Skip to main content

tv   Squawk on the Street  CNBC  May 15, 2017 9:00am-11:01am EDT

9:00 am
>> when things are going fine, no big deal. it's not the equity that gets you in trouble, but the guarantee that gets you in trouble. >> you'll be on again. you -- we'll be back and get -- >> hold on, a-rod will be back too. he's coming back. >> we'll see. a-rod has a lot going on. >> i gave you the closing moment. >> yeah. >> actually, i did. >> gentlemen, thank you both for being here. a pleasure. we do appreciate it. that does it for us. right now, time for "squawk on the street." ♪ good morning. welcome to "squawk on the street." i'm carl quintanilla with sara eisen and david faber. cramer is on assignment. the market takes stock of the global cyber attack, the north korean missile test and a final wave of retail earnings that are headed our way this week. europe is missed after merkel's
9:01 am
state victories and macron's swearing-in. oil up on news of more production cuts and an empire manufacturing the first negative read since the election. our road map begins with a cyber warning after hackers attack 1 50 countries over the weekend. microsoft said it should serve as a wake-up call to governments around the world. and there's an agreement on the extension of the oil production cuts. the white house is hopefully to quickly pick the next fbi director. will democrats make that possible? first up this morning, asian governments and businesses reporting some disruptions from this wannacry ransomware worm this morning. it's locked up hundreds of thousands of computers in more than 150 countries since friday. security experts warning of further disruptions as more systems come online today. we have examples of schools for instance in south korea warning their students not to fire up their computers today for fear this could get a new leg as people turn things on. >> what's amazing about this one is the size and scale.
9:02 am
the fact that it's reached at least 150 countries. the fact that we're talking about russian banks in the same sentence as chinese old gas stations. renault whiched what to shut down -- which had to shut down some companies and fedex. there's gotten to some intelligence sharing when it comes to the global manhunt that's under way to figure out who's behind this. >> when you talk about intelligence the exploit itself apparently taken from the nsa. which has of course spent a lot of time examining the vulnerabilities and all sorts of different parts of the cyber world in order to do its job. but apparently this one being used for purposes not intended by the nsa. of course, it wasn't intended to be stolen in first place. >> that's brad smith's point in this microsoft blog. you guys can't keep all this stuff to yourself. let it out there. and let tech companies at least try to make sure we find ways to
9:03 am
patch these things. here's brad smith. this attack provides yet another example of why the stockpiling of vulnerabilities by governments is such a problem. as always, guys, any event around the world ends up colliding with tech somehow. >> you can see it in the cyber security stocks in the premarket. very active. all flying hirer. symantec, fireeye. you have a few of the public companies, whether they're addressing it or not, 3, 4% higher in the premarket. >> it seems to serve as a warning sign for all of to be more aware of the next attack and yet, it's not clear that preparations are really being made by both corporate america and even the government to truly guard against what might still come. we continue to get sort of signs of that as a possibility and this is certainly one of them. >> or what to do. i don't know. are you supposed to be paying the bitcoin ransom of $300? because according to our article
9:04 am
on cnbc.com, they have only collected $50,000 for 200,000 hackers. which means people aren't paying the ransom. >> someone made an astute point. those people who are winning -- i think it's windows xp and actually know how to use bitcoin are not necessarily meeting. because that's a whole -- a fairly old -- in other words, you may not be technologically savvy if you're running xp and you haven't downloaded a patch for the exploit being used. you can't figure out low to use bitcoin. >> following the money is the key to solving it. bitcoin is untraceable. >> by the way, homeland adviser tom bosworth scheduled some emergency meetings. >> the fbi is all over it. the markets begin a new week after three week winning streaks were snapped and now the nasdaq aiming for a fifth straight week
9:05 am
of gains. it has been the bright spot. retailers such as walmart, target and home depot are dominating the earnings calendar. as for oil prices on the move, crude jumping sharply this morning as saudi arabia and russia both came out together expressing support for cutting supply through the first quarter of next year. guys, the retailers are going to be interesting after what was very disappointing results, off low expectations for the department stores last week. you do have names here like walmart, tj maxx and home depot which have outperformed some of them have avoided the retail mess completely like tj maxx. you have another interesting lineup of retailers and some of those are turn around stories. see if they can revive the discretionary train. >> walmart on thursday. and amazon's 20th anniversary of the ipo is today. it's now worth two walmarts.
9:06 am
two walmarts. >> yeah. it's come a long way from being a nonprofitable bookstore in 1997. less than half a billion. >> amazon, if you bought it at the ipo you're up 641 "x." >> that's just -- it's stunning. $640 billion market value. i was around -- i remember when it went public and i believed mr. qua testosterone was the banker. i think it was deutsche bank that took them public. >> i don't think it was an accident that he was tweeting. >> it was alex brown -- no. it is incredible from the very first shareholder letter that mr. bezos shared with us, hey, you know what, we're not about current earnings, but we're securing future cash flows and man, their investors have bought into it. we pointed this out so many times. it's hard to find a more loyal investor base than what mr.
9:07 am
bezos has been able to assemble, allowing them to make the long term investments that have secured a dominant position in retail. >> from the split adjusted close of 196, the stock has multiplied 490 times. ipo price. >> compound annual growth rate is 38% per year. >> not bad. >> every year for 20 years. so that's not bad. >> looking -- >> not getting that anywhere else. >> that'll get you somewhere. even when you're starting with not much. >> but look at how many people even warren buffett last week in an interview to us, sort of had the hindsight 20/20 wish i could have got in. it was hard for people to see that the vision was. as i mentioned, barnes & noble was scared but the retailers weren't scared and now look what's happening in the current retail quarter and amazon looms over every single retail disappointment. >> 90% of the s&p has reported so the retails are the last
9:08 am
gasp. let's get to the top stories out of washington including the search for a candidate to replace fired fbi director comey. our eamon javers is in washington with all of that. hey, eamon. >> good morning, carl. you're right. the reverberations continued through the weekend over the president's decision to fire fbi director james comey. including from the former director of national intelligence james clapper who said american institutions are under assault. here's what he said over the weekend. >> i think in many ways our institutions are under assault both externally and that's the big news here. the russian interference in our election system. and i think as well our institutions are under assault internally. >> internally from the president? >> exactly. >> clapper is a person that the white house has been pointing to as having said that he wasn't aware of any collusion between the trump team and russia in terms of the 2016 election but over the weekend clapper said he
9:09 am
would not have been aware of anything that the fbi investigation that's ongoing has turned up. that's because he wasn't even aware there was an fbi investigation until then fbi director james comey announced it publicly in march. meanwhile, the white house says it's pushing forward in its selection of a new fbi director. the department of justice interviewing eight candidates over the weekend. here's a look at the semi-long short list as who might be under consideration as of now. including andrew mccabe the acting fbi director. my sources tell me he's not likely to be selected ultimately but he's being interviewed. senator john cornyn of texas. alice fischer, the assistant attorney general. michael garcia another judge being considered. judge henry hudson of the eastern virginia u.s. district court. adam lee, a special agent. mike rogers a former house intelligence chairman. obviously a political figure and fran townsend a familiar face from television, the homeland security adviser to president
9:10 am
george w. bush. the president said over the weekend that he hopes to have this selection made very quickly. they have been vetted before, because their entire public lives are out there for all to see. we might see a selection before he leaves for the big foreign trip on friday. we'll watch for that and anything else that happens today, guys. >> eamon. we do have the treasury secretary on thursday in front of senate banking. got house ways and means on some stuff on tax reform, thursday as well. is this the week we start to see the shovels really work on taxes? >> well, the question is how much of this drama around comey, the alleged taping system, the apparent threat of comey, all of that weighs on this white house's ability to sort of corral people up on capitol hill around its vision on tax reform. remember, we haven't seen a whole lot of the details on taxes. so we'll wait for those. but politically, what this white house learned during the health care effort is that it does take white house leadership to push
9:11 am
all those factions up on capitol hill together on to some particular agenda. whether or not they're too distracted to do that this week is something to watch. >> that's going to be a big part of your week, eamon. thanks for that. eamon javers in washington, d.c. when we come back, we'll start a new week of trading. gm upping the ante with a new car sharing service. we'll talk with the head of the maven unit. the dow is down four straight days but the nasdaq is the mosul solid still. up 6 of 7. more "squawk" from post 9 in a minute.
9:12 am
i can't wait for her to have that college experience that i had. the classes, the friends, the independence. and since we planned for it, that student debt is the one experience, i'm glad she'll miss when you have the right financial advisor, life can be brilliant. ameriprise
9:13 am
9:14 am
♪ a little over 15 minutes before the opening bell. the futures point to the positive start. let's bring in our floor operations with ubs, good morning. >> good morning. >> we did get that manufacturing survey, went negative. a lot weaker than expected. including new orders. how worrisome of a trend is that as were looking for a rebound in the economic data. >> but you're getting some offsets. you get a big boost from oil. and a production cutback continuing. secondarily china with their transportation program is basically putting a decent bid
9:15 am
under the whole commodity market. so we've got that going. traders are going to look this week to see if the markets can break out of this consolidation phase they have been in for nearly 2 1/2 months now. the s&p got within hailing distance of 2,400 back on march 1st. and we haven't been able to successfully blow all the way through. so it's going to be a critical week to see if they can put all that stuff together. again, washington will be an important back drop. if it looks like some of these things are going to delay or eliminate tax reform and other things, you could see some disappointment come in. first thing we want to see is an attempt to break out. get it up above 2400 and move from there. >> these intraday ranges, art, 0.2%. friday was one of the narrowest in years for the s&p. can that last for a while or is it a spring coil? >> i think it's like a spring coil because you have friday was the 13th straight day that the
9:16 am
s&p failed to move more than half of 1%. that goes all way back to 1995. so we haven't had markets -- and you see where the vix is. other parts of the operation. so i think it's like a coil spring. >> why? why is it like a coil spring? >> because you have all of and these -- of and these background things going on. you would -- i mean, they're certainly grabbing headlines. the president grabs a headline -- >> they don't -- >> it's like a coil spring. it's got all this tension. >> you think it will eventually? >> i think it will eventually it will. heaven forbid if it became apparent to the market that we're not going to get any tax reform, that we're not going to get any of this stuff moving, and i think jim brown over at option investor also pointed out that you have people here who don't want to sell. even if they think they're getting disappointed, because
9:17 am
just in case taxes do get changed, i can sell at a cheaper tax rate. so if they begin to give up hope on that, there is some potential pent up selling that can come. >> that could last till the end of the year? >> it could, but i think you'll get a better definition as the president begins to move around. we begin to see if any real action in congress starts to occur. so the first hope is for a breakout to the upside if we drag on too long there's a possibility of a breakout. >> part of the story, art, has been the strengthening global economy that's fueled the market moves. not just in the u.s., european stocks are near record highs. china industrial production came in light today. some of the data out of china, i know you talked about some excitement around infrastructure spending there. i wonder how much it's going to take to hold up that part of the story, of a strengthening global economy. what we got out of the u.s.,
9:18 am
inflation, is that trade going to work? >> well, it's holding up so far. i think that's what you have is the clock kind of running down. how much patience will people have? if it continues modestly here, if we begin to see some moves on taxes or whatever, then you can have a really good move. if it delays and delays and you don't see anything else, then i'm afraid people are going to start to give up on it. so we'll watch to see if that idea of too early in the year to sell because i might sell at cheaper prices, see if that starts to wear down. >> art, during the course of a day here at cnbc you have -- a number of people say, well, the market is very expensive. then others say not really. where do you come down in the debate of where we are and the multiple historically and whether or not it should be viewed as perhaps at the higher end or towards expensive? >> it's not cheap. just on a face of it. you're beginning to see that the breakout between growth and value and value is not doing
9:19 am
well. so i think again, i think we have a compressed timetable here. we're going to have to see some movement from congress, from washington. see some kind of resolution. if that doesn't come, the longer it takes the more difficult things will get -- >> thank you for weighing in on this monday morning. >> when we come back, tra value go one of the big winners. up 15%. we'll talk to the ceo. look at the premarket. more "squawk on the street" from the nyse is still ahead. this is my headquarters. this is where i trade and manage my portfolio. since i added futures, i have access to the oil markets and gold markets. okay.
9:20 am
i'm plugged into equities- trade confirmed- and i have global access 24/7. meaning i can do what i need to do, then i can focus on what i want to do. visit learnfuturestoday.com to see what adding futures can do for you. hey dad, come meet the new guy. the new guy? what new guy? i hired some help. he really knows his wine. this is the new guy? hello, my name is watson. you know wine, huh? i know that you should check vineyard block 12. block 12? my analysis of satellite imagery shows it would benefit from decreased irrigation. i was wondering about that. easy boy. nice doggy. what do you think? not bad. looking from a fresh perspective can make all the difference. it can provide what we call an unlock: a realization that often reveals a better path forward.
9:21 am
at wells fargo, it's our expertise in finding this kind of insight that has lead us to become one of the largest investment and wealth management firms in the country. discover how we can help find your unlock.
9:22 am
♪ for the latest on these global cyber attacks we want to go to josh lipton who joins us out in san francisco. good morning. >> well, these kinds of attacks of course do tend to focus attention on the cyber security space. you can see how some of those names are reacting. it is being called an unprecedented ransomware attack. that's how this cyber assault is being detailed. rob wainwright, the eu police agency, said that this cyber attack had already impacted 200,000 people and at least 150 countries but wainwright said he was worried that the numbers would only increase as people return to work today and turn on their computers. now we have early report of
9:23 am
attacks in japan, korea and taiwan. the amount of money being demanded is relatively small. a few hundred dollars of bitcoins that could possibly go up. cyber security firm said that the ransom note looks like this, oops, your important files are encrypted. that means you can't access them anymore until they're decrypted. this used a vulnerability of old versions of microsoft which was originally discovered and exploited by the national security agency as an offensive security weapon. the chief legal officer said that the attack was in his words a wake-up call in saying this provides yet another example of why the stockpiling of vulnerabilities in governments is such a problem. guys, back to you. >> hey, josh, are individuals being targeted too? or is it just businesses? >> i have not heard any reports, sara, yet of individuals being targeted. but of course this is a fast moving story. as i mentioned you had european
9:24 am
law enforcement officials saying they expected the size of this attack to only grow. today of course as people come back to work and turn on their computers. >> all right. keep an eye on it. as you can see next to you, cyber security stocks are flying from the premarket. josh, clearly the demand is there. every time something like this happens. this is a big one. >> yeah. indeed. we'll get the opening bell in a few minutes. don't go away.
9:25 am
...it starts a chain reaction... ...that's heard throughout the connected business world. at&t network security helps protect business, from the largest financial markets to the smallest transactions, by sensing cyber-attacks in near real time and automatically deploying countermeasures.
9:26 am
keeping the world of business connected and protected. that's the power of and. so what else is new? humm..she's doing good. she needs more care though. she wants to stay in her house. i don't know even where to start with that. first, let's take a look at your financial plan and see what we can do. ok, so we've got... we'll listen. we'll talk. we'll plan. baird. i count on my dell small for tech advice. with one phone call, i get products that suit my needs and i get back to business. ♪ ♪ ♪ predictable. the comfort in knowing where things are headed. because as we live longer... and markets continue to rise and fall... predictable is one thing you need in retirement to help protect what you've earned and ensure it lasts. introducing brighthouse financial.
9:27 am
a new company established by metlife to specialize in annuities & life insurance. talk to your advisor about a brighter financial future. the opening bell is brought to you by brighthouse financial. established by metlife. >> jo're watching cnbc "squawk on the street." live from the financial capital of the work. busy week as congress returns to work. we get a last wave of earnings from retailers. we have oil up on news that the russians and the saudis have agreed to extend production cuts through march of next year. mike santoli joins us here at post 9 to walk us through the opening bell. you have barron's telling people to buy europe. among some other things. >> i think that's an accommodation of a consensus call. the u.s. expects -- but the
9:28 am
flows have been going in that direction. it's been pretty interesting if you look at retail, equity fund flows out of domestic stocks the last two weeks. really weak flows if you look back four or five months. it has been mostly overseas. people have gotten that message. maybe it tells you in a back door way that really it hasn't been about people pinning things on u.s. domestic policy hopes. >> i keep going back to this global growth story. treasuries have moved and they move big time. yields lower on friday. and despite the fact that the overall indices barely moved at all, you did see financials end the week lower by a full percent. now they're only up 1% so far this year. so there are beneath the surface some individual movers and some is being indicated by the bond market that's stubbornly pessimistic on a record high. >> it's a head wind. you have a tendency for that yield curve to flatten when the fed is getting active and bringing the short end up. i do think -- i agree, it's
9:29 am
about global growth. but that message has been absorbed by the market. we have been talking about this for months now. it hasn't incrementally gotten stronger overseas. i think the market needs more than it's still good. we're still hovering at all-time highs. not as if this market stuff -- it's kind of just sitting there very close to all-time highs. >> i got some research to look at today as well. morgan stanley's jonas cuts tesla to equal weight on a few things. >> yeah. >> says the model 3 expectations may be getting out of hand. is worried less about the auto industry being a fierce competitor than more capitalized giants like google and apple. >> very interesting. they have not established enough financial momentum and now with the other giants they're becoming much more of a threat. what i find fascinating is, morgan stanley is one of the firms that has the discipline
9:30 am
that says base case, the bull case, the stock goes to over 500 and the bear case is 50. that shows you the battleground in this stock. even it will take it for a whirl or it's a nice little company. >> i think their target remains 305. >> it was around -- >> let's get to the opening bell and the s&p at the bottom of your screen. at the big board, maven. the new car sharing brand from gm. we'll talk to the ceo in a few moments. over at the nasdaq, amazon.com. happy 20th anniversary to that ipo. we were just talking about frank q q quatroen's tweet this morning. >> if there's a risk of investors looking at amazon and how dominant it's become is the risk of kind of deceiving yourself into feeling like this was somehow kind of a lock that
9:31 am
it was inevitable that we saw this coming all along. the only reason you have the availability of the returns is because of something extremely unlikely, happened many steps along the way. not to say it's over. but it's fascinating. people are looking at the first 20 years of other huge dominant companies. i think amazon did 38% annualised and microsoft in the first 20 years i think was 33, 34%. not that much behind. cumulatively, that leaves you well ahead in amazon. but that shows you there have been other companies with the monster decade runs. >> they continue to disrupt though. i think certainly something you could not have anticipated is that, well, what the cloud was 20 years ago. >> right. >> and the fact that they would be a leader. as warren buffett pointed out -- maybe it was munger who pointed it out, unchallenged for a number of years in terms of competitors from the likes of a microsoft or a google. and that certainly is one place where they derive a good deal of
9:32 am
their profitability right now and the growth rate and the margins on the business are very, very strong. >> without a doubt. also, making it a little bit of a false comparison when you're saying it's worth two walmarts. that's not the comp anymore. that cloud business you have to figure is worth -- maybe it's half the business. >> could be. it gets a lot more than -- it operates at a much higher operating margin. >> the retail business is in focus this week. it is a top internet retailer. it continues to grow market share and continues to take share from traditional retailers. just this weekend we'll get a lot of earnings including walmart. tomorrow we get home depot. and tj maxx. but there are some downgrades. deutsche bank taking down jc penney saying their bull case is not there anymore. they thought it would outperform. they downgraded kors. they upgraded coach which has been a better performing retailer, saying it's a triple threat there when it comes to
9:33 am
the brand, the brand expansion. and there are winners, but after a week like last week, jc penney, nordstrom's, macy's, a lot of market value is destroyed in a matter of two days. >> i think that's what you're left with in retail, finding the exceptions to the dominant theme of top line decline and jc penney shows how many value traps there have been in this space for a while now. all the big kind of main line department stores, the -- basically the jc penney's, the kohls and nordstroms they're gravitating to one half sales. i don't know where the market is saying, but they're saying they're not going to grow fast. >> not at all. >> a matter of managing the -- >> some are looking at the cost to ensure them against default goes up. we're not talking about anything dire. >> we aren't.
9:34 am
eddie lam part complained that the media is painting too dire of a picture and it could make it more difficult for sears to borrow. when you factor in and put stuff on the shelves to the extent they have stuff on the shelves at sears. >> he and sears have had no trouble keeping the money tree delivering what they need to operate. i mean, he's been an expert at kind of selling assets. revising credit lines. >> he has. >> keeping it afloat. at some levels, sure, the bad press scares some vendors away and stuff, but it's a much bigger story than that. >> down 10%, and not too bad. some are wondering if he should have kept continuing to run his hedge fund in an effective way. ma &, not too much to share with you. that's more the rule than the
9:35 am
exception. not that it's been that bad of a year. there was a lot of hope for the second half. but as -- i don't know. we'll see. the tone is changing a little bit over the last couple of weeks. you never know. but this morning the one deal that is worth mentioning is a company i have not heard of, but it sells for $5.2 billion. patheon being acquired by thermo fisher, tmo there. the stock price is up. this deal again $5.2 billion. 35 bucks a share in cash. you also add in $2 billion in debt. you get a $7.2 billion overall enterprise value. can you do a cash deal at this these rates? it's always accretive. that's the case here as well. they're talking about 30 cents a share, 120 million total synergies expected to complete the deal by tend of the year. 30% premium that's being reflected in the patheon stock price right now. >> also been the pattern, david,
9:36 am
hasn't it not just with cash deals but the acquiring -- when you you turn cheap cash into the business. >> well, you always want to pay close attention to that. because that can change. but recently i have noticed, michael, that has been the case. that can always be an encouraging sign to the ceo who's consider a deal. certainly bankers will point out that the market right now -- they want to respond positively to bold action and you've got to take bold action here to stabilize and help your top line growth. yes, that is certainly a narrative you hear amongst those who will encourage deals to happen. it's important to keep an eye on. thermo fisher, in what about -- a spate of acquirers has gone up. coach went up a good amount when they announced that kate spade deal. >> the investors like that deal as well. look at the cyber stocks, cisco at the top of the dow. the symantec at the top of the s&p 500. it's clear when we have this
9:37 am
headline risk companies are going to need to spend more on their cyber defenses and these public companies are ones that are offering those kind of solutions. palo alto doing really well today. you have the boost in the stocks on some of the headlines. >> interesting to me that the mega cap ones are even getting a little bit of a bump here. the more focused cyber defense type names, it always strikes me as disease breaks out somewhere and a couple of biotechs start to fly. whereas cisco, that means the share of budgets of corporate i.t. is maybe going to be more allocated in this direction. >> a lot of the leaders in the oil space. marathon, hess, murphy. chesapeake, transocean, halliburton as the russians and the saudis agree to keep cuts going through march of next year. the meeting is the 25th of may. a lot of people are arguing they didn't have any choice in the matter this time around. >> no, they have to play defense. as soon as it's at the bottom half of the range.
9:38 am
it seems as if the stocks have been pretty awful. they have been -- you know, looking oversold. people try to bottom fish for a while now. any left toward 15 in crude is sort of a bounce. that's what this market has been. it's been even on the up days even 60% of stocks, 40% down. and vice versa. it's not been an all or nothing kind of momentum market. that's kind of stuck us in this range. >> first time since april 19th, oil has traded above the 50 and the 200 at the same time. >> not hoping ge which has an important business link to oil and oil services. that stock, michael around 28 bucks a share. off a 52 week low. seems as though there's -- i have a keen sense for the obvious. a lot of people wanted to sell that stock lately. >> sure has. i think the one thing you can say in it's the favor, it seems as if it doesn't have a lot of sponsorship on the street. it seems like it's underowned.
9:39 am
it's hard to come up with the rationale because it doesn't -- inexpensive relative -- >> still not necessarily expensive -- yeah. >> and there's not a lot of confidence in the -- in the earnings quality or the momentum there. so again, you can kind of say, look, it's getting washed out. the street doesn't have anything to say about it. it's got a blue chip, 3.5% yield, maybe a shot for patient investors. i don't know. >> j&j got an upgrade from jpmorgan. there's a lot of bad sentiment on the revenue growth, especially in the pharma business, but jpmorgan said that should be ending after the first half of the year and we should get organic revenue growing in pharma, but it's not priced in. they look at a number of catalysts. that stock is doing well. >> j&j and cisco, one of the reasons that the dow is up 55. let's get to bob pisani.
9:40 am
>> good morning. europe and asia are on the mixed side. more interest is here in the united states. let's look at the mark leadership. we're getting some rotation. started last week. guys mentioned energy. big loser has been moving up. banks have also generally been tough this year. they have moved up big in the fourth quarter. not so in the first quarter. retail another loser. see this rotation? all the losers are leading today. tech is the big leader. health care has done very well. they're fractionally on the up side. oil up $2. you heard about that saudi arabia and russian agreement, all the big oil names are up nicely. this bodes very well for this sector rotation. look at the groups this year. we all know tech had been doing well. consumer discretionary is a big leader. industrials are lagging. remember the industrials are up 7% and banks and energy but we have had a lot of rotation. this has kept the market strong
9:41 am
so now recently, energy has been doing a little bit better. maybe banks will pick up steam a little bit. and industrials were strong in the fourth quarter. banks were strong. but they have fallen back. so we'll see if we can get new leadership coming through. techs have done it so- far this year. banks and energy would benefit from the tax cuts and the lower regulations but they haven't done that well this year even though they had modest rallies at the end of the fourth quarter. s&p, well, we hit an all time high last week. everybody knows that. everybody has complained if you look at the s&p for the year that we have had the smallest intraday range for the year. that's certainly not good for active traders but for the overall market. there's nothing wrong with that here. yes, there's some warning signs out there. the flattening of the yield curve i think is a bit of an issue. there's been some commodity weakness although weakness in copper and iron ore, but that's bottomed out recently. the transports it's true, they're notably underperforming. the truckers aren't doing well. resale has been hard in the
9:42 am
trucking groups. a very specific reasons that transports aren't doing well. i see many more positives than i see negatives in the market right now. earnings are strong. the global guidance, global economy has been improving. credit has been strong as well. credit markets are holding up. i'm sorry, low volatility, folks that's a benefit. i know that people have complained about the vix being low. and somehow they think these is a sign of coming doom and gloom. i do not. my experience has been that quiet periods in the vix at least in the near term are not bad for the stock market. i asked how it looks when the vix is below ten, this has happened five times since 1990. within 30 days they're always higher. 80% of the time the s&p is higher. five times this happened. the nasdaq has been an average of 1.5% higher. low volatility is not necessarily a market negative at
9:43 am
all. finally, in light of what we have been talking about the wannacry attack, cyber attacks. remember, there is an etf for that. the hack is the big one, it's big, but relatively small considering the size of these companies. only about 1 billion market cap, sa ra. the stocks have done well throughout the year. symantec has been up for example 35% so far this year. that's only up 4% today. so you can see very small gains today. very big gains overall on the year. this is the group to be in. dow up. back to you. >> let's head over to the bond pits as the nasdaq reaches a new record high. rick santelli, good morning. >> good morning, sara. you know, the treasury's not exciting but exciting when you think of not only are they sharing the quality of sometimes going long stretches without a -- like the equity markets but they're holding very significant areas both with higher and lower
9:44 am
yields. case in point, look at an intraday of tens. we're holding kind of the low 230s that we held on friday as you see on the two day chart. but something bigger here. the failure on friday and indeed as sara pointed out earlier the reversal of rates that occurred from thursday's close close to 240 to where we closed at 233 on friday was a reject of 244. 244 is where we settled last year. and no matter how you slice it, not getting back or at least giving more trade to where we settled last year is significant as you see on the year to date chart. the pattern isn't aggressive but it's nonetheless making some traders a little bit nervous with the double top. but the market still seems to be holding. blur your eyes, 230 to 260 is what most traders continue to think will be the ultimate trade for some period of time. if you look at tens minus bunds, i like this trade because there's a relative value trade
9:45 am
going on. yet, the distance between our higher yields against the bund lower yields is not at the narrowest since november. remember, everything was affected and whatever dynamic was being priced in globally in november we could call it an election, we can call it the change of guard that didn't occur. whatever your hypothesis is, it pretty much uniformly affected everything. year to date chart, the hyg use it as a barometer as the way that the vix is used for stocks doesn't look like a lot of nervousness there. as a matter of fact, it looks pretty darn firm. finally here's -- if you want a chart that looks weak, this is the one traders are looking at. one week of the dollar index it failed enough to jump or test that 100 level although getting close last week. not to mention that we're still 2% from where we closed 2016 slightly above 102. carl, back to you. >> all right, rick, talk to you in a bit. rick santelli in chicago. when we come back a look at the car sharing business, we'll
9:46 am
meet the ceo of the maven who rang the big board this morning. we're back in a moment.
9:47 am
♪ ♪ welcome to holiday inn! ♪ ♪ thank you! ♪ ♪ wait, i have something for you!
9:48 am
♪ ♪ making every stay a special stay. holiday inn, smiles ahead. whether for big meetings or little getaways, member always save more at holidayinn.com
9:49 am
♪ gm's car sharing subsidiary maven launching in new york this morning as well as ringing the opening bell. a first on cnbc interview is gm's vice president of urban mobility and the head of maven, julia steyn, as well as our own phil lebeau in chicago. good morning to you both. this is an interesting product ott of gm. comes to new york as of today. you want to explain how it works. >> absolutely. maven is the new brand that gm launched. first of all, we hadn't launched brand in many years so this is exciting. this is a homecoming for maven because we started as an amenity with the real estate guys in new york to put maven cars in the high end buildings and it grew now to 17 cities in the united
9:50 am
states. and we are one of the fastest growing mobility brands. >> so the idea is you want to drive an escalade, you find one that's parked around the city essentially. keys are ready and you go? >> it's seamless. we interact with maven customers through the mobile phone. and you seamlessly open the door with a phone and you just get in and go. and with the broad portfolio of gm vehicles, we can find a ride to your taste. >> i'm sure you have gotten this question before, but how do you respond to critics who say doesn't this threaten gm's very business model of people having to own their own cars? >> i love this question. we view that this is a very complimentary to our core business. our consumers are changing their preferences. they consume transportation as a service. especially in a big metropolitan area like new york. so to get customers excited about the cars that gm produces
9:51 am
in the innovative way, this is huge. >> julia, this is phil lebeau, give us some demographics here where maven has launched around the country, whether it was starting in ann arbor or whenever you're at, give us the typical maven user. age range. some of the other things that give people a better sense of who's actually using the service. >> maven is heavily millennials. 7 to 8% of our customers are age around 30 years old. and we're right now in chicago, in boston, in new york, in d.c., and in san francisco, los angeles. and denver. and we keep growing. this is very exciting product. and this gives us an opportunity to innovate in the different way. >> julia, one of the other criticisms that's out there not just for maven but for all car sharing companies is that it's a limited appetite. so to speak.
9:52 am
that there are millennials who want to share a car when they'll occasionally need a vehicle, but it's tough for this industry, not just maven, but for all of the car share companies to grow beyond a limited base. what do you say to that? >> we provide at maven services to the consumers through maven home and city. the car share. we supply the vehicles on the short term basis to the ride share industry. through maven. this is again very important because a lot of the young generation, they look to work in the economy with flexible hours. so this is an opportunity to introduce them to the industry. with an agnostic platform. you can drive for lyft, you can drive for uber or for delivery services like grubhub and ins acart. we have a portfolio of services that we think can grow in the future and we'll change with our
9:53 am
customers. >> this is not about making money? is that the first goal for this to be a profitable enterprise on its own, or about the goals that you mentioned or the data that you pick up about the customer basis? >> maven is about providing important capabilities for the future. as i firmly believe the transportation is going to move into the service aspects so maven is on the forefront of that. >> will this be an autonomous fleet of vehicles at some point? >> we'll see. autonomous engineering comes faster than anybody thinks. our customers are ready. and maven brands will be important in that transformation. >> bill ford had some comments over the weekend that he thought the technology for autonomy would get here sooner than society was ready for it. do you think that's true? >> we have seen customers being pretty adventurous and adopting new technology very quickly.
9:54 am
and again, it will be an evolution of the technology that's going to face the public. a lot of different mobility concepts will coexist in the future. and that's what we're counting on at general motors. >> very quickly, how much does it cost per hour? >> in new york, you can get a maven car for under $100 a day. we can give it to you for an hour, a day, a month. >> you can always lease a car. >> thank you very much. >> thanks for having me. >> julia steyn of gm and maven. check out chairs of trivago, up sharply on the latest earnings report and the ceo tell us what's working for the hotel search website. more "squawk on the street" straight ahead with the dow up 73 points. finding time to get things done isn't easy.
9:55 am
9:56 am
9:57 am
but we've got the digital tools to help. now with xfinity's my account, you can figure things out easily, so you won't even have to call us. change your wifi password to something you can actually remember, instantly. add that premium channel, and watch the show everyone's talking about, tonight. and the bill you need to pay? do it in seconds. because we should fit into your life, not the other way around. go to xfinity.com/myaccount keep your eye on the cyber stocks today as we take stock of the cyber attack over the weekend hitting businesses, hospitals, governments and 150 countries. they're hanging on to gains of 4 to 6%. meanwhile, the dow is up. best gain in a few weeks. back in a moment. ust need to knf the customer app will be live monday.
9:58 am
can we at least analyze customer traffic? can we push the offer online? brian, i just had a quick question. brian? brian... legacy technology can handcuff any company. but "yes" is here. you're saying the new app will go live monday?! yeah. with help from hpe, we can finally work the way we want to. with the right mix of hybrid it, everything computes. remember here at ally, nothing stops us from doing right by our customers. who's with me? we're like a sports team here at ally. if a sports team had over 7... i'm in. 7,000 players. our plays are a little unorthodox. but to beat the big boys, you need smarter ways to save people money. we know what you want from a financial company and we'll stop at... nothing to make sure you get it. one, two... and we mean nothing. ♪ ♪
9:59 am
the power of a low volatility investing approach. the power of smart beta. power your client's portfolio with powershares. before investing, consider the fund's investment objectives, risks, charges and expenses. call 800-983-0903 for the prospectus containing this information. read it carefully. distributed by invesco distributors inc. containing this information. read it carefully. listen up, heart disease.)
10:00 am
you too, unnecessary er visits. and hey, unmanaged depression, don't get too comfortable. we're talking to you, cost inefficiencies and data without insights. and fragmented care- stop getting in the way of patient recovery and pay attention. every single one of you is on our list. for those who won't rest until the world is healthier, neither will we. optum. how well gets done. ♪ good monday morning. welcome back to "squawk on the street." i'm carl quintanilla with sara eisen, david faber at the new
10:01 am
york stock exchange. look at the markets on this monday. s&p reclaiming 2400. and it's best game of the dow for so far. you have to go back to april 25 to find a gain this good. we begin with the global cyber attack, crippling 200,000 computers and in more than 150 countries. it could be getting worse. oil shock, energy ministers from saudi arabia and russia say supply cuts need to be extended. we've got details. plus, amazon celebrating 20 years of the -- as a public company. we discuss how much room it has to run and look at one major industry that's hurting on its climb to the top. but first, we've got economic data crossing the tape at this hour. let's get to diana olick with that. >> reporter: well, home builder sentiment in may rose two points to 70 on a monthly index from the national association of home builders. anything above 50 is considered positive sentiment.
10:02 am
the index was at 58 in may. after following last month, it got a boost of sales expectations over the last six months and that component rose four points to 79. current sales conditions rose to 76, but buyer traffic fell 1.2 to 51. home builder sentiment is rising, but mortgage dependent home buyers are struggling with affordability. the new home build fell, that according to the mortgage bankers association. that's the first annual drop and applications plummeted 20%, although the index does not include any seasonal adjustments. more online, cnbc.com. back to you. >> thank you for that. cyber security stocks are up in trade today as that wannacry virus is expected to continue wreaking havoc around the world. ransomware attacks have hit hospitals, government agencies
10:03 am
and over 150 countries. joining us this morning is the former director of the national counterterrorism center, michael lighter and director of the cyber security project at the harvard kennedy school and from the department of defense, michael sewell meyer. thank you for joining us. >> good morning. >> michael, do we have a good sense at the moment of who did this and why? >> we don't have a really good sense of who did this. we know why. this is all about getting money from people. and we know that the tools they're using, so not knowing who is doing it right now than knowing how they're doing it and then the question becomes in the longer term who's using those tools. but the challenge with ransomware today is a lot of people can use it. this doesn't require high-tech capability and it can reply kate itself and be a global
10:04 am
challenge. >> what are the early stage lessons other than the obvious of being vigilant and keeping up with the upgrade cycle as much as you can. >> that's absolutely right. the main priorities should be to "a" keep up with the upgrade cycle and "b" don't use pirated software. we are seeing a lot of systems around the world known to be being using the pirated versions and when you do, you don't qualify for the safety updates. microsoft has made it easier get the legit software. >> microsoft said it was nsa's fault. can you put the blame here somewhe somewhere? >> there's no doubt that the nsa has responsibility. it has high end tools, it understands vulnerabilities and it needs to keep those secure. microsoft also i think has some
10:05 am
responsibility here. although they have stopped supporting the xp operating system which is at risk here. i think we'll relook at the responsibilities companies have in the longer term when the systems are relied upon in the critical supreme court. it is then the users and the maintainers of those networks that they have to know are their systems up to date? what information do they need, do they have resiliency plans and how do they respond when the things occur? there's a lot of blame to go around. there's a lot of work to do to make sure this doesn't happen so broadly in the future. >> michael, is there anything we can dedeuce from the fact it's so global and so diverse. has there ever been a period when it's russian banks, chinese gas stations, u.s. firms, a lot of european train companies and auto companies. i mean, it's pretty random and pretty broad based. >> well, you're absolutely right. to note the near unprecedented scale of the infections.
10:06 am
i think the key lessons though to take away this is not over. and even though the infection rate is dropping now, we really need to realize the lessons learned here that mike liter and about patching, using the right kind of systems in a much deeper period of introspection. because this kind of thing is going to happen again and we need to be better prepared in the future. >> as it applies to governments we know in general government is notoriously late to the cycle, keeping up, innovating. does this serve as a wake-up call at least for those of us in the u.s.? >> well, i think the trump administration has a reasonable plan ahead for securing the u.s. government networks and the executive order that's coming out i think takes a good step. but the problem with cyber security is that this really isn't just a government problem. this is a across society
10:07 am
problem, from individuals to corporations to network providers and if there's any weak link anywhere we have vulnerabilities throughout the system. as michael said even once we get passed this attack, the vulnerabilities will still be there. we have to have a much more systemic effort across all of our sectors in combination with government to provide a greater level of security and also appreciate that even with good security we won't have perfect security. so how do we keep our critical infrastructure up and running and businesses moving ahead in the midst of these sorts of attacks? >> the bitcoin ransom, adds a whole new dimension. is that traceable at all? >> on its face it's not as traceable as some other methods of tender, but ultimately this becomes and will become an effort for international law enforcement to get to the bottom of the whodunit. but it probably will take advantage of a number of different investigations not
10:08 am
just technical forensics. >> are certain companies more vulnerable than others around the world? clearly if you're using the microsoft xp, but who else needs to be on guard? >> the reason we're seeing this blossom around other areas of the world is because of pirated software so we hope that u.s. corporations are not in the boat. if you're not using up to date software that isn't being patched or monitored you're in real danger. i think in terms of sectors those who have highly complex systems and are reliant on old operating systems because they have an older accounting system or an older hr system which runs on these old operating systems that's where we have real vulnerabili vulnerabilities. if we get a system update from microsoft at home, you quickly update it. but if you're running a multinational and your accounting system runs on
10:09 am
15-year-old microsoft software it's a lot harder to keep them up to date and patched. but what we're seeing the downside of not doing that is clearly much greater than any cost you can do incrementally to keep that security tighter. >> definitely learning that today. thank you so much for your time. appreciate it. >> thank you. when we come back, crude oil surging today. energy ministers from saudi arabia and russia agreeing to extend a production cut. crude is up almost 3%. highest level since the end of april. we'll have details on that plus amazon celebrating its 20 year mark since going public. we'll look at one industry that's certainly getting hurt by the rise of amazon. much more ahead on "squawk on the street" with the dow up 75 points. stay with us. [vo] when it comes to investing, looking from a fresh perspective can make all the difference. it can provide what we call an unlock: a realization that
10:10 am
often reveals a better path forward. at wells fargo, it's our expertise in finding this kind of insight that has lead us to become one of the largest investment and wealth management firms in the country. discover how we can help find your unlock.
10:11 am
10:12 am
stocks in rally mode again this morning with the nasdaq hitting another record high. the s&p and dow posting best gains so far today in may. let's bring in jeff rosenberg and a global strategist. >> good morning. >> so jeff, how are -- i know you're primarily focused on fixed income but how are at blackrock looking at the seeming numbness of the market, the fact that it does focus on good news, but not so much on bad. >> well, we certainly had a lot
10:13 am
of conversations about the low level of market volatility, vix was the big story last week hitting new lows. so certainly it's a concern when you see a market that is very -- as you talked about, very immune to some of the potential risks out there. that being said, the underlying fundamentals of growth in the economy what we call the reflation, we and the market calls the reflation theme is alive and well. we got passed some significant political risk and there's some good fundamentals. look at the u.s. earnings here. so we have a bright outlook when it comes to the global stock market as well. >> on the economy are you getting that read and are you getk that read from the ten -- getting that read from the ten year treasury yield? >> there's a disconnect between what the economy did in the first quarter and particularly with a very domestic focus. you know, the story in the u.s. and what interest rates are telling you is a bit about
10:14 am
disappointment and the story last week was part of that as well in terms of disappointment on the inflation front. my earlier comments are really talking about the global environment. where global growth has been better and with that has come better readings in terms of global inflationary outlook. it depends on where you're looking in the world, and i'm speaking way out of school but when we talk about the global equity environment we are seeing the attractions outside of the u.s. in terms of emerging market equities, european equities as a reflection of that. >> samir, maybe you can help with that. especially when it comes to the equity market. if earnings are the primary driver right now and the better earnings, what does this week hold? we are set to see a number of the big retailers report after a very disappointing department store sales last week. >> unless they're very different from where expectations are, most have closed the book on the earnings quarter. there wasn't too much different on the guidance. i think people are looking forward to try to figure out if
10:15 am
we'll get something like tax reform. so as far as earnings season goes, that's no longer a catalyst. i think the markets run ahead of where earnings have come in and so the tricky part becomes valuations. with the s&p trading at almost 20 times trailing earnings. >> how high does that look to you? what do you compare it to? >> if you look at the peak during the last cycle you were in the 17 to 18 times. so we're already above the last cycle. you can say inflation is lower, rates are lower. then you find yourself going down that path of this time is different. and we all know the late '90s we went down that path and we're too exuberant. you have to be careful when you get to these higher levels. >> samir mentioned tax reform, jeff. how do you guys at blackrock think of the probability of that and how necessary it is for this market to continue to move higher, to tune out some of the
10:16 am
noise and whatever happens here when its comes the new fbi director. moving on to health care and then tax reform. what does it look like to you? >> we want to separate the issues. there was a post election surge in the u.s. financial markets. a lot of expectations around what united republican governmentence might bring. you add a lot of trump trades and a lot of that has really unwound. what hasn't unwound is the stuff that has preceded or came before the trump election which was the reflation theme, the global economic recovery. a lot of that is still with us, still in the investment horizon. certainly a better outcome in terms of fundamental tax reform. fiscal policy support for the longer run growth outlook would be positive. i think the markets are discounting any significance of that happening in i -- any time soon and that's irrespective of the back drop for the
10:17 am
reflationary outlook. for stabilizing the global growth is still supportive. if we can get something more in terms of the fiscal policy that would be good. i think expectations have come down markedly for that. >> on that point, samir, politico quotes forbes this morning. i'm reading here, this needs to be stated as directly as possible. the firing of comey will make it all but impossible for administration's legislative agenda to be enacted this year. so how far would you say if at all that policy expectations have dropped? >> you know, quite a bit. we have been in the camp all along that, you know, what president trump has been able to do individually has been underestimated but once he gets into or he has to work with others, whether it's the legislature or et cetera, we expected there to be some disappointment. we're not building any tax reform in our earnings in 2017, and looking at a 2018 story. you get back to just following the fundamentals.
10:18 am
following the earnings data and trying to price the market off of the fundamentals. that's why we can't move past the 2400 level. >> let's pin you down, samir. do you want to stick with information technology, the nasdaq hitting another record high. how far can that earnings lift take you? >> we'd be a little cautious on technology. we are neutral. if for no other reason it's had a great run. it's a large part of the s&p 500. if you're buying equities you're buying technology. we would focus on consumer discretionary. we like the pull back of financials. we think the expectations have come down. we still like industrials. not so much for the infrastructure. but we like that international growth that's improving. and then health care is a little bit of a dark horse. the demographics still favor health care and we don't find reform to be a major issue for the sector as a whole. >> gentlemen, thank you for the ideas and for kicking off the markets here on a monday morning.
10:19 am
>> thanks. >> watching oil this morning, back above the 50 and the 200 day. let's go to seema mody. >> a big day for oil. trading at $49.22 up 3% almost on the day. this as saudi arabia and russia back the nine month extension of a production cut agreement until march of 2018. now, this is longer than the six month extension that oil traders were anticipating. perhaps most surprising is russia's willingness to support this cut. i did take moscow -- it did take moscow some time to get to the daily threshold that was part of the agreement in december. now we look to opec and nonopec producer meeting on may 25th. oil traders are talking about the iranian presidential election this week which could be a driver of oil prices. the current president rouhani in a tight race with a hard-liner which puts the current nuclear deal with the united states at stake. energy the best performing
10:20 am
sector. look at marathon oil and murphy oil, all seeing substantial gains in early trades here on monday. david? >> thank you. when we come back, a deep dive into amazon as the company celebrates the 20 year run as a public company. plus, give you a look at the shares of patheon. this morning, the dutch drug ingredient maker, they help companies along the way in terms of getting their drugs can commercialized. bought by scientific instruments maker, thermo fisher. $5.2 billion. you can see it's trading close to that price. we have a lot more ahead for you on "squawk on the street." a naturally aspirated 5.0-liter v8 engine. a 10-speed direct-shift transmission. a meticulously crafted interior. all of these are feats of engineering. combining them with near-perfect weight distribution... ...is a feat of amazing. experience the first-ever 471-horsepower lexus lc 500
10:21 am
or the multistage hybrid lc 500h. experience amazing. i've got a nice long life ahead. big plans. so when i found out medicare doesn't pay all my medical expenses, i looked at my options. then i got a medicare supplement insurance plan. [ male announcer ] if you're eligible for medicare, you may know it only covers about 80% of your part b medical expenses. the rest is up to you. call now and find out about an aarp medicare supplement insurance plan, insured by unitedhealthcare insurance company. like all standardized medicare supplement insurance plans, it helps pick up some of what medicare doesn't pay. and could save you in out-of-pocket medical costs. to me, relationships matter. i've been with my doctor for 12 years. now i know i'll be able to stick with him. [ male announcer ] with these types of plans, you'll be able to visit any doctor or hospital
10:22 am
that accepts medicare patients. plus, there are no networks, and virtually no referrals needed. so don't wait. call now and request this free decision guide to help you better understand medicare... and which aarp medicare supplement plan might be best for you. there's a wide range to choose from. we love to travel - and there's so much more to see. so we found a plan that can travel with us. anywhere in the country. [ male announcer ] join the millions of people who have already enrolled in the only medicare supplement insurance plans endorsed by aarp, an organization serving the needs of people 50 and over for generations. remember, all medicare supplement insurance plans help cover what medicare doesn't pay. and could save you in out-of-pocket medical costs. call now to request your free decision guide. and learn more about the kinds of plans that will be here for you now - and down the road.
10:23 am
i have a lifetime of experience. so i know how important that is. ♪ check out amazon hitting another all time high this morning. an intraday high. continuing the stock's rally going 20 years to the day since first going public. get this, if you invested $10,000 in the ipo back on this
10:24 am
day in 1997 that would be worth about $6.4 million. $6.4 million. as it continues to transform the retail industry, amazon now worth the equivalent of two walmarts. for more let's bring in simian segal and michael olson from piper jaffray. it's appropriate to have this conversation while we're knee deep in retail earnings season which so far has been sort of a train wreck. who's getting hurt the most from amazon's rise? >> it's what you'd expect. you watch the contrast and what amazon has done now, they have returned retail into the zero sum game. you used to walk into the store, the store would give you something you wanted and then you'd give money and amazon has removed the profitability side. so the customer wins. the fight is all in favor of customer. so the people and the brands and the companies are getting most impacted are the ones that
10:25 am
purely write that proposition is tied into walking into the store and the mall is the most impacted. so for a company that their proposition was the experience of coming to the mall, we own the real estate that's no longer the advantage. >> i know you like coach, i know you have other favorites, lululemon as well. how do you amazon proof brands like that? >> so it's interesting. when you think of specialty in general, when we talk about the teen retailers and the gap versus a coach, there's two segmentations there. the commoditization versus the value of the bands. specialty retail large -- at large, had made it a few years ago. they were the first fodder for amazon. department stores are just starting so it's interesting coach we like a lot right now. the conversation is changing. their self-help stories they can turn around another brand after having done their own and now with the acquisition of kate spade it's more than just buying that mall. right now what you need to be buy is a strong brand. if you can find me profitability
10:26 am
opportunities that's the opposite of the zero sum gain we were talking about. >> how does that relate to your picks as they relate to e-commerce and amazon? >> well, when we think about amazon -- yeah, when we think of amazon going forward, wow, a look at the last 20 years been an amazing run. but look at the exciting things we have to look forward to related to core e-commerce. 5% of retail sales are amazon today in the u.s. it's such a small number. if we look at the opportunities for addressable markets going forward they haven't tapped into what could be well over a trillion dollar addressable market in grocery and furniture. think of everything they're collecting from a data standpoint. every time we talk to the echo, so they have reached the escape velocity versus the competition for data and fulfillment. look at that compared to the competition and it's no wonder they have done what they have been able to do. >> how much higher can they run,
10:27 am
michael? >> well, we think there's a lot of room to go. i mean, i think if you look at the valuation perspective, the stock's still trading not that much higher than a lot of the peers and we think certainly, you know, our price targets 1,050 based on the six times ebitda which is reasonable concerning the addressable markets i mentioned. we think there's a lot of room to go and we're excited to see what happens over the next few years. >> to michael's point, if technology has been killing my space and retailer, what they need to do is figure out a way to take that technology and use its to their own advantage. that advantage is playing with data. the amount of times i hear about loyalty programs, the new loyalty programs. ulta salon is another one we like, it's another beneficiary of department store donation. a lot of beauty is still done in department stores, but on top of that it's the ability to use that data. you take brand names, like the loyalty data and you speed up the inventory process, shrink
10:28 am
the lead times, have fewer markdowns. >> we just heard the word escape velocity. i understand a retailer maybe could create a little ed dee of growth at the river called amazon. has amazon moved beyond competitive threat? >> depends on who you are. what's interesting, there are still -- some companies, maybe plenty is a big adjective that are getting positive traffic. there's still experiences you want to experience. it's not just a trip. people walking into the tj or a ross stores that's unamazonable. not because people can't buy on clothing, but because ross and tj is not selling cheap clothing but they sell good quality clothing cheap. brands will overmake and over supply. they will miss fashion trends. then the off price channel will exist. that off price channel is not done you know line because of the way it works.
10:29 am
so you take that and take beauty. we'll see where ai, robotics and technology can take you. i don't know, but there's something to walking in and trying on the makeup and picking out the right element. >> so the makeup -- elf beauty, even coty had a good quarter. it seems like the street has been mixed lately on the competitive threat that walmart is now poising to amazon. they have jet.com. they have a whole strategy and they have been growing fast. is that a threat to amazon ultimately? >> i think it count -- could be to some degree. i think it comes down to certain experiences and products that are -- that customers are looking for. if they're looking for an experience that they go into the retail store or find, you know, a different sort of e-commerce environment to shop and potentially that could be, you know, a risk. but we think in general, given what amazon's put together between all of the opportunities
10:30 am
within core commerce and within international and within cloud, within new categories they haven't entered that it's going to be hard for anyone to catch them. >> we'll leave it there. thank you for joining us. michael olson covers amazon. >> at 30 minutes past the hour let's get a news update with sue herera. >> good morning. here's what's happening at this hour. north korea state tv releasing video of the country's latest missile launch. analysts say its apparently successful launch indicates a significant advance in the drive for an intercontinental ballistic missile. moscow is opposed to any new countries acquiring nuclear weapons but added that we should talk to north korea not threaten it. putin concluded a two day visit for a foreign policy conference.
10:31 am
on sunday while waiting to meet with xi jinping, mr. putin played the piano. there you go. russian state tv said he tried his hand at the anthems of moscow. and more americans are considering long weekend get aways over traditional vacations this summer. that's according to travel publisher travel zoo. three-quarters of americans are planning an extended weekend trip this summer. that's the news update this hour. carl, back to you. >> all right, sue, thank you. when we come back we'll go live to the white house as the search for a candidate to replace james comey continues. stocks at this hour hanging on to the best gain of may. dow's up 73. back in a minute. handmaid.
10:32 am
some build walls to keep people out. but these are walls that welcome you in. within these walls, california's educators create safe places for every student to learn and grow. where teachers open minds to history...
10:33 am
unleash creativity... and show our kids the future. some build walls to divide us. but the california teachers association knows these are walls that bring us together. because quality public schools build a better california for all of us. welcome back to "squawk on the street." it is another busy week in washington. for the latest on that, we'll get to eamon javers who's a outside the white house. good morning.
10:34 am
>> good morning, carl. the white house is still processing some of the fallout from the president's decision to fire fbi director james comey last week including this comment on television over the weekend from former director of national intelligence, james clapper, who said that american institutions are under threat from the president himself. here's what he said. >> i think in many ways our institutions are under assault, both externally and that's the big news here. is russian interference in our election system. and i think as well our institutions are under assault internally. >> internally from the president? >> exactly. >> the white house trying to move as quickly as possible here i'm giving some guidance we could see new name for a replacement fbi director before he leaves for his foreign trip on friday. here's who was interviewed by the department of justice over the weekend. it's eight names including andrew mccabe, the current acting director of the fbi.
10:35 am
my indication is he's not likely to be the selection, but nonetheless he's in the process. john cornyn being considered and alice fischer, former assistant ag at the doj. michael garcia of the new york court of appeals. also judge henry hudson, adam lee, a former -- an fbi special agent. mike rogers a former house intelligence chairman and fran townsend, homeland security adviser to president george w. bush. a familiar face from television. but i can tell you, carl, there's a bit of a sense of uncertainty surrounding this white house this morning because there are rumors of a pending staff shakeup. a lot of different reports in media outlets, some folks here don't exactly know what is coming and whether that decision will be made before or after the president's foreign trip. so couple of folks walking on pins and needles. i spotted ivanka trump walking and in an intense conversation with reince priebus in the west wing. of course that conversation could have been just as easily
10:36 am
been about the foreign trip as it is about the speculation that's swirling around the white house. no way to know for sure, but some anxious faces here at the white house this morning. >> it's a busy week as they prepare for that foreign trip. thank you very much. eamon javers. for more, we are joined by har harry 'canes good to see you. so we have that sound from clapper over the weekend. at the same time, the speaker says tax reform in his view remaims on track for the year. we need from you a reality check of what's on track and what is now vulnerable. >> well, thank you for asking. the reality check is that i think tax reform and affordable care act reform are both still very much on the cards. but not least because republicans are using house budget process, the senate budget process so they only need republican votes for that.
10:37 am
and they can work out deals with the president. so i think all that remains on track. what is imperilled is the rest of the agenda and the rest of the agenda what you need is normal budget process -- excuse me, normal legislative process which means that you need some democratic votes. so it's going to be tougher to get things going on infrastructure. it's going to be tougher to get things going on immigration. it will be tougher to get things going on financial services reform. all those things. >> that's because of a need for democrat votes. >> yeah. >> front page of the times, the senate gop is edging back from the president so what's more important? >> today on budget process, and tax reform what's more important is keeping your folks together. just keeping the republican side together. and by every indication i think that's what both republicans in the house and the senate intend to do. >> just to be clear, i'll quote from your note directly. you do think that congress can
10:38 am
walk and chew gum at the same time. that is they can legislate on health care, tax reform and handling the russia probe and the entire fallout from that. what gives you the confidence to say that? >> well, i think that, sara, basically for a couple of reasons. one is that no staffs are involved in both. so they can certainly continue to work on tax reform free of what's going on with 2 russia probe. secondly what's underestimated is the desire and need of congressional republicans to actually show progress and actually show tangible achievements going into the 2018 med -- midterms. i think that's very important. i think they'll be able to do that. for all of the watergate comparisons this week, you know, one water gate comparison is relevant here. which is it is widely assumed that washington was paralyzed by
10:39 am
nixon's impeachment resignation and that's not so. there were many, many, consequential pieces of legislation passed in 1974 from retirement, to clean water, even to the budget process that i just talked about. >> terry, the transportation secretary says that the administration will release some broad principles for infrastructure, quote in the next several weeks. do we have a guess as to whether that will be more detailed than what we got on that one page for tax? >> if they're talking about principles i would assume it's the same sort of level of detail. but it will be very much welcomed on capitol hill. the hill has been trying to figure out for some time exactly what sort of infrastructure plan is going to be proposed. what you can be real sure about is that it has to be a mix of direct spending and public/private partnerships because our estimation has been that there's probably only about
10:40 am
$300 billion available over three years in direct federal spending for infrastructure. so there's going to have to be a lot of private/public partnerships and other ways to fund massive infrastructure spending along the lines that the president talked about in his congressional speech a couple of months ago which was $1 trillion. >> yeah, we'll see what that proposal looks like. in the meantime i wanted to get your thoughts on the very buzzy piece this weekend from axios about a potential major shakeup at the white house, including chief of staff, steve bannon. this is not the first time we have heard the names mentioned as trump can replace them. even sean spicer is mentioned. how could it affect what you're talking about, health care, russia, the whole legislative agenda? >> what i -- what i read from those and see from those stories is a potential dissatisfaction
10:41 am
by the president with the way some top decisions are being made. but none of that's going to affect the expert staff on the economy, treasury and others that are already in place and that already working on these things. so i think that continues regardless. >> finally, terry, you do see one potential upside to the comey fallout as a result -- as it regards to the debt ceiling, right? >> i do. i do. that's the fiscal 2018 spending. and the debt ceiling. what i have been saying essentially is that -- again, with congressional republicans thinking their majorities are on the line in 2018, that this will provide an additional incentive to not shut the government down. to reach an amicable agreement on debt ceiling. all those sorts of things. what we just saw last month in the fiscal 2017 spending year
10:42 am
was no desire in washington to shut the government down. i thought that will continue and the comey business will probably be an extra incentive to make sure that happens. >> terry hanes who has one of the toughest job around, head of political analysis at evercore isi. see you soon. >> thank you, carl, appreciate it. as we head to break here, take a look at some of the top cyber movers. some of these stocks, symantec surging, fireeye. cisco after that ransomware attack crippled 250,000 computers in 150 countries. and bill isaac will join rick santelli. we have a 75-point rally for the dow with all of the s&p sectors higher right now. we'll be right back. ♪ it's been over 100 years since the first stock index was created, as a benchmark for average. yet a lot of people still build portfolios with strategies that just track the benchmarks.
10:43 am
but investing isn't about achieving average. it's about achieving goals. and invesco believes doing that today requires the art and expertise of high-conviction investing. translation? why invest in average? ...you realize the smartest investing idea, isn't just what you invest in, but who you invest with. ♪ hthis bad boy is a mobile trading desk so that i can take my trading platform wherever i go. you know that thinkorswim seamlessly syncs across all your devices, right?
10:44 am
oh, so my custom studies will go with me? anywhere you want to go! the market's hot! sync your platform on any device with thinkorswim. only at td ameritrade first quarter earnings season about to come to an end. what have we learned and what kind of quarters will we see
10:45 am
ahead? find out at tradingnation.cnbc.com. more "squawk on the street" coming up. welcome to holiday inn! ♪ ♪ whether for big meetings or little getaways, there are always smiles ahead at holiday inn. can we at least analyze customer can we push the offer online? legacy technology can handcuff any company. but "yes" is here. you're saying the new app will go live monday? yeah. with help from hpe, we can finally work the way we want to. with the right mix of hybrid it, everything computes.
10:46 am
the s&p is up nearly half a percent. let's get out to the cme group, rick santelli. >> thank you, sara. i'd like to welcome my first guest of the week, bill isaac. thank you for taking the time this monday morning. >> good to be with you, rick. >> all right. in the macro, we have treasury secretary steven mnuchin about ready to have his debutante, his debut performance in front of the senate banking committee on thursday. one of the topics that most likely will be on the agenda are the federal housing groups and the reforms. the government sponsored enterprises. the director of the federal housing finance agency, is mel watt. he's required to sweep out a lot of the money that he said now
10:47 am
missing is is a real problem for the ongoing operations of the mortgage entities. your thoughts? >> well, i agree with mel completely. i think that -- let's remind everybody how this thing came down. when fannie and freddie were put into conservatorship, they were -- they issued preferred stock to the government, 187 billion, they were required to pay a 10% dividend on that. so it would have been $18.7 billion on the original amount. if they had done that, they would have -- to date they have paid back $270 billion to the government. according to watt's testimony. which is more than enough to have covered the complete repayment of the principal and the interest that was required, the dividends of 10%. so -- >> for the bail -- >> yes. right. so what happened was the government in 2010 changed the
10:48 am
deal. without any authority. it just changed the deal. the treasury said we don't like this deal of a 10% dividend. we want you to pay all of your earnings forever. and they're not even applying that to reduce the debt. this debt still stands at $187 billion. and the treasury has already received $270 billion so it's really -- >> okay, so the money went to the treasury. the money went to the treasury. do we know what they did with the money? it's not in the special account saying, you know, rainy day fund for freddie and fannie. where did that money end up? >> wherever they wanted it to go they could buy submarines. they could take care of schools. they could do health care, anything. it doesn't -- it's all up to treasury. and the company doesn't have any say in it. we as taxpayers i guess have a say in it through the congress, but it wasn't the deal that was made with fannie and freddie. the treasury has changed the deal. and of course they can't ever get out of the hole they're in
10:49 am
because they're required to give all of their money to the treasury. i agree with mr. watt that this is the -- this is a dangerous situation for fannie and fred e freddie. they don't have any capital. >> it never ceases to amazes me, the rules changed in 2010 and the notion was to save these entities and somehow reform them, set them loose or try to get privatization. so what they did was they left them in place. it was needed. there was nobody to fill the vacuum to help the average guy get a mortgage and that money came in a slush fund. how can anybody watching this ever trust our government or our agencies, our representatives who say they're going to fix things and prioritize what needs work when the money just goes wherever they choose? your final comment, it makes no sense to me. we don't fix things, we spend the money to fix the roof and yet it still leaks. >> it would be hard for me to
10:50 am
disagree with you, rick. what has happened is not appropriate. it's highly inappropriate. i wonder whether it's even constitutional, but these companies really should been out of receivership by now. we're not even work on what they ought to become. should they be a government agency going forward? privatized? there are legitimate issues we need to talk about. and we can't even discuss those things in an honest way. i agree with you, this is not being handled well. i'm very unhappy with it. >> bill, thank you for taking the time. you know, no matter what issue it is, it always seems the prioritization is the problem. while everybody now is looking under every rock to find a there in the russian scenariscenario, other stuff goes to waste. we need to prioritize. bill isaac, thank you so much. carl, back to you. >> all right, rick.
10:51 am
thank you so much. aig holding a webcast to announce a new ceo. >> aig is moving higher this morning after alumnus brian duperreault was named as the new ceo. he said he came on board to grow the company and not to break it up. also that priorities will include a kmutment to technology, focus on growth. and discussing the just announced expanded partnership with two cigna insurance as well saying it will put aig at the forefront of the industry. aig has signed a deal with united airlines to provide global travel insurance and inked a deal with uber for singapore. so far upbeat on the choice for
10:52 am
him to lead the insurance giant. we've seen positive notes from analysts. if you look at shares of aig, they're up about 1% right now. back over to you. >> okay. thank you, morgan. now over to jon fortt to give us a look at what's coming up on "squawk alley." >> morning. we are digging out of this hack. we'll look at the impact on policy and on technology. also we've got joanne bradford to tell us why the lender might look like a consumer bank. all that coming up on "squawk alley." e playing. -what? -we gotta go. -where? -san francisco. -when? -friday. we gotta go. [ tires screech ] any airline. any hotel. any time. go where you want, when you want with no blackout dates. [ muffled music coming from club. "blue monday" by new order. cheers. ] [ music and cheers get louder ] the travel rewards credit card from bank of america.
10:53 am
it's travel, better connected. the trawith this leveldit card of intelligence...ica. it's a supercomputer. with this grade of protection... it's a fortress. and with this standard of luxury... it's an oasis. the 2017 e-class. it's everything you need it to be... and more. lease the e300 for $569 a month at your local mercedes-benz dealer. mercedes-benz. the best or nothing. the power of 100 of the world's top companies. the power of a proven 15-year track record. the power of an etf. the power of qqq. the thinking we put in, clients get out. power your client's portfolio at powershares.com/qqq. before investing, consider the fund's investment objectives, risks, charges and expenses. call 800-983-0903 for the prospectus
10:54 am
containing this information. read it carefully. distributed by invesco distributors inc. a used car,g this information. read it carefully.
10:55 am
a developing story out of north korea. the country announcing the missile it launched yesterday can carry a heavy nuclear warhead and is capable of hitting u.s. military targets in the pacific. this landed in the sea between north korea and japan. the latest launch widely condemned, of course, by the u.s., japan, and south korea. the white house called north korea a, quote, flagrant menace and urged allies to enforce stronger sanctions. shinzo abe telling cnbc he is concerned over these latest actions by north korea. listen.
10:56 am
>> translator: it is indeed very clear that the threat posed by north korea's nuclear and missile program is entering into a new stage. that is our recognition. with president trump, he is saying that all options are on the table and he is showing the act as well as by words what he is advocating in this arena. we look at this highly. >> abe also says it's important for countries to present a united front in battling the north korean threat. when we come back, triva goe surging after reporting earnings. the stock is up 12%. the dow up about 80 points. stay with us. in these turbulent times, do you focus on today's headwinds?
10:57 am
or plan for tomorrow? at kpmg, we believe success requires both. with our broad range of services and industry expertise, kpmg can help you anticipate tomorrow and deliver today. kpmg.
10:58 am
10:59 am
welcome back to "squawk on the street" on the street, everyone. cyber security stocks are surging following friday's malware attack that hit 150 countries that affected computers in factories and hospitals. now, the ise etf hack hitting a
11:00 am
52-week high and having its best week since december. leading the way palo alto networks, cy man tech, fireeye up. cnbc analyzed a week following the hacks. now, we'll send it back to carl and the gang for the start of "squawk alley." >> thank you very much. good morning. it is 8:00 a.m. at amazon headquarters and w headquarters. 11:00 a.m. on wall street. and "squawk alley" is live. ♪

52 Views

info Stream Only

Uploaded by TV Archive on