welcome to "squawk on the street." i'm carl quintanilla can jim cramer and david faber futures are steady as attention turns to retail blow out earnings from walmart, home depot and macy'ss with raised guidance. details on the discovery warnermedia merger walmart, home depot, macy's all

rallying walmart ceo making it clear customers want to get out and shop. >> shares of at&t are under pressure a day after announcing the mega merger of warmed with discovery. is there more consolidation in this business under way? and treasury secretary yellen gets set to make the case for business to help foot the biden infrastructure plans this hour carl >> guys, interesting retail picture jim.s 30% or 38% on a two year stack. >> these are totally joyous numbers. the companies are very very good and what they did was really have the right stuff and recognize this is going to be a blow out so what do they do they had the right inventory that is very important some of the great people like mickey trex ler over time has always said. you can't -- you have got to be very careful with inventory.

these companies were extraordinarily. they actually got it right david when you see home depot doing it, walmart doing it they had the right medirchandis and knew what people wanted. and we shouldn celebrate that. don't cut the dividend and don't screw the shareholders. >> 24 hours since we first discussed that referring to at&t at the end walmart and inventory. keeping eye on inventory, because if you have too much it means eventual markdowns and margins are compressed in this case not the case. >> but that is so hard to do >> yeah. >> that's why -- people don't realize -- my father was gimbels. old department store and they always had too many gabber deans. ed that to take the mark down. and it was a disaster. do you know why these stores are, how much they have to have?

including garden for home depot these guys are fantastic merchants. >> it is amazing home depot inventory up 28%, jim. and it still wasn't enough still not enough to keep up with sales up 30. >> it is so joyous and i know that diane was talking about the real estate, the home builds, really kind of saying no at last to lumber. i have to tell you the home builders have smart to do that but it is very hard to get an ie appliance out of home depot or lowe's you have to root around. again because the p appliance guys can't make'em fast enough the plumbing guys can't make'em fast enough. but at least the big companies had what was necessary to be able to have these kind of quarter. i think it is incredible. >> they also have a digital strategy and that becomes as we know has become so even more important. and walmart has been building on it for some time

37% growth in ecommerce. it is a pretty big number. and we used to say well it is off a small base not so small anymore contributed 360 basis points to comp sales which overall up 6%. >> how about mcmillen delivering with the grocery over walmart? grocery was the standout >> joyous. >> i am joyous when i see american business people do such a great job and not shenanigans and not financial engineering. good old fashioned merchandising and knowing what they are doing and really being ahead mark lorie, left walmart he took walmart plus with him. how many of these analysts came out and said walmart plus isn't

doing well shame on them carl they got it wrong. worse than the apple -- checking on that, doing the supply side checks >> and the guidance too, jim they do see full year eps up --. citi points out on walmart that it was encouraging, obviously stimulus helped. that's obvious in the numbers but it was encouraging the up tick in higher margin general merchandise in the quarter meaning customers are willing to make more discretionary purchases at walmart. >> again there is this mixture of people who saved a lot of money and are itching to buy and people who got the stimulus and of course the people who are both and what i'm seeing here is that american consumer has really decided. -- yesterday david, when they feel like they are vaccinated what do they want do. >> go out. >> they want to shop. >> dwrae.

>> and you have been vaccinated. it would help you a little shopping. >> i have been and i am fully vaccinate and would i go out every single night but i do what i like, which is just go out and eat. >> -- incredible to -- >> -- as you know and i don't intend do. >> well too bad for you. it is amazing carl because i'm leaving him immediately. it is amazing that people vaccinated want to go to walmart and spend money. >> apparently also macy's. seek to reengage with each other. seeing promising signs core customers are shopping again >> yes -- macy's call jewelry fragrance david. luxury jewel -- that's what you -- you don't need jewelry you don't need fragrance you don't. >> what do you need? >> this is what people are buying it is not discretionary. >> i don't understand -- oh i get it now you as in you don't need these things but you are going to buy them anyway. they are additional.

they are not necessary will to living your life. >> no one in this country has a row boat six months for a row boat. >> i can see you with a row boat do you have little cap -- that would be more venues. >> referring to the godfather? >> rowing -- >> -- freddie. >> -- rowing see jim out there rowing. >> you can't even get oars, carl but again, this is the shortage scenario be does a good one . >> i think our friend liz ann saunders pointed out this morning jim for the first time in history, retail sales exceeded inventory so it is going to be hard to find the thing that you want or the size that you want in the coming quarters jim. they are just hard to keep up. >> but at the same time, as long as there is no price gouging, which some people might think.

this is -- this is nirvana for retail and i'm a big believer that's okay. i think there are lot of people who feel when these companies are going really well there is going to be something wrong. i'm just a opposite. as from a retail background this is an extraordinary time and bountiful time and maybe the workers can make more money because they don't make a lot of money. anyway, i'm positive >> some -- >> -- the -- >> carl? >> i was just going say guys the only real wrinkle on the macy's is a classic reopening store. gross margin up 2,000 basis points but they did say labor crunchy is pinching and they also said that the return of international tourism, they do not see until 2022 which is obviously a big deal for -- >> they got bad covid problem and they will get that, dollar's weaker i thought the jeff was a little too down bate. he did raise sales guidance by

two billion dollars. macy's was a much higher stock this is a vindication of jeff's strategy is what i think david? >> i want to get to at&t, jim. >> no that -- >> -- shared some of your thoughts listen it was 24 hours ago when you first turned to me and said i think they are cutting a dividend here. we looked at the numbers, oh yeah -- and 20 billion free cash flow numbers, 8 billion and paying 15 now -- >> -- 40 years -- >> -- asked john stankey, ceo of at&t and of course that is the case but that seems to be filtering into the marketplace the idea that at&t is not going to have the yield or the dividend payout when it has a new capital structure once this deal with discovery is completed which is going to be more than a year from now. neither stock performed well yesterday despite what seemed to be very strong response early in the market day and as the day went on, everything went down.

viacom comcast crushed down 6%. concern about what are they going to do at nbc u can they participant no does it mean less length because discovery has so many cable channels and can dictate terms? lot of wireless. who knows. nothing performed well yesterday, jim and at&t today is looking to not perform well i want to get back to discovery though because, you know, some questions there about well, what's the product really going to look like we spent a lot of time with them yesterday talking about those questions. some questioning the synergy number of 3 billion. although what i hear and what i've seen previously, they can usually deliver on the numbers they did with skrips and revenue synergies. what they have been able to do internationally with taking programming from skrips and

getting a lot more women to watch. that is a revenue synergy number from that deal so don't discount the possibility there. but not a great reception jim. and i know obviously you deserve particular wrath for at&t at this point. >> -- but he was not ceo and he has. he's basically moved in a decidedly different direction as mr. stankey. i do believe we did question at the time -- direct deal. i remember having those conversations with mr.

stephenson and the time warner deal they did get hurt as well but the year of additional delay when the justice department came after them this time they were looking for deal that has as little regulatory risk as any a deep with nbc u where you imagine a double reverse morris trust which is something therm talk about was not something at&t was interested in giving potential regulatory impediments not to mention the fact that expectation the family would not give up their vote so to speak, their over sized vote. >> think of this for the nfl >> okay. >> and somebody had a great -- aaron rodgers. and he decides he wants to go be alex trebek. >> yes no i don't want him -- >> -- thegeneral manager at green bay would lose his job because what happened is that he was a knucklehead and lost aaron rodgers and didn't -- >> okay. >> we can say that i would say that guy is an idiot, a moron, aaron rodgers is

fantastic. he takes 5 billion to jeopardy instead of the 28 million and takes away the hopes of green bay. and we could decide that guy doesn't deserve the job but it is corporate america randle stephenson and had to go with the sometimes and staeng came in andnkey came in and -- but it is all fine men in suits doing a great job changing direction can you imagine espn --. would be fired so quick they -- >> yeah you would be fired quick. >> i could have -- >> dpsh stankey believes he's doing what he needs to to make sure he's got as long a tenure as possible and in fact he did respond to my question and say i don't know how long my tenure is going to be. a lot will be result of the decisions eve made

-- >> millions of shares traded by people who i generally thought -- >> i understand. should we listen to stankey again and his explanation -- >> -- aaron rodgers go -- >> -- stankey said when i did ask him about why the dividend was being cut under the new so called at&t. >> we're taking our cash and putting it towards the highest return and it is not to be unexpected that when we shift out as much of the cash flow as we do with the media company transaction, what we've dope with the direct tv transaction that we've resized the dividend as a result of that. but more importantly using the confi cash flow to generate returns is the right thing to do for shareholders and we want this business to grow organingly and

that is my goal and objective. >> problem with that >> if stock goes to 25 -- highest yield -- >> -- for a little while. >> really doze -- >> you don't think that strategy makes sense? >> -- >> -- success of warner at this point? >> screwed it up so badly. resize david is something you do to a suit when you lose weight. >> you have to resize when you -- new company stock we'll own 71 -- >> straight face i'm cutting the dividend -- >> as a result of the change in the capital structure with the new company. they are not cutting it now. they are cutting it later. as in this is a new company. taking this cash flow, we're moving it over here. we're giving you 71% of this new company. we think this new company is going to do really well. >> people wanted it for the

dividend david. >> then they are going from to change chair shareholders base aren't they? >> there are people who owned it and i feel badly because they got bagged -- >> i want to move on to -- >> -- i want you to admit they should have said we screwed up and we cut the dividend. >> i don't think you can quite say it like that but i do think you are absolutely right to be focussed on it. because it was something that surprised a lot of people. >> thank you, good go right ahead i just did it. -- >> seen some of the stories as well about amazon potentially buying mgm i can add in yes there's certainly been something discussed of late and hearing the samefrom many people as well we'll see whether they get to the finish line there. its been sort ofn and off as a potential sale cd for sandidater some time. we'll see if they combine hbo max and discovery plus but

certainly they are going to have a lot of content provided by warner mgm is owned by amazon and only produces for amazon? i asked that question yesterday. here is what he had to say. >> i think that created an environment that allowed him to get j.j. abrams and some of the best creative people in the world. it will be driven by maintaining the best creative talent in the world telling the best stories that is how we're going to be successful. >> this siloing to a certain extent because everybody needs to produce for their direct consumer platforms what is apple going to do? paramount is still perusing for

others but they have paramount plus and viacom. it will be interesting to see how things develop that is world continues evolve. >> this is so fluid, it is incredible fluid in some ways disappointing. >> somber jim cramer carl >> guys lot more to get to this morning, including this new put strategy on tesla. we'll talk bitcoin and upgrades on gap and mgm and lumber down six straight anfilid dety creating no fee accounts for kids young as 13. pack in a minute ♪ try to be best 'cause you're only a man ♪ ♪ and a man's gotta learn to take it ♪ ♪ try to believe though the going gets rough ♪ ♪ that you gotta hang tough to make it ♪ ♪ you're the best! around! ♪ ♪ nothing's gonna ever keep you down ♪ [triumphantly yells] ♪ you're the best! around! ♪ [ding] don't get mad. get e*trade and take charge of your finances today.

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>> the analysts didn't see the change c credit suisse depose from sell to hold. shifting to neutral ahead of lack of negative catalyst. do you think they are going sell gap to discovery to say hey listen we were wrong no that's joke about at&t saying we're wrong. here is 50 million i screwed up. we screwed, the board. old navy, the right brand at the right time price target raising to 34 but it is at 34. let's just again say we missed this one realized it is really great. much better than it used to be we're going to -- >> can't blame anybody who's owned this for any length of time to potentially selling here when they have that kind of a game you are saying the analyst is

ridiculous i get it they were horrible they were bad. -- >> -- >> you know that is not true really of the two of us who sucks up more to ceos and boards? who? come on. are you kidding me yeah that's exactly right remember that face all right we got -- but every so often, watch out because when he gets mad, ooph, not good we got opening bell coming up next

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the "opening bell" is brought to you by: >> apple is going to be a name to watch this morning. lot of moving parts. not the least of which jim is the page 1 story of the "new york times" about some of the compromises the company is making reportedly in china a market that tim cook helped develop. but now according to the times helping to censor on the app store and moving some user data on chinese server has raised some eyebrows today. >> they all have to walk tight

ropes on this stuff. and i think tim cook has done a great job walking the tight rope i think you have to compromise a lot of things when you work in china. the as big market. but i also think you can be a force of good in china i think the chinese communist party is always worried about apple but knows that the people like it. so i don't think -- i'm not going to say that china has been -- that china is kinder, gentler to apple than anybody else but apple's tried to -- apple's had to walk the tight rope. >> as any number of other companies that gain a great deal of profitability from that market but it is not easy. >> no it is getting tougher. >> particularly the pressure you get as well from shareholders who are interested in obviously esg and meeting various -- and a company like apple wants that. nike another name. walking the tight rope too, right? >> nike is the one that has i think of all the companies in america, other than ones coming

out and making statements about georgia, nike's been the most civil rights oriented company. i think it is hard to justify. -- selling for fear that they will say you know what we can't justify it >> well, clearly not the only ones jim kathy woods arc continues to sell apple there is the opening bell at the nyse and the nasdaq which looks like it is going to get lucid as they tweet a few moments ago about the spac merger. i think the ticker symbol under lucid is going to be -- i lost it here. l lcid following the plan merge we are cciv between that and fisker and tesla and ford lightning f 150 there is a ton of news in the ev space. >> ford with biden will be there. the electric f-150

tesla, tesla stock has become a -- a -- a -- a bad stock how about that. >> a bad stock. >> well after being unbelievable good >> -- >> -- 20e percent if year. >> what have you done for me lately -- mistake i think musk deserves a little better he's created huge amount of value. he's okay in my book fisker, they are gonna -- they made i think couple how to >> not bad couple thousand. >> 22 thousand -- 62,000 >> i notice d a k on our screen last night, jim. >> they are pre revenue. dave, what do you think about pre revenue companies?

>> i think you have to be careful. certain environments they work and lot of the spac, companies going through spac process, are pre revenue. think of it as late stage venture capital money to a certain extent some will hit. and many will not be at all. >> -- sell anything. i like to like the lucid i was in the lucid it was terrific the car, i loved it. i loved it everyone tells me mcdermott has the new fisker car good deal with magnum. good deal with fox con just they are prerev i'm uncomfortable prerev. >> well in this environment you have been saying that. >> right. >> four months ago, didn't seem like people were uncomfortable with prerev. and -- >> but then you and i both felt things had gotten out of control. >> yes we made references to past --

>> -- lucid when it was -- >> -- cciv's high is $64.86. >> that was more like the bore war. >> and lucid will become a full --. it will i think if i recall 1.6 billion shares in total. times $18.81 still a hefty -- >> because people don't understand they don't know, understand the hidden shares. because the sec nowhere on these. these are kind of like carve outs they don't have to be as forthcoming. whole special category of not to be forthcoming how does this happen >> jim -- there's a lot we don't know about michael burry's put strategy i wonder what you make of that the report would indicate it is a large short put strategy and then biden going to ford today. lot of discussion about what is

the overlap between the truck market and ev market and would you get a classic f 150 buyer to be interested in an ev, especially with biden ostensibly backing it with his appearance today? >> do you know my wife is in mind to buy a super duty electric super duty. that's bigger than the f 150 for this new place we bought with bitcoin. we bought this farm with bitcoin. now we're going to buy this f 150 with etherium. it was a currency that went bonkers. >> it did go bonkers.

>> it went bonkers i think betting against musk is something i would not do i think he just doesn't play by the normal rules and he's a genius and i'm not going bet against this genius. i'm not bet against mozart i'm not betting against edison and musk in there and he's got the benefit of still being alive. >> betting against musk. say you did that the last three years. that would be a suboptimal strategy >> yes as just about every cell site analyst can attest, jim. having a long-term bearish view has not paid off you mention -- yeah. you mention crypto though jim. long bitcoin now officially their most crowded trade which they point out with other episodes like that typically associated with a relative top

like technology in september of last year. and then there was a story on "today" that etherium that some traders are confusing the ticker with ethan allen eth, which has raised all kinds of eyebrows today. i'm not making this up >> --western digital and sea gate we're in a funny moment. some would say stupid. confusion with ethan allen, or confusing it with entertainment. and it is a telephone company. which is dumber. >> deadly serious on that. by the way we should point out at&t shares are down 7%. >> get out of town with that yield in it is going to be so high. >> actually has been the best performer of the group this year outperformed verizon which has not done particularly well t-mobile which of course we know is one of the key competitors there. but this turnaround on the announcement of this deal, it is not really what they were hoping for. i'll tell you that

lot to be explained. lot to be understood you are going to have a change in shareholders base to a certain extent to the point we've been making. when this deal closes it is going to change. capitol structure is going change but that could take some time. couple other things, the battle for rails here ksu yesterday. we got some from the stb, the surface transportation board that scared a number of shareholders here because it appeared wait did they say they won't give a voting trust, which is the key here to voting be shl? which they did but they didn't we're not going to approve it yet because we haven't seen a merger agreement so canadian national says hey we're committed to addressing those concerns we'll give you the voting agreement sons we and went on to say the decision to -- was based

solely on the fact that a merger agreement for the combination between canadian national and kcs was not available to be filed. they go on to say they are committed to addressing any competitive concerns to be successful in completing this combination. use might imagination canadian pacific had a different view they said there is a lot more to this and you know to be fair they could have just said that in a few sentences the stb but it was a pretty long filing with this new rule big the stb, cp's confidence in the superiority of its friendly agreement is redoubled -- is compelling and that is the only one that's viable what i can tell you is that kansas city southern, unless c raises at this point and they have until thursday i think after business hours, they are still going to most likely stick with what they have got from cn and go and sign that merger agreement with them. they get a billion dollars if they don't get a voting trust

and they expect cp will still the be there if that should be the case and they still believe more likely than not they will bet the voting trust that is where things stand right now. another story i want to get to on you, with you jim is -- yesterday coming out not a surprise been some press but they did move forward basically saying we want you to split up into three separate entities essentially. we believe that duke should conduct a thorough unbiased review into three regionally focused publicly traded holding companies, utility holding companies. carolina, florida and the mid west what do you think? >> they did a lot of these utilities are worth more broken up than not i did a piece of one friday about crown castle and how elliott approached things. they came in they gave a presentation they were allowed in a company basically said we don't really like it and then the company did exactly

pretty much what these people do and i have to tell you, they do have quality work. at elliott i understand that duke doesn't think their utility work has been as good. >> they believe scale is extremely important in this business. >> why >> they cite a number of reasons. including comments from simply resident ceo jeffrey martin. >> i love jeff. >> one belief important to be larger and a market leader in every market they cite gail clap pa i still believe we're in a consolidating industry i still believe scale matters. duke is coming out fighting. here is a quote from their release rebutting what elliott said elliott's approach to duke energy thus far is reminiscent of elliott's decided my licksed results in the utility industry as shown by recent --. establishing an unenviabletrac

record of shareholders value destruction. >> elliott's done a pretty good job. >> most people go oh, elliott. we're not going to raise the gloves in this case they are. >> they are fighting look, every one of these large utilities is really threatened by the man -- i elon musk. and generac. first energy, outperforming until that --. simply em sempress dte doing well -- outperform if you are going to cherry pick.

why don't we cherry pick some of the good ones. >> without a doubt. >> so those are good nrg's been great. >> glad you pointed them out we're going the keep following this duke is an important utility. >> very important. >> important company and this is going to be a battle. >> people own that for dividend. see, they like the yield. >> back to that already? >> its been a couple minutes. >> down 7.2% >> -- home depot and macy's have gone red, jim. i did notice home depot -- they mentioned lumber, affecting their gross margins by about 35 basis points lumber is down six days in a row, jim but those are the futures. it is not doing a whole lot for the cash market. >> and housing companies are all, they are telling me look it is going the right direction not enough yet because its been up so much. home depot's been up, up, up i know but -- and i'm not on conference call so let's just leave it at

that you know when you are not on the conference call. you are out here you lack what other people have. but that is, i just think it is such a great company take a i look at that by tonight's show walmart not lumpur but groceries, groceries are doing really well. when you go to walmart i was at walmart two weekends ago and it is just incredible the food aisle versus even say a kroger, versus the kings that i go to but they have a hard time stocking sporting goods, because of the pandemic. and people, i was looking for some very good bait, the phony bait plastic bait. >> bait. >> bait. >> understood. >> -- cabellas. >> in the row boat. >> there are no row bout boats in the country, david. he doesn't understand what america does

america rows and they get brunswick america -- >> america rows? you get the 24 foot bostonian whaler i'm taking you that one, partner. >> i'll take that invitation of course it never really will come. >> we're roughly flat on the s&p 4164 are we going pisani first or santelli this morning? >> let's go to rick. good morning rick. >> good morning carl you all were just discussing lumber down six days yes those are the futures contracts. lets look at those again from 1986 till 2019, you could see the contract was changed in '86. it existed before that but in its current form. but when you zoom forward, you see the way the scale changes, up to 19 looked pretty energetic until you include everything posted during covid. and we could see that even with the six days down that carl

alluded to we're still multiples where this contract is and those are futures and yes, your lumberyard prices and the mills, there is going to be a lag effect there but trust me the interesting thing about commodities is that when demand escalates. usually one season you really address that from a supply side. so be patient the prices will eastb ebb a bit. and why are we discussing this because we had a nasty housing number on the start side down almost 10% but it isn't because there is a problem with housing. it is a problem with the supply chain, commodity prices, just procuring labor, construction supply of single family. you guessed it look at the way it affected sber day 10 turned the market down a bit but if you move back to a week we had an auction last wednesday of 10 year notes it was the west of breed with threes and tens and thirties high water mark. 169 settlement last week a five and a half week high

close and we're starting to drift away once again. if you look at the dollar and foreign exchange has really been exciting of late not in favor of the green back a year the date chart of the dollar lowest levels since early january. but the you look back all the way to late 2014, you can really see how precarious where we are at in the dollar is. yes we're sitting at levels we haven't seen really since the spring of 2018, february, march, april. but look at how close we are to levels we haven't seen since early 2015 so we really need to pay attention when the dollar index is trading under 90 even carl, jim, david back to you >> rick, thank you very much rick santelli. walmart is your leader this morning. intel, hoept, walgme depot, wal

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all the arrows are now pointed in the right direction so let's get back to life. this shut down has caused all sort of damage we have to reopen. we have to reopen smart. we have have to reopen with a cautious eye, but we have to get back to life, and we have to get become to life and living, and we have to do it the way new yorkers do it. we have do it quickly, and robustly >> that's the new york governor in a news conference yesterday saying new york state will adopt the cdc's new guidelines on masks beginning tomorrow it was an eventful day for new york city yesterday. the marathon is back a film festival to going to radio city jpmorgan and i assume you're noticing this in your restaurant, too? >> absolutely. it's -- we had some unbelievable

numbers, but people are out. a lot of restaurants went under. carl, i have to tell you new york is celebrating vaccination. it's about vaccination it's not about -- it should be about ventilation. that's how you avoid the illness, but carl -- >> the illness is not around, you don't have to worry about it and it's a very low level right now and roughly 50% of the city vaccinated. >> it's a great thing to be vaccinated i don't know the bear case so much obviously as much as there are people worried you can go out and do whatever you want i wear this around here because i don't know who has been vaccinated and who hasn't. >> you still wear that >> yeah. >> are you surprised how many people in new york city still walk the streets in those? >> outside you're not going to get it >> do you think that's unwillingness to engage? >> i think they got used to it and they see in asia the numbers were better than ours. i think indoors is the problem and the indoor circulation in a

typical building is not good enough until i find out everybody is vaccinated >> yeah. i think it's important, jim, not to begrudge people for making choices like that. at the same time, we had ten states yesterday report fewer than 100 cases including north dakota and montana and some states in dire straits last summer more gawk on the street in a moment these days, we want sophisticated but simple. cutting edge made user friendly. in other words, we want a hybrid. and so do retailers. which is why they're going hybrid, with ibm. a hybrid cloud approach with watson ai helps manage supply chains while predicting demands with ease. from retail to healthcare, businesses are going with a smarter hybrid cloud, using the tools, platform and expertise of ibm.

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it's good. david, you and i are going to go to alaska on the haven the haven is the top part. there's just incredible bargains >> in a row. >> for $10,000 >> can you row there >> you know, carl, i'm an american okay and the things we do as we go rowing -- >> in your pickup truck. you have to say i'm an american. >> i sound like mer in "easton". i said to my wife, i said do people talk like that, and she said who do you think talks like that >> judi and you were talking about you last night we wondered if you were impressed with accent or not >> i can't talk about it i know my wife doesn't watch the show i have such a crush on her it's scary she says water right gasoline she says right. murray she says right. every single word she says right. she's amazing. >> she's gifted. >> and that's not a spoiler alert. she's incredible >> she's gifted.

>> jean smart also is really good >> what's tonight? >> tonight we have greg hayes. gina drosos with signet. every kiss, what does it begin with >> a k >> and hydrogen is like plastics in the graduate. hydrogen >> exactly how do you mean >> every kiss begins with faber, and hydrogen is the way to go in you're a young person. we'll see you at 6:00. "mad money". tonight. a lot more "squawk on the street" in a moment. ♪ ♪

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s&p in the red now at 4157 as oil as given up early morning gains. >> we're 30 minutes into the trading session. here are the three big movers we're watching retail is the story of the morning. home depot with a massive earnings beat. sales rising more than 30 % in q-1. the shares are flat. they're turning lower on the morning. down about .7% macy's is higher earns per share topping expectations same store sales were up more than 6 0 % you can see those shares are up 1 .5% right now. and walmart with a 6% increase in comps, raising guidance for the full year. courtney reagan who is having a busy morning in what is a busy week in terms of all of these retail earnings reports has been monitoring that walmart call she joins us now with more hi lots of coffee today big beats on the top and bottom line for walmart it upped the full year guidance forecast for earnings and

revenue. i spoke to the cfo who said, quote, stimulus helped in the first quarter. because of that we increased our profit and revenue guidance and added what we are seeing right now in q-2 was part of the reasoning as well. the trends continue. bigs also said overall i think the consumer is in good shape. there's a lot of money in the system spending rates are healthy savings rate also near all-time highs. on the call, walmart executives were asked about walmart plus, the new membership program they said the number one driver of selling memberships is grocery and super center pickup and delivery so the retailer has to increase capacity to get ahead of the demand for that program. it's a program that's long-term important. walmart executives say but it's not the primary focus when there are other opportunities here in the short-term grocery share has increased for walmart. general merchandise categories improved in the quarter including apparel, home, and lawn and garden.

those are higher margin as well. walmart's u.s. comparable sales were up 6% that's six times as strong as analysts forecasted. and compared to the first quarter last year, that big pandemic stockup quarter, where walmart's comp through 10% impressive the stock positive for the first time since april of last year. walmart's net us e-commerce did come back down to earth a little growing at 37 %. that's a growth rate last seen around 5 quarters ago. wal walmart's global e-commerce now 12% of total sales and pent up demand is still there. the cfo says for items like bicycles, printers and you can tell people are starting to get back out he said things like teeth whitener are also in high demand right now. it's a busy day for retail earnings i'll speak to the macy's ceo later on stay tuned all day long. morgan, back to you.

>> teeth whitener? that makes sense, especially as people ditch the masks and can see people's smiles for the first time in more than a year all right. it's a great place to start with our next guest as well andy dunne is the former sbg of consumer digital brands and the former ceo of banobos. >> thanks for having me. after all the coffee i had during covid, i'm ready for teeth whitener, too. >> i'm curious what you thought of the walmart results today and specifically what you think about the trajectory for ongoing e-commerce growth since that was a secular story before the pandemic we certainly saw it explode for retailers like walmart during the pandemic it's expected to continue to grow at a slower pace now that we're coming out >> look, i think the story of the morning is what happened with walmart's bask size i was reading guidance you saw this transaction coming down from the pandemic stockup,

but the basket size was up a meaningful amount. that tells me walmart is excelling in fashion, excelling in home, excelling in general merchandise. and adding the bigger ticket items to blend in with their grocery and cpg business i think there's a ton of momentum here. and i think the street was not sure what was going to happen this year. home depot, huge quarter, but priced in. walmart you see the pop. i think people don't realize how good walmart is getting at the nongrocery parts of the assortment >> in terms of the basket size, whether it's walmart, or this came up in macy's results as well the stimulus the impact of the direct checks americans have gotten. once again, how much of that is i guess affecting retail sales and the results of the companies? is it a sugar high how sustainable are these numbers longer term? >> i think it's huge i think it's huge with the american government and what they did some of the folks that are concerned, the size of the stimulus is too big, i think are

away from the lived experience of people who are folks in american, middle class folks in america. what we seeing is the stimulus is going to enable people to invest in their standard of living i see it not as a sugar high, but something that helped people endure during difficult times and hopefully now as people get back to work, particularly in industries that were really affected, we can keep the momentum as an economy >> it seems like there's a barbell strategy emerging within retail right now at least on something like, for example, the apparel side of things where you have a lot of companies that are doubling down and i think walmart could fit in this bucket alongside target and others doubling down on their own store brand labels and then on the other side, there's an explosion of new kind of next generation brands that maybe started as direct to consumer and e-commerce who are expanding to brick and mortar footprint how does the retail landscape

shape up post pandemic who are the winners and losers >> if you're selling brands, everywhere, including amazon and others, it's a race to the bottom and the truth is that a lot of the brands don't love the channels, particularly the challenges of working with amazon as a vendor i think where you see walmart winning is look at free assembly, one of the new proprietary brands scoop with a history in new york w the new leadership there is really focusing on brands that amazon doesn't have. brands that other folks don't have and walmart's acquisition of a fit technology company out of israel, and you can see they're playing offense with doing things their competitors can't because it's proprietary >> you mentioned the fin tech efforts. and it sort of reminds me of oh things we've heard in the past, 6 to 12 months about advertising, media we haven't forgotten the tiktok

episode. what do you think the ambitions there, exstore right? a both advertising, media, and fin tech >> i mean, look, i think the move there is partly just to learn. right? when you think about that minority investment in tiktok, just having doug mcmillen in the mix, the board of walmart understanding what's happening and pushing the learnings down, i think it's the kind of move you wouldn't have anticipated, but then when you saw the chess move in india with flip cart, look at the e-commerce growth internationally. it's making these smart digital bets i think the tiktok it's not just about buying or investing in e-commerce companies it's understanding the social trends that are influencing consumer behavior and spend. >> andy dunne, thank you for joining us today >> thanks for having me. take a look at the road map for the rest of the hour as we go to break. bitcoin biting the dust. massive outflows sending the

crypto currency lower by more than 20 % in the last week at&t shares continue to fall this morning down as much as 7% we'll have more on that deal with discovery then warren buffet and berkshire hathaway, we'll break down what names they exited with the portfolio. esg is responsible investing. who's responsible for building esg into your investments? at pgim, the pursuit is on for outperformance. as active investors, to outdeliver with customized strategies, integrating esg best practices into our investment decisions. as asset managers and fiduciaries, to outserve, with our commitment to better esg outcomes. join the pursuit of outperformance at pgim. the investment management business of prudential.

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crypto continues to reel after a volatile couple of d ddie days for more we're joined by jill carlson to help us understand what's going in the market good morning good to see you. >> hi. >> great to be here. >> jill, let me turn to you first and ask whether or not you think there's a single culprit for what's happened in the past few weeks. and whether or not this change in sentiment is really important. >> you're setting me up here to name the one man that's been in the news more than anybody else around these price moves elon musk, of course and listen, just to address that from the outset, i think there's a very simple explanation for his about face for tesla's about face which comes down to the

fact that tesla needs to maintain its status and perception as a clean emergency play as an esf. that's important for its inclusion, certain funds and portfolios that's important for its relationship with government and i think that it's as simple as that. it's very fun to conjecture about the rantings and ravings of a potential madman, but i wouldn't overblow that element of it. >> yeah. is it fun, though? i mean, how fun is it when so much of the market cap can be moved by literally one word tweets by one person >> but look, hold on that's not what moved the market at coin shares we look at data we manage 5 billion in assets. i don't care what elon musk says my job and my team's job is looking at the data. here's what's happening. macro marketing skittish, brief equities sold off. tax season means they're selling

across markets and bitcoin up 300% since the start of the year. it's very normal to see 25 to 40% corrections and pullbacks. what we're seeing, the majority of selling activity we've seen over the last week has been from new holders. people are coming in, they're getting spooked. weak hands are selling we see skittishness as we see uncertainty in the macro climate contributing to selling. primarily retail driven. if we look at options side of the market, skew has been bearish for two weeks. if we look at order books, traders are transitioned on the short side expecting a correction if we look at the data right now, we're as bearish as we can get. again, this is about using data to inform our perspective. we saw over 50 million in outflows in crypto exchange traded projects continuing to see inflows into athere yum.

they're going into other aspects. but there is a broader base sector rotation. crypto is not immune to it i wouldn't overstate the impact that any one person's tweets can have on the market >> i'm impressed you came armed for this conversation today, both of you. to dig into that a little more, jill, there's bitcoin and other crypto currencies and now there's more focus on stable coins starting to grow given the news around dm as investors think about potentially shifting out on the risk curve and rotate into some of the other crypto assets, what are you looking at what seems most promising or most hopeful to you? what would you stare clear of? >> yeah. it's a great question. it's been missed in all the fear and uncertainty that's been kicked up over the last couple

weeks around bitcoin and dogecoin and the proof of works systems they rely on the fact is there are plenty of other coins out there that don't rely on proof of work. so if that's your issue, elon, or whoever out there is listening, then i would encourage you to do research into those you have the likes of solana, testing all-time highs at the moment despite the overall market weakness. that's a proof of stakes system. you have chia, talked about. it was talked about earlier this morning, a proof of space and time system. you have alternatives to proof of work for a long time that's been a part of my thesis not that those are necessarily perfect replacements for bitcoin, but they're good alternatives if that's a concern that you have. >> yeah. there's a growing landscape, this -- of coins and offerings right now. coinbase last week said they're working to list doge on that

exchange how are you thinking about that specific crypto currency how are you thinking about some of the other ones, including the ones jill mentioned? >> yeah. that's a great question. again, at coin shares, we offer the market what we think there's demand for we primarily deal inrypto exchange-traded products we have been doing that since 2015 and then we have a capital markets business that trades and provides liquidity to other venues we're not trading in doge. in our view, there isn't a lot of demand for doge from anyone but retail buyers. let's not forget an important structural demand. in the last cycle, retail traders were trading crypto on platforms where they could only move in and out. today retail trader ks access dogecoin, penny stocks or meme coin named here through one

interface. we see a lot more correlation between some of these meme-driven assets that are seeing a lot of inflows and outflows and volatility. we focus on the institutional demand it's heavily focussed on bitcoin. we're seeing more inflows. over 3 billion in aum. totals now over 10 billion out of the 60 billion total in crypto asset etps. we are seeing as people get educated, more interest in the assets outside of just bitcoin again, in our view, bitcoin will remain the dominant asset for some time to come. it is the most robust in terms of market structure. >> yeah. to that point, jill. b of a, their fund manager survey said lawn bitcoin is their most crowded trade what needs to hold >> yeah. no, it's a great point

i saw that same headline out of b of a look, to me i think that's actually net net, a bullish signal for the market. if you look at how far we've come, the very fact that b of a is putting out that headline and saying that goes to show how much demand and how much real demand institutional demand has come into the market over the last three years if you had told me that headline was coming out three years ago, i would have laughed even i wasn't that optimistic then and so look, i think it comes back to what melton says the institutional demand needs to hold, and if this little bit of weakness and it is only a little bit of weakness in the grand scheme of the volatility that crypto has seen over the last ten years, if that has changed any of these institution's by thesis around bitcoin, they didn't do very much research to begin with. they need to revisit it. >> maybe you're right. maybe the institutional backdrop makes this correction different than the ones we've seen in the

past we'll have to wait and see guys, thank you. that was great i appreciate it. >> thank you >> thanks. well, after the break, we'll have more on that mega-deal between at&t and discovery continued negative response in the market 24 hours later. we'll take a closer look after this

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welcome back to "squawk on the street." it is now time for our etf spotlight. we're looking at the ticker xlf down fractionally. it's higher by nearly 20% over the past three months. investors pouring into the banks as recovery expectations continue to rise wells fargo leading the group. up close to 30%. we have more on the move into wells or out of wells later this hour as well by warr buffet. keeping a close eye on shares of discovery and at&t

more than 24 hours after we got the announcement of that mega-deal under which at&t is dispatching the warner media assets into a new company that will comprise discovery and warner media 71% of which will be owned by current at&t shareholders. the reaction in at&t stock price we got around this time yesterday. it was around when we were speaking with john, the company's ceo in part because it was becoming clearer perhaps to investors that there's going to be a different capital structure at at&t after this deal is completed. it will involve different capital allocation that means a dividend that is not what it is right now he made that clear in the comments at that point, but the market plays still digesting the idea stroefr, you can see not a positive response. day two here turned around yesterday after being up early in the session to being down after the day and that continues to be the case as well continued questions about -- i

mean, what's the name going to be how are you going to deal with the two platforms? are you going to integrate them? hbo went from make 2g -- 2 $.5 billion to virtually nothing. there are ways to save even those there's debate whether the synergy number that discovery used will be real. the sense i'm getting is there are a lots of opportunities for them to run the scripps play book they lowballed and delivered a lot more but one key question for mr. stan can i who reversed years of strategy at the company in a short amount of time is why was this if you're considering doing a deal under which you dispatched warner media, why was this the right partner >> this is the right one after looking at tons of options it's the light -- right one because of the nature of the

content with limited overlap it was a great way for us to to do a big cut at the capital structure within at&t to get it right so the communications company can grow and we can invest appropriately and my job is to mike sure this came out on balance right for the at&t shareholder and aggregate. i think we did that here and i'm really pleased about that >> and one key concern as i understand it was any regulatory threat given, of course, they have ptsd from what happened to them with the justice department you see the name nick and ray dell heem, i can guess he probably gets very upset this deal doesn't have a lot of regulatory concern back over to you >> yeah. long memory. don't want to touch that stove well-said. when we come back, mask mandates as you know, being lifted. how restaurants and the service industry are trying to deal with the guidelines

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new covid cases in children meanwhile dropped to their lowest levels since late october. 49,000 last week but children still account for around a quarter of all new

cases. and a subsidiary of japan's fuji film says it can detect new variants they can identify the variants first identified in india, california and tokyo >> thank you we'll see you in the next hour we're about an hour into the trading session right now. however, and right now the nasdaq is outperforming the nasdaq 100 is up about .6 %. in terms of what's leading the index, it's some of the former pandemic high fliers names like peloton and zoom are seeing a bounce. also chinese tech names like j.d.com. in terms of what's lagging on the nasdaq 100 right now, t mobile, down more than 2 % also paccar, charter communications, ross stores and csx. >> in the meantime, morgan, restaurants trying to navigate is new mask guidelines david palmer is with us today.

david, it's great to have you. i was thinking we got a lot of retailers that are saying you no longer have to wear them in the store. cvs, costco, target, today it's best buy but how are restauranting handling it and how are you folding that into your expectations for traffic >> well, we're seeing very strong results out there great two-year trends that are building even into the last month and fast food, double digit same store sales growth. the way that these chains and companies are responding is they're saying for you, the employees keep on wearing the masks. the customers if their vaccinated, they no longer need to wear the masks. that's the gateway option that's going to happen. and if they proceed cautiously and when people get comfortable, employees and customers, and anyone presenting an image of safety, they're protecting a brand. but for now, what we're seeing

is labor scarcities is the big issue more than this masks issue. and then over time we're going to have to see how much as things reopen that's competition for the restaurant chains, including the full service diners that -- versus a concert, were they the only game in town that's the competition >> it doesn't sound like you're in a rerating higher kind of mode of thinking >> well, it's a different -- difference in trend for fast food versus full service full service players, they're the ones that are doing the best are the ones that kept people largely employed they furloughed for a while. but they're fully staffed and ready to go right now. as people come back to restaurants, there's a top preference, they have a list of top preference chains, and they're ready and staffed for those customers.

so you would look to a name like that, it's a good option and some of the names we pull back lately. in the case of fast food, you're not only getting the benefit of the sales creeping up, but you have inflation protection. and international reopen that's going to be largely a late '21 into '22 event even those more drive to the vacation type stuff this summer, that's going to be a help. and the labor availability is loosening up slowly as kids get out of school. that's what you're seeing in fast food. >> i want to come back to you in labor. we hear at least from the ceos that we bring on it's going to be an issue it would seem i'm curious what your expectations are for how long and whether it will result in higher wages overall for the industry >> whether it's a food company with their manufacturing and

distribution centers or the restaurant operators, they're all freaking out about labor they're having a hard time staffing and they're having hiccups basically it's a limited traffic in volume. so that is an issue everybody is dealing with they expect it to go away into the fall as some of the unemployment benefits start to ease there's also safety and the annoyance of wearing a mask. all these things are factors so some of this will get alleviated or at least made less of an issue over the summer. particularly fast food worker issue. but really the fall is when some of this is going to really start to go away >> so david, given the conversation we're having right now, if you had to choose one stock to buy right now, what is it >> i would say darden restaurants is the one to focus on it's got the most zing, earnings up side from these things, and

so i like the company operated model. inflation will be an issue down the road, but right now you have the reopen benefit on the top line that's going to be leveraging the bottom line and you see it outside there >> all right finally on pricing power, we talked about soybean costs and whether pork gets substituted for chicken on the margin. but do they have pricing power at this point to change the number on the menu >> right now it feels like a consumer is strong enough to handle it, and the consumer is driving some pretty nice check growth in other words, they're buying that bottle of wine, and pricing power seems to be there across the board. we're hearing from food companies and restaurant companies. they're taking price, and they tend to go at least dollar neutral on this inflation. you know, typically the food markup is throw times what the food cost is at a restaurant

company. and with the franchise business, you're dealing with only something like 2 % of the system in the case of mcdonald's, it's company operated you get the beauty of the top line being driven by the pricing of the franchisees and, of course, they would also have pricing power on the company-operated units so everybody feels like this is the concern that rolls up into the concern around the economy around inflation everybody feels like there's a lot of pricing power out there, and you're going to see it >> yeah. i mean, it's a big macro story that is easy to tell through a microlens. david, fascinating stuff look forward to checking in soon thanks. >> thanks, carl. we're going to continue the conversation on mask guidance and pricing power. joining us now is president of grocery chain, the giant company. nick, thanks for joining us. >> thank you, good morning >> given the conversation about

reopenings, restaurants being able to increase capacity, consumers starting to feel more comfortable going out and perhaps dining in more often right now, what are you seeing at your grocery stores in terms of i guess shopping power, sales, are you expecting to see that start to ebb, given the strength, the flow, i guess you could say that we saw in the pandemic last year >> yeah. that's a great question. i mean, shopping patterns have changed a little bit to what they were prepandemic where you have war shopping taking place on the weekend during the pandemic, it's same every day, which is unusual in this industry. what i'm seeing is customers are still eating out they're exploring what it means to be a chef for their families, and they're still going into departments they didn't spend as much time in like seafood, and so we're happy with those trends we're also seeing they have really migrated to digital and so if i think about the way they engaged with our brands, it's not just coming in like they used to it really is much more so on the

web, on app, e-commerce delivery and other things thankfully we were prepared for that >> given the cdc guidance on masks and now that we're starting to see some states that have mandates in place beginning to pullback on those as well, what are you planning? what is the expectation for you in your stores around the country? are folks going to have to wear masks when they get their grocerys >> well, we were probably as surprised as you were when they came out, and we took a few days to explore what it meant we wanted to find out what our customers thought, but also our teammates. we made the decision yesterday and will follow the cdc guidance those who are vaccinated beginning tomorrow at the stores, won't have to wear masks. they're still invited to, and same for teammates we wanted to make sure that safety was above all else. we didn't want to jump the gun on this. >> yeah. i mean, we did see a certain

amount of safety and health and cleanliness protocols put into place in the midst of the pandemic i'd imagine you put some of them in place in your stores as well. how many of those are going to stick around >> it's interesting, mine is included, they didn't have to put in a lot of new things there were protective barriers at checkout. but cleanliness is core to food retail maybe the repetition was done more, but the core was there, during, and will be there, of course, after. if we were to lose food safety or quality, that's a threat to our business we have a history of making sure that's an issue. >> as we talk about the climb in commodity prices, agriculture as not been immune. today you're starting to get reports that the dry season, the drought that's manifesting in california has some farmers saying they're not going to plant this season.

what does that mean for your supply chain, your ability to source things like fruits and vegetables, and consequently for prices for consumers >> yeah. it has a lot to do with prices without a doubt. i think that we have seen some of our manufacturers, suppliers talk about cost changes they are having we had a team of economists to help out with a sister company to evaluate those to figure out input costs and everything else. it is real it is being talked about also transportation costs are a good part of that as well. we continue to negotiate those type of things but the good news is that the american food supply chain remains strong and we will have enough, i think, that we demonstrated that during the pandemic. although there were flavors or certain items out for a bit of time it's remarkable if you look at the food industry as a whole, what it was able to achieve during the pandemic. as we look forward to whatever normalcy is going to be for people going forward, i will confidence we'll have what people are looking for

>> last year we were talking about shortages and runs on toilet paper this year you don't expect shortages, particularly on the food side? >> there's plenty of toilet paper. i guarantee you that right now but no, we don't see anything right now. maybe some interruptions every now and then, but we have a diverse supply base. >> thank you for joining us. >> take care still ahead, more on president biden's proposed tax hikes and the gop's response plus warren buffett almost completely selling out of two stocks what are they? we'll have that next do you struggle with occasional nerve aches in your hands or feet? try nervivenerve relief from the world's #1 selling nerve care company. nervive contains alpha lipoic acid

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why rising covid cases in parts of asia is not derailing investing markets. more "squawk on the street" is straight ahead

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large fund managers disclosing the equity holdings. leslie joins us with who is buying and who is selling at least in terms of the end of the first quarter. >> that's right. the big whale, berkshire hathaway making noteworthy moves. warren buffett selling the remainder of the 99 wells fargo stakes in first quarter it went to $26 million. and here's an unusual one for berkshire. a quick change in sentiment about a holding cutting in half the stake in chevron shares they acquired in the third quarter and revealed only last quarter but at the end of march, berkshire owned about $2.5 billion despite selling 25 million shares berkshire also trimmed merck by 38 tokt to hold $1.4 billion worth at quarter end they indicated it was going to be a net seller of equities

during the quarter the firm did make some additions as well to the portfolio berkshire took a new stake in professional stake in aon and a boosted stake in kroger to nearly 2 billion all the positions are from march 31st they may have changed in the six weeks since it's a peak into how some big managers traded during the quarter. >> talking about berkshire, but we can expand this out for weeks we've been talking about the rotation out of tech we see that more broadly in the 13 filings we've gotten and you've been digging through over the last couple days we've had hedge funds piling into spac names, into more value and cyclical focussed stocks speaks to i guess more broadly what we've seen in terms of market action. >> yeah. absolutely now we get a better sense of exactly how people were positioning during the quarter and you're right

we saw a lot of big names d cap tech names a lot of selling in tesla. oftentimes these things mirror what happens in the broader market these are the people making moves and trading and having an impact it's interesting on fast money one of the traders said a lot of selling perhaps in big tech could be coming from people looking to crystallize some of the lower capital gains in anticipation of higher rates in the future that was an interesting theory, i thought. but it certainly reflects what we're seeing as well especially in some of these more liquidnames like the big tech names. speaking of which, we're going to talk some tesla in the next hour. on tech check, big short investor michael murray with that reported strategy we'll talk about what this means for a name that's down more than 20 % for the month stay with us hirteen-hour flight, that's not a weekend trip. fifteen minutes until we board. oh yeah, we gotta take off. you downloaded the td ameritrade mobile app

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welcome back to "squawk on the street." i'm dominic chu. stocks mixed to start the day with a slight reversal in leaders and laggards in today's trade. energy, for example, the worst performing sector this morning, despite out performance through

the the volatility of the past weeks. on the flip side, you've got consumer discretionary behind me as a relative outperformer top one today. within that sector in particular, many of the reopening stocks are leading that kind of charge, including travel names ranging from the cruise lines like carnival and nor region to hotel chains like marriott casinos and sports bettors holding up well. and end on penn national gaming. a big laggard run in the group in recent weeks still more than 40% from its mid-march all-time high penn national getting a bit today. 2.5% over to you, carl. >> dom, thanks. when we come back, taxes front and center as republicans get ready to discuss the president's proposal, and the treasury secretary talks of the economic recovery, talking about corporate tax. we're back after this. >> we are proposing to

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welcome back republicans meeting today to discuss president biden's proposed tax increases expecting a beefred up counterproposal, right >> reporter: morgan, this is all about taxes. republicans today are headed to what they're talling tax camp. aimed at freshmen and sophomore lawmakers who weren't there for the sig color legislative achievement of the trump era overhauling the tax code the goal get wonky but also unite the gop around a strategy to fight tax hikes leading on the house ways and means committee kevin brady who said they're framing this as a

fight for workers, families and for small businesses the messaging is centered around four key questions -- who will be the world economic superpower what drives up wages can america stay competitive and is the future freedom or socialism? republicans have been pulling east swing districts like the atlanta suburbs and found 23% of voters in the georgia seven who knew about president biden's infrastructure plan actually associated it with roads and bridges, but an all equal number to excessive spending. coalition to protect workers led by an official and new adds in the districts, part of a $25 million ad campaign. now, to be clear, even the gop polls show most voters don't know about the tax increases in the infrastructurcture plan, bub moved the needle highlighted tax hikes and connection to specific policies like paying for more irs agents, getting rid of the

local state and county tax dedu deductions inflation is a tax increase that is already here. >> seeing that as well elon, thank you. stick with taxes california with a new problem. i guess you could call it a high-class problem >> it is a very high-class problem, david because a year ago california was actually projecting a budget deficit of more than $50 billion. now they have a budget surplus of $76 billion more than the entire state budget of massachusetts or pennsylvania now, the reason, ipos, spacs, toring tech stocks by founders and capital venture firms. top 1% pay about half of california's total income taxes and much of their taxes comes from capital gains reaching a record last year a quarter of the more than 400 companies that listed shares or sold shares last year were from california not to mention the vc firms

around investors in all the other companies. on top of the $7al bp, california getting about $25 billion from the federal stimulus bringing total tax surplus to over $100 billion what to do with all this extra cash well, governor gavin newsom plans to send checks of up to guys, they're already calling it the golden state stimi. remarkable what this is creating. >> and what we talk about every day and that budget, the numbers are enormous california itself, a economy still with the world's eighth largest, something along those lines. any other states, robert you're aware of facing similar problems or is california alone given the specific specificity where this money is coming from

>> new york and new jersey kind of have middle-class problems relative to california we have a $3 billion better than projected revenues here in new york state $6 billion better than projected new jersey, but the reason it's no fuss, no high class, we still have big budget deficits in these two states. >> golden state stimi, i wonder about the plans given surplus, bailout money from the federal ghooft will go beyond that in terms of longer-term policies. fr for instance, taking another look at the tax structure in california >> morgan, the smart thing to do not a lot of those proposals -- look when there is money to spend in california, they spend it the risk is that they build this into longer-term budgets governor gavin newsom is running against a couple republicans who are proposing a tax cut, but that's not getting a lot of traction right now >> yeah. similar situation in the state

of new york. robert frank, thanks for bringing us the latest when it comes to the tax discussion. that is going to do it for us here on "squawk on the street." "techcheck" is going to start right now. good tuesday morning and welcome to "techcheck. i'm deirdre bosa with jon fortt and carl quintanilla today a $530 million bet against tesla. the man behind the big short says tesla will fall. then jeff bezos and james bond why amazon is reportedly interested in buying mgm and later, ethereum, even alan confusion on wall street bets in our laters trading