Transcripts For CNBC Squawk On The Street 20170425

Big earnings out this morning set to weigh heavily on the averages, cat, mcdonalds, dow, dupont, 3m and coke all on the move. Wow express scripts shares falling down hard on news it is likely losing one of its biggest contracts. Well dig in on that and the companys earnings. The trade war is heating up. The u. S. Will impose a major tariff on canadian softwood lumber. Hear what the commerce secretary says about that action. Futures are getting a lift, earnings from dow components adding to the momentum. We mentioned cat, blowing past expectations with its results, raising their full year guidance, 3m exceeding consensus helped by renewed strength on latin and asia. The story of the morning may be cat, jim. Nowhere near what analysts were expecting, almost double the estimate. Whats happened with caterpillar . We call it leverage and a lot of people think leverage, what does that mean, leverage with the president with congress or leverage leverage as in debt, how we typically refer to it. Exactly and the leverage here is when you have a dollar in sales, a huge amount of money is falling to the bottom line here. That has to do with the fact that caterpillar has streamlined the company in a way that they can do 9. 8 billion in revenues and just have a monster increase even though they did 9. 5 billion a year ago. So you take that just a small amount of revenues but youve g got 1. 28 in earnings versus 46 cents the restructure. If they have a big year and they will have a big year, youre going to see dramatic, and i think that frankly far in excess of what they are saying theyre going to earn. I mean, i think this could be, when you see Mining Minerals part of the business come back, construction come back, when you see china as strong as they are, this stock is heavily shorted. Its been the hedge fund whipping boy, a pinata. People worried about the tax situation. When you take that revenue from 36, 39, to 41 billion i have no idea but its substantially more than the 3. 75 they say they can do. Congratulations caterpillar. Street is 3. 26. Good luck. Put this genie back in the bottle. If these guys get the turn im seeing in asia and from so many countries, latin america, brazils stabilization the United States not doing much at the all. The United States like the stock market is indicating kind of a dud in almost every single case. Thats no referendum on the president but its dudlike. How does this compare with some Industrial Metals pricing, right . I think that you got the alcoa number. There is some better pricing, al cowith a benefiting from the fact chinese realize you have to stop producing something that pollutes so much. You are seeing coal do better, oil stabilize. Its not up. Its the return we better buy some trackers and buy some big engines, some mining equipment, because frankly they hadnt bought it in years. This is a catchup, pentup command play and a play on the fact that they just must have gotten rid of so many people. I mean, it is incredible. And produce the same amount of sales, this is what we talked about. This is Artificial Intelligence machine learning. All the things that you have to be worried about if youre trying to figure out how to put people to work because man, they did the number. Wow. Right, so its productivity increases . Big time. It is extraordinary. The company as always is just, you know, they cant save their lives to promote. They just dont do that. Thats up to me. Price realizations, lower cost, higher sales volume, favorable mix of products. It is a remarkable quarter and its right it should be up. Oil and gas higher sales in north america, thats really the kind of only real north american line that i like, but youve got Business Confidence going up, Global Growth going up, backlog growing up, everything is positive. U. S. Construction activity is one positive for the u. S. Amazing. Three months rolling retail sales on the verge of going positive after how many months . Is. After years, and good for them, that they took out costs. I remember that when goldman put the sell on in the summer, it was not so great there. The only thing is that the people getting credit for it are maybe not the people who did it. Thats okay. Right, you referred over helmet farthering. Lets not forget the fbi thing thats still going on. It is. Lot of people stayed out and shorted it. I believe its a 2 billion liability over multiple years max and what is important is that this company is the leanest ive ever seen cat since 198283, when they decided take on the union and 8485, big earnings split. Mcdonalds better than expected numbers as well. Global comps up 4 , company says the u. S. Benefiting from the expansion of allDay Breakfast, meantime coke misses on the bottom line, beats on revenue. Stay tuned for an exclusive with the incoming Ceo James Quincey coming up later this morning on squawk alley. Mcdonalds, the twoyear stack in the u. S. Is 7. 1, thats the best result since the First Quarter of 2013. Yes, easterbrooks doing a lot here. The comp. Plus 4 . People say how can that be if the u. S. Is only up, is up less, even though that is a great stack number. U. S. Is only 33 of the company. China was called out, the big mac and beverage promotions called out. Steve is very matteroffact about it. He has the franchisees motivated and i this i that matters. Hes talking about gain laps customers, convert casual customers to committed customers. The personalized and better visit has to do with the fact the franchisees feel like this guy has their back and this stock, which has, and this man continually underestimated. We had an aflac commercial who is the ceo of mcdonalds . We better Start Talking about easterbrook because he delivers, one of the better ceos around. It was the trivia question. Like who is on the dollar bill . Hello . Uhm, the Stock Performance itself is saying that, isnt it, jim . Yes. Seemingly was mired right around 100 f not below that for some time and has had a significant move up as we can see over the last year. Hes underestimated constantly. Why is that . Why do we underestimate this man . I dont know. We had two upgrades last week and another outperform initiated. The samestore sales for worldwide are incredible. I do think that people are underestimating how much, you know, how much that is not allDay Breakfast. All Day Breakfast is important. There is some discussion past the initiation of breakfast comps. Right. Its a much easier compare. I think people ought to recognize this is like a dollar store. They have cut prices. They have given, theyre giving you a value meal that you kind of worldwide resonates, and that does matter. People like a value. And are they eating big macs now because they dont worry about calories . I dont know. It is rather amazing, big mac making a comeback here. Big mac. The big mac is like if you eat those, you get i wouldnt know. Wouldnt know. Havent eaten have you ever had an egg mcmuffin . Theres 337 calories delicious. What do you do after you had a big night out on the town . A long time. Orange juice, a cold pressed beet and asparagus . Orange juice has a lot of sugar in that. Nothing like an egg mcmuffin after a big night on the town. You got that right. To your point, jim, there was a time people thought it would go out of business because millenials would never go and a time we thought shake shack could disrupt their Business Model or operating margin. They didnt realize the key to mcdonalds, i told mr. Easterbrook there was a very dirty bathroom on the exit to go to the l. I. E. Off the hamptons. You know how clean it was the next time i went in there . This guy is about the basics. Keep it clean, simplify the menu, get some technology in there. He is about blocking and tack tackling. He is the offensive line of mcdonalds. Never gets enough credit. Never. I agree. They struggle in the trenches all the time and nobody even knows their name, even when they go to the hall of fame. Right here right now. Thats true. The president is upping the antein a trade dispute between the u. S. And canada. Trump white house announcing a 20 tariff on canadian border, typically used to build Single Family homes. Earlier on squawk wilbur ross explained where it fits into the president s strategy. I think there is a larger takeaway. The Trump Administration has been much more focused on enforcement, than had been true previously, and theres a good reason for that. U. S. Is the least protectionist of major powers and yet we have the highest deficit, 500 billion. The other countries that talk about free trade are really very protectionist europe, china, japan. So they have the rhetoric of free trade, but the reality of protectionism. That set of facts is not going to be permitted to continue. That is the commerce secretary. Top of the fold of the journal if you think its an arcane topic its not. Well watch lumber futures which have been anticipating this, watch Home Builders and see if their prices rise. We got to get first of all when i listen to the secretary, i think his, hes speaking some common sense for anybody who tried to do business overseas. The numbers here. The average wood is 15,413 in a house, so we tack on some money there, not all bought in canada. Lets use polte at the entry level home. They report today and people werent crazy about the number, its 375,000. Are you hurting their margins, no. Is it a shot across the bow what canada is doing . Its been a long running dispute and pulte is not down because of that. They are missing some numbers. The others are not down like that. Some people were saying labor is hard to get. It depends. Home builder versus home builder, some are complaining, most arent. I just say this is not the devastating thing that people are saying. It is being played up big. Dairy and last night apparently the president said aluminum is coming next. Well aluminum if you go over the alcoa quarter, theres consistent dumping. The chinese continue to the only reason the chinese have cut back is because they realize its nothing sturdier than smelting, but alcoa has some good numbers about what is going on with china, and theyre still throwing it around. Theyre just not as bad as they were, which is one of the reasons alcoa is going up. China is producing way too much. Chinese stockpiles continue to grow, chinese are ramping up in guinea. There is, lets just say the chinese arent playing fair. One important point here weve speculated about what the president s approach would be in terms of tax reform and what a border adjustment tax, in other words a broad tax on imports be part of it. These oneoffs, whether its aluminum or lumber or whatever it may be, seemed to indicate to me at least, and well find out soon enough, that border adjustment tax may very well not be a part of any planned proposed by the white house when it comes to tax reform. I want to talk more about of course that later in the program. Youre dead right. If you invoke the very contentious steel the actual you do steel. Do you aluminum. Do you lumber. No longer price by price steel. Listen, steel is of national import. Right. Of course some people say listen, its not going to hold up under the world trade because the Defense Department hasnt called for it, but hes talk being steel plate, talking about making tanks and not being reliant on chinese steel to make tampg tanks. To me thats common sense. I think its horse sense. It may also indicate that approach. Tariffs as opposed to a broad border adjustment tax being a part of anything the white house supports. Which is essentially the obits are being written on border adjustment as of today. Mnuchin and kohn with meet with congress tonight on tax. If youre involved in some of the industries i think wilbur ross is right. My view is irrelevant, im not in the business, but i know that these market have been, we dont sell much in korea. They wont let us. We dont sell much in china but they dump. Why is alcoa good . Do you think theres a surge in demand . Its been decent but the chi knees cant make it as much because its polluting the skies and they have a Million People dying of respiratory illness so maybe cut back in dumping of aluminum. Thats the saviour, they want cleaner ear. I dont hear cat pill ear squawking about the high price of steel. Theyre not. Well look at the premarket and might have the biggest two days of the year and potentially nasdaq 6000 around the open. Well check on that when squawk on the street comes back. Been. Last year, he said he was going to dig a hole to china. At t is working with farmers to improve irrigation techniques. Remote moisture sensors use a Reliable Network to tell them when and where to water. So that farmers like ray can compete in big ways. China. Oh. He got there. Thats the power of and. We cut the price of trades to give investors even more value. And at 4. 95, you can trade with a clear advantage. Fidelity, where smarter investors will always be. And at 4. 95, you can trade with a clear advantage. Hey youve gotta see this. Cno. N. Alright, see you down there. Mmm, fine. Okay, what do we got . Okay, watch this. Do the thing we talked about. What do we say . Its going to be great. Watch. Remember what we were just saying . Go irish see that . Yes im gonna just go back to doing what i was doing. Find your awesome with the xfinity x1 voice remote. Im ricardo, a sales and Service Consultant here at the xfinity store in bellevue, washington. Here at the store, we offer internet, tv, phone, customer service, home security. Every situation is a little different. It could be about billing, simple questions like changing the phone number. Sometimes, they want to upgrade, downgrade, but at the end of the day, you want to take care of the customer. One of the great things about comcast, theres always room to move up. Of course, it depends on you, how hard you work. Big day for earnings as five dow xocomponents report and a l more tonight with chipotle, at t, wynn, Texas Instruments. We have express scripps false sharply. The manager says its contract with anthem unlikely to be renewed after it expires in 2019. Anthem is one of the companys largest customers, accounts for about 18 of revenue during q1 and the stock is reflecting that today, jim. Thats about as ugly a fight. David you focused on the idea they couldnt resolve anything. No. They hate each other. When you talk to the companies, theyre not like tmobile, where john ledger is like its d b and fu for the other guys. This is just a real dispute where they dont like each other. And they couldnt reach any it wasnt like they were chatting. For those who care, read appendix a in the release that came out yesterday gives you background on the relationship with anthem of course which really is a result of a contract signed back in 2009, but is somewhat complex. Thats the tenyear pbm contract, they talk about how during the several years initially of the contract the anthem business underperformed express financial expectations as anthems prescription plan volume was significantly below, and they go sort of to give you a real background as to what is behind this cessation of a relationship. As it appears to be likely. How do you make that business up . Im not sure. Im not sure. Its a lot of business. Yes. I think its interesting of course they kept their current earnings forecast, not that anybody cares. I mean, this is a real battleground. I know cvs traded up immediately. People think theyll get the business and no surety to any of that. Imly bi la little surprised. Anyone who talked to either Company Recognized there was tremendous acrimony. Express scripps says it was surprised that anthem intends to move its business without fully pursuing discussions. So express was a little surprise. Maybe they should have talked to anthem and they wouldnt have been surprised. Those guys dont like each other. This is not like harvard versus yale. Cramers mad dash and count down to the opening bell. Lot more squawk on the street still to come. The power of the nasdaq market. The power of 100 of the worlds top companies. The power of an etf. The power of qqq. The thinking we put in, clients get out. Power your clients portfolio at powershares. Com qqq. Before investing, consider the Funds Investment objectives, risks, charges and expenses. Call 8009830903 for the prospectus containing this information. Read it carefully. Distributed by invesco distributors inc. In about eight minutes start with trading. We are looking like were going to have a significantly strong open, that is if you are long the market, with the nasdaq poised to hit new highs. Is dupont a referendum on President Trump or a referendum on ed green . I dont know, as we get to our mad dash, about eight minutes before we get started trading . I think ed breen. Well go with the breen. This man is a quiet miracle worker. Managed to be able to, the organic growth here is extraordinary, plus five. Theres a 20 cent delta here. Literally 20 cents better. You have to move it so its the first half because theres crop issues but i got to tell you, david, he did that deal with fmc, still 20 billion in are ef knews coming from crops. Theyre going to merge with dow. That deal is going to close fairly soon. August, hes given us, thats a late day. Its not like the rite aid walgreens deal. They split 18 months late near three different companies. Theres some decisiivisions. Consumer electronics is strong. David, thats tv, thats cell phone, and by the way thats why best buy was upgraded today. Tv and cell phone, remember the days, wow corning, best buy. Tv and cell phones are doing very well. This is the two iconic cell phone companies. I cant mention one, just kidding, apple and samsung are shipping product and all of these guys benefit. Dupont, breen, when he splits this he will create value. Im using a 100 per share target when they xwcombine. Bernstein writes dupont is joining the culture club with the 80s party. As far as we can tell as much by internal culture changes as by external markets they say while were not sure breen is roaming the halls with dye and beads in his hair, the end result is we got the beat. Colorfully they are saying it is culture, it is what breen has been able to do. Its not a lot of and improving performance. Breen is a guy who came in, a lot of people felt there was nothing, there was nothing that could be coleman had taken it out. No, nutrition by the way when he gets that fmc business nutrition will be great. The guy did it with tyco and hes tireless. Hes tireless. He just gets up every morning and says we are going to expand our margins. Im not kidding. This morning should i wear a yellow tie or blue . No, where can we expand our margins. He is a margin expander. I think you got him lined up for another gig, i heard the undertone. The red sox . Boston is the city. The opening bell coming up next. About your brokerage fees. N fees . What did you have in mind . I dont know. 4. 95 per trade . Uhhh. And i was wondering if your brokerage offers some sort of guarantee . Guarantee . Where we can get our fees and commissions back if were not happy. So can you offer me what schwab is offering . Whats with all the questions . Ask your broker if theyre offering 4. 95 online equity trades and a satisfaction guarantee. If you dont like their answer, ask again at schwab. Predictable. The comfort in knowing where things are headed. Because as we live longer. And markets continue to rise and fall. Predictable is one thing you need in retirement to help protect what youve earned and ensure it lasts. Introducing brighthouse financial. A new company established by metlife to specialize in annuities life insurance. Talk to your advisor about a brighter financial future. Youre watching cnbc squawk on the street live from the Financial Capital of the world, the opening bell in two and a half minutes. Busy morning for earnings. Five dow components already reported. The german tenyear back to i aonemonth high, u. S. Tenyear back to 2. 3, as the cac is coming off a 4 day. Hasnt had a 4 day since in two years. We havent had one here in almost six years. Its funny. I had Illinois Tool Works last night, a Great American company and they had tremendous growth in france. 5 growth and pvh is doing better in france, calvin klein, tommy hilfiger. The French Economy could be coming back. I feel they have to stop the whatever kind of stimulus theyre doing, its really to me protectionist at this point. How tuned is your radar to things getting expensive here or are we catching up to what you think earnings are already doing . I think when you see these revisions, obviously look, if you get a 15 tax rate, we are undervalued but we see the revisions and you realize, how many people did we take out . How much firings were there, how many streamlining, how much supply Chain Management because these companies are making so much more than i thought with less that its not like theres this giant vector where theres just a huge ramp in sale. Dupont had a good ramp in sales but its kind of like well theyre making a lot of money with some decent growth but asia and europe are the callouts. Brazil stabilization these matter. Asia is so good, europe is so much better than we think. Im waiting for somebody to say that europe is bad. Not one. We do have a bit of a divergence between u. S. Markets and chinese markets. Biggest since 08, is that because the chinese are trying to tap the brakes . I think the chinese want to tamp speculation. I do see some good infrastructure building this time. Construction is good. United technologies is my favorite. Look at what shanghai has done the past few weeks. Opening bell, s p at the bottom of your screen. At the big board sec acting chairman doing the honors. At the nasdaq avidas medicine. [ bell ringing ] a lot if pharma and biotech we have not gotten to yet. Its interesting that ionis, it really is causing people to sit up and take notice. I look at buy jiogen, the ms dr was nothing that big but people wanted to see something from biogen. Terrible disease they have something for weakness of the spine, kind of amazing. Lilly wasnt as bad as everybody is saying. I think lillys fine. Whats interesting, i was looking at gilead as we pass nasdaq 6,000 we saw the scaring looking bolt. Gilead has had a brutal run. Once a 140 billion market cap. Down to 87 billion. They have a great balance sheet. Acquisition. Until they do something, theyve got to do something. You know what . I can give you a list of a half Dozen Companies they have to buy. Right. Will they . They did try on medivation, hanging around and cellgene, but pfizer bought it. Interesting to note not the level of acquisition activity some might have expected from buyers such as gilead or even a cellgene. Or an amgen. Pfizer and merck their stocks have been stuck here. Were not going to show any of those. We have to show the nasdaq. J j said they needed to do it. The consumer business was weak. Thats interesting. Thats cvs, everyone is excited because of the pharmacy benefit. Get the deal express scripps wants. Youre freaking out about the nasdaq 6,000 . Im not. Im not but the control room apparently is. Control room . Take a minute to talk about what this means here, jim. It surpasses the five handle levels of the dotcom boom. The thousand point thresholds to get from five to six, 6,255 days is how long its taken. Well look, ill give you some stocks that are not expensive, intel is not expensive, am gen, microsoft is not expensive. Theres a big cap stacks that arent expensive. As facebook expensive in 2018 . Absolutely not. As a matter of fact its pretty cheap in 2018. Alphabet is a cheap stock. 20 times earnings. Remember the big thing everyone was pulling their ads . Huh . Turned out to be a cunard. Speaking of alphabet, did you see the comments from diane green . She runs their cloud business. Shes fabulous. Why . Google, she said some things i wanted to share at forbes. I dont know what shes smoking. What . Shes the best. She thinks they can pass aws within five years. Really . Wow. I think we have a pretty good shot at being number one in five years. I actually think we have a huge advantage in our data centers and infrastructure, availability, security and how we automate things. We just havent packaged it up perfectly yet. This is a growth area for microsoft. Amazon and google, five years, really . Thats impressive. Thats impressive. Thats not why unless they were to buy something, large. Interesting. Like Investment Trust that own this . I dont think it would be that. You mention a few select large companies. Right. Which is the knock on the index, that its being carried by five, 10, 15 quarterbacks and the rest sort of just true. Minnows blind a blue whale. Alltime high on netflix. When you look at some of these, you know, Major Semiconductor companies, they are doing so well. Look at broadcom, avgo. Mid teens. Skyworks, mid teens. This isnt like when cisco was selling at i dont know, 80 times. Its not the same. No, it is in no way similar to the late 90s. I think microsoft report will be reporting a fantastic quarter. I hear how good pcs are. If you want to look at overvaluation, i think that you would look at overvaluation as some of the industrials but if they get the repatriation and get the tax cut then youre going to say it was cheap at 24 times earnings. When you say tax cut it is a worthwhile moment for to us stop for a second. Tomorrow the president is expected to unveil at least and perhaps very minor form or brief some sort of a plan that involves again given the reporting of 15 tax rate for corporations. Very light on specifics, is what im hearing. Probably less than five pages long. Really . But you know, important things to keep an eye on, doesnt include any sort of border tax, doesnt appear that will be the case given this focus on tariffs. Will there be anything involving the middle class and individual tax reform thats a part of this, or is it all going to be simply based as it would appear based on comments from secretary of the treasury mnuchin on dynamic scoring and some assumption of a gdp growth rate the likes we havent seen in this country in 40 years . I dont know. But the people that im speaking with, guys, seem to indicate its not or should not be viewed as a seminal event in any way because its not going to really happen in terms of whats presented versus the reality of what will actually pass. So its, what, for show . Yes. It is for show. Yes. Well we need it to be not for show, because a lot of these companies to get them to go much higher requires much do you think this market rally is based on the hopes theres going to be a 15 tax on corporations . No. No, actually theres a lot of people who dont want to get up at 3 00 and read these darned things and they just say listen, tax goes through. Im not one of those guys. Its not fun. Its not fun. You cant watch the phillies beat the mets and at the same time read all these earnings calls. Phillies beat the mets. I will get my revenge on you, as will the mets, of course, over time. This is typical. The stock was down ten. Whirlpool. Morons trading it before they get the debt, before they get the comp. Score. The Free Cash Flow is 1 billion, its fantastic. So many people dont do any work but maybe they say listen, get a couple congresspeople and shoot at the, you know. Right. Consensus still seems to be that we end up with some sort of a tax cut to 25 or 28 . It would help. We get a repatriation deal that seems to be the general expectation of Market Participants perhaps reflected in equity value indications already. I think that some of these companies, again, some of the companies are doing so much better than we thought, and i just struggle to say okay, well walmart has been great but this is back to where it was when mcmillan took over. Whirlpool looks great but hasnt done anything. The companies have been greater, facebook, amazon, netflix and alphabet was hitting a high. It was down low doing the advertising. The diane green thing is stunning to me. Im trying to get that out of my head. In five years, yes, i dont think that thats going to happen. But who am i to argue with her . Shes a i havery accomplished l. Compensated . Accomplished. Compensated would be marissa meyer, compensated versus accomplished. Diane green is very smart. There are people at alphabet who are within the company that ruth porat runs day to day they could work anywhere in the world and it would be dynamite if they did. People still point to negative year on year revenue at ge, honeywell, ibm, price with a,in telecom and food, price wars in used cars. Mike jackson today saying he sees new vehicles flat to slightly down, incentives 10 of msrp. These are z what about the auto sales . The United States is not the leader here. Were just not. I look at low growth for almost every company i deal with in the United States. Its not the United States. Mexico is growing faster than the u. S. , asia, japan doing withal. Do you know why russell and small caps are having trouble keeping up . I think so. Ib marx has its own problems. General electric was suboptimal, lets just say. The u. S. Is not the driver here so the companies you look at, and whether it be mcdonalds, whether it be, i think 3m is wrong that its down. I think the quarter was very good. When you look at caterpillar its really not us. Its not us. And people keep looking at the u. S. And thinking wait a second, how good can things be . I suggest you stop thinking about u. S. Its not the driver. It just isnt. Its europe. Its asia. Its latin america stabilized. These are the places at the delta. And verizon does keep going down every day. By the way, the tmobile conference call. You had ledger on yesterday as well, always you know, hes, sometimes speaks his mind. Hes really talking about verizon and this is something i think you got to go to Lowell Mcadam on. Since verizon went unlimit. Did their unlimited, their network has slowed down dramatically. Verizon would say thats not true. Right. Their capacity has been fine and they had a network architecturally ready to handle it. Okay, because well thats, when john does his Conference Calls a lot of it is to get new customers really energize his people. Yes. Hes a gorilla, and now hes a griuerrilla. Whom anyone. Stock up again today and watching verizon shares sink after that poor quarter. Takes verizon in a way how can you feel bad for verizon . I felt bad for verizon. Do you . Yes. They still have 45 billion in ebitda. Theyre going to figure something out. He makes you feel bad. Geez i hope theyre okay. Ibm div hike 7 to 150 from 140. Its kind what have people, what Warren Buffett wants and i think that we want a growth, that stock is down to where it was the day they reported. Theyre not giving you growth. Theyre giving you buyback and giving you dividend. People think of technology they want growth. They want, this is the good tasting tua versus tuna with good taste. Ibm is tuna with good taste. What does Warren Buffett want out of cocacola . See what quincey says. The company dramatically reduced its head count, going no longer for volume, going for price and its working. Now a total beverage company, selling a lot of different beverages not carbonated. Quincey is giving a good hand. I would be a buyer of that stock. We had a deal worth mentioning, tyson foods buyed advanced pierre. Were they lucky . I cant get was pierre luck why i . They make premade sandwiches. Philly steaks, lets not be gener generic. Sandwich components and snacks, the Company Getting bought for 40. 25, 3. 2 billion in equity, tyson food shares reacting positively to the deal which is always important as we know. Anything that makes see how at quithe acquired s reacts. Yesterday dickinsons shares did not react positively to the deal. This is a higher valueadded product which gives it a higher multiple versus conagra. People feel you cant get a higher multiple. Tyson has done right. Remember it was a Chicken Company and whatever the price offic chens was, they were hostage to it. Theyve done remarkable things. Theyre willing to pay up in their acquisitions. They came and they paid and they have benefited from that. Without a doubt. Selfhelp. Nasdaq 6000, record high, dow up 208, triple digit fort the second day in a rope. Lets get to bob pisani. 3 1 advancing to declining stocks. Yesterday we moved on geopolitical events in the French Election. Today were moving on earnings. Two big risk areas, a little less risk in the market. Take a look at the sectors right now. Its the reflation trade, its banks, its techs, its materials, a little bit on the industrial side. You look at the industrial earnings, caterpillar you heard about the great numbers, 3m had great numbers and raised their guidance. 3m is at an historic high right now, tough to move it forward even with good guidance but the guidance is coming up to the expectations. Thats the key right now. Look at the comments. Look what jim umpleby said these are encouraging signs with promising quoting activity in many of the markets we serve and retail sales to users turning positive for both machines and energy and transportation for the first time in several years. How much more positive can you possibly get . Look at all the companies that have not only beat guidance but they are raising guidance for the full year, in the last three or four days. Caterpill caterpillar, 3m, Illinois Tool Works, honeywell, stanley, black decker, dover, sherwin williams, not only beat but raised guide ansz. Thats a trend. Gm affirmed 1. 60 to 1. 70 guidance. Those are encouraging terms. Masco, think plumbing and cabinetry their numbers were excellent and look at the commentary of the ceos, if they say things are getting better. Keith allman said the Building Products industry fundamentals remain favorable and are expected to support longterm growth. Our outlook for demand in both repair and remodel and new Home Construction continues to be positive. Again, encouraging. So the important thing here is its not just here. Europe is getting pretty good earnings this morning as well, and the trend there is also well. So know var tis, longa, also farm sulical, volvo had good numbers, s. A. P. Business software they had good numbers as well. Its not just here. Theres a global trend of earnings improving in general. So remember, where are we on the risk scale . Four big risk factors we talked about consistently. Yesterday we moved on geopolitical events being a little bit lower and had this continuing worry stocks might be too high priced given what the earnings situation is. Given what the earnings trend has been so far and the guidance for the full year, i would say its still a risk but that concern is diminishing now as were actually getting full year guidance from companies. The weaker economic data, well that First Quarter were not great. The risk is still high there. If the Second Quarter numbers really improve as a lot of the bulls think they will, that will diminish as well and of course these delayed fiscal reforms moderate risk there. You know how big the president has been in trying to move forward that tax cut. Put it all together were trading range right now. 2300, 2400, 2500 on the s p. The risk is to the upside something happens on taxes and Second Quarter better than expected we it make the number quickly overall. You never get 100 perfect story. There are companies that have disappointed on their full year guidance. You just never get 100 perfect. We saw it with whirlpool, with Lockheed Martin, is ayou it with ryder. Generally their guidance was not as great as people were anticipating and ryder moving down and Lockheed Martin as well. They tend to be outliers. The overall earnings trend is positive particularly for earnings and the banks. Well see how the Tech Companies start reporting in a very short wlil. Were up 200 points on the dow and remember, 2401, carl, is the old high on the s p 500. Were 15 points away from that right now. Back to you. Well watch that, bob, thank you. Lets get to the bond pits with Rick Santorum at the cme group. Good morning, rick. Good morning, carl. Its almost sort of an antihedge move. Equities and fixed income markets always have had a very interesting relationship really cemented in the 87 crash. Stocks go down. People buy treasuries as a hedge, but what happens when stocks lead the way . Virtually that has been the case really since november, especially when their guns hot like they are now. So we see a very reluctant treasury move as rates try to creep higher. Look at a twoday of tens, keep in mind were up three on the session, also whats fascinating is if you consider yesterdays high was 232 we havent got on it that. Yeartodate of tens and we are fighting to get back into that bottom of the 2. 30 to 2. 60 range. The twoday boons their high yesterday was 36. The reason i mention that theyre up at 39, up three or four basis points so theyve taken out the high. Europes leading the band at this point so well continue to monitor to see if we test that 2. 32. Frances rates were down because it was a spread relationship. The bund yields were up, french and italian yields were down. Today all yields are up, that is important to monitor. You can see it on french oaths hovering below 90 or the italian tenyear hovering just below 2. 25. The dollar index is the odd man out. We talked about key Technical Levels to keep viewers, listeners in the hunt. 20,700 good pivot for stocks yesterday its zoom, zoom, zoomy. 2. 27, you want to monitor and treasuries were above it. That 99. 15 to 17 area, the dollar index cant get there. It certainly seems the dollar index is just having troubles mounting any type of structural rally especially below 100 and if you look at a december 1st start to the dollar index you can see the lower lows are really forcing the market to work pretty hard to try to hold any ground. Carl, jim, david, back to you. Thank you very much. Isn rick santelli. When we come back, James Quincey talks about earnings and future for the soft drink giant as he steps into the top job next week. Dow up 206, putting together the best two days of the year so far and the nasdaq crossing 6000 for the first time ever. Take a look at some alltime highs, facebook, alphabet, microsoft, two of those vr earnings this week, that doesnt include net plix, scrawl time high today along with the nasdaq above 6,000. Well get trading with jim in just a moment. The new new york. We are building new airports all across the state. York. New roads and bridges. New mass transit. New business friendly environment. New lower taxes. And new University Partnerships to grow the businesses of tomorrow today. Learn more at esd. Ny. Gov time for cramer. Maybe its not as bad as i thought, thats free port, fcx, gold a little bit better. Copper, fine. What this feels like, this stock has been in a down trend along with the rest of the minerals. Put this together with alcoa and caterpillar and come up with a rosy outlook about the rest of the world. My focus is on the rest of the world, United States we have plenty of data which says the United States has stalled. Tupperware my god, plus 30 from china. The rest of the world is doing better than we are, thats why the rest of the stock markets are doing better than us, fr freeport i call a bottom. I think you have to. Thats he a big call. I know. Im out theren ocopper and gold. They cut the debt down to 15 billion, thats exciting. If the stock goes lower you want to buy it. What about tonight . A company that is just hitting on all cylinders, a good name for it is briggs and stratton. Ill go aisle by aisle at home depot and whether it be Stanley Black decker, whether it be paint, whether it be engines, this is outdoors by the way, the summer and spring if they are good, its a little outside, briggs and stratton will go higher. I do not mow high lawn. I shovel my walk and i shovel david coties walk but hes no longer there. Dow holding to a strong gap open, and its holding up 200. Back in a minute. Stay with me, mr. Parker. When a critical patient is far from the hospital, the hospital must come to the patient. Stay with me, mr. Parker. The at t network is helping First Responders connect with medical teams in near real time. Stay with me, mr. Parker. Saving time when it matters most. Stay with me, mrs. Parker. Thats the power of and. Just dance, dance, dance all those things i shouldnt do but you tadance, dance good tuesday morning. Welcome back to squawk on the street. Im Carl Quintanilla with sara eisen and david faber at the new york stock exchange. Dow up a couple hundred points. Nasdaq above 6,000 for the first time ever. Some of the dow components and other s p Earnings Report strong earnings with our road map begins with another rally on wall street. Stocks surging, nasdaq alltime high of 6,000. Cocacola, mcdonalds, caterpillar reporting irpgz. Possible trade war looming. Plus getting ready to rumble, wells fargo annual Shareholder Meeting is under way as two key proxy Advisory Firms are urging shareholders to vote against some of the directors, well take you there live. But first, 10 00 a. M. We have some economic data. Rick santelli with the numbers in chicago. Rick . Thanks. Lot of data. In we look at new home sales for the month of march, 621,000, and the reason thats fascinating is, not only because its up close to 6 , but when you compare it, the last time were anywhere near here was july of last year when it was 622,000, seasonally adjusted annualized units and that was the best since january of 09. Lets move to some april data, from the conference board, consumer confidence, 120. 3, 120. 3, that compares to last look which was an astounding 125. 6, so backing away from historic levels, with very strong levels and finally april read on richmond fed, that came in at 20, we are expecting 16, so its better, and a lot like consumer confidence, when youre qualify Department Last month was 22, another stellar performance. Both numbers might have moderated but theyre way up at the top of the mountain. Sara back to you. Rick, thank you. We are glued to the markets this morning the dow is up, stocks are surging. The nasdaq as i just mentioned hitting a new alltime high, passing that 6,000 mark and being done with historic highs by some of the common names we talk about like facebook, google, or alphabet, microsoft, ahead of some key earnings from the companies later this week. We got more tonight, at t, chipotle and Texas Instruments to name a few. The nasdaq of course has been the leader of the week in terms of reports. The s p nine points from its alltime closing high and of course 2400 and change is the alltime intraday. Eliminating risk around the French Election, feels like the mood is still positive from that, even after a 200point rally for stocks yesterday, and youve got an increasing chance that the republicans that congress can avert a Government Shutdown now that President Trump signaled om willingness to compromise over the spending of the border wall and earnings pointing to growth. Were going to get into some of the individual ones but mcdonalds coming in strong, caterpillar, cocacola well received. Well talk about all of those individual names, of course we have the 100day milestone nearing the white houses first major trade tariffs are not on mexico, not on china, but on canada. Commerce department slapping new tariffs up to 24 on lumber coming into the u. S. Eamon javers live outside the white house with the latest. Reporter you talk to white house officials here and ask them where the focus on canada comes from, president President Trump heard from Dairy Farmers hurt by canadian imparts and theyre focused very much on the canadian lumber problem. Here is what theyre doing specifically over at the department of commerce, the tariffs are going to be between 3 and 24 and theyre going to be focused on specific canadian companies, theyre calling it a preliminary terdetermination. Final determination will be made in september, as a point of comparison the canadian lumber imports are volumed at 5. 6 billion in 2016 and businesses can seek relief from the injuryious effects of unfairly subsidized imports to the United States. Wilbur ross described the administrations attitude toward all this on cnbc this morning. I wouldnt regard the canadian situation as being anything like the war with isis but is a precise set of tariffs on a very precise set of imports. The reason we are putting it on is canadas forests are owned by the various provinces, and the provinces charge very discounted, we believe, very subsidized prices to the lumbermen. Reporter and carl, that is the key to this long running trade dispute in terms of lumber between canada and the United States. The canadian forests are largely owned by the provincial governments. In the United States largely privately owned. American lumber folks have to pay higher prices, the u. S. Feels, in order to get access to that lumber, so they say this will sort of even the Playing Field here, and well wait to see the canadian reaction to all of this later in the day. Weve already gotten some statements from the canadian officials on that, eamon. Well get to that. For more on the president s big promised tax reform announcement tomorrow were joined from washington by cnbc contributor and former executive to Vice President biden jared bernstein, with us here larry kudlow, cnbc contributor. Good morning to you both. Good morning to you. What do you make of this . Weve seen this movie before and probably see it again. I think wilbur ross is right theres pro vinnial subsidies in canada for soft lumber. Back and forth, back and forth down through the years. Temporary targeted tariffs, they come off and they come on. Well see how this plays out. This is going to be an investigation and a report. Well see. Its just not a huge thing. You see it more surgical than something ballooning into some that is correct. Right. One thing pleases me a lot, the early days of the Trump Administration, is with respect to the trade barking during the campaign, of which there was a lot, and sometimes troublesome, including to me, generally a supporter, the biting is much less than the barking, okay . So if we have to go through this and do a report on it, im okay. But look, we dont subsidize that stuff in the United States. We subsidize other stuff but we dont subsidize lumber. Jared you agree . I do. I think larry and i have to wait until the tax discussion before we start fighting. By the way, larry, nobody know what a long playing record is anymore but i take your point. I know what it is. I know what it is. I get it, touche. And yes, targeted and not anything like the kinds of trade war rhetoric or 45, 35 tariffs on everything coming in. You know, wilbur ross has prosecuted dumping cases for much of his career, particularly in steel, and often successfully, and this looks very much like the kinds of dumping cases we brought while i was with the obama administration, and the end of the day, we were successful in a number of these. I remember one on rubber tires, one on steel, one was on food stuffs, so a surgical kind of a surgical tariff and one that makes sense to me from what ive heard so far. Can i take the other side of this . Sure. Canada is our second largest twoway trading partner, much of what is going on in the administration, the first 00 days, is all about signaling. This is not in a vacuum. Theyve taken action on steel imports in china, President Trump is bashing Dairy Farmers in canada. Do we want to pick confrontational fights with a close security and trading partn partner . Can i push back on that quickly before we go to lar are i . What larry said is important. You get something surgical or something thats way too big and pushes back on globalization in a destruct tough way. I think you should be happy with what youre hearing versus the counter factual. Thats pretty good for jared, im afraid i have to agree with him on that as well. You know what . Heres the really big picture. China. China. All right. President trump met with president xi. They got along. They got along famously or whatever, but they got along. There was no currency fa manipulation, which really would have triggered big problems. Some of this is related to north korea. Theyre playing ball with us, i hope. The other one is i think big is there will be there will be no repeal, no withdrawal from nafta. Thats a recognition. Also when we get to it, the socalled back tax, the border adjustment tax is dead. Im here to tell you its dead, buried, six feet underground. I built a crypt over the grave so youll never be able to get to it. Do you think President Trump shares that view . I think hes in shriline wit that kind of thinking. Theres such a thing as customs enabling legislation. Can he put on temporary targeted tariffs, until the review takes place. This is i dont want to call it small potatoes. What does wood do . Jimmy and cramer and i used to say dumb as wood. This is kind of dumb as wood. Sorry. Jared, are you willing to go that far, we can write the border adjustment taxes obit . Im pretty sure, i wouldnt say zero but i started 30 for the tax months ago and kept coming down since then. I dont think well see a border adjustment tax which leads to some interesting complications because that was one of the key payfors in the trump tax plan, so now when you hear donald trump and some of his lieutenants talking about well, folks, get ready for some big budget deficits, not quite exactly how theyre putting it and they Start Talking about the kind of fairy dust about how the tax cuts are going to pay for themselves, a lot of that suggested that that is gone and theyre trying to prep the public for an argument about the budget deficits that their plan is going to leave them with. Larry, lets talk about tomorrow the back tax, factually, david, the back tack you never can win that. The bat tax was never in the trump tax plan. No, it wasnt. True that. Dont mean to interfere, david, with the greatest respect. Was never in it. I want to get your take on what well see tomorrow. My reporting indicates bare bones, something along the lines of a 15 tax rate with again if we take secretary mnuchin at his word, most likely being dynamically scored with some gdp growth rate we havent seen in decades. Decades. Is that really going to fly with the rest of the conference . For 60someodd years after world war ii the American Economy grew at 3. 4 at an annual rate. The last dozen or so years i agree it slumped below 2 . Let me make a point. I give treasury secretary mnuchin great leadership points for talking about Economic Growth, which is the most important area of score keeping, by far, okay . Now look, jared will say fairy dust. Jared, who wrote the obama plan, which was new deal spending and fiscal multipliers that didnt work. 2010, 2011, 2012, 2013, average growth of 4 , that came in around 2 or slightly less, that cost the federal treasury about 4 trillion plus in lost revenues. If you go back to the historic rates, david faber, youll pick up 4 trillion that we missed. If you go back to half the historic rates, half the historic rates. With no at all, talking about 2 trillion in revenues missing. Dont we have to are at 4 or 5 gdp growth . No you do tnot. 1. Le is the cbo baseline. I want to be clear. If you plug in 3 Economic Growth, which is below historic. Youre going to pick up close to 4 trillion in revenues. This is the biggest pay for, the mother of all pay fors is Economic Growth and if youre going to tell me i dont disagree. Slashing business tax rates is not going to pick up growth, im sorry. Hold on. I dont disagree if we were growing twice as fast wed be doing twice as well on the revenue front and all that but look, you better, larry, you got to talk to your folks over there and you got to tell them at least this. You need a plan b. Plan a has never come to pass. Weve had lots of experience with tax cuts, and weve argued about this for 20 years, ive never been able to convince you and fine, okay, thats okay. Reagan years, the jfk years. Exactly. Right. Now your folks are writing potential legislation, so there needs to be a plan b in case you dont get the doubling of gdp growth or whatever it is youre hoping for, which by the way youre not going to get. The Tax Policy Center scored dynamically scored the trump tax plan and its revenue costs went from 6. 2 trillion to 6 trillion so thats 200 billion over ten and thats actually about as favorable as a realistic dynamic score youre ever going to get. They do not score dynamically. I want to hear plan b. I beg your pardon, they do not. And i want to say this, look, jared, you had your chance, during the obama years you did the big new deal Spending Program and it didnt pan out. You scored it 4 growth, it came in at 2 first growth and 4 trillion. Now what im saying, lets try something different. Theres a bipartisan consensus in washington, d. C. , we need to lower marginal tax rates on large and small companies, we need to pick up repatriation, we need to go for immediate expensing for new investment. That will increase growth. If you take the 1. 8 cbo baseline and raise it to 2. 5, way below trend youre still going to pick up a couple hundred trillion dollars. If you move it to 3 , youre going to pick up over 4 trillion. Thats the way the numbers stack up. You guys had your chance. You failed. Lets try an older path that has worked. So let me ask you actually ask you an important technical question here. Do you know if the trump plan has a 15 rate for passthrough income . Because when we are talking about Corporate Taxes, people are making mistake. Theyre talking only about the business side. In fact, 90 of businesses now are passthrough, more than half of business income is passthrough, and so originally trump took the 15 and applied it to passthrough income that loses another 1. 35 trillion. This is only in stag. I do not know. Heres what i know. In the campaign, tax cut plan, which i worked on, steve moore, Steve Mnuchin, steve miller, lots of people, in that plan, the 15 rate was used for s corps, sub s corps and llcs, with qualifications that this had to be legitimate business income, and not personal income. Right. That is doable. Kevin brady the head of the ways and means said we could separate that. Thats all i can tell you. I believe it will be in the new plan but i cant say for certain. What i two know is another loophool, a big loophole. The National Council said they threw the campaign tax cuts out. President trump and Steve Mnuchin brought them back. This is going to give tremendous confidence and i think they can get a deal done at least on the business side in three or four months. Thats what i believe. Were going to find out at least with the Guiding Principles are tomorrow. That was a good one. Jared and larry, thank you. Thank you. Bye, jared. Bye. Mean tile the dow getting a boost this morning from mcdonalds after serving up a First Quarter beat. For more on that, were joined by restaurant analyst david palmer. Good to talk to you this morning. Good morning, carl. Do you know anybody who is looking for a 4 comp. . It was pretty good. It was above the consensus number. The key market was the u. S. , where the turnaround is happening. The u. S. Lapped a tough comparison with 1. 7 and the street was negative so that was a particularly good result. The International Side of things has been strong for a while. So the u. S. Is key. U. S. 1. 7. In terms of the breakfast comp. Thing are they past the initial buzz that drove comps back then . Are we past the initial turn . Are comps getting easier . Yes the comparisons get easier from here. They weighed on the industry and mcdonalds was not immune to that, going into the summer mcdonalds has the help of value and doing more with dollar beverages and the First Time Since 2012. The strong u. S. Number, 1. 7 samestore sales growth. Analysts looking for a drop. Does that say more about mcdonalds or the broader industry. Is the restaurant recession over . Industry is up 1. 5 and that number includes mcdonalds so mcdonalds was slightly better than the industry but the industry was slightly worse on that, Fourth Quarter coming into april, feels like a little bit of a firmer tone still and that would track with comparisons. You expect the industry to get better but our guess is mcdonalds and the u. S. Will start to gain share with the help of a variety of things. Their values to start but theyre doing operational changes, theyre doing reimaging of their assets and renovation of the food is on the table going into 18 so Multifaceted Program in the u. S. To turn it around. We did see a couple big upgrades last week ahead of the print, some of them built on the notion that mcdonalds is going to lead the industry in mobile and digital ordering and pickup. How important is that . When you think about it, you got quality and value and convenience and these guys realize that they werent the best on value or convenience which is their right to be best in those things. Digital is a big part of that convenience so with americans, obviously they have their mobile phones, they want to eat at home more and more, these guys have to bring the convenience to where the consumer wants to be, which is increasingly at home, but on the go payment is part of that, too. Why not have a Loyalty Program . You have to interact with the consumer where they are these days and mcdonalds has been noticeably absent from that whole dialogue. The old joke is that theyre really an engineering tech company that happens to serve food but with every quarter that becomes more and more true. David thanks again. Good to he so you. You, too. When we come back trade tensions are in focus. Well talk to the ceo of a west Coast Lumber Company that actually lobbied for these tariffs against the canadian lumber companies. Steve swanson, ceo of the Swanson Group and former chair of the u. S. Lumber Coalition Joins us next with squawk on the street with the dow surging 229 points here. Whoa thats amazing. Hey, im the internet i know a bunch of people who would love that. The internet loves what youre doing. So build a better website in under an hour with. Gocentral from godaddy. Type in your idea. Select from designs tailored just for you and publish your site with just a few clickseven from your. Mobile phone. The internet is waiting start for free today at godaddy. Your insurance on time. Tap one little bumper, and up go your rates. What good is having insurance if you get punished for using it . News flash nobodys perfect. For drivers with accident forgiveness, Liberty Mutual wont raise your rates due to your first accident. Switch and you could save 509 on auto insurance. Call for a free quote today. Liberty stands with you™ Liberty Mutual insurance. The Trump Administration slapping new tariffs up to 24 on lumber entering the United States from canada. Diana olick joins us with more on how this could impact the housing market. Some of the housing markets are under pressure. Absolutely. Home builders are not happy to say the least. The Industry Association out this morning calling the up to 24 duty on canadian lumber shortsighted. Chairman Granger Mcdonald a texas home plr sabuilder said i harm consumer answer housing affordableability. Onethird of lumber used in the last year was imported that grows to framing, moulding, floors, mattress box springs. It takes 15,000 board bead to build a family home and the lumber increase up 22 , that just from the uncertainty surrounding a possible tariff, added almost 3600 bucks to the price of a new home. Nahb estimates the tariff on canadian lumber will cost over 8,000 u. S. Jobs, higher cost, fewer homes and can afford fewer workers and hits businesses that sell and transport building materials. They say this is a net figure including added jobs from the increase in domestic lumber jobs. I spoke to a home builder in denver earlier this month. He could be building twice as many homes if his costs for labor and materials were lower. He was very nervous about lumber. Most of the materials that we use are global commodities, and so anything that affects the free flow of those commodities across borders will have a price effect. The Commerce Department estimates last year the u. S. Imported 6. 66 billion worth of canadian soft wood lumber. Argues canadian lumber is heavily subsidized and wilbur ross said this is not an idea of a properly free trade agreement. Diana thank you. What impact will they have . Former chairman of the u. S. Lumber coalition steve swanson, ceo of northwest timber company, the Swanson Group. Thank you for phoning in on this news. Great, glad to be here. You must be applauding the move today. I know this has been simmering for decades. For those of us who have not been following it carefully what exactly is your complaint against canadian lumber . The complaint is very simple. 95 of the raw materials, the actual trees are controled by the canadian government in canada, and they sell those trees to those companies at an art fusificially low administer price. Contrast that to the United States over 70 of the trees that we consume here are from private lands that we buy at open market fully competitive prices. So canada creates an opportunity for their companies to have extremely cheap artificially low and they unfairly compete in the u. S. Market. And yet, steve, canada, the foreign minister National Resource ministers say those allegations are baseless and unfounded. They call this tariff unfair and punitive. Well it simply isnt unfair. The administration is simply enforcing u. S. Trade laws to support u. S. Workers, the u. S. Country and communities. This is a u. S. Market. This is not a canadian market. We have a right to exist. We have entire communities that depend upon our businesses, and all were asking for is the situation where we can compete. Lumber prices in the u. S. Today are barely above the price they were in 1977, when i joined this industry. Nothing else has stayed static. If you adjusted lumber prices from 1977 to today, they are flat or lower. No other commodity in the u. S. Is lower than it was 40 years ago, and lumber simply isnt a huge component of the cost of a home. Its still only 2 of the total cost. The entire framing package of a home costs little more than what the Granite Countertops cost. We simply arent driving up the cost of a new home. The Home Builders should take a quick look at their own bottom line. Their margins have more than doubled since 2016. We simply havent had that experience. So you completely are disputing the fact that these tariffs, which are taxes, will raise the price of u. S. Homes . It may raise the price modestly, but a price that can be absorbed in the marketplace. These are u. S. Jobs we are awe tack being. We cant have the Home Builders having exorbitant process while mills in the United States go out of aboutis. It simple a isnt fair. Canadian and chinese officials are meeting this week in canada. The International Trade minister for canada and the finance minister are in china this week. Why cant china step in and become the biggest market instead of the u. S. For the canadian lumber . Isnt that a longterm solution for canada that could end up hurting the u. S. Industry . The u. S. Industry is fully capable of supplying its own markets. We are not doing it today because we have been unfairly harmed by canadian imports. If canada wants to ship their lumber to china, fine. The u. S. Industry can more than adequately supply its own markets. Well leave it there. Certainly one side of the debate. Thank you for joining us. Steve swanson, Swanson Group ceo and u. S. Lumber Coalition Former chairman. As we head to break, take a look at shares of dow member cocacola. They are pretty much unchanged, adjusting those earnings that missed an expectations by a penny a share. Net revenue falling 11 for the quarter. Coke did lift the lower end of its outlook. Well dig through the numbers and talk about some of the themes in the industry with James Quincey, he becomes the ceo of cocacola on monday, and he joins us here for an exclusive interview on squawk on the street. Hey. Hi. Hi. You guys going to the Company Picnic this weekend . Picnics are delightful. Oh, wish we could. But were stuck here catching up on claims. But we just compared historical claims to coverages. But we have those new audits. My natural language api can help us score those by noon. Great. See you guys there. We would not miss it. Watson, you gotta learn how to take a hint. I love to learn. Lets[ whimpers ] dog. Find pingpong. Okay, lets go. Find your awesome with the xfinity x1 voice remote. Thats amazing some drama at wells fargo annual shareholders meeting. Iss and glass holders vote against some of the director on the board. Leslie picker is at the meeting in florida and she has the latest. Leslie . Hey, david. The meeting began about a half hour ago to a packed room, more than 300 people in atendance, plus an overflow room. Ceo tim sloan opened by telling shareholders they desrerve a lo more from wells fargo and they have a lot more to do in terms of making it a better company. Sources are telling me this morning that its looking likely that all directors will receive more than 50 of the vote, and its unlikely that we see any resignations since theyre not obligated to do so, if they receive more than 50 . The three new Board Members which include Ceo Tim Sloan received closer to 100 and remaining somewhere between 50 and 80 . Those on the Risk Committee or served on the board longer had more trouble in terms of gett tg afirmive votes in. Dissatisfaction with the board in general. Many believe wells fargo did not act quick enough in the wake of the sales practices scandal and we spoke with several shareholders before the meeting including a nun from philadelphia with the sisters of st. Francis, they hold about 15,000 shares, shes bringing a proposal for more transparency into what happened with the sales practices scandal, she said they voted against seven of the 15 director. We definitely looked carefully at the Board Members. We believe that the board should not have been so passive. They actually apparently from the report gave control to one person, and we believe that the system did not work and many people were violated. Reporter now this is different than a political style voting where the votes can actually still change before the meeting ends, so well be keeping an eye on that as well as the q a session which should be quite contentious. Well watch that an important day for wells. Thank you so much, leslie picker. Sue we rherera has an date. North Korea Holding a tribute at the giant statues of kim ilsung and kim jongil, also staging firing drills but no reports of any Nuclear Missile launches. Ivanka trump arriving in berlin after accepting an invitation from ger nan chancellor angela merkel. Ivanka is participating in a special global summit in germany, focusing on empowerment for women and girls. This is her First International outing in her white house advisory role. North carolina trying to dry out from recordsetting rain. Storms have been ripping through raleigh since sunday, dumping as much as six inches of rain. The local airport breaking the record for the most rain in a single day. And theres a monkey on the loose in florida, about 20 miles away from orlando. Theres a look at him, or her. The primate has been hanging around restaurants over the past couple of weeks remains alucive. Monkey sightings are becoming more common in florida and many believe the primates are descendants of monkeys brought to the area by film and production crews many years ago. Well keep you posted on whether they nab him. Carl, back down to you. All right, sue, thank you very much. As we go to break, look at shares of caterpillar, obviously helping the dow, back above 100 a share for the First Time Since 2014. 1. 28 more than double the estimate of 62 cents and the Company Boosts its full year forecast. Dow up 231, back in a minute. Markets continuing to rally strong this morning, the nasdaq hitting 6,000 for the first time ever, this as investors closely watch washington. Congress returns to a hectic agenda, including budget talks and the president s highly anticipated tax reform plans coming tomorrow. Joining us news is ed keon, and tony pimco portfolio manager. Other 230point rally for the dow. Is this france, better earnings or this idea well get a 15 Corporate Tax rate from washington . I think its unlikely well get the 15 , but certainly the relief rally from the French Election results was yesterdays news. Today i think its partially earnings have been very good but also hope that maybe we will get some help on the policy side. I think some skepticism about the policy side is warranted but its nice to hope we have higher prices for a couple of days. Is the assumption government will not shut down now the president is edging away from the demands for the border wall . Probably a factor. It wasnt distracting from risk on attitude. Generally it relates to two factors. One word and one number, stability when it relates to china and 5. 5 forecast for nominal gdp growth. When it is growing in the mid fives, corporate profits grow in double digits. Nom nol global . Nominal global gdp. 2. 5 with inflation. On the stability front look at chinas data, the best industrial output in four years. Gdp sequentially accelerating first time in seven years, and all indications are that with a big political shift in the congress the 19th Party Congress in october, november, xi jinping will want stability and its a huge contributor to Global Growth. 700 billion contributor versus half that the United States. So its very important that the stability there, so those are the key underpinnings, people are easily distracted by the geopolitical factor and whats happening in washington, but these are ever present. We talked to you last fall when it seemed like the tenyear yield was going to zoom to the moon, you were very careful to say keep your expectations limited and thats exactly whats happened. Has that changed now . We got the journal doing pieces on peak inflation. The tenyear yield, from 187 to 260 as you said, moved back down to 215, probably closer to the lower end of the trading range. Why . Because the cost of money. The Central Reserve has been raising the cost of money for those two finance for bond purchases, costing near one percentage point, when the twoyear treasury got close to that, its one of the reasons you could say that all yields in treasury starts to move up a little and there is the prospect of course of the feds to raise at least one more time this year, maybe two, so as the cost of money goes up its difficult for the u. S. To go down but dont look for big increases either because of the very powerful Secular Forces on demographics, credit growth and numerous other factors. Sounds goldilockish. Ed am i crazy in zbl . International growth looks good. U. S. Growth First Quarter is going to be a bad trend and everybody expects the Second Quarter to bounce back so we get to the 2 rate. If you look at car sales, you look at credit conditions, theres at least some evidence that growth may actually be slowing a little bit. And we could use some policy stimulus but i think its hard to get it through congress, if it has to be budget neutral, its not going to have much stimulative effect, Structural Reforms help, but its not going to have a huge impact on gdp. I think id be on Larry Kudlows side of the debate when it comes to what policies we need right now, if growth is slowing a little bit, then having policies would help us. One thing investors are trying to figure out on a day like today whether trade will hurt the global Economic Growth. We got those new actions on tariffs from the Commerce Department and against canadian lumber companies. Were just getting some sound in from the canadian Prime Minister justin trudeau. Lets listen. Standing up for canadas interests is what my job is, whether its soft wood, or software. Whoa the media liked that. There you go. I liked it. And you know, what we have to know is we are fremd usually interconnected in our economy with that of the United States. But its not just a oneway relationship, as ive pointed out to the Administration Many times since they got elected, there are millions of good u. S. Jobs that depend on smooth flow of goods, services and people back and forth across our border. Justin trudeau speaking looks like in sort of a town hall format at a tech company in canada. Tony, is this troubling actions like this from the administration . Or not . Consider that it affects only 5 billion of goods, this is the sort of thing you likely will see over time. Nothing big, so to speak, but look at the headlines. You just referred to it, put the focus on the Prime Minister in canada, and so there will be headlines created from this, but no big economic impact. The Canadian Dollar at multimonth lows against the u. S. Dollar. I refer to Global Growth being stable, china being stable and strong growth. Export data in korea last week was off the charts and same from japan. So it looks like the export story has actually good and the threats probably smaller than you think. One final point. Most of the disputes the u. S. Will have is socalled wto compliant type disputes, in other words taken up in the means that markets can handle. You were cautious on u. S. Stocks based out on the last few days which have been very strong. Were moving underweight stocks, overweight internatio l internationals, thats helped. We certainly didnt anticipate this strong a run but i think if you look at the overall picture, if we do have a link in the economy the market may be ahead of itself, not in terrible shape but we think perhaps a bit, get too far too fast. First back to back 200 point gains for the dow since november since the election. Well leave it there. Ed keon and tony crescenzi. When we come back James Quincey joins sara in a cnbc exclusive after reporting earnings this former. Talk to former oklahoma senator tom coburn, talking about taxes, regulation and health care. The wells meeting is recessed after the shareholder asked the director to explain what they knew about sales prices. Well get an update in a moment. Welcome to holiday inn thank you wait, i have something for you making every stay a special stay. Holiday inn, smiles ahead. Whether for big meetings or little getaways, member always save more at holidayinn. Com strategist tom leesays dangerous signs are lurking below the surface. Find out why hes wording, tradennationth cnbc. Com. The wlgz far foe Shareholder Meeting has been recessed. After a shareholder spoke up. Reporter there were fireworks and starting early, about a half hour into todays Shareholder Meeting a shareholder stood up, not part of the q a session, so he stood up out of order, and asked for each of the Board Members one by one to explain what they knew and when about the sales practice scandal. That of course required the Shareholder Meeting to be recessed and we were told that theyre just now reconvening after that outburst. Well get back to you with more as this meeting goes on. Guys . All right, thank you, leslie. Yep, promises to be somewhat contentious. Well be checking in with leslie picker later. Now srick santelli for the santelli exchange. Welcome former oklahoma senator tom coburn. Thanks for taking the time, good to talk to you today. Good to talk to you, rick. W today is the day. White house Economic Team is going to meet with the gop lawmakers, and theyre going to try to iron out some of the legislation particularly under the microscope tax reform. Tomorrow, we may get the principles for tax reform. Youve been there, tom. What do you think is going on and what do you think we may see tomorrow . Hopefully we see a significant reduction in Corporate Tax. Not just pass through but Corporate Tax in general. Hopefully we see a tax holiday on oversea s earnings and maybe make that permanent. If you get a good tax rate, then you wont have the problems that weve had in the past with this high Corporate Tax, and then we ought to have middle class tax decreases because of the decline in median Family Income and the decline in asset worth of the middle class. And so if we do all of those things and then pay for some of it by eliminating some of the waste and fraud that we have out there, we should get a real stimulus, a real kick out of that. You know what i find so fascinating is theres a lot of discussion about cbo, not necessarily from the standpoint partisan nonpartisan, just in the form of accuracy. Many wall street Journal Articles talk about what their numbers looked like before reagan cut taxes and how ultimately inaccurate they were. Can you weigh in on the static versus dynamic scoring in the cbo . I can weigh in on static from my experience because some of the assumptions they make if you go and talk to them after they made these assumptions, they really cant defend them often times. Thats one of the reasons you see them so off. They were off on obamacare. They were off on the Medicare Part d. They said it would cost more than it did. So they make great efforts, but, again, theyre guessing. Its the art of guessing. If you compare static to dyna c dynamic, youre going to measure in those effects as we go along and to me i think we should never have status accounting or status estimates from cbo because it causes us to make poor decisions. I found them wrong more than i found them right. We only have about 25 seconds, but very quickly, on repatriation. Big deal. What type of strings do you think should be attached to that . In other words, for infrastructure do you foresee any strings . Your final answer. You ought to let companies be free and bring money back and do with it what they want and one of the benefits for the economy whether its share repurchases, increased dividend, youre moving more money into the economy and hopefully get greater velocity out of it and greater Economic Growth. I would add one thing real quickly. If you want to increase Economic Growth, what you have to have is transparency both in terms of price equality and any health care bill. Its 20 of our economy. We dont have any Market Forces holding it accountable. I agree. Thank you, tom. You need transparency. You need to make rules that everybody follows and they remain constant. Thank you again. David faber, back to you. All right. Thank you, mr. Santelli. Lets send it over to jon fortt with a look at whats coming up on squawk alley. The nasdaq pops above 6,000 for the first time. What will it take to go higher from there . Also, we have the coke ceo after they announce major layoffs. All that and more coming up on squawk alley. We, the device loving people want more than just unlimited data. We want unlimited entertainment. So we can stream unlimited action. Watch unlimited robots. Watch unlimited romance. If you are into that. But we also want more like. Unlimited hbo. Can i stop dying now mark . No cant do mi amigo. Its unlimited. Besides you are really good at it james. Dont settle for any unlimited data plan. Only the at t unlimited plus plan comes with hbo included. We cut the price of trades to give investors even more value. And at 4. 95, you can trade with a clear advantage. Fidelity, where smarter investors will always be. When we come back, cocacola reporting earnings this morning. Ceo james quincy will join us in a cnbc exclusive interview. Much more ahead. Squawk alley coming right up. Stay with us. Online u. S. Equity trades. You realize the smartest investing idea, isnt just what you invest in, but who you invest with. Welcome to holiday inn whether for big meetings or little getaways, there are always smiles ahead at holiday inn. Welcome back to squawk on the street. Stocks off to a strong start after upbeat Earnings Report. Materials and financial stocks leading the rally so far on materials front we have freeport, dupont, dow chemical, Cf Industries outperformers ones to watch today. Lets send it back downtown for start of squawk alley. Back over to you guys. Good morning. Its 11 00 a. M. At coke headquarters in atlanta. 11 00 a. M. 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