>> live from new york where business never sleeps. this is "squawk box. >> good morning. welcome to "squawk box" here on cnbc we are live from the nasdaq market site in times square. i'm becky quick along with joe kernan and mike santoli. andrew is out today. take a look at the u.s. equity futures. doirch r down by 66 points the dow not far from its highs at this level. it actually dropped by 59 points yesterday, and while that is a small loss, it was still the biggest loss the dow has seen in two weeks. the nasdaq has indicated up by 55 points.

>> you saw the -- >> again, flat in spain. finally, take a look at what's been happening on the treasury markets. the yield on the ten-year is the one that we watch so closely yesterday the yield on the ten-year closed at 2.522%. hitting just above that this morning at 2.527%. we're going to talk about the fed today and what potential moves could mean there >> other currencies are softening up it does seem like that's really

range-bound. treasury yields and the dollar has been really stable stocks grinding higher it's been the story with both stocks leading pausing near the highs for the s&p is basically, i guess, all you can sigh it's a push-pull of earnings that happens below the surface breaking news in the banking world early today. talks between deutsche bank and commerzbank have collapsed deutsche bank walking away due to the high cost associated with such a large scale acquisition you see shares of actually daing burb rallying. >> on the earnings front, let's start with a major milestone for microsoft. we could just look at what's happening here i think we can talk about this until 7:00 tech giants market cap is now over $1 trillion it's going to trade at nigh highs today. closed yesterday at 125. it indicated up at 130 that's an all-time high.

there's 960 billion was the market cap it's over a trillion a revenue in earnings beat sales jumped 14% last quarter. 73%. cloud revenue up 41% it's now one-third of what microsoft does now base revenue. since the new gentleman came in in 2014, stock is up i think 350% it's up 2.5 times or something when you think about old tech and the way you try to reinvent yourself and, you know, balmer, i guess, sort of kept it going long enough for a bridge or however you want to look at it, but it's got to be the envy of an ibm or any -- i mean, ibm predates microsoft by a wide

margin, but you think of microsoft as old tech. >> it's been the most market cap for the most of the year to apple. it could sit again, but, i mean, microsoft years ago we thought, you know, when -- >> it was just tethered to pc. >> they did have a much more secure built-in lock on that pc. ibm -- >> the government went after them >> when it was the stock had traded and arranged for years and years. every quarter i was always shocked at how much windows $30 billion again in a quarter >> they're printing money. >> keep us from getting pcs. business is still getting pcs.

>>. >> it's a lot of people every quarter. it adds up. >> sichlko never got to six. maybe got to six got to 60 at least it was ahead it got to -- remember, i think it was -- >> touched 70 at some point. it was over a half a trillion. >> over half a trillion for sure >> oracle was not there. >> microsoft, here we are. >> amazon, apple, and the others that's amazing just watching

we used to have people on that remember the late great vince fererly would say instead of the high flyer, he said i with go microsoft versus google. >> another big earnings report last night facebook topping estimates for the first quarter. two key metrics in line with expectations daily active users of 1.56 billion and then the monthly active users of 2.38 billion the company announced that it expects to be fined 3 billion to 5 billion for privacy violations facebook ceo mark zuckerberg has called for more government regulations. here's zuckerberg addressing the cost of privacy concerns and regulation

i understand any regulation may hurt our business, but you think it's necessary getting these issues right is more important than our interests, and i believe that regulation will help establish trust. >> that was enough for the market last night. you can see that the stock is up by 8.5%. i was this ig about that you are kind of showing -- it's a big tell for the government that we're willing to pay this even before we're going through the negotiations this is what we're anticipating and expecting. >> it's a value to investors of just simply putting a number on it, and just sort of know wag we're dealing with, and of course also, of course, from the context of no real loss from engagement obviously, advertisers, very sticky all of the operating metrics are fine everything that was a shortfall was under facebook's control, which is lots more costs based on trying to beef up the privacy. >> you're going to have to change your business model, too. >> i think the take-away might be that nobody else is

necessarily going to have better more intrusive targeting mechanisms if facebook reforms and goes through more privacy focused area right? it's not as if somebody is going to say now the advertisers can get all that private data somehow through another platform >> when they shut down -- it's my first reaction too. it is surprising to see that what we thought was going to be something that really brought equality on all levels has been turned and can be used in so many different ways. >> why don't i do this thing where we can, like be in touch with each other. now it's -- we have a $3 billion fine, but it's not a big deal. it's reserved for the $3 billion. >> after they have 5.1 million

dollar fine. >> it used to be rockefeller and jp morgan and you think of henry ford you think now it's this guy that he is in a t-shirt or hoody, and they rooev suicide -- 3 billion. i got that yeah it's a $500 billion company. where was it 15 years ago? how does this happen >> rockefeller was pretty young when he made his launch too. that was oil >> i mean, this is like -- let's talk to each other at college. >> this is everybody in the world. >> that's what happens >> a little piece and try to basically get, you know, $10 in revenue. >> taking advantage of the infrastructure that was already built just like jeff bezos did.

>> phil lebeau will go through the numbers. phil, we knew it would be ugly, but this is even uglier than we had anticipated. >> far uglier than people had expected they were expecting to post a loss of -- ended up losing 290 a share, and there was a little bit of everything in this report the good for those who are optimistic about the company a few nugget ez here or there. the bad, the numbers themselves. for the curiosity seekers, a new product from elan musk let's go over to the first quarter from tesla as you mentioned, a big miss for tesla on both the top and the bottom line. the cash burn, 1.5 billion dollars. then you had the lumpy delivery indicatedence and that exasper ated things for tesla in the first quarter. now, if you are a bull, if you are somebody who believes tesla will ultimately get where they say they are getting, they did reaffirm their guidance for 2019 full deliveries vehicle.

total vehicle deliveries between 360 and 400,000. don't forget, today is also the deadline for elan musk's

attorneys. attorneys for the fcc, and attorneys for tesla to give the judge in the contempt of court case an update have they worked out an agreement in terms of perimeters for elan musk communicating over social media or will they ask for another extension, and we'll be watching that as well today guys, back to you. >> what's the insurance angle again? i'm not sure i understand what they're offering, what they would do. for those who buy our vehicles and use autopilot technology and

then when they have robo taxis coming in to service next year, those who own a tesla and is part of the tesla autonomous vehicle network. do they try to get somebody else to underright it it seems like -- that's why he even said this might be a good time to raise some capital >> that's unclear. they did talk about that this might be a good time to raise capital. >> it's not always clear what's being said by the people on the call, but elan musk is asked about raising capital. it's not really the right time then there was a follow-up question, and he said maybe this is the right time to raise capital. which is it? you know what i mean that's sort of the issue that people face when they're looking at tesla

who is underwriting it >> regulators in every state >> absolutely. absolutely a far more complex business, and far different than auto manufacturing as well as energy generation, storage. i mean, the question is -- >> flame throwers. what's -- >> i like his idea the noiseless leaf blower. that's a good idea >> noiseless leaf blower this is the question for tesla investors. do they have so many projects and so many ideas and so many different things that they are looking at doing i mean, solar panels that are -- >> you're going to be changing all kinds of different things. it's a lot put on one guy's plate. >> right >> did you say -- >> that's something they mentioned. noiseless leaf blower, which i would love in our neighborhood somebody blowing the leaves constantly >> i have been tweeting out the

two-pay challenge, phil. we have people accusing me of wearing a toupee i have used a leaf blower. technical e about beingy used it on my hair it's very clear that it's real >> could you collect the leaves with the leaf blower and use the flame blower to burn through the leaves this guy has lawn care covered, i think, at this point, right? >> that would be great >> you know what's the scary thing, joe, is if you mention this to people, just like when you first mention, hey, they're thinking about manufacturing some flame flowers not that they're going to sell a lot of them, but they're going to manufacturer them >> it's reaction for people. they think that you are joking around >> right >> now if you say, hey, they're going to do a leaf blower, normally people say, oh, that's absurd now you start thinking, well, maybe.

snoo if you get one, i'm ready to stand again to prove to you >> i'm willing to turn it on you. >> to prove to these haters that -- >> anyway. >> they all hate trump, too. they hate my hair and -- it's so weird. coming up next -- >> go figure >> maybe it's the hair they don't like his hair either. anyway, coming up, coming up changes coming to a key china investment initiative. we're going to get a live report from beijing next. then a busy morning for earnings to get you ready for reports from comcast, southwest airlines, 3 m and more then at 7:45 comcast ceo brian roberts will join us later on squawk on the street,

exclusive interviews with the ceos of southwest and chipotle as we head to break, here's a look at the biggest premarket winners and losers so with xfinity mobile

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>> government leefrds are discussing tweaks. that's the president's program to strengthen frain structure, regional cooperation, and connectivity throughout the country. eunice yoon has more from beijing. you know how to say that in -- what is it called? the trump administration has been calling it a death trap, and that's not been going over well in beijing.

what we have laerd on the three-day summit is beijing sending a message it's going to fight this criticism you borrow money from the chinese to pay the chinese to build you stuff and then you end up owing the chinese that has been a problem for some countries like pakistan, for example, which now has a lot of debt nooik pompeo described it that washington didn't send a delegation this year.

>> he said his companies who are already wary about getting involved in the program would wait for more information before koom committing to join. >> president xi will be speaking tomorrow there's been some expectation that he could actually moderate his language in order to address some of the apprehension among china trading partners about this program >> thank you >> you can -- if i ask you for something else, you're not going to know. are you? >> i'm learning. dlz a couple of phrases too, but he can't say them on air >> i would mess them up and say something worse. >> no wear words >> no, no. yeah >> the --

>> coming up, we've got a ton of earnings we'll tell you about, including volatile reaction to chipolte's quarterly results a programming note the cnbc stock rap on the clock. this year new york mets pitcher flowa and celebrity chef bobby flay competes. nick laurie will also defend his title. that all kicks off today 2:00 p.m. eastern time here on cnbc "squawk box" will be right back. this is huntsville, alabama. aka, rocket city, usa. this is a very difficult job. failure is not an option.

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stocks to watch today. ubs first quarter profits topping estimates, but those proflts are still down 27% from a year ago ceo of ubs telling cnbc overnight it was a challenging quarter, but he is pleased with the results. ubs shares you see up by 1.3% right now. chipolte shares have been volatile in the premarket. the company beating on the top and bottom lineses digital sales doubled and same-store sales grew 9.9% it came well above estimates reported last evening. chipolte shares up now about .6%. you see that kind of gyrating

around stock up tremendously, obviously, off the lows. that could explain why. >> live new in line. as you can see, the shares up just under $1. less than 1% visa reporting better than expected results for its first quarter. revenue of 5.5 billion was slightly above estimates earnings of $1.31 a share beat by 7 cents visa shares up 22% this year alone.

>> we'll find out how much it had on the company's bottom line the stock is up over half a percent. as we head to a break, the winners and losers. 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.

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zbloinchts welcome back. >> good morning. u.s. equity futures at this hour indicated down 117, and i think it's because of what we're going to talk about right now. we are down 60, right? now it's down 117 and 3 m just

reported in a quote of 3 m, check it out it's not -- >> revenue also missing, too >> the ceo, mr. roman, admitting that the first quarter was a disappointing start to the year, and that operational execution fell short of their own expectations >> what's it is dif icer now >> it's about 6.8. down for every dollar.

jo we were talking about that before i'm sure we can find someone >> they know if you went -- it's good to know other -- good to know. >> jay is here to cover microsoft, but we're going to start with victor anthony. he covers facebook for ages capital. victor, let's talk about it. the numbers were pretty much in line with what the street was expecting, but maybe just relief from the idea that the company is putting a number on what they anticipate will be u.s. regulatory overhang in charges

>> pretty much in line slightly above when you look outside of the u.s., it was slightly above. first, though, i wanted to point out that i made facebook my large top cap pick, i will admit the blow-back from data privacy issues and defections, regulatory issues, the stock is up 40% >> there you go. >> i think it's still more up side i think last night's results was probably less about the quarter and how facebook will revolve over the next several years. >> what was it that you heard? there are so many questions

about how do you do that without disrupting your business model how profitable will it be? >> i think -- it could disrupt the existing revenue model >> i think users today can, you know, incorporate the privacy settings it's more cumbersome to do it on the platform it makes it easier to urks and that's probably what he was trying to communicate. i think it will resonate with users. they can choose to have a more, you know, privacy focused interaction and have a more open platform you can do either/or you can monitor and monoties either platform. >> the stock is under $200 do you think there's more room to run

>> they're taking about messenger modernization and what's appear mono ti zplation they didn't push that as aggressively as anticipated. >> it's as well as the potential for modernization stories with platform ar lot more upside left on the platform itself. >> there were questions with some of the founders of what's app and others leading earlier this year. what that would mean if it was because they were uncomfortable with how facebook was pushing towards monotization and concerns about privacy there have those concerns been answer snd. >> i think largely >> it's a normal -- essentially normal for what i've seen over the past decade. you know, i think he has basically said we won't push the

monotization those are multibillion dollar opportunities over the next several years. the way to do that is what he is saying with facebook, instagram. >> $10 .45, $10.90 now we're going to $9.25 to $9.75. >> what's the end market did they say which one >> i looked at -- i don't know which of these are above or below, but they've got safety and graphic sales.

zmool they're talking about the previous return on invested capital view was 22% to 25%. that goes to the 22% down as well there's some reserve the adjusted -- that's adjusted for the earnings we're using if you use the gap earnings that was even well below that because of some reserve for environmental matters and litigation and other things. if everyone was 3 m, we would be in that minus 5% area year-over-year >> some of the issues that were of concern was rising dollar and very global companies. 3 m is a company that has stumbled badly over the past

several quarters it's an operational issue. i think there's been a lot of criticism there. it's whatever. the reorganizing into -- there's basically an ongoing process, i think, catching up the years of, you know, some businesses not really up. >> i was looking at -- a diy i was looking at all the tape that you use when you want to get a nice paint and you put it over the molding you use -- >> total sales and electronics and energy were down by 1 1.8% that's the biggest decline that they saw of their business line. >> they had declines in one, two, three, four or five business lines >> i think that the idea is that

3 m maybe surrendered some of its bell weather status just because they have had operational issues >>. >> let's get to microsoft. covers the stock for griffin securities we were in awe of the turnaround in 2014. mostly cloud, i guess. not everybody has been as successful trying to do that, right?

>> a year and a half before he even became ceo. to the point we've discussed on earlier appearances, steve laid the ground work, but sacha has greatly built it i called microsoft the house that sacha has rebuilt, and he has certainly done a great job in executing the strategy. zplie hear time and time again people pradsing him. what did he go in and do that was so transform >> it's internal investment, and it's the other management. of this a good cfo they've been managing their costs well you can see them driving now through the profitability.

for them to -- the shares of more than quadrupled since we recommended it >> now what you do do? do you raise your price target >> the last price target we set was six months ago that was 130 >> now it's above that >> it's been conditioned to change >> your preparation is you're going to raise your price tar t

target. >> it's a business that he used to run, and it's their software business, and that's a substantial beat windows oem came in stronger that's not necessarily something you would extrapolate. >> we're month on where the company is going, and the addressable markets are doing very well. there's clearly an uplift in chinese spending >> victor, frank, gale, i just got an e-mail, and it is addressed me, and it uses my name to start out. it's personal. addressed to me from joe biden i'm not kidding. he is indeed running for president. america is an idea based on a founding principle that all men are created equal. are you with me? can you chip in $5 he wants money >> are you a likely donor? >> i'm a likely donor, possibly. it just came in.

>> didn't know he would do that specifically >> my question is, what's ernie now? is bernie going to feel like, again, the establishment types are going to make sure he doesn't -- this is going to be us u ugly.

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but at this point you can see that it is sharply lower i think what the nasdaq is actually up. >> i think you have to look and see if people take this as an excuse that the market is coming a long way the sector has anticipated semiconductors have been a leader in flew highs i think it's -- >> this looks pretty operational and specifically -- >> i think i wondered on a trading basis people say, okay, fine maybe we take some off here. >> revenue also above forecast it's the largest prargt of those jets the stock indicated a bit higher >> it's a cost for duration of the next groundings, and they published their flight schedules for the next several months, and

they've removed all marksz flights through august 5th that's kind of where they are getting the guidance at this point. >> when we come back our next guest will tell us why boeing is still one of the top picks despite the steady drumbeat than despite the steady drumbeat than less than favorableto collabora. giving you a nice big edge over your competition. that's the power of edge-to-edge intelligence. we see eat emerson,mulating when issues become inspiration, creating a better world isn't just a result, it's a responsibility. emerson. consider it solved.

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boeing shrugged off some potential bad news after yesterday's earnings report, trading higher intraday before settling slightly lower. our guest is joining us now, david bonnson, founder and cio of the bonnson group what do you have to assume right now to back boeing at these price levels in terms of the ultimate impact of the whole 737. >> if the 737 max issue were the worst case scenario you hear people talking about, not the company but negative analysts it is not much below 350.

i thought it was very telling that they suspend the stock buybacks they're not touching the dividend they're not going to touch the dividend and this has been -- first of all, it's the second biggest free cash flow generator in the market and has been one of the great dividend growers in history, 14% per year for 20 years they have grown the dividend so to me the free cash flow generation, they have to get over this hump worst case we think is about six months away impacting 5% it's reasonably priced in. and i have never seen a drama get this kind of attention and the stock is up 15% year to date it's just stunning to me >> sure. no, obviously the financials people are able to get some comfort there. chevron, another pick, another company in the news for different reasons potentially having to pay for this acquisition. >> there's no question chevron is more cyclical company you're talking about a company that's grown their dividend 33

years. this is obviously a theme of our's we're dividend growth investors. chevron's case, i don't believe they have to raise the bid. >> why >> i think it's a no brainer that they would take this bid at 65 as a better bid than 76 for moxie based on the post-deal leverage the fact of the matter, after they absorb the debt, they'll come out with a debt to ratio that is below exxon's now. the post deal would make it one of the more levered companies in the united states. >> that's nuanced to tell that to sharer. >> it may be i think it isn't nuanced for those shareholders will represent the math. >> we want more. >> because of the ratio to stock price, we have seen this a lot. >> exactly. >> 50% in stock, i think that the 65 will be a higher price any ways why is chevron's stock and their ratio a more stable pricing

mechanism to shareholders, because chevron is that much more available of a company. >> blackstone, want to get to that, obviously changing from a partnership structure to a corporate structure. >> they no longer have to pay out the dividends, but it's the kind of culture of the company they're a big cash flow generators they don't have a lot of balance sheet assets they're asset managers, right? really all of their business is ska cash flow. they can redistribute it out in a tax efficient way and they will that stock yet can't get the full pricing because the investors that will come in mechanically can't until after july kkr got a 25% premium in valuation. blackstone so far has gotten 10%. more to go there. >> would you buy it here >> we would not and the reason is purely it's so priced for 3m for 64 years at a high enough dividend 3m is a great company.

3m for us is the type of company we liked but not a company we buy because of the level of dividend income. >> david, thank you very much, david bahnsen. coming up, set your dvr on your xfinity system. we are awaiting comcast. those results are due in the next few minutes and, and this is what i'm talking about, we'll bring you an exclusive interview with comcast ceo. 3m had a big miss, dow component down double digits and that's hurting the dow more than 'lbeinxer des. wel right back. ♪ pnc bank has technology to help make banking easier,

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♪ good morning and welcome back to "squawk box" here on cnbc i'm joe kernen along with becky quick and mike san toely andrew is off today. u.s. equity nufutures affected significantly by the big selloff of dow component shares of 3m after they reported lower than expected results really across the board. revenue and the bottom line as well as the forecast for the rest of the year all trailing expectations we will get back to more 3m, but we do have a now numbers coming out from our parent comcast which the bottom line number is you don't necessarily see comcast do this. these are close, 76 cents is well above the street estimate of 68 cents a share. stock at this point looks like it has been down

that's a daily chart it's now down 1 1/4% the revenue number overall looks like it might be a little bit shy of expectations. the company, though, points out that this year there is -- there's no olympics and there's no super bowl and typically analysts have trouble seeing exactly how to model that into their numbers. a lot of the other numbers are like free cash flow is way up. >> that's an important number. free cash flow up 49%, 4.6 billion versus just 4.3 billion the street was expecting. >> that's 35% above what wall street was expecting. >> yeah. >> then you look, everybody always looks for the cord cutters, but if you just look at net customer relationships which includes, you know, that type of stuff, the video customers video customers were down 121,000, which is worse than

last year. >> i read an analyst report yesterday suggesting that the video customer losses might be worse than expected because the company has said it's not going to chase those they're much more interested in the high speed internet customer. >> overall net change in customer relationships is up 300,000 which includes sky stuff, too >> that beat the street's expectations. >> high speed internet. >> they're working a lot more with those customers giving them a new box you can rent for $5 to give you a lot of the video aspects to it, too. >> the revenue number was 26.9 and the street was at 27.2 so, at first blush that may have been part of the -- i don't know. >> the free cash flow beat, just for some insight into that, cable cap x down 19% year over year on the quarter now for the last quarter cable cap x is 9 compared to 12.3%. there's obviously flexibility in

how much you spend on cap x, that is some source of the freer high cash. >> uh-huh. >> there's a lot in here about sky, obviously as well think about what you have to talk about with comcast. you have to talk about nbc's results and that's multifacetted in and of itself in terms of both broadcast as well as all the cable properties then you have theme parks, too which i think the theme park was flat, was it not >> it was consistent with the prior year, $1.3 billion in terms of revenue, but part of that reflects the timing of most spring breaks. remember spring breaks were a lot later because easter was later. >> that makes a difference. >> it was first quarter of 2018, second quarter of 2019 so you could see better numbers in the third quarter. >> for years after the acquisition that was a big surprise and a lot of growth. >> and all the money they plowed into it comes back in spades that's a huge cap x spending but with great results as well. >> we will talk over all these

issues with ceo brian roberts he will join us around 7:45, i think, or there abouts chairman and ceo of comcast. let's talk very quickly, ups also out just moments ago the delivery company coming out with numbers that were light on both the bottom and top line. 1.39 a share is below the 1.41 the street had been expecting revenue also coming in slower. whether you lowered the u.s. profit by about $80 million or 7 cents a share. so if that were the case, they would have beat by 5 cents without some of those weather conditions they are also maintaining their guidance for the full year they say they expect to earn $7.45 a share to 7.75. the street was looking for 7.56, that's at the low end of the street's expectations are at the low end of the bracket that company is giving. you can see the stock is off by 1 1/4% right now. >> looks like we'll get a test of both the transports and the

industrials today. couple of other earnings movers, 3m will be a big weight on the dow, set to knock 150 points off that index at the open company missing on both the top and bottom lines and cut its full-year earnings outlook and also announced a restructuring that will see it cut 2,000 jobs worldwide. down indicated 10% this quarter a year ago, stock had a similar move, similar shortfall and also reduced guidance from the company. at the time they were blaming things like their exposure to the automotive cycle. >> right. >> so it seems like a little bit of an always something issue. >> they saw weakness in end markets, they said if you look at the five businesses, they saw revenues decline in four of the five businesses and you said cramer was taking them to task. >> i believe it was a quarter a year ago when it seemed like it was a big miss you know, there was a little bit of a sense i think this company has just been so well managed over many, many years that it was -- they kind of clicked to the numbers each time. they can usually pull it out of

the hat if they have to because when one thing is not working the conglomerate number worked for them where it didn't for year and there was a big stumble and also in october. obviously this has been an issue for 3m in trying to make it. >> they do have a restructuring taking place they say they're stepping up some of that and also announced there will be 2,000 job cuts around the globe as part of that restructuring, too. >> not a huge number, but it's an on going process for the company here. facebook meantime topped estimates for its first quarter. the l.a. active users 1 spnt 5 billion and monthly 2.8 billion. the company expects to be fined some 3 to $5 billion by the federal trade commission for privacy violations in the aftermath of several data scandals mark zuckerberg called for more government regulations the stock up more than 9% all the operating met rix were basically ahead of expectations

in terms of digital advertising demand and that user engagement. obviously seems like a dodged bullet here for the business itself, even if the on going business model is under renovation. >> the analysts we spoke with in the last hour said that he's even more positive after hearing conference call last night than he was before and already had a buy on it. >> exactly so obviously that stock it topped last year maybe it was like 212, $212 a share so still well below microsoft also out after the bell tech giants topping 1 trillion dollars after posting an earnings and sales jumped 14%. big number revenue for its cloud service azure serged 73% that 131.11 seems to get it over the line for the trillion dollar market cap. >> joining us right now to talk earnings and the markets and what to expect from here tim holland. and on set with us this morning, greg hahn, chief investment

officer of winthrop management let's start with the earnings we heard so far, overall they have been better. this earnings recession is not here when you hear things about 3m, does that concern you about the industrials. >> we expect this earnings quarter to look more like 3m than we have earlier in the earnings report, this earnings season we expect to see more of the 3m. >> this is a broad concern, you think, not just operational, this is something that could be an issue across many companies. >> yeah. the smaller manufacturing companies that we talk to that serve the auto industry are all flat to down right now. >> why what's happening >> the auto industry, the demand is down. and we haven't seen the capital investment intothe space so, it's -- they're leading that slow-down. we're not talking recession, we're just talking a slow-down. >> are there companies that because of the size you think they're particularly open to being hit with numbers like these? >> right now part is capital

investment this whole move into electrics, you're talking one transmission when you have companies that build pieces that go into transitions, into carbon engines, that's a whole different industry than if you're just looking at electric. it just changes. >> internal combustion you're talking about? >> xactly. if there's growth in tesla, that's a whole different engineering than if you're dealing with -- >> it's de minimis, the electric car component of what we sell. it has to be bigger than transition to electric car. >> well, it's actually growing what's happening is -- >> car sales were at record levels and flat basically. we have mike jackson on all the time 17 million a year, right >> and trending lower. so you have dealer inventories stacking up right now. so we have to move that through the system and then you have this growing piece of the electric market that's coming on. >> tim, what do you think? what have you seen so far? what concerns you? what do you expect the rest of this earnings season >> sure, becky brinker capitol we take a still

broadly optimistic view, as you noted earnings season, we're 25% of the way through in terms of s&p 500. 80% of companies have beat at the start of the earning season, folks were expecting 4% drop year on year, now it's 1%. so to your earlier point, we think when all is said and done, there won't be an earnings recession. the bar was set too low and corporate america is easily jumping over that bar. there will be the 3ms, but for every 3m there's a facebook and microsoft and then some. we're still broadly optimistic on the earning cast and earnings season support that more optimistic world view. >> is there a direction you would be focussed given the fact there will be winners and losers >> sure. we think there are two things worth pointing out one is west texas is up 47% year to date, the west of west texas, wti. and the yield curve is steepened by three basis points which

doesn't sound like a lot year to date it's at a high for the year. but financials broadly as a sector is still down year on year at bripger capitol, we don't pick individual securities we pick best in class strategies and blend them into portfolios we think financials are pretty interesting and energy and as west texas continues to grind higher we expect energy earnings to be better than expected throughout 2019. >> are you looking for a down quarter for s&p earnings >> no. not at this point. so we think right -- >> greg? >> we're not. >> i want to drill down. you said autos what else? what's gdp going to be tomorrow? >> we're looking at about 1.7 to 1.8. >> you're low. >> we are. >> we'll be able to see tomorrow. >> we're looking at compression in profit margins and we're surprised also you saw with 3m, declining revenue. if revenue stays constant, then we could probably see flat earnings but if we see revenue declin

declines -- >> i'll cut you off. sorry, tim so what were you starting to say, tim you think we go flat or do we even get a year to year gain in s&p? >> we think when all said and done there's a slight gain year on year. not to be too flip about it. i was watching seinfeld last night. i went and took a look at the fed atlanta gdp number and that's well over 2%. take that with a grain of salt considering where we were when we started the year q1 economic growth and where things look today, we think again it makes sense to be optimistic on earnings and on equitis. >> tim, maybe it's no surprise to the market to say there's not going to be an earnings recession. i just wonder what do you think is priced in at this point to the s&p? >> if you use the s&p 500 as a broad proxy for u.s. equities we think a reasonable price target is 3,100 we think there's a lot of

credence to the classic rule of 20 you take 20, minus the rate of inflation, there's a reasonable p.e. 18 times on 2019 earnings gets you to about 3,100 so, we think there's still more upside we haven't seen the highs for the year the volatility has absolutely collapsed. we wouldn't be shocked to see more volatility after the year but we think the trend is up. >> you saw the piece yesterday, reading "the new york times. but about how -- thank the fed once the fed said it's no increases the volatility went away, market goes back 25% when was -- when did seinfeld -- tim, when did seinfeld end because it's like everyday there's something that you reference. i've already referenced on twitter. you referenced costanza. i'm getting anti-baldite comments remember, george went to an aa

meeting and anti-baldite comment. i don't need that. any way -- >> it's over 20 years. >> that show -- it was about 20 years ago, i think that show was absolutely brilliant. the whoa sereniity now festivus birds are supposed to fly away when you're approaching them in the car. the guy that parks your car and the b.o. never leaves after you valet it everything everything has been done comcast added -- not that this is more important than other companies, but it is but comcast and sky added 412,000 new customer relationships. not 300 cable added 300. okay little birdie told me that okay any way, want to thank these >> you're right. i'm looking at it right now.

good to see you, greg. tim, thank you, too. thanks for coming in. tesla's path to profitability hits a bump in the road we run you through the numbers and discuss must battle with the s.e.c. and later comcast chairman and ceo brian roberts. stay tedun you're watching "squawk box" on cnbc ♪

♪ a developing story out of russia north korean leader kim jong-un and russian president vladimir putin wrapping up their first face to face meetings. wide range discussed including sanctions, north korea's nuclear ambitions, russia's vladimir putin says they're in favor after a complete denuclearization of the korean peninsula, much like the u.s and he made those comments during a news conference about two hours ago. the north korean leader had this really cool train. did you see that >> i did. >> an armored train like luxury digs you remember wild, wild west, remember that cool train they

used to travel on? you probably don't remember. >> i don't remember that >> part of missing robert conrad >> or the movie they made with will smith. >> that one i remember >> come on you don't remember robert conrad the guy with the batteries >> no. >> any way, he was traveling in stock. i don't know if he has a nice jet. that's part of his -- >> no, he doesn't. he borrows. >> that's part of his reason for wanting to become closer he wants a global express, i think. >> they took a train to the summit, right, with the president? >> yeah. that's probably the same one, armored train. we are also following another developing story, this out of japan carlos ghosn has been granted bail he'll be free to leave a tokyo prison after he posts $4.5 million bond ghosn was rearrested on april 4th over new claims of financial misconduct ghosn denies all allegations. let's get a quick check on 3m shares this morning if you're just tuning in, dow

component missing estimates and the shares are down sharply in the premarket. down by about $19 that times 7 is why you're seeing the dow implied open down by 150 points despite the gains in microsoft after its much better than expected results last night. again, dow futures down by about 152, but the s&p is hanging in there. it's down just minimally and the nasdaq is higher because of both microsoft and facebook big morning for earnings aside from just these. we have a slew of exclusionive interviews you don't want to miss including comcast ceo brian roberts, gary kelly and chi poetly ceo brian nickel just before 10:00 a.m. eastern time today. keep it locked to cnbc all day "sawbo wl rhtacquk x"ilbeig bk. so we're answering their questions. aflac is auto insurance, right? no.

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welcome back, everybody. tesla in the spotlight this morning after reporting a wider than expected loss and less revenue than anticipated. phil lebeau joins us right now and he's been covering this stroir and he has much more because, phil, there's always much more when it comes to tesla. >> there is. the analysts notes are coming in this morning, becky.

most of them -- there are bulls mixed in the bears following this report. but the note of the morning clearly comes from web bush where dannizen, i won't read all of it to you but this sums it up right here to this point, we view this quarter as one of the top debacles we have ever seen while musk and company in an episode out of the twilight zone act as many demand and profitability will magically return to the tesla story. that's one quote regarding tesla's first quarter report of earnings or i should say a wider than expected loss when you look at tesla deliveries they were down in the first quarter, so we knew the company would be reporting lower margins, lower free cash flows and that's the reason for the big ere than expected loss, lower deliveries so what happens now? what comes after the rough first quarter for tesla? elon musk said on the conference call, he's open to a capital

raise. the second quarter, guiding to a loss they are lowering their estimates. you look at shares of tesla that have said, look, we will lower our estimates for the second quarter if not for the remainder of the year. here is elon musk on the conference call talking about the manic stock price and how he deals with it as tesla goes up and down >> i think it does feel like the sort of price the stock is being set in a manic-depressive way. and i think warren buffett's analogy is like having someone stand at the edge of your home and just randomly yell different prices for your house everyday still the same house >> don't forget, today is also the deadline for elon musk's attorneys, s.e.c. attorneys to give an update to the judge on the s.e.c. contempt of court case

>> that's what we want to talk about now, in fact phil, stay with us i want to talk to you at the end, too, phil. >> uh-oh look out >> the deadline for elon musk contempt of court will be resolved today joining us is senior associate for leadership studies at the yale school of management. that's why you're on, jeff you also saw those -- i'm sure that you, like everyone looked through all the comments and scuttlebutt from what tesla said yesterday. what do you make of companies losing money again, much more than people thought. they will lose money again next quarter. where are we at this point in time. >> thank you, joe. and i think that phil's echoing of the wed tech critique really is the worst disaster i think of an earnings in technology, a lot can remember and a long time especially for a company of this size and this market cap, when you take a look at each one of these items, any one of them

alone is catastrophic. the fact that you have -- projecting just a few months ago that we're into the black ink now. no more losses for the company just a few months ago and now we take an unexpected $702 million loss that revenue is crashed, especially with the volume of the model x and the model s that they're down 52% that we have cash has fallen, what, 40% you look across this with the disappointment across the line, it isn't just that he's dramatically failed in expectations, but it's that he's set these expectations himself when he talks about how crazy or manic a public company can be. it depends who is at the helm. nobody says that minhaj as you were just saying earlier this morning is manic and disney good for you in defending the fantastic bob iger is manic. they're very well managed.

it's sure that steve jobs and thomas edison and henry ford were wild self promoters themselves but they didn't promote beyond what they could deliver. this guy is consistently missing. are we anywhere near that $425 stock price he told us about back over the summer when he was going to sell the company, supposedly privately for that. the turnover in the staff is crazy. it's still 55 top executives in the last 18 months, including now again his cfo and the general counsel if even two months on the job. when is the board going to wake up they lost a few people on the board. one of them steve who hasn't shown up for a board meeting in over two years because he wasn't allowed because of other problems that's not a big change. the place is -- you know what they are, they do understand cruise control, anybody -- better than anybody else the board is on cruise control. >> you know, jeff, and phil, you can weigh in, you know, i think of the polarization of the country, it's the same with

tesla bulls and bears. they could not be further apart, phil and i've got people in my ear telling me that this is going to be the biggest disaster in the history of the world i have other people saying that this company is going to change the way that history looks at transportation forever phil, is this the beginning of some slow motion implosion or another temporary setback where they just get it together logistically and back on track do you know? >> there's no way of knowing there is no way of knowing because every time you say here is proof one way or the other that these guys are either a disaster or they are visionaries who are leading us to a new business model in the auto industry in the future any time you see something in either direction, something completely opposite happens. and i can -- i've had this debate with both bulls and bears, and it's very easy to make the counterargument to either of them that they're

wrong with whatever view they are presenting in part because of evidence that is provided by tesla they do things that make you say, what? what are you thinking? then they do other things and say spot on. you are right about that so, joe, i hate to give you this answer, but there's no way of knowing at this point. >> i knew that was the answer. jeff, what do you think happens today in terms of what's going to happen with the meeting today? the s.e.c. stuff or the stuff you're on for, not the earnings? >> thanks. it's hard to see that they're just charismatic -- i'm happy to talk about earnings. we didn't talk about the consequences of all his other misses in his forecast yeah, the s.e.c. issue that he was scoffing of course the s.e.c. and basically making fun of the court at the same time, but referring to it as the securities and exchange commission as the short sellers, enrichment committee, that

that's ridiculous. and making mockery of his own board. his chairman saying she has no control over him after making a legal commitment in terms of a consent that they resolved in the fall and then they violated. they said after he violated it, by the way, in december, he then -- the board said we have a two-page memo. here is how we're going to vet anything that has to do with any company forecast they didn't and still not. what is the proof of that? to ask phil if he's still on with us, is there any way, phil, you wouldn't take a bet with me that there's no way he'll have a million autonomous taxis this time next year as he says? that's just ludicrous. he'll have a fully autonomous car by the end of this year? no the s.e.c. says you're still making up these wild forecasts. >> what about a silent leaf blower, jeff that's the one i'm most excited about. jeff, we have to run because it's phil's birthday and i got -- >> happy birthday.

>> phil, i'm a little bit worried. it says here if today is your birthday, you're obviously planning something big i don't know what that is. you need to go about it in a logical way and look ahead to how you would like things to be a year from now. what the hell are you planning that you're not telling us >> jeff is a religious horoscope reader. >> in a new york post says if today is your birthday, you are planning something big where would you like to be a year -- what is it look at him. he looks like a ches shire cat. >> a year from now i want to take you out to freemont, california i would love for you, me and elon musk to sit down for an entire "squawk box." how would you like that? >> that would be amazing, but you know who is going to have to beincluded or he's going to pout for the rest of his life, you know who i'm talking about. >> oh, andrew. >> yeah. if we don't bring andrew along we have to bring him along if we

do that. actually it would be fun if we didn't, though you know whey mean let's try it that way. i love that, phil. can you do that? can you set that up? >> we'll shoot for that next year >> all right >> thank you, phil jeff, thank you. happy birthday, phil >> thank you >> birthday wishes. still to come, we have a look at this morning's movers and shakers. and as we head to a break, let's look at the u.s. equity futures. dow futures down by 140 points, largely because of 3m and the big loss big miss in its expectations s&p futures up by one. the nasdaq up by 64 and "squawk box" will be right back. ♪

for a run down of other market movers, dom, a lot on the move lots of earnings. >> 60 companies in the s&p 500 throughout the course of the day, becky let's start off what will likely be the biggest influence on the dow jones and that's shares of 3m roughly 100,000 shares of premarket volume, buying everything from scotch tape and post-it notes to commercial filtration systems and cleaners, profit and sales both missed consensus estimates.

it said it would cut 2,000 jobs. 3m saw weaknesses in china and with its automotive and electronics units. not helping the overall market narrative either shares of ups down between 3 or so percent the package delivery giant posted profit and sales that missed analyst estimates hurt by the effects of severe weather in the u.s. among other things. it maintained its full year outlook. we'll end with bristol meyers. 000 shares of premarket volume sales of cancer immunotherapy drug higher than the same time last year, mike, those shares moving will end with a positive one there. back over to you. >> all right, dom. slight relief to the health care sector that's been under some

pressure let's chat more about quarterly results and the markets and what our next guest says is a must hedge this earnings season and beyond here is yule yan emmanuel, chief equity and driven strategist at btig good morning. >> good morning. >> what is the must hedge at this point, run up 24% in the s&p 500, pretty much hovering around a new high. >> so, we think you should be a little bit cautious with with regards to technology. and we're very encouraged that the reactions to last night's earnings in tech space have been positive, but we think there's little bit of nuance here if you go back to the january reporting quarter, you had positive reactions in stocks that have been beaten down and then they kept moving higher, but you already had a really, really large run and the message of this morning is that the broader index level it will be really hard to make progress if it's going to be tech alone we think tech is overbought here. >> overbought and yet you would have thought microsoft looked

like it was set up to be disappointed sell in the news and it seems like it's adding to it market willing to double down. tech plus what used to be included in tech, right? like alphabet, like facebook, like netflix which are now in communication services must be a third of market right now. >> it's the percentage is gaining and it's one of those circumstances where, you know, you certainly paid the price at the end of last year people are jumping back in and you've seen these stocks they're up 20, 30, 40% or more it's probably time -- we're not saying sell them we're saying that particularly if you're looking at a three-month bias or so that there's likely to be a pause. >> now, if tech is that big of a driver of the upside and you're seeing maybe it should pause or pull back a little bit, the overall market, where does it leave it you think there'sstill upside to your target >> we do again, you've run a really long way, up 25% or more off the bottom in december and things don't move in a

straight line. so, our view is that the next several weeks are likely to be a pause, digestion you know, we're still in this mode where a lot of things have to go right for the market to move further and frankically the geopolitical things, brexit and china have yet to go quickly. >> will the fed continue to go right if the economy grows more than 2% in the first quarter and that's the low >> well, i think the message of the earnings this morning and the messages we're getting out of europe is that this economic recovery has yet to take full flight in the rest of the world. so, from our point of view, particularly given the dollar strength of recent days, we think the fed continues dovish we actually think that they are on course to cut rates later this year. and we think that that's going to be born out. >> so you think the fact that the dollar is strengthening against other currencies is itself a governor on what the

fed might do >> it's an engraved invitation to cut rates when you go back to last year when there was turmoil in the markets, a lot was due to dollar strength putting pressure on the rest of the world. it's very clear, china has stabilized no question about that but that stability has yet to bleed into europe and you still have political dislocation. >> julian, thanks very much. >> thank you. when we come back, our exclusive interview with comcast chairman and ceo brian roberts make sure you catch brian sullivan's interview with former trump aide steve bannon and hedge fund manager kyle bass they'll talk about china and the world stage and what it means for your money catch that interview today at 10:30 a.m. eastern time. "squawk box" will be right back.

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negative impact on the dow index. you see the broader market, s&p just above the flat line. when we come back, comcast ceo and chairman brian roberts will join us to talk quarterly results, streaming wars and much more that exclusive ierntview is next right here on "squawk box. help me meet a client's need. is the fund built to sell or built to last? etfs are only part of a portfolio. so make it easy to explain. give me a quality fund that helps me get clients closer to their goals. flexshares etfs are designed and managed around investor objectives. so you can advise with confidence. before investing, consider the fund's investment objectives, risks, charges and expenses. go to flexshares.com for a prospectus containing this information. read it carefully. onmillionth order.r. ♪ there goes our first big order. ♪ 44, 45, 46... how many of these did they order?

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10 cents above estimates revenue was below forecasts. 10% jump in high speed internet revenue. brian roberts, ceo of comcast is joining us now obviously comcast is a parent company of cnbc. mr. roberts, thank you for joins us today. >> good morning. >> good morning. so that was the bottom line number was good and also free cash flow was up 49%, which was well above the consensus estimate, like 35% above it. there was a beat on consolidated cable and high speed internet additions but the revenue down 3.3% consolidate seems to be what is dictating the trading in the shares which are -- we'll take a quick look at the chart 40 and change right now which would be down. on a stock, obviously actually we're at 41.35

it had a great run. >> so let me maybe help you there. >> talk about the revenue and whether it actually is disappointing or whether analysts were just wrong. >> well, we were pretty happy. the first quarter last year was an unusual first quarter so when you do a year over year comparison you go down a bit because we had the super bowl and the olympics, very rarely happens that way in the same first quarter. so if you adjust out for those two events only, we grew revenue very comfortably and as you just pointed out, we had an incredible start to the year particularly in the cable division we had the best first quarter in ten years. broad band is at the center of that growth with revenues growing at 10% across the board when you adjust out for the super bowl and the olympics pretty much exactly what we expected on the revenue side, at least internally. few soft spots here or there but

mostly the excitement is the power of the broadband network, all the content nbc finished first place for the sixth straight year, the advertising business is still pretty strong and healthy here a little softer in europe and all in all a great start to the year >> it's amazing when we see customer additioning everyone worries, as you know, brian, about cord cutting, et cetera, but it always seems to be offset at comcast by high speed editions and business additions and now we have comcast has sky additions through customer relationships as well. >> yeah, we had 400,000 additions, net additions, a little more than that, 3.5%, close to 3.5% growth for the whole company. here is maybe a different way to look at comcast than we have talked in the past now that we completed sky and look at ourselves in four major countries, the u.s., the uk,

germany and italy and if you take just those four countries, they're a video and broad band subscriptions in the world, they represent about 15% of the global subscriptions but they're 50% of the global revenues, just those four countries. we're number one by a long shot when you combine those four countries. and we've got 54 million customers with $110 average revenue, so that far and away puts us in a unique position to take advantage of this changing ecosystem. it has demonstrated in the first quarter. every country we grew and that's the way we're looking at the company. it's very different than others. >> so brian, just i don't want -- we'll talk more about the results and come back to that, but just a couple things that you probably watched, like we all have in the last couple weeks, most recently was at&t

and some of the paid services and the exit of consumers from that and then the launch of that disney streaming service, which juiced that stock i don't know whether --when you were watching it that way, i don't know what your reaction to that was and what that says about the future and what comcast needs do can we glean anything from those two events, do you think, for the way comcast should manage its futures? >> i'll let you talk about all the other various companies. i'll try to be a little bit more general. >> okay. >> and say the following clearly video over the internet and streaming is something consumers are rapidly adopting to and making part of. i don't think exclusively at all, but part of their portfolio of how they're consuming the world's greatest content and our company has pivoted, and we talked about that pivot far long time, away from just

focussing on video subscriptions and focussing on customer relationships. and in our case, in the u.s., led by the broad band business which is now substantially larger than the video business so the more people want to stream, the more you want the best broadband hence you're seeing the kind of results we saw today in the first quarter which is why broadband has been strong and not zblus this quarter but all of last year and we hope throughout the remainder of this year i think second we have the best video product. x 1 in our markets and in sky with the q box, these are premium experiences. these are voice navigation, great search, lots, the best content library. i'm not sure every other provider has invested the way we have so we're seeing better results and we're also transitions to more of anon demand relationship that's where nbc has looked at its broadcast and said, how do we modernize for the 21st century our content?

and be part of streaming so we're working on a way rather than charging for it, making a part of the value you get by being part of the ecosystem and improving the -- by reducing th load and giving more relevant ad to the consumer. producing $24 billion a year worth of content or there abouts, one of the largest content producers, we want to sell to all of the ecosystem, not just to our own platforms, but in addition to our own platforms, so other platforms we want to have our technology be the best and constantly improving. which is what x1 and done and our broadband service. it's not just about speed. so that's why our broadband results with control and coverage and our technology pods where we make sure wify works throughout your house better than any other device and that's free if you take our broadband

to get that additional capabilities you're not paying per bit, like cellular and then we have mobile where we also have a suite of products we're selling here and the uk so these relationships, the 54 million relationships that we have with bundled offerings, we come to your home and there's an average of $110, sets up particularly well for the transition we're all living through. >> brian the front page of "wall street journal" says nbc universal has been talking about pulling "the office" off of netflix. that's the number one most watched show is that true >> i'm here. i haven't read the journal this morning. you got me there, becky. the logic over time will be to take your most valuable content and find ways to deliver it where you monetize that as best as you can for your shareholders and in the case of nbc shows, they are particularly relevant to a younger generation through

other mediums and through other off broadcast network. we see some of our broadcast shows have two and three times the ratings not on the nbc network. >> right. >> i think all the media companies are looking for ways to find the best montization path and we'll have more to talk about that in the future i do think that that's what makes comcast nbc universal and now with sky in such an enviable position and as long as you execute well, you can think about how to transform in the future and that's why today we're focussed on how well we execute in the first quarter across the board. >> brian, most people realize that the value of the sky assets, if anyone had any negative to say about comcast and sky, it was how much it costs and get the company had to take a loan to buy it. the fed seems to be on hold for a while. is the environment -- are you

comfortable with the debt gone up or are you more comfortable at this point because of -- we all changed our view on where rates are headed, i think? >> i'm very comfortable that -- i'm really glad that we bought sky. i think that we're able now to see relationships between the two companies. we'll have lots of things to talk about in the months ahead, but we've already gotten started in the first 100 days with a number of initiatives, global advertising, synching up how to create a platform that no one else has we're looking at some news with sky and nbc news and trying to look at that globally. there's a real galvanizing effect in terms of the entire company. 2 in terms of the questions of debt level, we paid down some debt this quarter and get to the ratios we expected to in terms of deleveraging very quickly look at the free cash flow, this is extraordinary quarter for

free quarter those are the two metrics that bondholders like to judge us by. and i feel like we're off to an excellent beginning with the new levels our plan is to delever as quickly as we can and get back to where we historically have been as a solid a minus credit. >> brian, how does hulu fit into the strategy it's now a valuable asset. >> well, i don't have any news today for that other than to say i agree with you it's valuable. i would also say that we're proud to be able to have a number of our shows air on hulu and we have a good relationship with the company and we'll have to see where that goes in the future but it's again, another asset in the company that's not in the cash flow numbers that you see this morning it's not on balance sheet. and it is a very valuable asset.

you're right about that. >> brian, you're a lucky guy you get to come on "squawk box." you get to interact with becky and me and mike and all these things i'm told that you were like able to talk to tiger like right after everything happened? you were with his -- was that -- can you bring us up to date? >> i don't know what you were talking about. that was another network but, no. it was an amazing moment. >> unreal. >> for one of the great sports comebacks. >> why do those moments happen at augusta it's weird it's like there's some weird thing going on i'm not sure why -- what -- i don't know can you explain it >> like everybody, it was just fun to be a fan and see that amazing comeback and of course the golf channel has done a great job for us an asset in the company. >> we have a lot of golf coverage it's good for -- that did not hurt our -- the golf channel what happened with tiger down there. i know you know that any way, thank you for your time

this morning. >> thanks, everybody see you soon. >> we'll talk to you hopefully next time. this is "squawk box" live from the nasdaq market site in times square it's 8:00. andrew is off today. the futures right now down 135 points or so and that is in large part due to what's happening at 3m we'll wrap some of the earnings that we see. many, many companies reported i think dom said 60 in the s&p 500. he has done like six of them so i don't know if he's -- kind of screwing off a little bit. >> 54 more to do. >> dom has to put his nose to the grindstone. >> half will be after the close. >> he's got at least 20 more to do if he's -- unless he's slacking any way, let's look at treasury yields while we're at it too we were just talking about debt levels and the new viewpoint for the fed, 2.5%. 5.2, would have thought we would be there almost at midyear.

>> we have ratcheted back down over the course of the last couple days. let's start this hour with a look at some of this morning's key earnings movers. we were just talking about comcast. but the big one affecting the dow today is dow component 3m, posting revenue and profit that both came in below what the street was expecting for the first quarter. 3m announcing a restructuring that will see it cut 2,000 jobs worldwide. that stock, as you can see, is off by 8.5%. decline of almost $18.5. that alone is set to knock 130 points off of the dow this morning. check it out, dow is now implied to open by 134 points. 3m alone entirely responsible for what you're seeing with the loss of the dow this morning in fact, the nasdaq is indicated higher up by 25 points because of help coming from both microsoft and apple and 3m is offsetting the strength in microsoft sharing in the dow

comcast posting mixed results for the last quarter that was above of what the street was expecting of 68 cents a share. revenue fell a little below but they say their total customer relationships increased by more than 3% for the quarter and high speed internet revenue was the growth of the high speed internet customers for comcast cable in the united states that stock down by 2%. 4102 southwest airlines posting quarterly profit 9 cents better than the street was expecting. revenue topping estimates but profit falling 16% from a year ago. largely because of the grounding of the boeing 737 max jets southwest also says that it has published its sed schedule out through august 5th and through that time it removed all of the max flights that had been on its schedule previously. and logistics giant ups coming in two cents shy of what the street was expecting for the latest quarter adjusted profit of 1.39 a share

and revenue missing forecasts but ups said that bad weather had significant impact on its performance. they said bad weather alone knocked 7 cents a share off of its earnings the stock is down by about 2.5%. tesla trading lower in the premarket today after a big top and bottom line misses in its latest quarterly report. phil lebeau joins us with more >> that's one reason, mike there's also a number of notes out this morning we'll lay it out for you in just a little bit why some analysts are saying this wasn't that bad of a quarter take a look at shares of tesla as well as they're deliveries and remember this is a company that reported lower first quarter earnings because of lower deliveries, particularly for the model 3 but also for the s and the x. where do the bulls come from who say, really, really wasn't that bad of a quarter it comes down to this. a couple things came out from

the conference call from tesla ceo elon musk. they're expecting to be profitable in the second quarter of year. elon musk also said he believes demand is stable not only for the model 3 but also for the s and the x and reaffirmed the company's full-year delivery guidance he believes they have gotten through the worst of the slow-down in demand for the model 3. here he is on the conference call last night. >> we're getting past the overhang of the tax credit cliff which for us ended in the u.s. on a bust. these are all positive factors we also have a lot of markets where we're tapped into them especially for model 3. >> those are all factors that analysts put out positive notes. they all sited those today is the deadline for elon musk's attorneys as well as the s.e.c. attorneys and tesla corporate attorneys to update the court on whether or not

they'll be modifying the contempt of court agreement that they had regarding his communicating over social media relevant information from the company. guys >> phil, thank you stick around. for more on tesla, we are joined by craig erwin. craig, let me start with you you have a whole grading on the stock. did you hear anything yesterday that changed your mind >> no. you know, this was very much as telegraphed. we have known the units for a while. obviously eps was much worse than what even the lowest estimate of the street was you know, nothing gets me more constructive here but frankly i'm not more bearish i just think that the probability of an equity offering or some capital access is much, much higher with the cash position down as much as it was. >> yeah. he eluded to that on the conference call. i guess at one point he said, no, we don't need more capital

but another point when he was asked to follow up, phil was explaining he said, well, it might be a good time for equity raise. what would that mean for current holders of the shares? >> so, it sort of end up being where does the raise get placed? a lot of people are pointing to the fact that a third of their 2.2 billion in cash is from deposits the future is electric for trucking damler and most of the other kpaeps taking orders for trucks are hindering the deposits back. truck deposits are at least 100 million. so, they definitely need a placement. they need some access to capital now. and it's probably in the multibillion dollar range. >> tim, what did you think it seems like everyday there's a new torrent of news on tesla it's hard to keep on top of it how would you cap things up,

things we heard in the last week >> well, the big take away is these were the warmest comments elon had about raising capital in more than a year. and that's been one of the big questions. as there have been this slow-down in demand, was he going to need to raise more capital, right we saw on monday this talk about pivoting the business into robot taxis and he's got a lot of ambitious ideas for the model y and other vehicles going forward, so he's going to need money or it's going to be a continual pressure point every quarter looking at that cash balance. >> he certainly needs money, tim, certainly over the long term i guess that was to be expected. what about operationally, though for the longest time, it was can they get to build these cars at scale? and now the question seems to be more on the demand side of things do you think operational as a manufacturer, tesla has made enough progress here >> well, you know, the interesting thing about the way they have been building cars and

really hurt them in the first quarter is that they would spend the first half of the quarter building vehicles for overseas and spend the back half for north america. what they found was essentially they were tied up in the first quarter and vehicles were getting to europe and china late and they got tied up inventory and it's costing them a lot of money. so now they're going to try to even that out as they go forward throughout the quarter, so they don't end up with a lot of inventory tied up. >> craig, i know you have a hold on the stock that you're continuing to do that. what would it take you to push you one direction or the other >> so the key thing i'm flagging for investors today is the potential cannibalization of model s and model x sales. people really do want to own a tesla. they want to drive an electric vehicle. so, as we get data points, some of these high frequency data sets that come out that give us more confidence that there

either is or is not cannibalization and that this seasonal they they pointed to in the other production issues either are or are not credible excuses. i think that ends up having a fairly material impact on the trajectory of the stock because it will give us a real indication of what the actual demand is, you know. and it could quite likely be well outside of the where the wall street consensus is. >> thanks to phil lebeau and craig for joining us. what happens when a hedge fund thinks about a new tax on the wealthiest citizens? what are they going to do? we'll explain. as we head to break, take a look at the shares of 3m down big. stay tuned you're watching "squawk box. ♪ for beauty that begins with nature. ♪ to make connections of a different kind.

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loss in 3m after an earnings shortfall. the s&p 500 futures indicated less than a 3-point gain so about flat near the all time hiez nasdaq is fuelled by facebook and microsoft indicated 73 points right now. we have been speaking a lot on "squawk box" about taxation in america now, a new idea in a state not too far from here is sparking debate and a watchful eye from wall street. robert frank joins us with more on this. >> good morning. lawmakers in connecticut are considering a new tax on wealthy investors even as residents of that state and companies are moving out democrats in the state senate and house are proposing to raise the top tax rate for capital gains, interest income and dividends from 7% to 9%, that would make it one of the highest in the country the tax would apply to individuals who make more than $500,000 or households who are earning more than a million.

the green witch hedge fund association and that world already coming out against the tax. the hedge fund association saying, quote, in a statement that after five tax increases in 15 years and the new salt limits on federal taxes, quote, connecticut taxpayers, high earners and otherwise are paying enough the state is especially top heavy when it comes to incomes and taxes. just 350 families paid 12% of the state's total incomes income taxes in 2014 according to the latest consensus and connecticut was the only state in new england to lose population between 2017 and 2018 the state's new democratic governor ned lamont vowed to block any tax increases but there will be a public hearing on the plan tomorrow. >> when 350 families are 12% of your income, you have to be aware because that's a case where just a few of them leave and you'll be dealing with budget shortfalls. >> even in that group it's probably super top heavy if two of three or them leave,

that is meaningful and when you talk about that group in connecticut, if you make more than $2 million in income, average of 80% of that income is capital gains in connecticut. so this is a surgical strike on the wealthy and investors. >> as a state, it's just so lopsided, right? you do have the concentration of wealth not a lot of other -- >> you go to new haven. >> i think it places big emphasis on the changes that are and the big battles that are coming in the states that are the high salt -- used to be high salt deductible states that aren't under the new tax laws. you'll see this in connecticut, in new jersey, in new york, in illinois, in california. big battles where people are going to be paying more in taxes than they had been before in federal levels but the states are also looking for ways to make up that shortfall, how do

you do it? >> that's right. everyone expected this would put pressure on state governments to lower their revenues, lower taxes instead it's the opposite. it's raising and it's got to come from somewhere. everyone is saying well, the democratic plans to tax the wealthy are not going to go anywhere it is happening in the states. >> well, those are little test tubes. >> yeah, yeah. >> i mean, nationally it's hard to extrapolate what happens in a state where you see the flight of capital, because nation nationally -- if you can't get the federally bureaucrats can ignore what happened but the states we will see what happens. >> you want proof, look at the greenwich and fairfield county real estate markets they cannot give those mansions away people said, well, the wealthy aren't really leaving connecticut. they don't have to

that real estate market far more than even new york or west chester or any of the suburban communities is really getting hit hard >> do you know whether that's -- >> well, i know that if you look at connecticut, even though the governor said no more tax increases in connecticut, this is very popular in its state of connecticut. >> all right >> of course it is. >> when there's only eight people with the money, you have the other -- >> exactly, exactly. >> it's always going to be popular. >> exactly. >> robert, stay with us. joining us now for more on this debate, national taxpayers union senior fellow maddy and alexander thornton director of tax policy at the center for american progress. alexander, i want to start with you. what gets me a lot of times -- and i'm not sure how we should handle a lot of these things, but for income inequality, if all i ever hear about is ways of capping wealthy people and sort

of if we could cap wealthy people and how much they make and lower the amount that wealthy people, that's going to solve income inequality. i think we should be going to the other end and trying to figure out how to lift everyone else up. have you got an answer for what we do when we finally get all these revenues that will be effective in actually narrowing the gap instead of just bringing the top people down? >> well, despite all of the talk, i think that you have to look at the last 30 years. if you do that, you see that at the federal level, taxes have actually been going down on capital. capital assets and capital income and what we have seen is that people at the high end have actually been getting much higher incomes at the same time that taxes are lightening on capital. so the result is that the tax code is actually failed to tax people according to their ability to pay and it's actually worsening income inequality and despite all the talk, there are many,

many provisions of the federal tax code that make -- that are lighter on capital and capital income you have, you know, stepped up bases, which is where you can basically get rid of any tax on the gain that's happened on your assets at the time you give it to your heirs. >> that's a big, you know -- that's a big stumbling block for me i can avoid a taxation as long as i die that's not a big selling point it sounds great. i understand my heirs get it, but hopefully i won't get to that point, hey, geez, i got a great deal here as long as i'm dead i don't pay taxes. >> but there's much more, of course we have the preferential rate on capital gains. we don't tax unrealized gains. >> but if you start turning these dials with capital, will you admit there might be some unintended consequences that actually end up slowing things down or somehow it actually ends

up hurting the people, as it does so often, it hurts the people that you're most trying to help? >> just a quick point, in connecticut, this would be a state where the rate on capital gains, on capital is higher than the rate for ordinary income so you're talking about there's a preferential treatment in connecticut, it would be the opposite, the first state i'm aware of that has a much higher tax rate for capital than income. >> well, i think that one of the -- i think generally it is a good idea to have equalization of tax rates of course, at the federal level, we don't have equalization of tax rates at all because capital income is so preferred in our tilted towards the wealthy and preferred in our tax system. and by the way, the wealthy have a much greater share of their income in capital income now than they did 30 years ago so, that's causing a lot of the inequality but it is generally good to have the rates be equal across different forms of income. but it's not necessarily a bad thing to have somewhat higher

rates on short-term trading. >> you're punishing investment in a state that builds its entire revenue system on the investment world, on hedge funds. >> but some of that investing is actually churning. it's actually short-term arbitrage types of things that actually don't help anyone in the economy. >> let's get maddy, do you have the answers for us >> well, i just want to say that the reason the federal code has preferential tax treatment for capital gains is because the rest of the code penalizes savings in investment. capital gains, of course, capital gains tax is taxing income that has been taxed on the personal corporate side of the code you heard robert talk about the connecticut case and a lot of problems connecticut has one of the problems connecticut does not have is taxing its earners too little this would be the first time, the only second state in the country have a surtax on investment income after connecticut has seen a win fall in tax income after last year,

$900 million in a tax win fall for connecticut last year over a billion dollars in its rainy day funds. one of the problems is even with that flush of cash is that connecticut still can't get its fiscal priorities right instead it's looking to tax an ever shrinking tax bases and that of course will create a lot of problems when you have 12% of your tax base coming from 35 families, was it that's incredible to me the notion that's a long-sighted plan for sustainability. it's very clear it's not and that's why the governor himself is opposing this plan. >> so how do you pay for what the state needs? clearly this is a state that is very unequal they have a lot of need for services is your answer just cut government or is there a better, broader way to raise revenue >> well, so last year a legislative commission recommended several proposals for the legislature to be able to get some of these spending priorities under control one was cut a billion dollars in spending the other was to cut the top rate, not raise it, and the third was to give the legislature more control over a

pension and retiree responsibilities but if you look at the connecticut example, you can see when you reduce barriers that actually credates more revenue base they saw $100 million come from with holding income result of a bigger middle class and employment situation that mirrors the national level which is high employment and robust growth in the middle sector to create more income yes, if you create more jobs, you create more income. >> they're playing us out. alexander, i mean, the taxing the unrealized gains, are you really a proponent of trying to do that in some way, shape or form >> well, i think it's something that we have to address when we look at the change in the comps -- >> what does that mean you think that would work in any way, shape or form what if it goes down the next year and you already taxed people on it >> well, there are ways you can accommodate that and you can also do it at a very low rate. there are a number of different proposals, but i also think you can help the situation a lot by

improving various provisions in the existing tax code. >> we have -- that's what everyone always says we have to have that conversation i don't know what the hell that means. i want to thank both, though for joining us. >> i think we just did. coming up, anthony diclemente weighs in on the earnings and those still to come st stay tuned we'll be right bac

coming up, this morning's breaking economic data the latest reads on initial jobless claims and also durable goods just moments away we'll haveboth when "squawk box" comes right back. as we head to break, take a look at the shares of 3m. ntuetoei on dow futures after a big earnings miss we'll be right back. what's the hesitation? eh, it just feels too complicated, you know? well sure, at first, but jj can help you with that. jj, will you break it down for this gentleman? hey, ian. you know, at td ameritrade, we can walk you through your options trades step by step until you're comfortable.

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♪ welcome back to "squawk box. yes, breaking news, latest read on initial jobless claims moved up actually rather substantially. 37,000, to be exact. we went from a slightly revised 193 zoom zoom zoom all the way up to 230,000. let me think, maybe easter holiday, good friday, maybe there's some holiday issues there. we'll have to wait and see on continuing claims move from 1.65 to 1.655. not a huge change. all right. for the money number, our march preliminary read on durable

goods, up 2.7. wow. this is over three times the .8 we were expecting. and we gained half a percent from last month's minus 1.6 to minus 1.1. take out transportation. still twice expectations, up .4. and if you look at durable goods orders, and this is important, non-defense x aircraft, kind of a proxy for business spending, this is really an important number and it's strong up 1.3 man, that's a real powerful number and that's sequentially follows up .1 which is mirror revised from minus .1. finally, if we switch from orders to shipments, it does deteriorate a bit. it's down .2, but that's the only ointment here flying the ointment i see and there was a .3 positive revision to shipments last look from minus .1 up .2 now, listen, mike and the gang,

this preliminary durable goods, even the final number is volatile, but we have to see what the investments are made. just a drive-by really solid pairing of data even though jobless claims surprised in the wrong direction. mike, back to you. >> rick, little noisy but seems to tilt towards the positive side here is jay bryson, acting chief economist at wells fargo security jay, filter that into the view here this is -- this does have bearing on how the first quarter is going to shape up at first report >> yeah. i mean, i think you hit the nail on the they had when you said it's a little bit noisy here these orders and these shipment numbers are a little bit noisy, but in general when you look at the first quarter, and this shipment numbers will feed into that, i mean, we are looking for a relatively slow investment spending, you know, in the first quarter. somewhere along the order of one, maybe two percent those numbers that rick were talking about, the core part of the durable goods orders, that's a strong number and that's an

encouraging sign. >> and what is your forecast for first quarter gdp and what is the trend right now for 2019 >> so, for the first quarter, we're looking for 2.6% annualized number. for 2019, we think it's probably going to settle out somewhere around there somewhere around 2.5, sort of percent. so that's down from the 2.9% that we grew last year, but still 2.5% number in 2019 is that where it comes out to b that's not a bad number at all. >> so you don't think that a stronger than now forecast first quarter is simply pulling forward from the second? >> well, there's a little bit of that what we do know is that some of the shipments that boeing is going to be making, those things are going to weaken us up a little bit in the second quarter. but in terms of consumer spending, the good news there on consumer spending we ended the first quarter on a very, very positive note. and so, as we go into the second

quarter, we look -- we think we're looking at a pretty decent number there in terms of consumer spending as well. >> and if you're right, if with grow more than 2.5% in the u.s. this year, is that compatible with the federal reserve being content to remain sidelined all year >> you know, i think the hurdle for the fed to hike rates this year i think is still pretty high what they really need to see -- we could have a 2.5, we could have a 3% sort of number this year, but unless you start to see the core rate of inflation start to go up above 2% on its way to even 2.5%, i think the fed is content at this point to remain on the sidelines. it's really hard to make a convincing case at this point why they should be raising rates if you're looking at an inflation rate that's still at or even in some cases below what their target rate is. >> and so does that mean you think the bond market has it roughly right here in terms of where treasury yields are sitting? >> i think so.

i could see some upward tilt towards the bond markets and ten-year rate as you go forward here what the bond market is looking for a cut later on or in 2020. and if the fed is on hold for most of this year, i think some of that cut will get priced out and you will see bond yields start to move higher here, but i wouldn't expect them to go rocketing higher you know, as long as the fed remains on the sidelines >> so about a third percent of the way through this year, the question coming in to 2019, of course, was how much more is left in this cycle what's your latest thinking on that >> you know, i think there's a lot left in this cycle you have to ask yourself how do recessions happen? it happens one of two ways, one is something unexpected happens like an opec oil shock and those things obviously can occur very time but they're very difficult to forecast. the other way you get a recession is when something gets out of balance like the housing market or go back 20 years ago tech when you look around the economy today, you say, what's wildly out of balance there's nothing that's wildly out of balance at this point

so i think this cycle still has some legs to run. >> all right, jay. thanks a lot for weighing in today. jay bryce. 3m reporting an ugly earnings miss this morning for the first quarter. it's a full-year forecast announce restruck you aring, 2,000 job cuts 3m is bringing the dow down by 120 points joining us to discuss is scott davis. he is research ceo and lead analyst for the multiindustry sector has a hold rating on the stock. out of all those things, scott, also quite a bit half a billion dollars worth of charges in here as well, what's the most concerning to shareholders right now that are exiting the stock would you say? >> well, i think the most concerning thing is that since the prior ceo stepped down, 3m has really not performed anywhere close to its peers and industrials. we look across industrials, we

have seen some amazing earnings so far honeywell was 8% full growth some really good numbers we're seeing here. and then you got 3m comes in with a bit of a stink bomb here. it's hard to explain >> really? okay so we were talking earlier about the different segments they broke out, safety and graphic sales, industrial sales, health care, consumer sales for your whatever you have on your spreadsheet, where were the biggest misses were any of those numbers better than expected? >> no. they were not better no nothing really was better than expected. >> no. >> you don't expect health care to be as weak as it was. that was tough you know, we expected things like auto to be weak, but really when you think about consumer, that should be more stable and industrial we're forecasting up 6%, maybe at worst case up 5% core growth in the quarter for industrial overall and these guys came into a negative 3

that's a pretty big delta versus our peer group >> well, if all those other companies were less affected by macro issues the ones that you mentioned dover and danaher and the others, what is -- this is a 3m problem then, we should not worry about the economy being slower than we thought based on 3m this is purely a -- >> i think this is 90% chance this is 3m specific. all of these products are things that can be inventories, destocked, restocked and could see a fairly large destock here. and some people would say that these guys can be a canary in the coal mine because their products are so short cycle when things turn down they're the first to see it. there is some -- i mean, there's some truth to that, but we have other companies that have shorter cycle businesses, too, and they have not seen this type of decline so i don't think it's broader than what we're seeing i think it's fairly 3m specific.

3m has a larger emerging markets business than most of our average companies. they're really big in china, and it could be fairly isolated to those markets. >> do you think that the restructuring moves and the 2,000 job cuts, are they addressing the issues in an effective way and -- is it going deep enough for what needs to be done >> well, i've covered the stock for a really long time one of the things that 3m had historically done is they have been really behind in restructuring. when things turn down, they're a quarter, two quarters, three quarters behind and their reputation is that it was a bit of a sleepy company that just didn't move fast enough. and struggled to make the most difficult decisions. i think mike rome and the new ceo is new in the job to criticize him. it's we'll have to hear on the call at 9:00 whether really a little bit of color around the results here but, look, the long-term reputation in this company is

that they're slow to restructure and when they do it's oftentimes not enough so, we'll have to see this time. it's hard to put into context 2,000 jobs you don't know really where they are and such and how much influence it will have it doesn't sound like a lot given the results today. >> i mean, in a paperless society,ky think of a lot of things 3m has that we're not going to use anymore but that's not the real issue here is it that this is just -- >> no, no. i mean, one of the other potential issues here is that they're in a lot of emerging markets where currency wacs you pretty hard over the head sometimes and the strong u.s. dollar can cause havoc for these guys it's tough to get price in local markets. so, we could be criticizing them and at the end of the day find out that a big chunk of this is just really emerging markets, specific currency issues and the fact that it's tough to raise price fast enough. we'll see. it doesn't look good so far. >> i'm fine. i still use post-its and stuff

i don't think millennials use post-its. >> they make great products, guys they make great products. >> reminder here the phone bill -- >> our daughters use them, too. >> post-it >> that's a small part scott davis, thank you it's not going to recover today it doesn't look like. >> no. when we return, do the fang stocks belong in your portfolio? netflix and facebook reported quarterly earnings this afternoon we'll get amazon. in terms of making you money, are they working ever core anthony diclemente will weigh iafr n tethe break. stay tuned you're watching she show right here on cnbc a cfa charterholder does. you've worked hard to grow your wealth. make sure you're working with a wealth manager who can grow with you. cfa charterholders have the investment expertise to unlock opportunities other advisors might not see.

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welcome back to "squawk box. futures right now down 119 that's better than some of the worst levels take a look at the nasdaq. you have to think, wow that's really weird, isn't it? and it's 3m, but it's -- when you talk about the stock market, you obviously need to be specific about what the heck you're talking about. >> you always do and the s&ps will probably be your first stop just to capture what's really going on. >> because that's 3m and dow but it's interesting because microsoft obviously is helping the nasdaq a lot. >> it's helping the dow, too but facebook is not reflected in the dow. >> we went through this. >> it's not good when the two of us -- when we talk about a dow

component and it's like breaking news for us that it is a dow component. visa, nike >> well, look. >> walgreen's, for real? >> walgreen's. >> if you say so. under an hour until the opening bell on wall street. dominic chu joins us now with a look at some of this morning's biggest movers hey, dom. >> yes, mike a lot of stuff moving. we'll have a very big tech and consumer release consumer theme to this update we're going to start with shares of micro souft up by 5% or so and 600,000 of premarket volume now. if these gains hold into regular trading, it's a record high for microsoft and takes its market value above the 1 trillion mark. thank those better than better cloud computing and sales. facebook shares speaking of the

tech trade communication services, facebook stock up by around 9%, 1.7 million shares in premarket volume the social media giant topped for key user metric and expects to pay 3 and $5 billion in fines to federal regulators tied to privacy related issues and again, check out what's happening here about 1% gains for amazon. 50,000 shares premarket. not hugely robust but it's a massively traded stock price company. the internet and cloud competing giant results after the closing bell today shares are up 45% since the christmas eve lows for amazon and the options market currently pricing a possible move of 3% higher or lower post earnings report and just to give you a quick status check on what's happening with earnings season overall right now, according to data, as of yesterday, we hit the quarter mark with about 129 companies in the s&p reporting. we're still tallying up yesterday and this morning's results, but if you take a look

at the numbers, 129 companies, 78% of beat, 5% of met estimates 17 missed which means if every company reports as expected, the blended earnings growth rate for the s&p will be down 1.1% and the blended revenue growth will be up 5%. >> but wait a second, we keep saying the earnings recession that we were expected is not here if those numbers are accurate, then the earnings recession is here. >> it would be decline year overyear 1 two quarters in a row, looks like at least for right now we will see earnings decline from the same time last year, but whether or not that constitutes, becky, an earnings recession it depends on how you want to wrap it. >> we noted that you slacked quite a bit. >> how have i slacked? >> you're not doing as many -- you need to do every one you just aren't. are those just the ones that you've done.

or are those all of them, all in, 1.1? >> these are all in. i've only done a handful -- >> we'll give you more time. you need more time >> you handle a lot of these on your own there was a time the closing bell i used to sell cattle >> there are literally thousands of stocks in the s&p 500 yes. >> someone once said that. >> there actually are more than 500. >> there's 502. >> there's 500 issues. >> 502 or 503. >> dom, i want you to do the russell every quarter. >> the 1,000 or 2,000? >> the 2,000 >> i don't think there are 2,000 stocks on the russell 2,000. >> remember the days of the 5,000? >> yeah, do that >> doesn't exist anymore. >> that's not going to work for you because you're on the third tee half the time. >> exactly. >> see you dom. let's talk more about big tech joining us is anthony

diclemente anthony, pretty good numbers from some of the early big internet companies and big technology companies were you in favor of all these stocks, buying these stocks before we heard some of the numbers? >> we were, yeah facebook had been one of our picks, top picks going into the quarter. >> that looks like a good call today. >> yeah. on operational metrics not much to quibble with the question would be if you're trying to make money on these stocks, at what point do the prices get too high and you sort of say, let me book the gain and i think they'll keep running. i think the reason is for facebook, i mean, the company is really executing you need a reason to not get on board. there aren't many of those they beat on profitability by a mile the narrative on regulatory is improving. i think putting a marker on the ftc fine is helpful for investors to quantify that and the stock is still below the highs from last year now, maybe if it drifted up to kind of 215 level, people would

think it looked expensive. but these companies are flexing their muscles for all the secular tail wind reasons we talked about plenty of times. >> let's talk about netflix. we heard from the company on earnings but i think there are bigger questions circling now including the front page story w much more they're going to have to pay for the material that is their library, the reruns that turns out to be more than 75% i think of the viewing time that's spent on the network according to nielsen media we asked brian roberts this morning, what are they going to do at nbc universal in terms of letting "the office" stay there. he made it sound like it could potentially stay there but it will be up forbidding and that will be expensive. >> it could. you go back to the fact that netflix can afford to pay the most because they have the biggest scale of distribution and that they're ready for it in terms of the fact that they've made this strategic pivot to originals which i realize that licensed programming is very important to netflix and they'll continue to try to fill those

hours. >> yeah, but if 3/4 or more than 3/4 of your viewing time is based on stuff that is not originals and you're talking about -- >> i think the debate is -- >> "friends" is three times. >> is that filler viewing time or is that driving whether or not to subscribe or renew? is it the hit show or hit documentary that keeps you there on the knowledge that you're going to get, like a "stranger things" or original or self-produced. >> that would make it feel more like an hbo versus netflix where you come to think they can be all things to all people. >> yeah. i mean, i think netflix is going to try to be all things to all people in terms of genre but they'll try to make it in terms of new, original programming. >> you're a buyer anyway you like this stock? >> i have an equal weight. i have gotten to free positive cash flow. soft on subscribers but i'm a long term believer that netflix is really the most powerful

deliverer of media in content. the whole legacy has had to rearrange around that. that's what we've seen. >> just quickly around facebook. if you think that they're executing correctly and this 3 billion and $5 billion is kind of paying for the past, not the future, what does it mean for average revenue per user if they reach out to the business model, do you think they maintain that advertisers stay that sticky >> they do the proof of this quarter is that advertisers can't buy around facebook. it's really necessary and we hear that from marketers and the fact is the ads are performing well marketers are getting strong roi. there's a little bit of deceleration in revenue given the headwinds to target ads. that has to do with regulatory implementation and consumers limiting what they want facebook to do in terms of following the data, but it's not -- it's not affected really north america revenue growth which was awesome in the quarter and, you know, basically i think

that what we want to know is that the ftc fine will be a finalization, will be -- you know, will not really include any incremental changes to the business model from here and it will be something that investors could say, look, it's less than 1/4 of free cash flow facebook is like one of the only enterprises in social media that can afford to pay this and onward and on we go and facebook builds its competitive moat because it can afford to comply with regulations whereas others can't. >> very quickly, amazon tonight? >> amazon is up a little bit i think it's microsoft azure in the cloud enterprise space that bodes well for aws tonight. for amazon, people are focused on profitability there were some yellow flags last quarter with deceleration in the high margin business lines like advertising, like third party seller services. i think and i hope we'll see a reversal in 3 dlgsp growth

and if you can see growth in aws half the value of the stock, that stock will be fine. we have google on monday. >> thank you. >> thanks a lot. >> crazy amazon, isn't it >> the biggest retailer -- online retailer. >> and talking about that web thing, i'm going to go watch something on amazon prime. >> competitor to netflix. let's get down to the new york stock exchange. cramer joins us now. jim, this must be one of those days where you're bouncing off the waltz. >> it's just very exciting. >> microsoft, 3m, facebook, ups. i mean, you're going to have a good show today. >> yeah, you can see what dom was saying you've got a lot of companies that are not doing well, but the companies that we all talk about, the big ones, they're doing fabulously and they kind of over shadow the rest of the s&p. 3m was in total debacle. ups, i believe the weather story. when you get a company like microsoft with double digit growth facebook with just incredible top line growth.

when you get some of these companies like i don't know what amazon is going to do. geez, everything is setting up for them to be great alphabet we don't focus onthe tool works. we get international paper day, they say near term demand is good comcast starts with the stock down a buck. you ask all the right questions. brian comes back with everything that we need to know about profitable cash flow and the way the value accompany, he literally is pivoting on the fly, becoming more international and he's not missing the numbers domestically do you know how hard that is to do of course the stock is up. it should be up. there are a lot of companies like brian nickell, demonstrating greatness at chipotle look at what brian kelly is doing at southwest despite the 737 max. i am seeing ceos rising doing great things we have to focus on how well some people do their jobs. >> up 2 3/4% now. >> why not the interview turned it. you're double digit this, double

digit that what am i looking at that's so negative the answer is, the wrong things. >> yeah. >> yeah. i could talk to you -- like i said, i could talk to you for at least an hour about microsoft and about 3m >> ah. satya. >> but the down 1.1% dom said, doesn't feel like that. >> that's great. it keeps that fella, pal, just -- >> it's only if everybody meets expectations. >> j.p. -- >> if we beat like we have been. >> all right, jim. >> thank you, guys >> dvr on my comcast system that takes "squawk on the street. >> it's so easy to use, xfinity. i love it. >> you can use it with a voice. >> i have four other cable guys, they can't do anything to me listen, it's the wind. >> not that there aren't others. >> it's the wind. >> see you in a few moments. cnbc, stock draft is on the clock today. new york pitcher noah sindegard

go up against bbboy filllay. was ahead of its time.

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cnbc is doing its part back at the wall, we have a lot of kiddos who are there including emma contino, right here with us at the nasdaq we have brayden ramali. 11 years old in sixth grade. he's been with us since i walked in at 5:00 a.m have a wonderful day make sure you join us tomorrow right now it's time for "squawk on the street. ♪ ♪ ♪ good morning and welcome to "squawk on the street. i'm david faber along with jim cramer carl is on assignment this morning. it is a big morning we've got on tap including exclusive interviews with the ceos of southwest, chipotle and lululemon. let's give you a look at futures. we've also got an awful lot of earnings facebook, microsoft out and they're lifting the nasdaq 3m, well, it is dragging the dow