tv Squawk Box CNBC April 16, 2018 6:00am-9:00am EDT
>> this is "squawk box." good morning, everybody. welcome to "squawk box" here on cnbc andrew is off for the week you're going to see that right now it looks like things are very sharply positive. 162 points after that lower market on friday up market for the week you can see the s&p 500 up and the nasdaq opening up by 50 points take a look at what happened overnight in asia. the nikkei was up by a quarter of a percentage point. then in europe where you are already seeing some of the early trading activity taking place, a mixed bag. footsie is a little weaker
stocks are flat in france and higher in germany. .2 of a percent. finally take a look at the treasury yields. the ten year looks like it is yielding 2.85% wpp, a wire company. wire products -- >> they made shopping carts. >> like wire baskets. >> he had been in the advertising -- he had been there since '75 so it was like he -- like berkshire hathaway. he did it himself. sir martin sorrell stepping down following allegations of inappropriate conduct which we know absolutely nothing about. >> it sounds like it was money related. >> i don't know. it sounds like both. >> potentially, yeah he's a good leader, they're
saying, which means he'll get all of his vesting and everything else. he's allowed to compete with wpp. the board is satisfied with the exit so that they're not going to continue -- >> they said it was an immaterial amount. >> they're not going to continue with the investigation. >> right >> compensation ranked near the top, $100 million in 2015. his resignation is fueling speculation that the ad giant. it's the worst the forecast has given in this time of the year he's a visionary
we're moving to google google is going to be this facebook is going to be this even with him anticipating, it's so hard -- >> it doesn't look that much better. >> he was ready for it and still couldn't position the company -- >> when it's google and facebook and it's ad exchanges, right >> they're getting cut out >> or not. >> when things are going very well, people tend to -- >> do you think julia knows anything >> i don't know. she's going to be with us though >> she's british so she must know. >> she's british. >> doesn't she live here now >> well, she did >> hopefully she knows high bar. the ceo of starbucks is
apologizing after two black men were arrested at a starbucks in philadelphia it shows multiple officers, guys in uniform, arresting the men sitting at a table one man asked to use the restroom but an employee refused because they hadn't bought anything they were eventually asked to leave. when they declined, an employee called police. protesters gathered outside the starbucks location and on saturday there ace a hashtag boycott starbucks. kevin johnson called the situation, in his words, a reprehensible outcome. he hoped to apologize to the men in person. he said practices and training led to the bad outcome and starbucks stands firmly against discrimination orational profiling. i can't imagine that two white people would be sitting there and --
>> i've never seen anybody -- >> that's what happened. other customers were outraged by it and they started videotaping the entire exchange. >> i'd hate to be a ceo -- how many starbucks are there >> 10,000. >> you do your best, i'm sure, to make sure that every single one has certain policies and practices. >> people are people. >> still, it's a problem >> it is look what happened "60 minutes" taking aim at allegiant air. >> what's that >> it's -- >> it was united. >> allegiant air. >> what is allegiant air >> it's a low cost -- >> have you flown on it? >> sara eisen in cincinnati and some in pennsylvania.
>> that's what she said. >> "60 minutes" reported that allegiant had issues that it's reporting between the beginning of 2016 and october of last year allegiant experienced more than 100 serious mechanical inches bents including engine failures. >> you're a former member of the ntsb would you fly on an allegiant plane? >> i've encouraged my family, friends, myself not to fly on allegiant. >> allegiant stock took a hit on friday allegiant responded to a request for comment which said in part, all of us at allegiant are proud of our strong safety report. safety is at the forefront of our minds and the core of our
operations faa records showed that allegiant was 3 1/2 more times likely to have breakdowns. programming note for you, "squawk box" is going to capitol hill. >> we are. >> you're coming with me >> we are, all of us. >> what? >> house speaker paul ryan, house majority leader kevin mccarthy, kevin brady, minority whip sammy hoyer, omb mick mulvaney and steven mnuchin. this and many more "squawk box" in washington starts tomorrow at 6:00 a.m. eastern time i think we're on the same train. >> seems like a lot of studying. >> biggests. >> you have time on the train. >> i wish i had known about this not compared to who we have
today. michael cohen. poor guy he's director of energy at barclays. >> there's michael cohen who's in prague and stayed at a hotel. same spelling and everything i don't know whether that's how this all happened. as it turns out, he did, because it's not on the passport they're saying he could have been in germany and went in. he's still swearing he's never been to prague in his entire life there was one other guy that named michael cohen in a hotel there. >> not exactly -- >> maybe it was this guy he was at an energy conference if you got excited, he was on, we're going to grill him, he's not. we will grill him about oil prices right, mike? >> sure will. >> do you think he's a lawyer? >> i doubt he would be a lawyer.
>> i know. i have, too. i'm kidding. >> pension consulting programs will change it speaking of washington, former fbi director james comey blasting president trump in an interview with abc we are getting new reaction from the white house. eamon javers is live >> you're not going to see me because i will be in florida at mar-a-lago tomorrow. the president will be down there. i'm leaving right after this to jump on a plane and get down to florida. hope you have a great trip to washington where everybody is talking about this james comey interview last night exclusive interview on abc news with george stephanopoulos he fired rhetorical broad sides at president donald trump. here's what he said. >> our president must embody
respect and adhere to the values that are at the core of this country. the most important being truth this president is not able to do that he is morally unfit to be president. >> morally unfit to be president is about as tough's told me about the allegations, that the russians have some kind of damaging material that they're holding over the head of president trump. here's how comey responded to that. >> do you think the russians have something on zplump. >> i think it's possible these are more words i never thought i would utter about a president of the united states i'm not certain. >> that's stunning you can't say that the president. united states is not compromised by the russians? >> it's stunning i wish i couldn't say it
>> comey not lifting the veil on what the fbi does not know he's conducting the ongoing investigation there. a lot to chew over this morning. we'll wait to see if the president has any further reaction to that he fired off broad sides on his own yesterday against james comey. the other thing we're going to be waiting for here in washington is more reaction to the syria strikes from u.s. and allied militaries over the weekend. on friday night firing as many as 100 missiles in syria hitting three targets, the u.s. said scientific research installation, storage facility and bunker all related to syria's chemical weapons programs the president declared those strikes to be a success. there is some acknowledgment here that the chemical weapons program might be able to continue in some way, shape or form going forward
the secretary of defense signaled to the world that this might have been a limited operation. here's what he said on friday night. >> right now this is a one-time shot and i believe that it sent a very strong message to dissuade him to deter him from doing this again. >> so the secretary of defense there saying that bashir al assad has been deterred now from his chemical weapons attacks on civilians. we'll see if that is, in fact, the case or if the trump administration feels it needs to continue the military campaign >> comey is going to be with brett farrell in two or three weeks. i wonder how long this is going to be something everybody is talking about. >> whether you're morally fit for the office it's in the eyes of the
beholder it's the truth that i don't know whether there's anything it might be more if it was the truth that he did know. >> yeah. you can't prove a negative, right? he can't prove that it didn't happen comey says in the interview that the president asked him at one point to investigate and disprove that salacious sexual allegation against the president involving moscow and comey suggested, look, if we investigate that, the narrative will be that we're investigating you and we can't prove something did happen, but it's still clear that he's racing that as a probability. he wasn't happy with how he was treated. going back to morally unfit, i heard that a lot about the blue
dress. got a 20-year-old intern in the oval office. that president is morally unfit. so the right thinks bill clinton was morally unfit. i don't know how far that -- you know, it's not grounds for impeachment probably at this point. >> what's fascinating about this is comey who was at extreme pains throughout the 2016 campaign to not be partisan in any way, he clearly was really straining to not suggest that the fbi had any side in this now he's kind of unleashed and he is taking a partisan side here he is taking a very clear anti-trump side in what he calls the tribal warfare of american politics that puts him in the camp of one of the tribes from here on out we'll see if that affects the investigation. if comey is a key witness -- >> hillary clinton supporters didn't like him either. >> looking at what we know now
from the inspector general report for andrew mccabe, for comey to say nothing i saw showed any bias. that's just crap it's in the i.g. report for mccabe he's always been pretty virtuous, at least in his own eyes, comey. anyway, whatever eamon, thank you. >> yeah. >> it's going to go for weeks and weeks and weeks and weeks. >> yeah. this is just the beginning >> honestly, the more the white house targets him, the bigger the story. paul ryan said that. we're going to have him on he said to get in the food fight, it just helps book sales. >> this is going to be a massive, massive book, right it's going to sell hundreds of thousands of copies. >> he can make $10 million on this probably? >> yeah. my book didn't sell nearly that
well that's the way -- >> i think michael wolf, we haven't seen hide nor hair of th him. he's in tahiti he's on a place on stilts. they're bringing trays of stuff. >> peel me a -- >> get that skin off of there. thanks, eamon. joining us now, jack jacobs. he's the author of "if not now when, duty and sacrifice in america's time of need." i tried to figure out my own notions about what to do in syria, colonel i finally decided there's two types of people in the world there are people that say that's not our problem and, you know, people die if you die of a chemical weapon, it's not that much different than a child dying in a bombing so why do we go there. then there's other people who say you absolutely need to make
a statement so that other people in the future think twice about this we need to stamp this out and no matter what we need to do it where are you? >> well, we have a long tradition of punishing evil doers. we dragged our feet in world war ii, we've regretted it i see nothing wrong with punishing this kind of behavior. the only problem is we've gotten rid of the stockpile he can use it again. the interesting question is why he used chemical weapons in the first place. that town was probably the last rebel strong hold anywhere near damascus and, you know, with russian and iranian help, assad has pretty much won the war.
so it was a pointless thing to do in any case i think we are prepared to hit him again if he tries using chemical weapons again because he doesn't have to do it but he does it, we might have to respond. >> he can't control every one of his jeshls when he found out about it, you don't think he had given some type of implicit auth for ryization. >> no, i think he did give implicit authorization. >> he may have ordered it himself. there's an argument that says you can't do that without assad giving the order there are others who say he can implicitly give the order by giving authority to release down to the next lower level of
command. any way you look at it, he's responsible for it it's doubtful they'll ever answer for it any more than we've already attacked them. he'll stay in the country and continue to be able to have one more in the caribbean. >> to not actually overtly tell assad don't do that anymore. if you want our support, stop it is he that cold heart fd of an sflid what happened to the spice in -- putin is the last guy in the world to tell someone -- >> that's a hard hearted guy who
looks at children dying. >> the world is full of a lot of hard harden people assad may be the worst at the moment, but there are plenty more just like him we have to make a decision to what extent we're going to intervene in places where people are being abused i think doing that in this case is the right thing to do and we should do it again. >> colonel, thank you. i hear both sides. i'm trying to figure out exactly what is right here we didn't do what we set out to accomplish thank you. all right. when we come back this morning, it is a busy week for earnings and economic data. we're going to get you ready for the trading week ahead right after this break. meantime, check out the u.s.
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box", everybody. earnings season kicked into high gear we're joined by peter bookbart and ryan payne, president of payne capital management gentlemen, welcome to both of you. peter, what do you think earnings season, is that going to over shadow some of the concerns we've seen about stocks >> earnings should be good i want to separate out the corporate income tax and the earnings should still be good particularly on the earnings side i think the shares will price that in with the great performance in the equity market in 2017 and how do we play off of the rise of interest rates that explains the pull back off the january 26th high and now that rates continue to move up, particularly on the short end with the two year yield at a 9 1/2 year high, what that means not only from a multiples standpoint but whether that starts to impact the economy
does it impact housing and autos? >> ryan, we have seen stocks trade higher over the course of this month first time that's happened since january. earnings about to report makes people nervous about shorting things as you head into that >> absolutely. i think, look, we know earnings are going to be very good. earnings have driven this market the whole way through. i think that's going to continue this is as good as it gets, becky. >> do you agree with peter though, that there are some larger concerns kind of hanging over things that would make you cautious overall >> no. i think the problem is we're if you focused on how this economy is that's why you see most investors sitting in cash. >> peter, you mentioned the two-year note hitting 238 or whatever this morning. investors say the fed's on track to hike twice more this year, who knows how it's going to play
out. that's fine. the two-year note is pricing a lot of that in it has an effect even if people say it's expected. is that what the market is just trying to sort out >> every time the fed hikes in, we say they hike in for a good reason they hike into a point where something happens. and we have to understand that there's still trillion dollars of libor base loans out there. corporate america is now over levered. more bbb companies out there as a percent of the investment scape. we're seeing a pick up in delinquency rates. there is sensitivity it was only a 30 basis point
move in the ten year that blew up the trillion dollar plus trade. so i think we are very sensitive to the rising interest rates because we were so medicated on lower interest rates for as long as we were. >> is it enough to really throw a recovery kind of off base? >> well, that at the end of the day is really the question and i think that is -- and it's not just the rise in rates it's liquidity flow, too the fed is going to take out $420 billion of liquidity this year while that's the scene >> quick thought in terms of where you'd be telling people to invest. >> globally is the place to be if you look at valuations, they're more attractive over seas they've become a lot more attractive here because the market's pulled back you've already had two 10% corrections here what are we waiting for? get invested in emerging markets. >> thank you both for coming in. appreciate your time. coming up, reaction to the
airstrikes in syria. we're going to talk to congressman john garamendi from the armed services committee. we'll have the numbers from the bank's loans nobody's putting their money into equities. they're not investing in commodities or fixed income. what people areally putting their money into is what they hope to get out of life. but helping them get there requires a real refusal to settle for average. because when you approach investing with a tireless desire to beat the status quo,
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♪ ♪ welcome back you're watching "squawk box" live from the nasdaq market site in times square. >> welcome back, everybody right now it's time for the squawk planner on the data front. march retail sales at 8:30 a.m. eastern time then at 10:00 a.m. the latest read on business inventories and the april home builder's survey. bank of america is expected to report around 6:45 a.m netflix will be reporting after the closing bell today plus, two fed president's expected to speak today, raphael bostic and dow's robert kaplan steve liesman has an interview with william dudley at 10:00 a.m. on ""squawk on the street."
they haven't budged 2349 last hour dow futures up by 172 points nasdaq up by close to 50 points and s&p up by 17 points. russian putin vladimir putin said more tax on syria will bring more chaos congressman john garamendi is joining us we've had a lot of discussions, congressman. the last thing i said to colonel jacobs, there are well-intentioned people on both sides of this issue that on one hand say that a chemical attack cannot go -- you need to make a statement that it's unacceptable and others that say what's our end game why is this our responsibility i can't tell where you come down you want congress to be involved, i think, is that -- >> well, two things. first of all, we cannot let chemical attacks go without an answer and certainly this was an answer
the other part of it is it's an answer for which there is no legality this is an attack on a foreign country, an act of war and therefore congress has to declare war or what we now call an authorization to use military force. so both things are correct going forward, where do we go from here? and that leads us to the third question, which is, there is no long-term strategy it's an incident of the one off event. a year ago and one week trump bombed an airfield with cruz missiles and now one year after that he did it again the question is is there a long-term strategy how do you deal with syria going toward obviously you have turkey that has critical interest in the area and now has an army in syria and certainly you have
russia there in a very, very big way and the united states. so what we have to have here is a coherent strategy based upon a set of objectives, long-term objectives hopefully dealing with a reduction in the violence, dealing with the refugees and dealing with the fact that assad is likely to be there for some time to come. >> i guess the -- you know, in my initial question, the people -- what i was sort of referring to is that there are people that -- you know, that wasn't the intention to cure all the problems of syria and to have a long-term strategy on what we need to do with that civil war, that the intention was to make a statement that you're not allowed to use, no one, wouldn't matter whether it was syria, whomever use chemical weapons, that there is going to be a response and that that was the reason for doing it. so, i mean, i -- and the people that feel that way feel very strongly nikki haley, for example, i don't think we have a solution
i don't know whether bashar assad stays. i don't know whether -- i don't know who you back there, what you tell putin, any of that stuff. their rational, the first thing you do is this is unacceptable every time you do it, it would happen. >> if only life were that simple if only this area of the world were that simple the reality is this is the second time, one year apart, where the used -- >> that's -- >> the size and scope would be greater and greater. >> congressman -- sorry. >> i don't know about that i do know that unless we have a coherent strategy for this region, we're going to continue to find ourselves wandering from one side to the other -- one side of an issue to the other side of the issue and we're not going to be able to find a solution to this
there has to be a response and certainly that has occurred. the fact that the united kingdom and france engaged is very, very important. what we need to do is make sure that russia carries out its responsibilities so that it does not encourage or allow assad to have these new -- these chemical weapons so these are all parts of it. if it was only as simple as launching 100 tomahawk missiles, we could do that often, but that doesn't deal with the underlying problem that we have a government, assad, that is willing to engage in horrific actions. he needs to be dealt with beyond just cruz missiles raining down on his facilities. >> there are some congressional leaders who have said they would like to be involved at this point, that congress should be weighing in on this? do you agree with that if that's the case, what would your plan be >> certainly i do agree with it.
when president obama faced this same question in 2013 i along with others weighed in on this we said he needs congressional authority. he worked out a path with russia and nato the chemical weapons were removed and the precursors were removed. at least that's what the united nations convention put forward, that there were no further chemical weapons in the intervening 3 1/2, 4 years obviously assad did rebuild some of thinks -- they rebuild it with saran. this is where the problem could and should have been dealt with. this is where we hold russia to its previously announced commitment to prevent assad from
having chemical weapons. going forward, we need to have a strategy how do we prevent this from happening again? another missile attack that's one way of doing it the previous didn't work so that's what i'm saying. now with regard to congress, would, could, and should have congress passed some sort of resolution authorizing this? my sense is a narrow resolution saying the president has the authority to strike against the chemical weapon facilities would have passed very, very quickly in congress, but that was never brought to congress and the leadership in both the house and the senate did not even pursue such an activity i think that's incorrect the constitution is perfectly clear about this only congress can declare war. the president has no such authority. once more, once authorization of
force has been allowed, then it's up to the president to carry it out. >> thank you. >> thank you. when we come back, bank of america set to report. we will bring you the numbers and the reaction on wall street. that's straight ahead. plus, sir maarten sorrell stepping down from wpp we will talk about the future for the world's biggest ad firm. later, more reaction to the u.s.-led airstrikes in syria more from michael o'hanlon fm e brookings institute. more coming up on cnbc tomorrow, it's a day filled with promise and new beginnings, challenges and opportunities. at ameriprise financial, we can't predict what tomorrow will bring. but our comprehensive approach to financial planning can help make sure you're prepared for what's expected and even what's not. and that kind of financial confidence can help you sleep better at night.
welcome back, everybody. long-time wpp ceo sir martin sorrell is stepping down from the global advertising giant julia boorstin is here and she has the story. julia, good morning. >> reporter: good morning, becky. sir martin sorrell has resigned following the investigation into alleged personal misconduct. over 33 years sorrell built a
global giant from scratch overseeing the listing of the company on the nasdaq, joining the london stock exchange and acquiring a range of marketing companies including j. walter thompson and young and rubicon and others on april 3rd wpp's board said it had appointed an independent counsel to investigate an allegation, an allegation which sorrell rejected unreservedly. no details have been released other than saying the 73-year-old will be treated as a retirement he will be treated with a payout of 19 million sterling over the next three years who's replacing him? andrew scott, wpp's corporate development director and mark reed he's chief executive officer of wonderman and wpp digital. he's considered in the running for the ceo's spot as they do a full search for the ceo outside of the company there are some looming questions
about whether this company needs to be run differently or split up wpp shares down 32% over the past year after a handful of quarters and disappointing performance and the most recent quarter the company gave a grim outlook saying it's assuming no revenue growth in 2018 back over to you. >> breaking news let's get over to wilfred frost with the details. >> reporter: the shape of these numbers at the headline look kind of similar to what we got on friday. revenue in line, that's at 23.1 billion. eps is a beat at 62 cents a share. forecast was at 59 cents a share. remember back down 2.7% on friday it's already fallen in sympathy with the other banks coming into these earnings it's up half a percent in the premarket. let's dive into the numbers a little bit more. ongoing sort of similar theme
for them of impressive cost cutting and improving the operating leverage without blowing out the numbers on the top line expenses are improving down to 13.9 billion down another 1%. that's allowed an operating improvement of 9%. headline number, 30% so a decent sort of top line revenue beat but not an aggressive blowout if we look at the returns, return on tangible equity, 15.3%. that's quite a significant improvement year on year, up 4%. had -- that means the efficiency ratio is at 16.3%. we're looking at trading
performance, that's a little disappointing compared to jpmorgan compared to citi's up 1% year on year jpmorgan up 7% coming into the quarter we were thinking trading could pick up significantly. jpmorgan at 7%, we thought that was soft that will be key for jpmorgan and goldman sachs. equities up and fix down 13% they're more weighted towards some of those areas of fixed income for one of these thin currencies that's why the headline number despite the equities number is only up 1% that trading disappointment still a scheme bank of america sold off 2.7% on friday. >> it's tough to figure. friday everything was up early, wilf analysts were saying, earnings
season off to a great start. by the end -- when it was over, you never know what these guys -- and i read it was -- the corporate loan growth so far didn't show enough benefit from the tax cut as was to be expected as simple as these things ran up so much already. >> i think that's very fair. the share price performance, not only the year before which was up over 20% but just the day before on thursday they were all up quite nicely. three factors on friday's numbers, one was trading and loan growth numbers were tepid the net interest income not so strong and there was also some comments on a number of the calls and in particular pnc call of increasing pressure for deposits that sort of thought that we had seen the rates rise. the banks might have to stop
paying it up >> you know, you -- you're british. >> i am. >> do you know anything about sir martin we don't know anything have you had any better insight than we have are you hearing anything >> i leave it all to jewel whose summary i thought was -- he's a friend of the show we never know what to think. the dots aren't connected yet. >> i know. i will leave you. >> he's a fan of the woolsley. >> as both of us are >> some things never change. just great -- >> is that the restaurant? >> yeah. sir martin and i have the bets every u.s. election. he bets on the democrat and usually i bet on whoever's the better candidate. >> no, you always take the opposite side.
>> by the way, you get the lunch. doesn't matter who's buying. it's a treat either way. >> thanks, wilf. coming up, much more -- now i know sir martin can afford it whether he wins or now realize >> coming up, much more on bank of america's reports then later, we'll get more reaction on sir martin stepping down jillian kett will join us. as we head to break, a quick look at european markets right now in the red at&t provides edge-to-edge intelligence, covering virtually every part of your retail business. so that if your customer needs shoes, & he's got wide feet. & with edge-to-edge intelligence you've got near real time inventory updates. & he'll find the same shoes in your store that he found online
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we'll be there welcome back "squawk box" is going to capitol hill tomorrow. we have a huge lineup including house speaker, currently, paul ryan maybe the next one house majority leader kevin mccarthy ways and means chairman, kevin brady. majority whip steny hoyer, mick mulvaney, kevin hasset, and much, much more.
oh, senator david perdue he's there as well and congressman cathy mcmorris good to get the bolton brothers on, wouldn't it? i don't mean michael i mean john and josh but josh so far. we're happy for that let's tell you about a bit of deal news this morning. goldman sachs buying clarity money. it's a free app that helps consumers try to manage their money. that app will be combined with goldman's marcus business which tries to help save and borrow. will join as part of this deal he is the brother of michael dell when we come back, fallout from the u.s.-led missile attack we will get word from michael o'hanlon plus more of the earnings report of the morning bank of america. looks like now that stock is up by about 14 cents. better than expected earnings, but the stock was down on friday
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global markets reacting to actions in syria as earnings season kicks into high gear. >> shares of wpp getting hit after its long-time leader maher tis sorrell steps down who will replace him and what's next for sorrell straight ahead. plus morgan stanley's vice chair of global wealth management is here to talk
business investment and more as the second hour of "squawk box" begins right now live from the beating heart of business, new york, this is "squawk box. >> good morning, everybody welcome back to "squawk box" here on cnbc i'm becky quick along with joe kernen and mike santoli. u.s. equity futures have been sharply higher we've been watching the market up dow futures looking to open by 172 points s&p futures up by 18 and nasdaq by 48. the resignation of founder martin sorrell sorrell says an investigation into an allegation of misconduct
was putting too much strain on the company. we will have more on his departure from wpp and what he might try to do next as well that's coming up in a few minutes. starbucks ceo kevin johnson has issued an apology following an incident involving two black men. johnson called the incident reprehensible and said he would meet with the two men to apologize. and the government is going to be out with its look at march retail sales in a little less than 90 minutes. economists expect a rise of 0.3% bouncing back from a slight decline back in february bank of america out with earnings just a short time ago wilfred frost is here again to bring us more insight. hi, wilf >> hi, joe as we said earlier, it's a beat but not a resounding beat. similar to the theme we saw on friday with others it was expected at 59 cents.
revenue in line with $23 billion. continued slight improvement in some of the themes expenses are down a little bit returns continued to rise a little bit and the overall efficiency ratio improves a bit but perhaps not quite as much as people had expected one thing i didn't touch on last time was loan growth and deposit growth deposits up 3% but that core loan is up year over year not showing the quarter improvement that some had hoped for with the tax change that hasn't really happened much like the other banks if we look in as well on the chargeoff rates, a lot of people focus on this with things like credit cards you want to stay low it's a sign of credit risk that has stayed low. some were a bit higher than 3% 3.3% for jp. i think wells fargo's 3.7% that's a decent number for them.
trading we said earlier is only up 1%. there was such high hopes for trading this quarter that breaks down as equities up 38%. vic down 13% overall that plus 1% compares to citi being about flat. it'll be interesting now to see morgan stanley the next couple of days. morgan stanley heavily weighted equities which has been doing well >> all right, wim -- wilf. we'll check back with you. let's talk markets now joining us, richard effen bernstein. have you changed your outlook at all given this i'll tell you why i'm saying it the last month and a half. saw a piece in the journal over the weekend. it's not just the action in the
equity markets but there are -- if you look across the board, there are some troubling signs for stocks do you see it yet? >> no. >> this is what a correction is supposed to do, isn't it >> exactly i think, look. it's not march of '09 and we're not at the point in the market where we're going to get steady improvement month after month after month and every indicator you can think of we are in a late cycle environment. you're going to see certain things deteriorate but the question is what's improving versus what's deteriorating. you could say interest rates are going up that's bad but so earnings are going up that's good. we're at the point where you get this tug of war. and there's going to be bad. there's going to be good our bet is it still wins >> we need your analysis now followed you for a long time i have a grudging respect. and for you to still say things are good with this guy in office is -- it's very difficult for
you to say that. >> no, it's not. >> dragging and kicking and screaming. >> i look at it as -- >> so money is green it's not blue or red or anything else >> exactly my job is to make money for our calls. >> and then just e-mail me with political crap >> i just e-mail you to annoy you. it has nothing to do with what i really think >> let's get your take >> i agree i think at the end of the day we're now at a point where markets are going to refocus on fundamentals we're back in earnings season. this historically tends to be a good time to invest. i think what's happened over the last month or so, we had a void in terms of catalysts for the equity markets we haven't seen the news out of the corporate sector as a result, focus shifts back to politics, geopolitics the other thing i think will be supportive heading into earnings season, you hit a blackout for buybacks i think they're going to be really supportive as companies start reporting. they're going to buy back shares
i think that will support markets. valuations which a lot of people were concerned about at the start of the year, the combination of higher earnings, lower markets means that valuations actually look fair today. >> yeah, like, middle of the -- maybe a little bit higher than normal, but we don't see some looming crisis like some housing crisis or the fed getting too tight or inflation. >> well, inflation -- >> higher rates. >> i think if you're worried about multiples contracting, the thing to worry about is inflation. inflation expectations troughed almost two years ago they've been gradually rising. what people forget is everything in this cycle has been elongated. right? things have taken longer than people wanted. i think inflation is creeping up and that will put creeping pressure on multiples. >> is there no way that earnings disappoint just from the viewpoint that, wow. we heard about the after tax
results flowing to the bottom line given tax reform. and now we're not really seeing it they're not really investing they're not really -- like, we heard the banks should be loaning more corporations should be borrowing more and it's not happening yet. is it possible we get disappointed >> i don't think so. i think it's going to take some time to see that transition. but we are seeing a pickup in terms of capital spending. we are seeing a pickup in terms of buybacks. those are things that happen more quickly ang lot of the longer term effects will take some time to play out the other thing that's important b, we're looking at high teens, low 20% growth expectations. but we're seeing 12% of that organic. you add that in and it's a good environment. >> why can't the 10-year get to 3% in this environment you're sketching out? is that just typical of this point in the cycle >> i think it'll go pretty far above 3% i think it may take longer than anybody thinks, but that's where we're going end up
we're at the point in the cycle where you start getting bottle necks in labor, bottle necks in production we have a weak dollar. and now we have tariffs. so -- >> not yet, we don't >> we don't. >> don't hit my arm and tell me yes, we do because we don't have them yet you know who's there right now larry kudlow so we'll see whether -- >> well, there's talk. there's talk -- >> steel and aluminum. >> did those go in >> i think >> all i'm trying to say is inflation, the backdrop for inflation is getting meatier and meatier. >> have you seen the markets ready for a 40% selloff yet? have you seen those? guggenheim, somebody else said that so we do a trillion dollar deficit this year and rates go to 3.5%. that's not -- that wouldn't cause you to think that we could have a pullback? >> if the trillion dollar deficit is somehow stimulating the economy, it all makes sense. if it's not, then you got problems >> but that's a lot of debt service in terms of -- if it's a
half point higher and we continue to add to the debt, what are we at $21 trillion or something? we got to pay. everything that we generate goes for debt service >> yeah. i think that clearly is a longer term roblem. but if you get some stimulus in terms of growth, that will eventually offset that modestly. but i think the call for the 40% correction, we could go back to the archives for the last seven, eight years and find somebody every year saying we're going to get a 40% selloff and it hasn't happened >> gentlemen, thank you. what's your middle name? >> michael >> everybody's got one >> i'm sorry i got to be different. >> mike, you have one? >> i do. john >> everybody's got one i got a third one. i gave you one and if you look, now people can look you up in the phone book. not call, like, 400 people before they find you >> absolutely. >> thank you coming up, more on syria
from senior foreign policy fellow michael o'hanlon. i don't know his middle name either but it's not oscar and then later, one of the longest serving ceos in the world is out following allegations of misconduct of some sort. sir martin sorrell stepping down at advertising giant wpp don't forget, tomorrow's "squawk box" is live from the nation's capitol. guests include house speaker paul ryan, steny hoyer, steven mnuch mnuchin, and mick mulvaney and also maybe the guy in waiting for the speaker job. nobody knows big names across the board all starts at 6:00 a.m. eastern time tomorrow. stay tuned you're watching "squawk box" on cnbc it can detect a threat using ai, and respond 60 times faster. it lets you know where your data lives, down to the very server. it keeps your insights from prying eyes,
when only certain people can get it. let's fix that. let's give this guy gig- really? and these kids, and these guys, him, ah. oh hello. that lady, these houses! yes, yes and yes. and don't forget about them. uh huh, sure. still yes! xfinity delivers gig speed to more homes than anyone. now you can get it, too. welcome to the party. welcome back, everybody. the u.s. ambassador to the united nations nikki haley says that washington is preparing new sanctions on russia to punish moscow for its continued support of the syrian regime this in addition to the military strikes against what the u.s. calls chemical weapons facilities michelle caruso-cabrera has more on all of this >> nikki haley made the announcement on "face the nation" this weekend
she expects new sanctions to be announced today and they will affect companies providing chemical weapons equipment to the syrian regime. her announcement took them by surprise they see it as an aggressive stance considering the military strikes appeared to stop the escalation by russia and in fact jon huntsman said in a statement, before we took the action the united states communicated with the russian federation to reduce the danger of any russian or civilian casualties most observers said they expected a bellicose reaction but did not expect the strikes to lead to a wider conflict. however, the russian response may be coming in other ways. the telegraph of the united kingdom reports russia has stepped up its cyber war against the united states and the united kingdom with a disinformation campaign perhaps banning u.s. companies from the aerospace or nuclear
energy or prohibiting the sale to companies joining us for more on this is michael o'hanlon from the brookings institution. what do you think is putin's next move? >> good morning, becky i think he's going to be pretty restrained on this let's face it. he and assad are still winning the war in syria now, putin is always going to counterpunch he's never going to give you the impression he'll be docile on anything so he'll find a way to do something modest in reply. but i supported the strikes over the weekend, but they're not going to to do much to change the war. the overall is we're hoping to defeat isis in the east. but the the major populated portions of the country, assad has been winning there's no reason to expect that to change. i think russia's reaction is likely to be notable but limited. >> why do you think assad uses
chemical weapons against his own people >> it's a great question mostly because he thinks he can get away with it and twice he's been proven wrong. but even when wrong, the consequences were modest at most i'm not objecting to the response taken by itself if your only goal was to re-establish a red line on chemical use, i think the trump administration handled these two cases last year and this year pretty well. but it's 1% to 2% of all the fatalities in this war have been caused by chemical weapons and it's only one of five or six tools all of them equally brutal against civilians that assad has deployed he's watched the world let him get away with mass murder for years. i think that's the fundamental reason he does this. >> your points on cyber war, that's something we don't hear a lot about happening in the background is this more than just disinformation taking place? >> it's hard to know in the telegraph they attribute they source the u.s. defense
department and also white hall there wasn't a lot of details related to that at this point. but a natural expectation considering they've been doing it >> michael, where do you get worried about this or do you when it comes to the cyber attacks? are there other things happening beneath the surface? >> you always have to worry, i agree with michelle about the possibility of more russian cyber attacks given how prevalent they've been i think russia will see cyber as an area of advantage for them because we have such a wired society. and we're such an open society and so, you know, it's going to be a dilemma for policy makers for months and years to come how do we respond? you can't respond in kind and be equally effective. if they're just targeted sanctions on certain russian individuals, i'm not sure they're ever going to reach the necessary level of pain.
russia's economy is growing again. we may have to think about broader sectoral sanctions i don't advocate that at the moment if this cyber nonsense and other such things from moscow continue, it's the only way to really get greater leverage over moscow's behavior. >> you have any sense of what you expect to hear when it comes to sanctions being announced by the administration today i've talked to some experts who believe we could hear some sectoral sanctions at this point. and given the context that we already have really, really tough sanctions announced a little more than a week ago against the oligarchs with their designated -- being officially designated person which a lot of people thought was incredibly aggressive >> i think the oligarchs will continue to take hits, but most of them don't spend a lot of time vacationing in the united states anymore or keeping a lot of money in american bank accounts these are still measures that hurt them and complicate their lives. i don't think that's going to change things. we'll keep putting up the pressure but it's close to a ten
on the rheostat. i would be surprised if they're of significant bite at this point. the kinds of russian provocati n provocations we've seen are not dramatically different from what we had been tolerating for many months and years or at least, you know, responding only with measured kinds of replies. so we should up the ante a little, but i think a sectoral response of the kind i was just alluding to, that's more likely to happen if there's a real escalation somewhere >> what should our broader strategy be? there's so much at play in the region what we do with iran, how should we be kind of going forward? >> i think on broader regional strate strategy, there's so many dimensions how we hope that syria's strategy at least evolves. one of the things is to help our allies there hold onto the land they've got. you start by doing no harm and there are places in the northeast and south where, in fact, american allies hold
territory. partly because of the fight against isis we should not be abandoning them we should not be letting them now fall to assad or iran or possibly reinvigorated isis. but also we need a more realistic strategy with assad. we expect him to be negotiated out of power through a process the u.n. is running in geneva, switzerland. that's not going to happen we need more realistic ways to manage a transition, to someone he probably has a hand in choosing that's a big change in american policy from either president obama or president trump but i think we're going to have to face that one head on. >> michael, this is kind of a -- i mean, it's the elephant in the room, i guess, among certain people in the country. but you've seen now how donald trump, president trump has exercised his powers as commander in chief you saw a year ago i don't know if you saw how this decision was arrived at. took awhile. i guess there were five scenarios. he has mattis.
he has, you know, people that he listens to are you comforted in the way that he's handled his duties as commander in chief because there's a lot of people that their primary fear is that the football travels with donald trump and he has the nuclear codes. are you comfortable with the way that -- i mean, tweets notwithstanding -- are you comfortable with the way he's handled his power and authority? >> comfortable is a little strong with me >> are you comfortable with anyone that has the football that's the thing should we be comfortable with the way obama wielded power in syria? >> i would say the decisions wind up being better than i often expected but on syria in particular, whether it's president obama or president trump, our policy has not been up to the requirements or the challenge and even with this relatively good decision over the weekend, we still have a much bigger conundrum on our hand.
we've got to avoid celebrating in the end zone just because isis is on the ropes. >> no mission accomplished i wonder if he knew that was a loaded phrase. normally it's two words that would be happy about but now it's got all the stigma attached to it i don't know what the mission accomplished would mean in syria, anyway, michael at this point. i don't know if it's our business to make sure that we affect -- you know, force our will on what they need to do we tried that in iraq. >> we don't have that option at this point anyway. i think you try to prevent iran and assad and isis from coming back and getting more. then over longer time periods, you try to find a way to manage. but he's going to have some hand in choosing his successor. i think we're going to have to accept that. >> michael thanks. caruso-cabrera is a maniac right winger that we share on certain
things you see how unhappy the right was with this whole deal are you there? are you unhappy? >> nos as far -- alex jones sobbing on the air, i read about that yeah no i'm not there. >> i can understand certainly that the chemical -- but then i also understand dead children -- >> the president said he was going to do something. he had to do something the minute you say it, you got to follow through. >> because what's that name of that book? >> you know i'm right. more prosperity, less government available on amazon. >> i know you're right and you are. >> michelle, thank you when we come back, sir martin sorrell out at wpp. the stock is getting hit this morning following that news. we will be joined to talk about this in a bit. "squawk box" will be right back. nah. not gonna happen.
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now you can get it, too. welcome to the party. good morning welcome back to "squawk box" here on cnbc rain and cold weather. live from the nasdaq market site in times square. it's the boston marathon today i just can't imagine people have said you'd rather be in this weather than 90 degree weather, honestly, in shorts >> you'd die if it's that hot. >> i know. but the real feel is 18 degrees and rain
>> for me the weather wouldn't matter 22.6 miles forget it. >> jowe'll intro you in a secon. among the stories front and center, caesar's entertainment has announced plans to open its first non-gambling operation they're partnering to open two caesar's branded resorts in dubai. that's part of a $2.2 billion project. in other casino news, icahn enterprises is selling tropicana for $1.85 billion. el do ra d eldo ra d dorado resorts will b buyer. and netflix earnings, they're expected to report a nearly 60% jump in earnings year over year.
well, sir martin sorrell is resigning. the departure comes as the ad giant was investigating him for various claims of misconduct joining us now gillian tett, cnbc contributor i was going to get the low down from you, gillian. in low down what i mean is this has been a rough year already for wpp in that the forecasts were worse than any year in the last five years. >> absolutely. >> totally unrelated >> you can see it in the share price. >> but unrelated >> yes, to a large degree. you can see the share price was around 19 pounds a share in february it dropped to 12 pounds a share even before the shock resignation. you know, the issue is partly you've had sir martin as he likes to be called at the helm for a long time. there was a feeling he was beginning to get a bit overreaching, overwhelming for the company. and the company's been doing pretty badly recently compared
to the history because it hadn't seen the depth of the digital changes >> whenever he was on, he was always so out front. that if he couldn't deal with what he knew was coming, how can anyone expect to >> he used to tell us a lot in the media, well, you guys are going to get run over by trucks because of what's happening with facebook and google and silicon valley and the advertising revenue going away i asked him at dinner a few years ago saying, sir martin, what is that going to mean for you? all the ad buying and stuff like that takes away the value of the middle man and what we're seeing, i'd say, is partly the digital disruption eating away not just at the traditional business model of the media but also the advertising agencies that's something which ironically he appears to have talked a lot about but not really found the strategy to deal with. >> i guess the question becomes can you do anything about it mike had pointed out, the other advertises agencies have not
faired any better. >> and the ad changes you talk about, they cut that out of the process, right i mean, it's -- they used to be able to say we'll buy your media for you, be smart about it >> middle men are getting squashed >> and the problem about wpp is sir martin through his sheer gravitational pull and personality basically cobbled together this incredible conglomeration of different companies which kind of are related but it's not clear to anybody they have much business being together as part of this old fashioned conglomerate style. >> two questions what happens to wpp. >> and then as the financial times points out, what happens to sir martin sorrell? he's free to compete >> this is a story we had today which is sir martin is indeed free to compete. he's somebody who has always been a total workaholic. at the age of 73, you might say perhaps he could chill out and
relax. >> i don't see that. >> it's very hard to see him just sitting quietly in terms of wpp, two options the most likely is it gets broken up now. because it really was sir martin who was a gravitational pull around which everything else revolved some people say, well, maybe you get a new person coming in at the helm who actually has vision to knit together these different companies and really do something with that. but the very fact they've cobbled together the chairman and a couple of sir martin's deputies to run the place right now shows this was not a planned departure. and if you compare it to publicist and what happened with louis there and see how smoothly and gradually another big ad agency planned to cope with this, you can see what a total mess this is for wpp and a real shock. of course what everyone keeps asking is what the hell actually happened >> that's the thing. and it -- i never heard the term he's a good lever.
which means the board won't continue to investigate it it's done. >> well, there are all kinds of sad stories going around london right now. >> at the financial times -- financial times is not the guardian or something like that, but i know you're dying to get more >> well, the one thing -- i have a good idea. but the one thing is basically it wasn't a lot of money that's a key issue. >> was it personal was it a me too thing? >> no, it wasn't a me too thing. status is changing about what is acceptable as corporate behavior >> personal? >> what i'll say is this a brit, someone born in the uk, it's a tragedy because the uk doesn't have a lot of these incredibly dynamic, powerful entrepreneurs who go forward to build business empires. let's not forget about the fact the literally took a time shell company created to create wire
baskets. that's where the word wpp comes from and in 30 years he turned that into a giant and frankly the uk needs more people like that it's a sad way for the story to end. >> the board can say he's a good lea leaver but they're not going to leave it at that >> people are beating the bushes but the bigger question, though, structurally is what's going to happen to the ad agency in general. >> it is got to get digging. >> but you're right. you want to see more entrepreneurs. >> and more british success stories. we want to see more dynamism >> that will happen with brexit. now you're out from under the yoke of those bureaucrats. >> let's hope you're right i desperately hope you're right.
>> things are going okay so far. right? we'll see. >> well, let's hope you're right. certainly there is going to be a chance to rewrite -- >> how about best out of three >> bring back a few times, we'll see. >> thanks, gillian all right. coming up, morgan stanley's multicultural innovation lab is pushing for equality and innovation at start-ups. we'll hear from senior client adviser and vice chair of global wealth management carla harris she's with us after the break. check out the futures at this hour up about 150 on the dow. quk x"ilbeig bk."sawbo wl rhtac as a control enthusiast, i'm all-business when i travel... even when i travel... for leisure. so i go national, where i can choose any available upgrade
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for the second year in a row, morgan stanley has chosen a cohort of ten start-ups to grow through the multicultural innovation lab joining us now to talk all about it is carla harris she is vice chairman and senior client adviser at morgan stanley. great to see you >> good to see you again >> it's good to have you back talking about this for people who aren't aware of what the cultural innovative lab does, explain to them where this comes from >> it is an in-house accelerator that focuses on entrepreneurs of
color and women. one of the reasons we decided to have a focus there the reason is there's inequity to early stage capital to entrepreneurs of color and of women. as i always say, whenever there's a market insufficiency, there's an opportunity. >> why do you think the gap exists >> the gap is huge there's less than 4% of venture capital that goes to women and less than that thatgoes to people of color. part is they don't have access to the early stage networks or the family and friends or the seed capital that actually funnels you into the vc community. once you get behind the eight ball, it's difficult to catch up to get that kind of visibility that will attract the vc community to you we think it raises the level of visibility we certainly saw that with the first class. because as you know, last year when we launched this, there was only five companies. we're now doubling the size of the lab which we are ecstatic
about. >> how many companies did you kind of check out before you found these? >> well, this time we had 300 companies apply in three and a half, four weeks for ten spots last year we didn't even put it out on the internet. we put it out on the whisper network. >> when you said it's not exclusive, is this morgan stanley making the investments directly alongside other venture capitalists? do you open for other clients? >> while they're in the lab is morgan stanley invests in the company. again, the level of visibility is such that we're able to attract institutional and individual wealth to these companies. pulse their time in the lab. we saw amazing success last year with the five companies. one was purchased while it was still in the lab seven weeks in. another one got another purchase offer. another one doubled their size of investment such that they had to shut down their fund raising. they blew through their targets. another one received a fortune
ten contract and the last one accelerated their corporate pilots so five for five we think we did a pretty good job picking them but more importantly we were in the ecosystem to be able to find them as you know, part of the issue you see with on accelerators, they don't have many people of color and women in their cohorts. they can't find any. but clearly they're out there. >> let's talk about some of the companies you found this time around what are they, what do they do >> all technology enabled companies. one is an end to end solution for pregnant mothers and new mothers. it's called baby to body another one is coi energy which allows companies to eliminate waste. another one is based in london which gives you an online unique entertainment experience another is called broadway roulette which will give you an experience in new york city.
>> what does that mean you hit the roulette button and you get a show >> that's right. you're guaranteed a high quality show and gives you a unique experience every time. the other is goal setter which teaches kids how to gift and save online. across the board, all tech another one is called hat chat which allows a software developer to distribute and create an app without writing a single line of code. so i could go on and on. we're excited about these ten companies which covers energy, technology, you know, health and wellness it obviously also exposes you to a specific cohort. one case, women. another one, mothers another one, bloggers and influencers. across the board >> you said at the start you did this because you saw an opportunity where other banks, other investment firms weren't willing or weren't looking does that mean you can invest in these companies, you get a great opportunity because you maybe don't have to pay the high multiples where you would in
other places with people getting in >> i would say that it's a differential with respect to the multiples. but i will say the fact we found them early gives an opportunity to build a relationship. so it's not only a commercial opportunity, but you can build a relationship from post seed all the way to distribution whether it's m&a or ipo. i hope that will allow us to own it down the line >> what sort of investment does morgan stanley put into this >> we give capital which every accelerator would give them. we also give them content which every accelerator would give them but we think our content happens to be unique given we're a global leader around the world and the third thing that we give them is connections. because we are who we are, there's really not a potential client or an investor that might be useful to this company that we can't touch because we are who we are >> couple more years you do ten each year. i mean, it actually looks like a
venture capital fund do you have to staff it that way? what's the plan for subsequent years whether that's shepherding them or graduating them out? >> actually, we leverage all of the intellectual capital within morgan stanley so it's not just my group that touches these companies. we have managing directors in technology, in our technology investment banking group, in other parts of investment banking, other parts of sales and training so we bring all of our capital to bear on these companies and they have mentors while they're at morgan stanley. then after they graduate from the lab, it extends beyond there. because the companies that graduated already are still connected to the morgan stanley network. and we're still continuing to help them. >> carla, we want to thank you for being here today >> thank you for having us begun again. >> let us know how this works out. >> thank you very much when we come back, cnbc international opening up a new studio in abu dhabi. we will head there after the
break for a look also a programming note for you. "squawk box" is going to capitol hill tomorrow. we have a huge lineup including house speaker paul ryan, house majority leader kevin mccarthy, ways and means chairman kevin brady, minority whip steny hoyer, omb director mick mulvaney, kevin hassett, steven mnuchin, many more names all of this coming up when quk x"oes to washington, d.c. it starts tomorrow at 6:00 a.m. eastern time to buy or sell?ght be e with fidelity's real-time analytics, you'll get clear, actionable alerts about potential investment opportunities in real time. fidelity. open an account today. fidelity. - anncr: as you grow older, -your brain naturally begins to change which may cause trouble with recall. - learning from him is great... when i can keep up! - anncr: thankfully, prevagen helps your brain and improves memory. - dad's got all the answers. - anncr: prevagen is now the number-one-selling brain health supplement in drug stores nationwide.
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"60 minutes" taking aim at allegiant air last night saying allegiant experienced more than 100 serious mechanical incidents including engine failures. >> you're a former member of the ntsb would you fly on an allegiant plane? >> i have encouraged my family, my friends, and myself not to fly on allegiant >> now, allegiant's stock took a hit on friday when news of the "60 minute" investigation broke. they responded with a brief statement which said in part, in their words, all of us at allegiant are proud of our strong safety record as noted in the most current comprehensive faa audit. safety is at the forefront of our minds and the core of our operations faa records over a period of more than a year showed that allegiant was nearly three and a half times more likely to have
mid-air breakdowns than delta, jetblue, and spirit. all right. how do you define a mid-air breakdown? >> i don't know. my guess is the engine has some troubles and maybe there's two engines. >> you know, from the sound of it, i don't want to experience one. i don't think. right? cnbc international opening its new abu dhabi bureau today we are joined now with more on the big debut. looks nice >> thanks, joe we're really excited to be here at the abu dhabi global market inside the financial center. it's a really exciting time to be in the globe gcc. what we're doing is covering saudi arabia, the united arab emirates, egypt. certainly that's become a much more interesting investment
destination in the last several months and of course we're also speaking to the some of the big names from the region. earlier today i got the chance to catch up with egyptian billionaire philanthropist very outspoken on everything from the refugee situation in syria to what's happening in north korea. he's the only person to own a license. we also spoke with the leader of etihad airways a lot of excitement surrounding how they're going to restructure that business. bringing it back to profitability. we're going to be talking tomorrow with the ceo of the largest property developer in abu dhabi. so a lot of big names on the horizon and a lot of equipment surrounding what we're doing here >> it looks beautiful. >> it does a lot of money over there, i think. i got that right >> i think you're right. i think you're right hadley, thank you. we look towaforward to it.
meantime, mike santoli is with us this morning mike, we've been watching the markets all morning long looking at pretty sharply higher open after a disappointing day on friday what's happening >> it looks like -- well, right now the futures are indicating the market is going to get back up to friday morning's high. we had that selloff in the day with the financials. in part it was people kind of wondering what kind of response might be in syria over the weekend. and just kind of a general defensiveness going into a weekend. bank earnings remain a bit of a puzzle so widely shared and so kind of obvious for so long, for two years, that you don't have as many blowout numbers on trading. other than that, the market has held above those lows. it spent a lot of time down there on the bottom end of the range. up about 2% last week. i think it's still kind of grinding in the right direction, but we'll have to see how the earnings response goes >> i think that gets you back to the question of where does the leadership come from in the market
it's been banks and financials it's been technology and both of those areas may be stalling out a bit >> they definitely are not as effortless as they were before if you look at year to date, it still looks like banks and financials and some consumer discretionary. but it's hit some friction along the way. so energy has been acting well but it's only 6% of the s&p 500. so really how far can that take you? at one point it was over 10% '06, '07 when exxon was the largest market cap country in the world. >> i guess that depends on wti which was around $66 earlier this morning >> i don't think you have to say it's game over for tech and financials it's just a matter of them maybe growing to the valuations. >> okay. mike, thank you very much. again, mike is with us for the whole morning co-hosting here on "squawk box. when we come back, bank earnings are in focus this morning as we mentioned. bank of america reporting earlier. we have the street reaction coming up. you can see right now bank of america shares up by abou
breaking economic news a fresh read on the consumer just 30 minutes away as stocks point to a triple digit gain at the open new this morning, bank of america out with earnings. the results and reaction from the street is straight ahead plus a video of two black men getting arrested in a starbucks goes viral >> what did they do? they did nothing >> the ceo of the coffee giant apologizing amid calls for a boycott. the details coming up as the final hour of "squawk box" begins right now live from the most powerful city in the world, new york, this is "squawk box. good morning and welcome back to "squawk box" here on cnbc live from the nasdaq market site in times square i'm joe kernen along with becky quick and mike santoli andrew is off today. the futures are up have been up for most of the morning session.
up 140 points indicated on the dow jones. s&p indicated up 15. nasdaq about 38. treasury yields, we're back in the 2.8% area for the 10-year. maybe this is the time we'll just have to wait and see. >> how many times have we thought that >> like a hundred. five years' worth. here's what's happening at this hour. icahn enterprises is selling its majority owned subsidiary tropicana entertainment for $1.85 billion. el dorado resorts will get that. goes to gaming and leisure prospects which leases real estate to casino operators mike, you were talking about this earlier this morning. >> it comes a week or so after icahn also sold federal logo these are assets housed within the publicly traded icahn vehicle. iep is the ticker symbol it's interesting he feels he's a net seller at least out of this
portfolio. >> makes you wonder what he thinks of -- >> he's been skeptical for awhile he's that kind of investor that loves to buy when times are desperate, when he has a huge advantage just sitting there with capital maybe not his market to be a buyer. but it is interesting at least >> it is also with rks. rks p founder and ceo sir martin sorrell stepping down over the weekend following allegations of inappropriate conduct. no details were released the ft reports that sir martin is free to start a new advertising venture because he never had a non-compete agreement. his compensation typically ranked at or near the top companies on the london stock exchange he raked in about $100 million back in 2015 we're going to talk much more about the future of wpp and martin sorrell in the next hour. it was 70 million pounds >> only 70 million pounds. let's get you caught up on a few analyst calls this morning costco upgraded to outperform
from market perform at wells fargo. they pointed to the increasing same store sales, improving membership trends, and a special dividend and mcdonald's downgraded to equal weight from overweight at stephens the recent comp store sales were driven by a number of initiatives coming together at o once bank of america reporting first quarter results this morning. the bank beating on both the top and bottom line. results helped by improved loan growth and bigger deposits too joining us now is jeffrey hart thanks for being here this morning. >> morning >> all right so we see the bank is trading a little bit higher on this news what did you think of the news >> they're pretty good results people are a little green today after friday is not that surprising they beat us by a penny. the street by three cents. there's always a few things.
but net we're seeing progress where we need to see progress. and should keep it higher in my opinion. >> let's stick with that top line this is an improving picture one that is better than people had been anticipating. but if you had to nitpick, where would it be? >> i'm sorry, i didn't get that. >> if you had to nitpick, what wr would it be >> just a few things one, a lack of loan growth that's been an industry issue for the big banks. secondly, expenses the bad news is expenses were higher than i was expecting. and part of the guidance has been to $53 billion of expenses this year. in my opinion if they get 3% better revenue growth, it's going to be a hard expense number to hit. nonetheless, expenses came in higher than people were looking for. and the third thing would be fixed income trading
we knew they'd have a tougher quarter. but down 13% year over year is more than we were expecting. >> what about the lack of loan growth is that an issue some people were saying we're not seeing the loan demand we would have anticipated after the dax plan went through. or is it too soon to be judging that >> i hope it's too soon to be judging. kind of spurs loan growth. especially on the commercial side and we're just not seeing it we're seeing it in the economic numbers. hopefully that will pick up and come to terms. i think we will see it accelerate maybe not as strong as maybe historically we've seen it it was pretty strong a couple years ago. i think we'll get there, but that's certainly something weighing on bank stocks in general. leading to a big question of why is that loan growth not materializing when sentiment's still strong and we're seeing, you know, the economic picture really globally still moving in the right direction. >> jeff, that dynamic of basically investors being impatient for the loan growth or
quibble with the trading numbers that was in effect friday with the way the stocks reacted are investors just sensitive to not being sure how much is left in the cycle obviously delinquencies look fine, but i'm wondering what you're hearing from clients in general in the sector. >> yeah, i don't think it's so much we think things are going to turn bad as far as credit goes or something tomorrow but it's some skepticism on what the upside will be kind of not feeling a need to rush to kind of act. in general, those i'm talking to seem pretty positive loan growth will show up, credit quality is going to hang in there i think they're to some extent waiting to see that may be something you saw on friday some positioning coming in expecting the forward outlook numbers. credit line utilization. things like that they weren't bad, but maybe not quite as good as they were
as long as we keep moving in the right direction, i think there's still investors looking at the market in general. specifically in banks once they're a little more convinced that some of these things would materialize. >> would you tell people to wait or jump in right away? >> i would say it's a good time to be getting in right now it's tough to time when things are going to be better or worse. but i think when corporate sentiment is still good, corporations still have a fair amount of cash on their balance sheet. believe it or not, that tends to correlate with consumer loan growth we're seeing some robustness in the capital markets environment. i think it will keep getting better when you look back to last year, the first quarter looks pretty good second quarter, things really slowed down. probably some concern that will play out again i don't think that's going to play out again as the second quarter plays on, more people should be coming in. >> great thanks for joining us today. >> always fun. thanks it's the official start of the trading week less than 90 minutes away
earnings week too. let's get to the markets here is david bianco i was thinking about all of our previous discussions and the s&p's at 2650 which is in our history that's been one of your numbers. for awhile it was a number that was, like, a year-end target i think for last year. so pretty good number in terms of valuations compared to where we are now but now i kind of see it, it had been a price target. now i see it for you maybe as a support level, maybe or is it >> that's well said. i think support around 2600, i think fair value for the s&p right now, media moment is more like 2700, 2750. i think we get to 2850. >> can i not read your mind? i remember -- i listen to you. because i need to know these things because i worry about this is your year end target 2750 >> no. 2800 exactly
and we are very tactically bullish at this moment i think we've got more than usual upside for the short side with less than usual risk. this is one of the things that has us bullish for the short-term as well as constructed for the long-term. i do expect over 20% earnings growth this season a little bit more than $38 million in the first quarter >> when you're not excited about multiple expansion because from the end of last year, 2800 is -- >> a lower multiple. >> it's single digits though earnings are growing at 20%. you're looking from the end of the year what is it from here 20% earnings growth means the multiples aren't going cooperate. >> we're expecting the pe to be 18 on a trailing basis by the end of the year which is a multiple that is well supported. >> what about s&p earnings then? >> 155
almost 2800. >> is that it? >> that's exactly it. >> when you go from forward to trailing -- >> forward to trailing we do believe that the 10-year treasury yield doesn't exceed 3% that in 18 to 20 multiples is reasonable as long as the risk of recession stays low that's the case right now. >> in we weren't in the market in 2017, we blew it, didn't we that's what we're -- the return this year. but it's not -- >> look. we still think they're attractive >> what about the year -- >> there's still attractive gains to be made >> that's what's interesting in six months, isn't the talk going to be, going to have tough earnings comparisons what are we looking at in terms of higher rates? >> part of that multiple is on a trailing basis but it only requires about 5% earnings growth. 5% earnings growth, couple percent dividend yield, 7% total
nominal return far better than interest rates we think that goes on for another two, three years longer. >> does the fed ever -- what -- does the fed ever get to a terminal point where we're not going four every year? i think we're going four every year to get back there >> i don't think we will we do think we get two more hikes this year. >> how many next year? >> probably a couple more. >> then after that >> i don't think we could go any higher because i don't think inflation is going to accelerate much we believe it plateaus. >> you do? that'd be good for multiples >> that'd be the reason why an 18 to 20 multiple even after ten years of a bull market could be supported. >> but every time they raise rates we say it's for a good reason we should be excited because the economy is doing well. you think it's a goldilocks scenario >> as the unemployment continues to fall, inflation stays sticky around the 2% target, there's no
need for the fed to push higher. and we think the bond market will -- the long-term yields will show the fed they've reached pretty much neutral levels >> all right >> in the meantime, we're reloading on what's been the softness on the market we're buying tech in emerging markets. >> are you buying broadly? >> we're buying broadly. and we are attracted to fang we are attracted to tech beyond fang and we're attracted to tech in emerging markets and then it becomes a little bit more difficult health care, consumer discretionary, parts of industrials. they're all kinds of difficult to adjust. >> good move not listening to me when i kept telling you to raise your target to 3,000 >> a lot of good policies are in place. >> you had to resist >> i did have to resist. you could see the excitement for the tax cuts you could see the higher estimates. >> but you wouldn't go to 3,000. i want you to go to 3,000 now.
>> through the end of 2019, that's a reasonable number. >> thank you >> thank you >> i like that you are very fair in critiquing. >> i do. i also remember too. >> you do. all right. when we come back this morning, the eu calling on iran and russia to stop the use of chemical weapons in syria. this after the u.s. and european allies launched attacks on syria. we will talk what it means for the markets with a former ambassador to syria, iraq, and afghanistan. plus check out shares of wpp the world's largest advertising company losing its longtime ceo martin sorrell very familiar to cnbc viewers. quitting over the weekend after allegations of personal misconduct the reaction has been sharp. shares down by almost 5% this morning. we have that story coming up
we're back here's the markets right now up 147, almost 148 now on the dow. the s&p is indicated up 15 and the nasdaq is up 40, probably triple digits one way or another even money on whether it's up triple digits or down triple digits friday turned out down after looking okay at the start of the day. >> it's any given weekday. in our headlines this morning, former fbi director james comey blasting president trump in an interview with abc comey saying the president he says is morally unfit to be president. he also compared the trump administration to a mafia family and he believes it's possible russia has material that could
be used to blackmail the president. he said he didn't think it was likely, but said he couldn't rule it out either this was comey's first interview since being fired by president trump in may of 2017 the assad government responding to the .s.-led air strike by launching more attacks on the rebels. and russian president vladimir putin says more attacks on syria would lead to global chaos joining us right now is ambassador ryan crocker. he's a veteran of foreign service including spending time as ambassador to syria, iraq, and afghanistan. out with a new op-ed in "the wall street journal. it is called "after the syria strike, a strategy." a it was coauthored by michael o'hanlon who spoke to in the last half hour >> thank you for having me >> when you think of the strategy that has bedeviled many presidents when it comes to syria. the strategy you lay out today, tell us what that is
what's the best way forward? >> well, this is a moment, an inflection point where we did respond on the chemical attack so it's a moment, i think to assess how we move forward we're still going to be in the anti-isis phase for awhile to reduce them as far as we possibly can, but now's the time to look ahead from that. what should our strategy be? we should protect them and that should start really by ensuring that we are giving forces that have worked with us a reasonably st secure position. look at the battle space right now. start there. we have to be realistic about assad. he needs to go, certainly. but he's not going to go right away we think we should reinvigorate the geneva process, start
talking about agricultural problems and above all else to consult with our allies and to send a message to our adversaries russia, iran, and the syrian regime that we are there because of our interests they need to be sure that they in no way threaten those interests or we will respond, again, militarily. >> just thinking of what that might mean, that basically sounds like we'd be sitting down at a bargaining table across from russia andothers and saying something like let's divide syria assad, we recognize may not be leaving soon, but we want "x," "y," and "z. is that the type of discussion that you're talking about? >> absolutely not. it's good to reflect we're about a hundred years into the new middle east that was created by the british and the
french literally drawing the lines on the map that is still an issue in syria and elsewhere who look at these countries for what they are. they are imperialist or were so the last thing we should be doing is drawing any more lines on the map i think it is seeing what's happened, who we can work with, who we need to contain and then what the possibilities are. but, again, the last thing we should be talking about is time for the west to draw new maps in syria or anywhere else in the middle east. >> pardon me for kind of reading between the lines, but that still sounds like what we are doing. if we're saying we have allies in this part of the country and this part of the country here, and we protect those interests, we may not be drawing a map but we're essentially doing the same thing deciding where we're going
to continue to support groups. >> well, the alternative to that would seem to be telling these groups who fought and died with our assistance in countering isis basically telling them good-bye and good luck >> understood. understood on that front what do you think of the response that we've heard from nikki haley today about sanctions that are going to be coming for russians as part of all of this? >> i think it's an important step the russian economy is not in great shape to put it mildly so this i think may be a case where additional sanctions are going to cause them real pain and one would hope a reconsideration of what they're doing in syria basically backing a mass killer. >> do you anticipate that this is going to become a long protracted issue where we send lots of additional troops or support? or do you envision this is going
to be something kind of more to what we've been seeing over the last five or six years >> what we need in our view, michael o'hanlon and i, is, again, a clearly delineated policy we don't have one now. and in that process, i think we'll make some decisions on what our posture should be going forward. do we need military there? if so, for what purposes how can we ensure we don't get into mission creep and so forth. but these things will not be clear unless or until we decide to engage at least to the extent of an assessment of the battle space and our equities in it look, remember in iraq the obama administration decided our work there was done. we got out in 2011 what happened? pro-iranian shia militias on the
one hand and islamic state on the other occupied the space we once held. that should be a sobering recollection for us now. is that really what we want? just to get out of the way, allow the russians and syrian regime and the iranians and their proxies to become even stronger there >> ambassador crocker, thank you for your time today. >> thank you all right. coming up, starbucks under fire. the ceo of the coffee giant speaking out this morning after a video of two african-american men getting arrested in one of its stores goes viral. we'll tell you what the chief executive said and "squawk box" is going to the hill tomorrow. don't miss a lineup of news makers including steven mnuchin mick mulvaney, cathy mcmorris rogers we keep skipping her it's not fair. and paul ryan and the man who
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retail sales futures are up 160 now 10-year about $2.86% this morning. jim iuorio is standing by for us in chicago he's going to bring us the numbers. jim, what are they, please >> this is a big deal. remember last time retail sales was a crummy number. this time it comes in at plus 0.6%. we were expecting plus 0.4%. so it's a solid beat this time we got worse than expected with 15.8%. the retail sales ex-auto is plus 0.2% as expected. ex-auto and gas, plus 0.3% little bit worse than expected stock was doing good s&p up 15. now up 15.5. the bigger deal this morning is the 10-year was trading 2.86%. it lost a little bit
we somewhat faced our fears over the weekend with the attack in syria. sh some markets are shrugging them off. if the numbers are coming in pretty good, it seems to me that all we're really going to have left to worry about is the fed but right now it seems like a risk on day here back to you, joe >> interesting all right, jim thanks for that. let's get to steve leisman with more reaction. >> kind of expected an upside surprise on this gasoline didn't fall as much as was expected and some good numbers in here. i don't want to set the table a little bit on what the issue's been we had three negative numbers on retail sales at a time when we would think that the consumer should be doing just fine. sure, they stretch themselves out for christmas, but you had the tax cuts and other increases, more jobs out there pretty decent wage gains but we had these numbers finally the consumer steps up with this big 0.6% raise with a 2% raise
in motor vehicles. electronic appliances up 0.5%. pretty broad based 0.3% modest decline in sales but that was off a big number last month >> i just wonder with some of these things, how much of it is a lack of price inflation or price deflation in these situations because you might be selling just as many units of clothing when prices come down, same thing with electronics >> absolutely. so that would actually tend to -- that would definitely increase the total out there, the real spending. like, for example, we saw huge price swings we know electronics continue to fall you have to square that up with the real numbers that come in into the quarterly gdp data. and i am looking -- speaking of gdp, the control group, the one that flows directly into gdp, up 0.4%. that's a strong number after being flat in the prior month.
so what that's going to do, that's going to help gdp a bit we are running we talked about this last week that weak first quarter gdp seems to be there. at least now we got a decent retail sales number. people seem to be stretching out a little bit in the month of march here after couple down months in january and february and one note, if i might in about an hour and a half i'll be sitting down with outgoing federal reserve president william dudley who will be out in june. we'll have a chance to talk to him for maybe the last time as president. i'm sure he'll join us after he leaves >> we will be watching
>> president trump just tweeted and he tweeted earlier about jim comey. but this is kind of -- it's not new, but interesting russia and china are playing the currency devaluation game as the u.s. keeps raising interest rates. not acceptable >> but they just found them not
to be a currency manipulator and the currency has been stable hasn't it? >> ours has been >> and the ruble is down because of sanctions >> all right let's bring in columbia business school dean and former counsel of economic advisers, glenn hubba hubbard. tax reform is in it's early would you say so far so good and then factor in what tariffs mean and whether that has, you know, taken away from the positive effects of the tax reform or not. >> sure. i think so far, so good. tax reform is a one-two step in the beginning we've got a positive demand effect i think you're seeing it in things like retail sales over time you have a strong effect on investment on productivity i expect to see that obviously the tariffs and the approach they represent do represent a head wind to the success of tax reform and deregulation i agree with the president on
the diagnosis that went into tariffs. the medicine is all wrong. >> medicine is all wrong and do you think the medicine is sort of on the shelf, you know, the teaspoon's out, maybe the lid's off, you know, you've got some water ready to take but we haven't taken it yet. will we finally take it? >> well, that's the hope we will i mean, the right answer given the centrality of china -- dealing with china across all major countries it's reaching out not looking in and actually helping people who have been left at home by trade. that's the one-two step. fortunately we haven't seen aggressive use of tariffs. we hope it's more talk than action we'll see. >> do you think we could get into tpp what did you make of the overtures to do that and the reality of whether that's still possible >> well, i was fascinated by it. the real reason to do tpp from a u.s. perspective is a
counterweight for china. it was never really about boosting growth in the u.s it's really a counterweight to c china. we have a lot of concessions we got the other 11 to provide and then we walked away. i don't know what getting tpp means at this point. the devil will lie in the details. >> is -- have you seen the president sort of talk down the fed before it sounds like he doesn't -- is he sort of massaging them to not raise rates with that latest tweet i read at the beginning? >> i never read too much into the president'stweets one way or another he will have whatever views they have and they speak for themselves the fed's independent. it should do what it thinks is right and it's doing exactly that >> what's your forecast for the -- do you think -- when we average all four quarters together for 2018, will it be 3% >> well, it's too early to tell. i think it'll be at least 12.5%.
whether it is further to the upside will depend on how policy plays out the rest of the year it's certainly possible. >> are you still here? >> i'm still here. >> all right >> mind if i ask glenn a question >> all right >> how would you react to the tax cuts here? would you give more tax rates or fewer given what's going on in the world today? >> it's a great question if you thought the tax cuts were all about aggregate did demand, that pushes the fed to decrease a bit. but i think most of the tax reform was about supply, investment, productivity if i were the fed, i would be watching and waiting we have to see what they do. >> do you at this point agree with the point charts on the fed? i had someone on earlier, glenn, that said i figured we'd do four a year for the next five years to get back where i remember interest rates being but could we end up at a terminal point that's up than
historical facts >> it's possible where you want to end up. it's an inflation plus real growth 2% inflation targets well set. what's real growth going to be i think there's still debate about that i think the tax reform really helps that but real growth is a complicated thing. i think the fed is right to take its time here. but we could wind up lower than we've been in the past looking for history is not necessarily the right guide. >> how are you feeling about deficits, entitlement spending, interest rates going up? as someone -- in the past we've worried about deficits we don't seem quite as worried now. are you worried? >> i worry about it a lot. it's not particularly because of interest rates and international capital market those effects may not be that large, but future taxes or future spending cuts when we let debt levels rise the
way we're doing, we'll have to adjust at some point and the more gradually we adjust, the less painful it will be that's just math >> all right you're still smiling you seem okay. >> perfectly okay. >> we haven't gone over the -- you haven't gone over the cliff quite yet, huh >> no. >> all right we appreciate it thank you. >> my pleasure the world's largest ad firm wpp losing its longtime chief executive. martin sorrell stepping down over the weekend the stock off by 5%. julia boorstin joins us now with more >> becky, this is a dramatic departure of the high profile team of the largest group. martin sorrell has resigned since earlier this month into alleged personal misconduct without any details of what happened
building a global ad giant sorrell overseeing the company on the nasdaq and acquiring a range of marketing companies including j. walter thompson he was known for his massive pay packages which were the largest of any in the ftse and sorrell will continue to get paid his resignation is being treated as retirement qualifying him for as much as 19 million sterling over the next five years as the board conducts its ceo search, it promoted its chairman to executive chairman and named two co-coos. and the pressure is on to find a new ceo after the company's stock has lost about 35% in the last 12 months and the company in its most recent quarter forecast zero revenue growth for 2018. this all raises questions about whether the conglomerate needs to be run differently or split up given cost pressures and the fact that google and facebook increasingly dominate the sector now, a source tells us that sorrell does not have a
non-compete clause though he's 73, he's not ready to retire quite yet. joe, back over to you. >> well, i would hope not. that's very young, julia >> i cannot imagine martin retiring. >> no. shatner's 87 and he's doing "the amazing race" over in europe >> it'll be interesting to see what he does next. no concrete plans, but not ready to play golf yet. >> well, i think he's very young. i don't think he'd be very good at golf. i don't know but he's good at advertising, that's for sure. used to be making headlines with starbucks facing backlash after officers arrest two black men just sitting at a table. this video went viral. reports say one asked to use the restroom but the employee refused because they had not bought anything. they were asked to leave when they declined, the employee
called police. ceo kevin johnson was on tv this morning speaking out about the incident just a couple minutes ago. >> i'll tell you, the circumstances surrounding the incident and the outcome in our store on thursday were reprehensible. they were wrong. and for that i personally apologize to the two gentlemen that visited our store >> and protests are scheduled at the philadelphia starbucks location this morning. check out the shares of starbucks. not affected too much. down about two-thirds of a point this morning >> but the two gentlemen were waiting for a friend or business colleague to show up who showed up as they were being led out and arrested other customers were so offended, they videotaped it >> also, starbucks as a brand, i mean, they are supposed to be welcoming. it's almost like a library you go in there, use the wi-fi >> i talked to other people who used to work there who said that's what they said. they want this to be the third
place to hang out. right. it's going to be something we're watching and continuing to talk about. when we come back this morning, oil prices staging a reimpound jur rebound just in the last week. it's what michael cone calls a perfect storm. he will explain next right now, though, as we head to a break, check out the futures at this hour they've been higher all morning long still indicated up 170 points. this has been a fairly steady number touhrgh the show. the nasdaq up by 45. and "squawk box" will be right back ♪
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welcome back, everybody. among the stories that are front and center this morning, shares of truck maker navistar are on the rise in premarket trading. volkswagen's commercial vehicle unit says it is considering buying the part of navistar it doesn't already own. the automaker's navistar stake currently stands at about 17%. this news follows a sweeping management overhaul at volkswagen that was announced late last week the stock is up by 6.2% this morning. the latest read on home builder sentiment is going to be out later this morning the april index from the national association of home builders will come in at 70 according to consensus forecasts. that number would be unchanged from the march reading and then proxy adviser iss is calling on equifax holders to vote against the five directors.
prior to the massive 2017 data breach the credit reporting agency estimated that 147 million people were impacted by that breach meantime, oil prices in play as tensions between the united states, syria, and russia escalate joining us now is michael cone who is head at barclays. great to see you this morning. >> thanks for having me. >> how much of this geopolitical tension do you think is playing into the oil prices right now? >> we actually did a survey on this as we released our latest report and just so polling the clients that had weighed in on this estimate, there was roughly between $5 and $10 of geopolitical risk premium in the price. at least based on their assessment >> is that more than just syria though this syria situation has been long running >> right the other thing is general this
the market is tighter over the summer that aek success to the range of inventory is also ticking lower. we think we will be back into market balance if that is even a thing. you know, by april or even may compared to the five-year average. >> i was going to say. oil's never been produced in particularly calm or stable places right? so really it's the sentiment of the market itself seems to dictate how much the market responds to things like syria. where do you think the price goes to if we are in balance and we stay at the same level of geopolitical risk? >> right so i think from our perspective at least in this quarter, things are likely to remain pretty tight. we think prices will remain above $70. >> brent above $70 >> yeah. when we look at the possible catalyst to higher prices over the course of this quarter, you look at the syria issue that's not going away even though, you know, trump was saying mission accomplished. this is not an issue that's going away
escalation there can precipitate an escalation in yemen, saudi arabia, iraq which is also having parliamentary elections this quarter then you also have the extension or renewal this quarter. all of this at the same time we're gearing up for the driving season so in our view, we think prices are skewed to the upside this quarter. but we're looking for a correction as we go into the second half of the year into next year. >> how much of this if you're looking broadly is a good picture in terms of the world economy doing very well and demand really being strong >> yes, the demand issues are the big question you know, clearly we've got the trade dispute in the backdrop. in the background, we've got this question of whether china can sustain high levels of growth as they've sustained the last several years that's going to have a disproportionate effect on the
commodity space. but broadly speaking, at least for the course of the last several quarters, you know, the pmis, the industrial production, all of these indicators have been ticking higher and economists continue to look at the global economy in a better state of affairs going forward. >> michael, it's been a busy week for you we appreciate your time this morning. >> thank you all right. the opening bell on wall street. we'll find out what jim cramer is watching as the trading day kicks off. check out the futures. we'll be right back.
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get down to the new york stock exchange where jim cramer joins us now did you watch the banks on friday, jim? could you make perfect sense of what happened and bank of america? >> first, bank of america looks very strong. the market, obviously, suddenly dislikes these stocks intensely. i've gone over it many times there were a lot of lines of pnc nobody else had. it brought things down wells fargo tried to say none of
the newfound regulations matters. i thought jpmorgan was terrific bank of america. they're growing. and they're growing in a very i'd say less risky way a lot of digitization doing well the positive growth is good. so the groups and quandary selling at about 13 times earnings, i think the group is mispriced. the market is speaking loudly and saying don't own the stocks. >> i didn't look closely but i will later why 60% expected earnings increase is there stuff in there or what is behind that gain? >> everybody thinks it's just much better. extraordinary. the sentiment is just so positive it's positive as it is negative in the banks i think we struggle because it must be such a blow out. you can't have deutsche bank
upgrading now. you can't have the number bumps until peek figure out this thing internationally is strong. if it doesn't have a blow out, the stock could be going down 30%. i think there will be a blow out. >> what is your next most anticipated report this week >> well, i mean, i think there is a definitely a line from almost everybody in the trading is pretty good goldman it should be excellent the stock did come down on friday the stock was, though, at 248/249 two weeks ago. i think the problem with the banks, they felt like the market kind of politely said this is where the lack of risk is and these things are getting back down and i think it's wrong but i understand just because i think it's wrong doesn't mean it's not going to happen. >> yeah. becky was out last week when
david leaving goldman. >> talking about it all morning. >> michael cohen off. >> yeah. >> poor guy. anyway thank you, jim. we'll see you in a couple of minutes. big interview coming up on "squawk on the street" bill dudley will join him live. today 10:00 a.m. eastern time. ♪ directv now gives you more for your thing. your letting go thing.
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all right, folks a big show you don't want to miss tomorrow morning on ""squawk box." we're heading to capitol hill. we'll be live in washington, d.c., with a line up of big news makers tomorrow including house speaker paul ryan, house majority leader, kevin mccarthy, house republican conference chair cathy mcmorris rogers, treasury secretary stephen min knew shen. it's starting tomorrow at 6:00 a.m. eastern time right here. >> all to celebrate tax day. >> yes the 17th this year because of a holiday today. >> right favorite day as americans. >> holiday only in d.c., right >> yeah.
and another look at the markets. i'm going to washington for you, make sure you watch us "squawk on the street" going down to the swamp. 'squawk on the street is next. ♪ >> good monday morning welcome to "squawk on the street." i'm karl the dow seeing a 200 point gain as earnings season gets in gear. investors respond to friday's missile launch in syria. europe trying to shrug off losses retail coming positive after