coming into fight or anticipated >> the dividend is fine from the cash flow. david, you lose those kinds of -

>> with the machete? let's get that one >> taking it off >> weapon ke'll keep an eye on a of at&t. we got opening bell about 4 minutes away, stay with us

you are watching "squawk on the street," the opening bell is set to ring in a minute. busy wednesday morning coming off those records closing highs, at&t and caterpillar and anadarko we covered all that in the first half hour. 120 days to go up 25%. i mean does this remind you of a certain period in the early late '90s? >> i know people want t to -- qualcomm was the stock in 1999 they had the chips that you needed for the next generation cell phones.

i don't want -- microsoft is a big company now and apple. we can argue we are seeing some sort of explosions,. >> that's the opening bell, at the big board is john hancock financial services and pet iq, a pet health and wellness. >> that's a great group by the way. that swine flu, you get a win there and the immunization pets, i have been sticking that. gunpoint a dog that ate the banister when i was awake. ate the mbanister, he's stupid. he ate it icy hot last night what a moron but people love

their pets >> the banister is way out of bound for that you will do anything so you will take your pet to the vet it is a catch business there is a big mistake that we should have all been vet >> there is good business for health insurance for pets, too >> yeah, that's a big rip off. >> you mention apple, katy, you go to 234 from 220 as it is a 40% run up >> i wish she had not done that. i wish it is time for her to let it go for a while. it is funny, when qualcomm, apple hung there y before that you were waiting on intel. that was a big mistake that was good for tim cook the wearable number on verizon yesterday. the biggest grower, more than

200,000. wearable don't feorget. i think apple is in the captain's seat but i don't want to get ahead of it >> they would have figured out a way to get this figured out a long time ago. >> i pause at these reactions. they were like jim, jim, that's up to you. we just do our job we don't do the stock. how long do they say that? i am waiting >> i have not seen that thing. it is actually coming back it was up about a percent for qualcomm people were talking about $7 they're talking about the importance of apple being customer in the 5-g and having a 5-g hand set being ready

>> it is amazing anything by the way even of a hint of 5-g. it is not being representative hock tan sat down there and basically said i am smarter than everybody. >> here is a little query. what happens if you have no idea what the future is and you pull your guidance. what happens >> your stock goes down. >> except for today. >> look at that.

>> people were mad at me because i had one bite yesterday, great pizzas, i got 8.2. someone said hey, listen, you like the banana pepper, domino's with no cheese when your kids are like they're not allowed to eat anything. you can eat a pizza with no cheese and tomatoes. our food just been on fire repeated record highs from mcdonald's, starbucks. look at domino's turn around >> there was a note today raising price for mcdonald's and the note said we don't know why we are doing it but jesus, it is looking good >> that's the new record high at mcdonald's, too. why? we are getting some inflation. you can't make it up in traffic. >> you are right >> i got to tell you mcdonald's

offers a terrific package. they slim line everything. easter book is looking at a work force. let's make a little more easier, let's get rid of all this tofu burger king. >> really? >> the vegetarian burger that people have been offering? >> beyond meat >> my daughter only eats navy beans. >> what's the capital of navy beans? >> north dakota. >> thank you for sharing that. >> decent results in details, i saw lulu in is the record. they're going to tackle men's wear just as nike is going after

women's wear >> those pants that are former, editor >> i think kohl's is going up. it is a $12 billion company. i don't know how amazon came with 1%. >> you read it over and over again, what came through to you? >> they're not going to destroy kohl's >> amazon won't destroy kohl's the department stores are still front and center and not moving. macy's, that thing is stuck at 24 >> city's reaction with the kohl's reaction is it is not good for macy's. it would like that traffic >> jc penney. well, sephora lost support from

jc penney. i don't know what's going to happen i don't think it is going to have services. >> no? >> you mentioned ebay earlier. revenue was ahead. they raised their guy. marketplace, gmv was down. >> i wanted to see paypal that's been off with stub hub i did not think the quarter was fabulous >> thank you for agreeing with me >> i am happy to agree with you when you are right gmb was down >> gmb was down. >> why is everyone going crazy for it >> that's not a stock that should be up today >> let's still to come, they do have representative from eliot

a can we just go back? did you know how many drug companies have not reported good numbers? and then boom, wow >> novartis, they're taking it to myra? >> they spun off some bad and pick up the good becoming more cat. >> a lot of people are worried of bristol with the combination of celgene, i am not >> i know you are not. >> speaking of stocks under pressure, occidental is not done very much this morning. only 2.6% right now. shares of anadarko are up sharply about 11% or so. but, that's not a bad move down.

now, you don't have anybody setting it up. right now it is going to be the winner or event related fund or not sorting this you may expect shareholders to be a bit less excited -- i don't know what do you think? >> here is what i think, all right? i am going to hit it right between here >> a little music. >> here is what chevron is going to do. they can buy occi and anadarko, you won't even see it. listen, we kind of like your company, we'll buy you with anadarko that's why david, you seen it you have seen a guy comes back and listen, i will buy you now, i am saying chevron has the fire power to buy companies. >> i don't think they're going

to do that >> they have the fire power. >> yes, the bump that they may need at some point to initiate is certainly not a huge number for them unless as we have said and i don't know the answer, they don't feel it is a core asset they have to have the way vickery vickie hollub made earlier >> 10,000 wells. that's a lot of wells. >> that's boomer, that's booming wells. >> by the way, remember i told you that texan allowed those stupid people and they cleared out and finished the first amendment right. >> some said that number was the most important numbers last night. >> these are no fun. texas instrument runs 11-page conference call. they just get right to it. they do have a big meeting coming up so they did not give

you a lot. what they said i just love those that didn't want to participate in the terms, you got 30 days. you got all these analysts coming out and say oh, we are so far from the term. look at micron, micron said the same thing look at lamb >> lamb chop >> speaking of the number after the bell tonight, we are going to get not just facebook but microsoft and visa and tesla >> here is what i am going to say about visa visa did it and killed it. these companies make money, they make money in their sleep and they have no risk. visa, if it goes down, buy it. buy it some now. it is really hard to not do well with these you have to be like direct tv.

cut your visa card in half that's how good visa is. >> um -- >> what? >> nobody seems to be able to screw it up. >> the justice department. this guy is not screwing it up charlie was interesting in front of the house >> yeah. >> it is almost like $350 billion market. >> it is the greatest business every credit card, they take their share and have their bond so to speak. they take their pound to flesh every single check >> i get it there, all right shakespea shakespeare. >> we'll watch for those numbers later on after the bell. bob pisani is on the floor with the dow down at 11 >> good morning guys let's remind everybody why we are here at historic highs, four

major factors. the earnings situation stabilizing rather dramatically, that's been helping a lot. recession fears faded as well. europe is more stable and there is controversies of how much assertness we have about this. the market is obtained and they have more confident. look at the sectors today, a bit of a mix picture, consumer discretionary and utilities are doing okay semiconductor are flat we got a little bit of problem of texas instrument. on the conference call, there were some comments about demand may not be recovering as fast as somebody anticipated, it was down over night. maybe the question is are we in the middle of the weakness or at the end. it is not quite answered texas did open positive though earnings today, i am told it is

a mixed day. we heard today about at&t in line on earnings and ibita was on the bright side boeing is up a little bit and some relief. caterpillar, a modern beat stanley black and decker was a clear win. they were 20% of estimates and they modestly raised it. the biggest problem the market has right now, i would say getting two positive earnings right now. it is all moving in the right direction. on april 11th, we are expecting earnings to be down 2.5% today it is only down 1.1% look, we moved that's where i think we are going to go to flat to slightly positive it is moving in that direction

the other problem the mark het has, it is getting a little pricey some of these taxes are way over board. i use symbol relative strengths. this is just two weeks, you can see when you are over 70 or over bought when you are near 90, you are stupidly over bought it is difficult toll move these stocks forward in the near term. disney apple and intel and amazon and microsoft, these are the big market movers. they have been monsters and they're getting a little over stretched. what's the right multiples when you are at an historic high? where are we you are making assumptions that u.s. economy is going to grow and earnings are going to grow in 2020. china is going to be better and europe is going to stabilize the s&p is 17 times forward numbers. that's pricey. historic average is 15 to 16, 17

is pricey. some people are saying oh, let's use 2020 numbers forget about 2019, they're stretching it and you get to 15 and that's more reasonable and that's now they justify the current number if you want to move the market up towards 3,000 and above, you are going to have to make a positive assumption about the economy. that's where the debate is right now. >> guys, back to you >> bob, pisani, let's get to the bond pit with rick santelli. >> good morning, rick. >> good morning carl, if you are looking for logic in the financial markets, you are not going to find it today before we get to the chart, interest rates, not only the u.s. globally we debate why, they rolled over at a time where our stock market is at least two out of three and at an all time highs and the dollar index, it is like a rocket ship, it orbits, let's look at the three day chart of

2-yr note yield. we took it out to the upside and we strengthen and settled below it and looking back. if you look at today at 10-yr on the left of the point i am referencing was 256, exactly where we closed yesterday. now we lost another four basis points it would be difficult for technicians to not think we are going to retest those levels if you look at the month today to bund, this is part of the issue. we can argue that our ten-yr, you are looking at everything wrong. this is not sustainable or we can look at bund which have gone negative again we know some of those confidence numbers are week all and all, this could be a demand trade for our treasuries in lieu of the yield separations of other sovereigns around the

globe. the dollar index continues to be the biggest story. look at the one week chart of the dollar index, rocketing and getting close to 98. when was the last time of the spirit of '97 or 76. of course, we'll continue to monitor how treasury closed today, if they had a big sell-off that could change the chart but does not have that feel today charl, ji carl, jim, daifvid, back to you >> as we go to break, take a look at anadarko and occidental, ebay is on there as well boeing and cat cancelling each other out, adding or subtracting 30 points each

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time for cramer and stop trading. >> precision railroading is something david first introduced me to. norfolk southern with a terrific quarter up a precision railroading which means trains on time. okay to compete with trucks well done jim squires. he's a terrific manager. union pacific, what can i say they are up there with the chips. fabulous stocks. >> another story along with consumer products where pricing is powerful. >> i got into a piece of the rails tonight. snap, i'm not -- i like. okay here we go tonight service now, oh, man, john donahoe this is a love, love stock tzuo about the subscription economy. when you put in your name and you get through the website, that's zuora

rich allison up 20 points, dominos. he did it. everyone doubted it. i want ritch allison >> the month that's been amazing. so much so people are worried about the last few days of the month. would you get that normal payoff as the month rolls over? >> i solidify skepticism if facebook delivers a great number, you'll be stretched -- then we have a trade deal. you're going to say, you know what the only thing worth selling is the hmos because of managed care that's going to come back. it's all going to be doc on demand their products >> i find that this is a tape where i have to spend a vast amount of time why stocks are up kohl's, amazon

come on. come on. good to see you on the occidental pick. chevron can buy cimarex >> all together. >> all together now. >> jim we'll see you at 6:00, "mad money" 6:00 p.m. eastern time a lot more on the bidding war. s&p is down 2 1/2. you should be mad at airports. excuse me, where is gate 87? you should be mad at non-seasoned travelers. and they took my toothpaste away. and you should be mad at people who take unnecessary risks. how dare you, he's my emotional support snake. but you're not mad, because you have e*trade, whose tech helps you understand the risk and reward potential on an options trade

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♪ good wednesday morning welcome to "squawk on the street". i'm carl quintanilla trying to consolidate some record closing highs of yesterday. dow is down 26 s&p down about two on a busy day. boeing pulls its guidance. >> our road map for the hour starts with stocks s&p 500 and nasdaq hit record closing highs. a ton of earnings to die greft from boeing, caterpillar to at&t >> and the power of three,

lululemon unveiling its five year strategy. we'll give the details but we start with that bidding battle between two oil companies now for ownership of a anadarko october octobercy dent -- occidental has made a bit occidental has been pursuing anadarko for years and was part of the bidding process by which chevron succeeded in winning the prize of anadarko. as we reported previously occidental felt it didn't get an opportunity to make its final bid and that it was in a position to offer more now from anadarko's point of view it was concern about a bid

that was at the time 60% made up of occidental's stock price, what would happen to that took price and whether occidental would have the certainty of getting shareholders of its own to vote in favor of a deal something it would need to do. now it will be issuing 309 million shares, if, in fact it succeeds here. that continues to be a key question will occidental be able to succeed. we haven't heard from anadarko or chevron earnings on friday will be asked on the call. we'll see what the ceo chooses to answer in a potential to raise their bid. but this is early days we spoke earlier to the ceo of occidental which made a fairly significant decision to go into battle despite the fact they are competing against the company chevron that can defeat them simply by offering more if, in fact, it should even need to do

so, that is if anadarko decides this current bid from occidental is superior to that, that they have already signed up with chevron. she talked about synergy and a lot about opportunity she sees in the permean basis in texas. >> that's only about 15% of the value of this deal where the money will be made where the value is added is in development of the shale >> in the last two weeks we've been talking about the process that took place. do you feel you did not have an opportunity during the period of time you were negotiating with anadarko to submit your best bid. did you feel, perhaps, there was a favoritism of the chevron bid? why would you decide to, obviously, move forward with a public proposal if you had the

opportunity one would expect to have submitted a proposal that clearly did not get the attention of the board of directors? >> we've been working on this anadarko and studying it for two years. it was in july of 2017 that we made our first approach to talk to the ceo of anadarko since then we've been in friendly transactions, in conversation and engagement, and even today this is still a friendly engagement and if you look into the details of that, you'll probably -- you're the one that can figure this out >> it's friendly for shareholders i'm not sure anadarko will see it as friendly >> it is, because the way we view it, we're a great company and the industry knows that. we have a great reputation our reputation for core competence and expertise is in subsurface whether it's in recovery or shale development we're a great company. this shale play this is where we

excel and we have the most compelling bid out there today and we can have the most value to the shale development >> you'll issue approximately 309 million shares to anadarko shareholders assuming your proposal goes forward. there was concern on the anadarko part that those shares would not be worth anywhere near where they appear when you made the first bid. what assurances can you give that you think that your share price will hold up >> we're combining anadarko's great assets with the best portfolio that we've ever had as a company. and i think we clearly have shown that through our improvement and performance over the last few years, that we after high performing company. we delivered a return on capital a and did the best in 2018 the important of that we're delivering better return on

capital than the majors are. so our performance is better what we haven't had a chance to do is talk to our shareholders and help them understand the strategy here and how we view this now with this information today we'll have the opportunity to be clearer about what we intend to do >> you'll be able to engage with them >> exactly >> you still need a shareholders vote you confident you can get it >> i'm very confident we'll get support of our shareholders. they realize how much we really gotten to the point where we're the experts in the shale play. >> there it is the permian. can they provide the certainty will anadarko want to wait until they are certain they can get the yes vote from our shareholders we might see what chevron chooses to do. a long way to go nobody expects chevron to turn around and raise their bid >> but they are going against a super major that is four times

their size >> correct >> when is the last time we saw a bidding war? >> i don't know. it has been a while. this "morning jomornin morning were trying to remember. you may see it again the permian is the post productive field by far probably in the history of the oil industry and there is potentially a fight brewing in terms of trying to consolidate some of those assets for some of the majors and clearly for occidental as well and has an opportunity to draw a lot more wells >> i know you made this point earlier but occidental is down almost 3%. that doesn't seem like terrible news as it might be perceived for the stock holders a company like this getting in a bidding war against chevron. >> it is not their own advisors probably and the ceo expected the stock would get hurt more than 3%.

that said you don't have a lot of the invent related managers shorting the stock because this is not in any way a done deal. but they would be very happy were this to hold up with a down 3% day on a day they announce this very large deal it has enormous synergy, far more than chevron can bring to the table. but there was concern amongst the shareholder base they would do this not being reflected in the stock price. >> energy is the worst performing sector right now on the s&p 500 which brings to us the broader market s&p coming off its first record close of the year. four months ago, christmas eve, stocks bottomed pap steady march higher ever since then this as the busiest week of earnings continues joining us is joyce chang and brian. brian, we know you want to take a victory lap. the whole time you've been saying it pays to be bullish

stocks will melt up. you said it before larry fink said it. >> listen. thank you. i'm humbled by that. i'll tell you this -- >> you're not going to say the shorts are bitter? >>they are bitter. >> that's what you said the last time >> here's what i said. i was blessed to be on your network december 26th, and i said this. now is the time to act justly, love mercy and walk humbly 2018 was an exceedingly humble year we were humbled by being bullish and we are humbled for being right again. there's three problems with the market right now >> you were wrong in 2018. you're right in 2019 >> we were wrong for the fourth quarter. we missed our target by 15 point on september 30th. 15 points. the fourth quarter we were on. six times in 30 years the market has been negative. i'll take those odds going forward i think the market and the rest of my compatriots are wrong for three reasons.

number one my compatriots remain way too macro driven we have to increase our fundamental investing. we lack perspective. they never owned a stock we have a very good fortune of running $2.7 million of equities for our clients. number three the whole notion we're so afraid to be wrong we don't want to be right portfolio turnover is the highest i've seen. we're speed dating stocks not owning stocks. we're trading so fast that american earnings are the strongest and most stable in the year so afraid of missing everything else in the world we're missing our best companies in the world right here in the united states. >> you think there's more room to run >> there's more room to run. over the next few days we'll here sell. but the second half of the year

i remain with our call, second half of the year earnings will be stronger than everybody anticipates and no earnings recession. >> i see you nodding your head joyce. >> with a 3,000 target for s&p since december we do watch the liquidity factors very closely we're very comfortable with that target i do think bit the revenue growth which has been above expectations it's also been about the margins and also about the record buy backs. we expect 850 billion this year. we stuck with our call since december that the stock market would come back strongly from what was a liquidity selloff >> you focused on liquidity. what are you focusing on when you say that where are we >> you had one of the most v-shaped moves in the last 50 years. you had a very sharp downturn in december where the risk of recession was over priced.

in the first quarter you had earnings surprised and he are bullish on the energy sector that's one where you have had a call out there now for a number of months. this is one that could actually play catch up. and i think with iran sanctions you probably have more upside coming up on oil >> now we're in a period where people are looking at our size, arguing things are expensive when do we start reading europe is the new long, something like that >> again, let's go back to fundamentals our view is that europe is the next japan >> meaning >> no growth >> decades of lost growth. >> decades of lost growth, stagnation >> they have a higher per capita gdp than we do their stock market is doing just fine >> their smatock market you cou have lost a lot of money people chased emerging markets in 2017.

foreign investors are under invested in the united states. technicals only confirm what's happening fundamentally. technicals don't lead fundamentals things have to slow down something that joyce talked about is very important. we saw a broadening out in the rally. so we think that we've turned back to fundamental invests, active investing, be more concentrated in youyour portfol. >> where do you want to be in the market right now, in the u.s., joyce and if so what sectors? >> we're overweight in the u.s. and we like the energy market. growth numbers out of china will be more stable and some good news on u.s.-china on getting a trade deal even if southeast technology and enforcement issues are outstanding we like the energy sector. we're pessimistic on europe. the pmi is weak and you have

european parliamentary elections and lingering uncertainty from brexit we think that will hurt. >> china's ai capabilities will potentially exceed that of the u.s. over five to ten years. is that a maybe or probably. >> i think it is the going to happen i think the china's ability to go mass production on ai sits it apart. they have more centralized funding. it's not about innovation. u.s. and other countries lead on innovation their ability to go mass production, it's cashless. not even credit cards. qr codes now so china's ability whether it was manufacturing or ai to get it out into society at a broad scale has been unparalleled. >> vocations for us here in terms of migrating tech into public life? >> that's very important we show a slide that you've seen the five biggest consumer staple stocks over the last 20 years to become a decreasing amount of the market

look at the five fangs they are 10% of the market that's the new consumer staples. tech will continue to be a marriage, major play and that's why we're long but we're long from a fundamental perspective because of the 11 sectors of the market tech by far is the most stable earner. >> chips don't hit new highs, brian. you still want to be in a group library that >> great question. we would say we own stocks like intel and texas instruments for the dividend growth. we avoid the momo go-go stocks >> thank you both. when we come back boeing, as you know by now reported results pulls it's 2019 guidance and pauses the share buy backs we'll talk about why and break down stocks moving on that news. the power of three lululemon unveiling a new strategy revenue growth for the next few years. tomorrow right here on "squawk" the ceo of lululemon calvin mcdonald will have his first

broadcast interview since taking the helm dow is down 30 "squawk on the street" will be back after this short break. transparency. expertise. these are the building blocks enduring relationships are built on. as investment management professionals, let's measure up.

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>> big new out of boeing it sues espends its repurchase program. >> reporter: this is one of those case where it's less about the numbers that were reported in the first quarter and more

about the conference call later this morning for the first quarter boeing did meet expectations in terms of revenue and earnings per share that's really not what people are focused on we should point out free cash flow, no surprise here given most of this is tied to the max. it was down 15%. two other pieces of news in terms of boeing's guidance its pulling its full year 2019 earnings guidance because it's not sure when it will resume deliveries of the max as a result unsure what the earnings might be it's suspending its repurchase plan the max is the cash generator. if you take a look at how production has been brought down on the max boeing announced today that it will have an additional $1 billion in costs into the future with the max now we should point out because of the way they handle accounting when it comes to aircraft manufacturing that will be spread out over the life of

the program, years, way down the line where they will be accounting for these costs and that's why the shares moved higher this morning. we have the current call within the next hour with boeing ceo. we'll be on it this will be the first time we hear from him in extended fashion about the state of the max and efforts to get it approved and flying again. back to you. phil, really quickly, the billion dollar initial hit that they talk about today they even referenced their liquidity were there any surprises in the release as far as you were concerned? >> reporter: no. i think that everybody expected them to pull the guidance. the share repurchase plan might surprise some people i think they are being judicious. they have $7.7 billion in cash. there's no concerns about them running out of cash. in terms of numbers from the

first quarter no surprises there. what people are really focused on will be the tenor of the comments from the conference call within the next hour. >> thank you for that. a huge story joining us on the news line today for a closer look at the numbers, sheila kahyaoglu. thank you for your time. back on april 9th you said you viewed the delay as transitory for 2019 >> phil is right on the point. it will get worse before it get better it's about investor patience and timeline the company fwhoetd a billion dollar of cost so if you think about it it's less than 1% gross margin. in term of the cash flow for q1 it was down 15% year-over-year because inventories were a huge part of cash so when we think about that impact over a quarter than a

month it's 5 billion impacting 2020 >> when was the last time they suspended a buy back any idea i wonder what the performance was like coming out of that window >> it's prudent. it appears wise carriers are not receiving their aircraft and looking to alternate plans >> what is the action in the stock today tell you trading up about a percent was this all factored in >> i think it was. it was largely expected that they would pull guidance in that they can't give their commercial delivery number out. in a way it looks like you're front running the regulators so from that perspective they couldn't give out guidance and investors were somewhat aware. it's about keeping this 2019 and not impacting 2020 and going forward.

>> been some reporting about the relationship fraying between boeing and some carriers specifically southwest which we know is heavily exposed to the model. can you shine any color on that at all >> sure. i think, you know, we spoke to multiple carriers. customers are happy but there s-ys is, you know, unhappiness because they have to make alternative plans. in our forecast boeing will have to make some concessions >> what will you be listening for on the call and how optimistic the ceo is that some of these issues are getting fixed. >> i think it's, you know, boeing will focus on safety and how they think about it because it is very important to them and just cleaning up the perception that's out there at the moment what i'm listening for most on the call 737 when does it get back in but on the 777 x their

new wide body aircraft is expected mid-2020 how that impacts that and any potential color on their next aircraft that they were expected to launch at the paris air show in june >> i wonder if you think -- 400 in the rear view mirror as we look at a chart of the past week, do you see any long term legacy issues in terms of the market's perception of their manufacturing quality coming off of this "times" story over the weekend about the dreamlindreamr >> i don't think so. the "new york times" was focused on the 787 when we look at things on that aircraft, th receptiveness has been very good they've had 1400 orders. 73 customers 41 of them coming back to

repurchase the plane so, you know, the customer reception on that plane doesn't coincide with what the article is talking about >> sheila camp h-- kahyaoglu joining us lululemon unveiling its new strategy from its new ceo honing in on digital growth don't miss the interview with calvin mcdonald tomorrow on "squawk on the street" we'll be right back with the dow going positive up three points every day, visionaries are creating the future. so, every day, we put our latest technology

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welcome back to "squawk on the street". lululemon holding its analyst today. new ceo calvin mcdonald unveiling their strategic plan the company says three top priorities to drive revenue growth over the next five years are production, innovation, lululemon expected to more than double the size of its men's business by 2023, and pursuing

new opportunities like skin care those abc pants, casual work wear, fastest growing category they aim to grow digital and expects to double its digital revenues quadruple it's international revenue in the next five years new ceo calvin mcdonald telling the "wall street journal" don't expect discounts or price cuts or find lululemon clothes in other stores maintaining that premium brand that has helped the company really grow in an outsize way. we'll have a chance to ask him directly about all of this in an interview tomorrow on "squawk on the street". calvin mcdonald first time since taking the job back last summer that he'll be on tv. the stock is up 80%. growth story has been appreciated by the market and every time you got skeptical analysts out there or investors saying it's already factored in the company comes out with

another blow-out quarter so that's what we've been accustomed to. 40% revenue growth 350 basis points even on margin expansion in the past two years the bar is set high. these growth plans that the ceo is announcing on men's, on digital, on international are key. >> i just keep thinking about lululemon would be a distant memory after levi strauss was done with them >> deep roots and history tend to do better certainly a question we can ask. that is how do you control growth, that it's not too far, too fast under armor ran into a speed bump along its way a few years ago after tremendous 20% growth per quarter. they had to right size the business how do you grow in a sustainable way. that's key the growth is super fast >> so much to understand at this point about sustaining a brand

younger people like lulu, they get older. >> he said younger people don't have loyalty that they shift. i agree with you i think that there's plenty of room for new brands to come in and establish roots with new consumers. it's not clear just how unloyal these millennials and gen zs are. it's not just millennials. >> no. thanks, sara let's get to our etf spotlight. here's a look at leaders and laggards >> markets are taking a bit of a breather this morning. the s&p 500 and nasdaq composite closing at record highs. that run for the s&p has taken it roughly 25% higher than where it was after that carnage on christmas eve, with the run towards record highs hasn't benefitted all part of the market equally as we talk about stocks at record highs let's look at other

parts of the market that underperformed that move in the s&p 500, 25% gain. keep that in your mind we'll do it through the lens of etf. while the surge in consumer sector made a record high not all of retail is equally waited. the s&p is up 25%. biotech has done better. the laggard remember this year ibb is up 18%. so still underperforming the broader market overall on the precious metal side gold miners represented by the gold miner's fun, gtx they were negative down 2% or so since the december 24th lows yes record highs for the broader indices but not every asset has participated fully and some of those parts of the market may be a focus for investors as we

approach other areas of record highs. back over to you dow and s&p going green. let's get to courtney regan for a news update. >> good morning. here's what's happening at this hour in a tweet this morning president trump said he'll go directly to the supreme court if the partisan democrats ever try to impeach him he said he did nothing wrong he said democrats committed crimes and looking to congress as last hope north korean leader kim jong-un arriving in eastern russia for talks with put tomorrow. he arrived on his armored train which pulled into the station of vladivostok. eight pedestrians are in the hospital after a suspected speeding driver intentionally drove inthe home witnesses said the driver was speeding and never slowed down no injuries have been reported after a union pacific train carrying ethanol derailed in fort worth and caught fire nearby homes were evacuated as a

precaution because of the fire hazardous materials team is on site to monitor air quality. back over to you, carl as we go to break take another look at shares of snap up as much as 10% but now down 5.5 as we saw a selloff after oping bell "squawk on the street" is back in a minute. don't go away.

>> stocks are erasing earlier losses looking to continue their run. big earnings continue to roll in joining us now with what to do next in this market. morgan stanley chief investment office per this idea of a melt up is

perpetuated with the idea there's money on the sidelines people haven't embrace this rally and as it rushes in you could see new highs. is that something you guys are seeing from your clients >> yes so our clients in the private wealth business have been fundamentally conservative for most of the first four months of the year, cash balances are well above average, and so, you know, the thesis around a potential market meltup as investors embrace kind of, you know, fear of missing out and coming in from the sidelines i do think is somewhat bullish for the markets in the very near term. >> is that why the second point you have is volumes have been thin which is something we've seen is that why we haven't seen a lot of conviction? >> i don't know if it's conviction i just don't think we've seen a

lot of retail and private individual investor participation. so a lot of what we've seen is kind of, you know, just institutional money being repositioned in this market. we have not really seen flows come in through certainly through equity mutual funds. >> jim, do you buy this idea that the market has more room to climb as people continue to get in, because they have fomo >> well if people continue to get in momentum of money that philosophy alone would lend credence to the view what we believe will drive the market higher is fundamentals. earnings here in the u.s. is better than expected, strong our economy is better than expected no signs of an earnings he recession or economic recession. we think low interest rate environment continues to net benefit, consumer driven economies like our own especially given full employment and moderately rising wages and

a very confident u.s. consumer we like the fact that the fundamentals to us suggest there's reason for cautious optimism not just about being able to selectively pursue more gain but to reasonably defend the gains we've achieved >> lisa, you sound a little bit more like larry fink than mike wilson i wonder if you think there's going a strategic pivot at morgan stanley regarding at least earnings for the next couple of quarters >> no. so let me be absolutely clear. while i value larry fink's view quite a lot and i think he's got a unique purview as we do here at morgan stanley on investor flows, mike wilson and i are in violent agreement that this is a market that is going to have to digest the realities of a potential earnings recession and that it is a market that at this point from a valuation

perspective is running on fumes. you know, in a very short period of time we've seen pe multiples re-expand to almost, you know, 17.5 times forward earnings. and, you know, we see margin pressures emerging and we think it is going to be very, very hard for companies to, to surprise. one of the things that -- >> just to follow up on that point, though, why aren't we -- i know we're not nowhere near the end of the earnings quarter but we're just not hearing that tone out of conference calls why not? >> yeah. i mean fundamentally i believe that, you know, the fed has given everyone a gift. there's a lot of optimism that we're going to get a trade deal. there's a lot of optimism that non-u.s. or international markets will re-accelerate so i think right now, you know,

managements are maintaining that level of optimism. but i think the reality is going to hit, and, you know, i think investors are going to have to re-evaluate what is truly possible and truly achievable in terms of earnings numbers. one of the thing that happened is that earnings expectations were crushed in the first quarter. and that's why we're getting these earnings beats on a year-over-year basis the earnings are not at all impressive so we need be very careful in birring in to this rhetoric we have 80% of companies beating expectations those are expectations that were slashed from a view that companies would grow their earnings at 18% last summer. then that they would grow their earnings at 12% in january% to a view that they were actually going to see declines this quarter and that's fundamentally what we're seeing we're seeing beats off of an

unbelievably reset bar >> jim, do you want to take the other side >> well, i'll take at least half of the other side. i do think sooner or later we'll have to pay the piper in terms of slowing rates of growth most domestically and globally. that said when you look at the u.s. and all of the headlines that have been profoundly negative with relation attorney general's recession, u.s. recession when you look at the concerns relating to brexit and china slowing growth these are three markets especially the uk and china that are fairly significantly better than expect this year and we suspect so long as the fundamentals remain their strength there's reasonable room to run >> jim and lie sark thank you. >> thank you take a quick break here and take a look at shares of caterpillar this morning also raising the full year guide

on a q1 tax benefit. shares are down 3% taking about 30 points off the dow. here's a look at the top performing names on the s&p which include an dark jo adarko.

>> tesla reports earnings after the bell find out what to watch for on trading nation @cnbc.com more "squawk on the street" coming up. people know aflac... aflac! ...but not what they do. so we're answering their questions.

aflac is auto insurance, right? no. uh uh. is it homeowner's insurance? no... uhuhuhuh! is it duck insurance? nope. ahhh! do they pay me money directly when i get sick or injured? yeah. aflac! you got it. you know aflac! boom! get help with expenses health insurance doesn't cover. get to know us at... aflac dot com. >> welcome back. extreme rainfall is causing chronic flooding in parts of the u.s. making some neighborhoods uninhabitable. state of louisiana is using funds for an experiment that could turn into a blueprint for what some are calling climate refugees there's a rising risk to real estate good to see you. >> that's right. now the federal government has given individual flood

homeowners money to move before but never done anything like this moving an entire town out of harm's way at a small church meeting house in a small louisiana farm town a small community is making a very big decision >> the option to purchase has been signed. it was signed today. >> the community up to 40 homes is moving together to higher ground the state of louisiana is using federal funds to purchase land, build new homes, demolish the old flood damaged homes and turn this neighborhood into wetlands. >> so you're going to knock down all of these houses? >> right >> pat forbes who administers community block grants for disaster relief is in charge >> it's quite clear that we're having more disasters. consequently we have to start doing things that are smarter. one of the easiest smartest

things you can do is get people out of harm's way. >> pecan acres was built in the 1970s near a canal in the last decade it has seen more frequent and intense flooding its levee is no longer adequate. back-to-back floods in 2016 and 2017 drew the governor's attention and a plan was hatched to buy out the homeowners and move them here, barely two miles away but ten feet higher miss jackson was eager to hear the details. she raised her children and now her program daughter in the home that recently flooded beyond her financial ability to repair. >> water came up to about here and then you had to take that drywall out. >> losing everything you don't have time to pick up anything got to go back and just start all over again i mean it's miserable. >> the program will buy out each homeowner but since these damaged homes have so little value now, homeowners will also

get forgivable loans, up to $200,000 to buy into the new community. for each year they live in their new home they get one fifth of the loan forgiven. in five years the home is theirs debt free. the cost roughly $8 million. in the past the federal government has given flood homeowners money to simply relocate but this is one of the first plans to move an entire community en masse here to higher ground and it could be a model for the future >> when we get done with this we and everyone else will know more about how to do this and more about the mistakes to avoid than we know right now. >> we all in it together and, you know, i'm not just happy for myself but happy for everybody el because we've been through a lot. >> you're ready to go? >> i'm ready to go >> the state of louisiana is spending an additional $4 million to turn the old area into wetlands. this will protect neighboring

communities from future flooding because the wetlands acts as a sponge during heavy rainfall >> ten feet make that much of a difference >> for now this is a canal. a levee that's been failing. but they are seeing in the heavier rainfall and it's not working anymore. ten feet and further away from the water. >> any signs like other states like florida or similar areas might look at this >> louisiana is doing it somewhere else as well, which is actually sinking into the gulf of mexico, so you know other states are going to be looking at this. >> it's an interesting approach, diana. makes you wonder whether it's possible to do on any large scale, expensive and difficult logistically, right? >> these are community development block grants so it's going to be up to the states and the federal government, how much they're going to do before the disaster happens we talk so much about paying to repair the disasters, but if you do it beforehand you avert the disasters and pay first. >> but when you're talking about

louisiana and i think "the new yorker" had an interesting story about it recently or florida and the long-term prognostications for how much of the states will be under water the numbers have to be virtually impossible to meet. >> you already have miami, the city has millions and millions of dollars it's using right now to use pumps and extra things to help the city survive longer term but again, taxpayers actually want to foot that bill because they know it's going to help their property values in the long run. >> finally, while we have you, names like horton are seeing 52-week highs for the first time in a long time. >> new home sales yesterday. a nice bounce all because of the huge drop in mortgage rates in march. rates are back up again. i don't know what we're going to see in the next month. sensitive buyers today. >> new home sales, how much of a leading indicator is it? >> it's a big leading indicator. these are signed contracts based on, you know, people out shopping in march. the existing home sales numbers disappointing in march based on people out shopping in january and february when mortgage rates were higher.

>> great story. >> thank you. >> really interesting. we'll keep our eye on it diana olick. quick programming note here as we go to break. don't miss an interview with chipotle's ceo brian nicole. chipotle reporting results after the bell today the stock up more than 60% so far this year. we'll be right back. dow's just about unchanged this is loma linda, a place with one of the highest life expectancies in the country. you see so many people walking around here in their hundreds. so how do you stay financially well for all those extra years? well, you have to start planning as early as possible. we all need to plan, for 18 years or more, of retirement. i don't have a whole lot saved up, but i'm working on it now. i will do whatever i need to do. plan your financial life with prudential. bring your challenges. you should be mad at leaf blowers.

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welcome back to "squawk on the street." i'm dominic chu. stocks are hovering near the flatline so far trying to find some momentum after the record close for the s&p 500 and nasdaq composite. yesterday just about half of the sectors are trading in negative territory at this point in trading so far despite those gains, from anadarko the biggest underperforming is the energy sector overall a sharp reversal from the last couple days. the stocks were under pressure as data is showing rising u.s. crude piles counter fears of tighter supplies resulting from the u.s. sanctions on iran you have marathon and chevron

and valero the energy sector a key focus after a nice run up for oil prices i will send it back downtown to you guys at the stock exchange >> interesting looking at that chevron down as well perhaps an expectation it will have to raise at some point. thank you. okay sara, what do you got coming up? how are you going to match what we've done on this show today? >> with a ton of earnings is how. and the party just rages on to today. if you thought today was exciting, facebook, microsoft, tesla, chipotle, visa. all coming your way at 4:00 p.m. after the bell of course we'll bring you the numbers, instant analysis and talk to some ceos of the companies that have reported ceo for lion holdings will be with us on the heels of reporting their results. some new competition there with southwest. we'll talk about boeing's problems and more. you won't want to miss any of it, david. we'll talk to td ameritrade ceo as we reach new record highs and will today be another day we

close in record territory? we're wavering all over the last. >> i think it was cashin' who said the bulls need to take out the intrayig aad hhsnd we'll see. dow is up 8.

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good morning it's 8:00 a.m. at snapchat headquarters in santa monica, 11:00 a.m. on wall street and "squawk alley" is live ♪ makes me that much wiser ♪ thanks for making me wiser ♪ learn a little bit faster mad my skin a little bit thicker ♪ ♪ thanks for making me wiser ♪ oh, oh, the question is, will we add to yesterday's gains welcome to "squawk alley." i'm carl with morgan brennan at post nine, jon fortt has the morning off. >> we're going to start with techs charge higher. the s&p leading gains since the christmas ev