well above $70 with expectations, some think being on our way to $80 a barrel brent now trading 49 cents and the ten-year note, at this point, yielding 3.017% don't forget to join us tomorrow we'll be joined by gin ginni roemetti right now it's time for "squawk on the street. good wednesday morning welcome to "squawk on the street." i'm carl quintanilla and jim cramer and david faber the president throws cold water on both the china trade deal and a north korean summit. retail earnings come with scars, as well. 1% sell-offs in europe and asia overnight. global pmi at multimonth lows and ten-year yield cracked below

3% and the geopolitical risk for stocks futuring pointing to a stharply lower open as the president down plays china trade talk optimism. >> plus on the fox hunt. comcast is in the advanced stages of preparing an all-cash bid for the fox assets. >> and financials are in focus congress passing the biggest roll back of financial regulations since the global financial crisis we'll talk about the impact there. stocks are set to open lower one day after the dow's worst session in a week. geopolitical and trade concerns weighing on the markets around the globe. about an hour ago, the president tweeted our trade deal with china is moving along nicely but in the end, we will probably have to use a different structure in that this will be too hard to get done and verify results after completion hard to know exactly what that means. >> i keep coming back to what larry kudlow told us on this show which is we have to develop some sort of trust but verify situation like reagan had with

the soviet union i think this is actually somewhat consistent with what larry told us. trying to come up with a strategy he said there's new real terms yet. the president has spoken informal off the cuff interview where he was denigrated the chinese in terms of the way they were approaching this. but you call the president a great poker player if we're going to do this, if we're going to tweet the tweet, this reminds me a little bit of the grand scale of amazon. where it's like, you know, if you're going to trade every day on the tweet, may i suggest las vegas i know has a strike. perhaps you go to one of those biloxi casinos or the terrific carnival chip today. they've got casinos. that's not the way you should invest that's the way people are investing. they're investing like that in europe may i suggest you do not go tweet by tweet you're going to be selling,

buying, selling, buying. you'll have made nothing nothing. comcast, david, you'll have made -- >> not clear. >> right [ laughter ] >> i like not clear better than nothing. >> not clear if you're a comcast shareholder, it hasn't gone so well for you so far we'll get to that in a moment. signifying nothing like the middle of macbeth. >> like shar-- shakespeare people think it happened to be faulkner no, it was shakespeare. >> he was talking about life. >> i know. >> deep. that's deep for three minutes into the show. >> sorry. >> meanwhile eurozone we'll get market pmi today eurozone at 18 month low japan is nine month low. we'll get ours in about 12 minutes or so in the u.s i mean, they mention weather they mention holidays in europe, at least but in japan it's a lot about supply chains, bottle necks,

inflation. >> look, if you mention inflation of any sort on any conference call you're dead. executives just say it's business as usual. because if you -- yesterday koch brothers had a good call they did mention raw materials was bad and labor was bad. no kidding with lumber skyrocketing everything it was almost as if every analyst was like shocked shocked. it's like casino gambling in morocco. we can't be shocked continuously. >> lowe's was bad. we knew it was going to be bad therefore it goes higher target was good. it was not good enough and then it goes lower big. you need to have people prepped that your quarter will be bad. when you report a bad quarter, your stock goes higher. >> we were looking at international markets. italy down another 1.7%.

it's been a long time since we talked about italy years. but now their ten-year yield is up to 2.45%. that's nowhere near five years, 2011, i guess. >> two years on the basis points today? >> november of 2011 it was at search -- seven. >> right there seems to be growing concern there. i wonder if we'll be talking about it a bit more often given it's the third largest bond market in the world. >> you need a government i find it's helpful to have a government if you're going to buy treasuries of any country. there is no government in italy. when i say no government, what i mean is no government. and if you go back, i think people are fearful of the moo mussolini. >> is it worth watching? >> if you want to miss the bigger picture which is our

economy. there are economies that have done nothing structurally to change what's wrong. nothing. so the idea that italy somehow should make a come back when all that happened is you have no government enforcing the number of rules in italy are insane versus the number of rules that -- i'm not kidding. >> i know. you have first-hand experience. >> yeah. if you have property in italy, let's say you have a swimming pool okay you have a swimming pool it said did you almost take life save training. and then out of nowhere and you have to take a course on life saving you have a pool. can you imagine in this country if we decided everybody has a pool has to take a course on life saving and pay a lot of money for it italy is not functional. they have one bank one bank one solvent bank you need more banks than that. and you need to deregulate the banks. let them do what they want

who is doing that? >> we are. >> yes thank you, david prosecution rests >>well, we want to talk about, of course, comcast versus disney we talked a lot about it yesterday, and what do you know this morning comcast, for the first time, publicly admits, if you want to call it that, or comes out and said, yes, we're planning to make an all-cash offer above the disney bid or the disney deal to acquire those fox assets and of course, we're talking about a couple of big cable channels here. we're talking about the movie studio, the tv studio, perhaps en more importantly, the 39% ownership of sky and all the international assets and the ownership stake in hulu, as well that comprises most of it. star india a key part, as well we've known it for a long time yesterday we reported on the likelihood that will fox will set a shareholder vote on said deal with disney and so comcast wants to get as much time as it

can between that vote and now to convince fox share hold terse will have a better deal. they want to focus on it now even though they don't know what the number is. it also said they'll have regulatory structures in place that will be beneficial in terms of tempering if not eliminating any risk that a regulatory review would take, as well so reverse termination fee would be equal to what disney is playing and on from there. you might get stronger language in terms of showing a willingness on the part of comcast to take the rsn and having to potentially sell them or a movie studio, should it be the case or a couple of cable networks. we'll see where all of this goes there are still no shortage of potential hurdles for comcast, despite what i'm told is the strong desire of brian roberts to not miss what he believes is a generational opportunity capture these assets

and his willingness to be extraordinarily aggressive in doing so price, of course, is one key part of that regulatory concerns is another and meeting them then there's also a issue of tax, jim currently the fox bid that's remaining is tax free. now if you go into it and get a meeting with murdoch and say, listen, we know this is not ideal for you to have an all-cash deal because you're going to have to pay taxes we're willing to give you stock for the fox assets your portion of ownership there. it still would have the effect of making the spin of the fox assets what we're calling new fox. you know, the news channel and things of that nature that are staying. still have the function of taxable spin. >> right. >> and that's not good either for the murdochs there's a question there as to how comcast will thread the

needle it won't be easy in terms of meeting their needs on the tax front and not screwing the tax free nature of the spin right now or somehow coming up with a high enough price it doesn't matter. >> yeah. one of the things about this market in general is that yesterday you reported what everybody reports today. i turned to you yesterday at 9:35 and i said how odd is it that comcast stock is actually up >> yes. >> it seems wrong to me. you said, yes, but rational. everybody reports may i say the exact same story you reported. everyone is copying you and the stock is down. the reason i say this, this is actually a metaphor for this market yesterday lowe's said listen, you know, things are okay. then they reported up. okay yesterday you said what comcast is going to do it's negative for comcast stock. everybody else says it and stock goes down. the market is reacting to every

bit of news. it's becoming unnerving to me. >> yeah. it's interesting and comcast now at 31.75 that's one of the reasons they can't use their stock to compete with disney in terms of making an all stock offer despite what murdoch wants they're open for business on the fox side there will be potentially a willingness to meet. we'll see. that's what they want to do. get in a room with murdoch and see if they can put a deal on the table he's willing to potentially endorse. remember, in the shareholder vote, the murdochs only can vote about 20%. you still have an opportunity, if you're comcast, to put a higher number out there on the part of fox shareholders for disney you cannot force the murdochs, i keep saying this, to sell you the company if they're opposed to it. because you need to run a proxy

fight to get rid of them in that case, they have that 40%. you won't win it. >> i listen to your report and say you brian roberts he wants to win this. if fox were a regular company with no family control, then this would be done. >> yes that might very well be a different story. >> the board of fox was unanimous in their approval of the disney deal. by the way, at the time, comcast did not offer the regulatory give ups they would have needed to you know, the things that would make risk go away in terms of if this is not actually approved or meets certain divestiture needs. by the way, all of this depends on judge leon. everybody assumes to -- he's

going to say i side with the government if he says that it's off it's all off disney will move ahead, of course not without its own regulatory concerns. >> what if the stock goes higher stock goes higher. >> figure out a way to split the baby and give comcast of what it wants. >> a little solomon. >> yeah. >> a big story when we come back a busy day for retail earnings. we'll talk about that and more with robert herjavec we look at futures disappointed over yesterday's optimism on trade, anyway. more "squawk on the street" in a minute

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earnings target and lowe's missing. they cited bad weather lowe's sees upward tiffany is surging a day after lowe's named marvin ellison as the next ceo, ellison posted a video message on j.c. penney's website take a look. >> one thing i didn't do as chairman and ceo was grow the stock price and generate for you and the shareholders this is a number one responsibility of a ceo and something i did not deliver on as i prayed about my future and where god wants me to be at this point in my life, i think it's appropriate for me to step aside, get back into home improvement retail, and allow the board to bring in a new ceo with fresh ideas. >> he goes on to say, if i were you, i would be disappointed. >> yeah. self-evasive i remember when he took over the job, speaking of about what a

great job he did at home depot merchandise is merchandise we both talked about this being merchandise is merchandise if you're good at selling one thing you would be good at another. i think the challenge at j.c. penney is much larger than people realize because of the disruption that hadn't been really covered from with ron johnson. but i think this says i'm not an apparel guy. and i let you down i'm not an apparel guy and many retrospect, those are two different sets of skills you need that's what he basically admitted i actually thought about the board of j.c. penney and, yes, the board offered him the job. and it was a great job and i know that the instinct is to take the job. retrospect, i'm sure he -- >> he's known from his time at depot as more of a hardline guy. appliances and things that he'll

have an easier time selling at lowe's. >> j.c. penney did have the vision of going more into hard lines. but j.c. penney was sephora was going to inexpensive clothes where they were having success hindsight is 2020. the board did make an offer to a guy they thought that maybe the future with j.c. penney would be hardline he thought that, too it doesn't work. it's unfortunate. >> given his success at home depot, his knowledge-based course of how things worked there, lowe's is up sharply today. >> a not great number. yesterday it was up and the president tweeted and then people said a lot of stuff from lowe's is from china and it goes down this is a remarkable affirmation of what he said. i'm a hardline guy the people say the bad stuff about the weather is over. we have ellison coming in.

he did a good job. lowe's is ripe for a basic reorganize and he's going to challenge home depot and maybe take some home depot people. >> target gross margins down year on year as they pay more for remodelling and wages. comps were better. best traffic in ten years. >> target was a good quarter it was a good quarter. the way these work, so everybody knows, when a stock goes down at the opening, that's people who are freaking out but then they continue to reload and they sell and they sell and sell and i don't know but the vast majority is close it below because you have a broker working to sell a million shares what the broker wants to do at the end of the day and say listen i got you an average of $70.30 and the stock went out at $69.80 i beat the low. >> as for the quarter, margins go down as e commerce goes up. >> that's what you want. it doesn't matter. today is a bad day for target.

>> you want margins to go down >> no. brian is shifting the strategy to take share from amazon. >> you can have a good business but it's expensive to compete with amazon. >> yeah. the merchandise is great cornel is doing great. today is a bad day for cornel. yesterday was a bad day for lowe's tomorrow will be a good day. if the president tweets sudden progress and you sell target at $70. wrong. >> the president did just tweet about two minutes ago. there will be big news coming soon for our great american autoworkers after many decades of losing your jobs to other countries, you have waited long enough. >> wow. >> we'll see what it means take a short break here. get the mad dash and the opening bell in a couple of minutes.

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all right. we got six and a half minutes before we get started with trading. six minutes. where are we heading in the mad dash. >> we're going 32 seconds. make that 26 to phillip roth one of the greats of american literature all time. >> tiffany david, 7% comps. people are looking for 2.6%. a billion dollar buy back. new styles i went in there to buy my steph daughter a present it was like you were never to tiffany. there wasn't anything that was the same

it's selling like mad. japan really good. so don't be surprised because there's a lot of people shorted thinking once again it couldn't be that good it was they did -- what did they do >> they changed the merchandise line up. >> wow. >> buy back stock and new york turned a lot a lot you could say is the weaker dollar but the merchandise line up is radically different. and so exciting. when was the last time you heard that tiffany had -- tiffany decided basically the same thing for kingdom come i urge people to go to the stores why didn't i tell people to buy it i don't know i hate to think what i looked at mattered but it sure did. >> there you go. there's another name in retail up sharply an opening bell in a few minutes. quk srt o gettingtaedn "sawon the street.

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we've covered target and lowe's. obviously trade and the president's q & a questioned ongoing tweets media with comcast and disney and fox. and overseas, jim. italian two year and ten year continue to make noise questions about whether contact is named to the position by the president because of his lack of experience >>well, it is interesting to see how much we can diverge from europe when you come in in the morning, should we be looking at those futures and those markets. because i don't think that they're positive to anything here they really aren't i think europe has it wrong. i think we have it right europe is overregulated. high taxed we're getting under regulated and low taxed. i think it's not zerosome but if you buy our market because italy is going down. that's stupid. you have to buy our market because of employment. employment is going up our country has --

>> unbelievable stuff. wow. no question about that. >> anybody could get a job in this country, if they try. it's almost a feeling. [ opening bell ] over at the nasdaq celebrating an ipo payment technology and services provider you mentioned the difference the spread of regulation between europe and us. >> yeah. >> as we roll back the first major part of dodd/frank yesterday as the house backs the senate bill. >> to me, that is dodd/frank you know, obviously they're trying to have -- because the democrats don't want to give the large banks a break. >> right this was actually -- there was some bipartisanship. >> yeah. 33 demes.

>> i mean, the bankers are supposed to be hated in this country. >> right but he's the $250 billion level and assets comes down. >> excuse me 50 billion goes up. >> yeah. more lending for small business. more lending in inner-city neighborhoods. big democrat opposition and very good are people going to start -- and how many days will it take >> the changes to dodd/frank are not that big. >> no. >> they're small the shorts will say back in the period where we're going to lend to anyone, which is not true. >> no. but it will relieve some of the burden on the smaller and medium sized banks. in terms of asset size and so yeah. too small to succeed that's what heidi heightcamp said. >> yeah. she said take what you can get and run to the daylight. right, i mean, everybody wanted bigger things but not everybody can have the same big thing. >> that's important, by the way when stock is moving up here is

tesla. baird has a note talking about the bears overplayed their hand. now we have nothing to do with the company at all we're betting on whether the bears have to capitulate or whether the bears can win. you visit the giga factory that's kind of like he's busting the shorts remember the last upgrade was a short buster i find it tiresome that's what people are doing i want to ask you about the bell, david, if the government wins this case, will succession matter to the time warner? >> that's a great question. >> hbo is the key asset. >> hbo is probably the key asset. >> and sports. >> turner is insignificant but, yeah time warner has to have a plan b. they've got to and a plan c. >> plan c. >> there's got to be if, in fact, judge leon does

something unexpected on the 12th and say i name the government opposition to the deal and won't allow to occur there's an ability for at&t to meet whatever his objectives are and do something. >> all right. >> that would potentially or they might be unwilling to do so, in which case, time warner will live on a lot of time warner shareholders won't be unhappy. given what happened to the stock component and below the bottom of the cool collar and therefore it's not that much of a premium any longer for those shareholders it will question what succession plans there are in place and if he, in fact, rules that you can rule that any other potential media buyers for the asset. >> apple have interest who knows. you have to same conversation forever. >> a lot of craziness in the market low's is up three. then up four and six and seven ralph lauren up three and four ralph lauren did a good number it's almost as if people are

short ralph lauren and lowe's and they're capitulating, but they win on some others. stocks are trading erratically ralph lauren can be up five points from where it was seven minutes ago. >> up 85% in a year. for all of their troubles. and ralph today in the release talking about a strong partnership with the new ceo remember the prior ceo they sort of clashed but the top five gainers for the moment -- actually, six are retail tiff, lowe's, ralph, nordstrom on an upgrade. >> i met with our team this morning. ralph lauren was up 3. i said it'll be 12 that's happen in this market the market is over running some will say it's a liquidity problem. >> there's no liquidity.

if you decide you want a stock, you're going to move it up yourself no broker is going to short it to you whoever shorted it is overrun. >> yeah. nothing, by the way. there's nothing great about the lowe's quarter home deport, on the other hand had a great quarter retrospect and that stock does nothing. that's ludicrous it's ludicrous home depot is better than lowe's for heaven sake. >> judging from the promo for the show succession. based on murdochs than the redstones but it might be a little bit of all of it in there. >> we'll talk to franc rich, one of the producers this morning on squawk alley "veep" fame they sort of pushed back. >> it seems like a little. i'll mention it because this morning cbs does file an amended

complaint in delaware seeking permission to issue that dif dent the dividend that will have the diluting the investments they want shari out of their business as i said yesterday, this is going to wind the way through the delaware courts. we wait for the desz court to render the judgment. should could replace the board at any moment, if she wants. the optics of that wouldn't necessarily be good. >> i hate these stories. >> i know. i did this media yesterday and now today, of course, we have comcast coming out and saying

publicly what they had yet to. we're going to make an all-cash offer that is higher than the disney offer for the foxassets the key for comcast to get fox shareholders to vote done the current vote we'll see. there's fcc filings that haven't been completed yet or fully signed off on. we'll keep an eye on when the vote is going to take place. >> why doesn't viacom trade higher given the fact they would be wholesale viacom is not that bad here. >> you don't think so. >> i don't think so. >> down 11 fortuna% for the yea

>> cbs doesn't believe the projections they got for viacom management they think they were too optimistic. >> okay. i didn't know that. >> if you want to work off economics, .1635 was agreed upon the exchange ratio it wasn't a bad exchange ratio as our viewers know at this point it was about management at the combined companies that divided the sides. why is there not more combination. there's a lot of video game companies. all of these within the context no onen'ts the stocks as much as they used to. >> it's actually the story line of the pilot of the show. >> it is. >> is it old school media legend media company is not growing

and sons trying to say hey dad wake up. we have to juice this up with new brands digital content. >> he's a -- franc rik rich is genous. >> investment happening around the country now. ting is in part at least maybe in large part to tax reform. also, regulatory reform. and we see it across the steel industry we see it across industrial chemicals in the energy sector housing starting to pick up nicely it's pretty broad in terms of the expansion. >> that's a key point. people point to buy backs as the first effect of tax cuts but buy backs are easy investment takes time. >> yeah. what a fabulous story that is.

they have an analyst meeting next week. i think lance is ready to buy back more stock than he has. let's quote larry kudlow he has more business it hurt his first quarter that they had so much congestion. that's a high quality problem. >> it is cut it out mention it's better. please what a great story business firing on all cylinders. hiring like mad. offering 10 $25,000 bonuses to find workers he trimmed management. he's adding workers. adding locomotives taking locomotives out talking about, you know, literally tens of billions of dollars of investment in taxes it's going to be hundreds of

millions and he has mexico. he's not as worried about nafta as i thought there's a lot of good stuff in the interview. it's a buy the stock is a buy there i said it. >> you did you said it. loud and clear. >> right how can home depot but down and lowe's up. who is making these decisions? >> lowe's up 7.5%. >> that's ridiculous 7.5% i mean, honestly honestly this is exhausting i mean, you know, it's exhausting because it's just not logical. >> fascinating

tom wolf, philip roth they're all going. >> yeah. >> a lot of giants. >> none of it is good. >> yeah. i don't like it. i don't like it at all. >> yeah. commencement speaker. >> so were you that's one thing you have in common. >> i got to tell you -- anyway ge the worst dow component off the initial lows we'll get to bob this morning. >> sad philip roth died. tom wolf died, as well these were my generation that had impact on everyday life. here at the stock market 3-to-1 declining. trade headlines coming and going and averagingthe markets the trade headlines improve.

here are the semis energy industrials defensive names like utilities are up you see it in the dow with the defensive names like proctor and gamble and johnson & johnson certainly on the upside. we put the dow industrials and of course the industrials like cat caterpillar. very predictable same with europe, by the way industrials. the energy nokia. the car companies all down but this is more than trade headlines. the european economy is much weaker did you see the numbers overnight? the manufacturing pmi. look at the european earnings. the stock 600. up 3%. we're up 26% in the united states look at the outperformance you see the orange line. that's the united states s&p 500 in one year up 13% bottom line that's europe. it's flat. we're far out performing because the u.s. economy and the u.s.

stock market, u.s. earnings are far out performing european earnings that gap is only getting wider you can see this in the tiffany numbers. look what happened with tiffany. jim mentioned the 7% good numbers but look here. america is up 9% japan up 9%. europe down 9% the european economy is weak right now. as for the retailers, the guys told you this. i think the key point is tiffany's raise their full year outlook overall. low's missed and reiterated their full year guidance target missed but their guidance on q2 seems not that bad overall in retail trends we're reaching the end there's some trends here i think are obviously. a lot of people like lowe's cited the weather, obviously i was struck by how lean inventories are. remember three or four years ago inventories were too high. mark downs you didn't hear it apparel seems good active wear. a lot of good about active wear.

at leisure thing goes on and on. guidance was fairly intact with a few exceptions overall not that bad in terms of ipo we have a couple of big ones. today there's one trading as the nasdaq global payment processer 16 that's a high end of the range. 14 to $16. that should open in about an hour and a fairly big one a cnbc disrupter should be pricing tonight. digital lending platform we'll see. remember this has been a tough business the digital lending platform but they had a tough time overall. 34 billion shares at 21-to 23. it's going to be a big ipo right now the dow down 88 points we're moving up here from the rows after the open. carl, back to you. >> thank you very much busy morning fed minutes later on today we'll get to rick santelli. >> good morning. we're down four basis points of

tens bunds are down 6 flirting with 50 basis points which puts the spread around 250. so it remains quite high and that spread reflects what bob is speaking to, to some extent with regard to what is going on in europe let's look at a may 1st of tens. this is important. we broke through the first high close of the year of 303 which went back to new year's eve of 2013 first time since we cracked that that we're trading below it. if we close below it, as the 30-year bond which cracked the first high of 2018 and is now below it, and it may be significant. it might be more consolidation of lower yields. let's go back to europe and look at one week of the italian ten it's above 240 again it's up ten basis points that's one week chart. if you open up to the beginning of april, you can see how it zoomed and how is that all connected with what is going on

with regard to the aggregate eu? well, it's hard to peg any one country. i think it is the canary in the co coal mine for a variety of reasons. not the least which is lack of reform, overbearing regulation, and maybe even more to the point where the placement of interest rates and prices are in the southern sovereign economies is misguided and the market, when it sees fit and there's an incentive or capitalist it makes quick work of things look at the chart. we cracked 94. we haven't settled above 94 in like one session in early december of last year. opened the chart up to november of last year you kind of see that one session. listen, the dollar index rally has been rather orderly. maybe the impact on the emerging markets is not orderly and i don't suspect that's going to change. but i think it gives us a glimpse into investor performance and maybe, maybe how

the u.s. can dodge some of the policy issues that are ahead for the ecb, especially considering mario draghi may be leaving. these things are all important just look at italy carl, jim, david, back to you. >> all right rick, thank you so much. we'll take to you in awhile. interior secretary ryan zinke boosting oil and gas drilling in the united states. initial low down 140 and change. down 84 now on the dow back in a moment it took guts to start my business.

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senator bernie sanders and amazon going back and forth on twitter. amazon responding, defending its pay and track record of job creation and inviting the senator to visit a fulfillment center which he has now accepted so we can look forward to that photo op interesting that amazon gets it from the far right and the left. >> amazon such a hot button, but

317 million people eternally grateful for the pricing >> carl's poipnt, they also get it from the white house but that seems focused on his ownership of "the washington post. a lot of amazon supporters wish bezos had not purchased "the washington post. >> and his personal wealth >> where did he come up with that $275 million a day. what is that based on? >> does he know where the stock is going >> maybe he's making -- >> maybe he's shorting amazon. he's a practitioner of economics. >> if we had him as president we'd have a tax on anything that traded >> a serious practitioner. >> we'll get stop trading thwi jim in just a minute dow is down 88

let's get to jim and stop trading. >> look, i admit with the micron management yesterday, the stock is up very big but only 5.5 times price to earnings ratio. lowest in the s&p. that makes no sense. buying back $10 billion worth of stock. they'll be pretty aggressive if you are looking for something

inexpensive, i know david says, jim, when your going to stop talking about it i'll stop talking about it when it's done. >> what's on "mad" tonight >> carnival. arnold donald. fantastic manager. and thin tech. >> the buddy who runs sofi now, right? >> disrupter >> he's disrupting things. rent the runway. very disruptive. >> are you disrupting things >> i try >> you disrupted things with that comcast thing today everyone else got today. >> we'll see you tonight at 6:00 on "mad money." a closer look at retail and some of the big gainers in that sector today leading the s&p. the dow has more than t cuits early losses down 57

♪ good wednesday morning welcome back to "squawk on the

street." i'm carl quintanilla with sara eisen and david faber. markets managed to cut its early losses about in half dow down 78 points meanwhile, new economic data new home sales this time let's get to rick santelli >> yes, for the month of april, we're expecting a number around 680,000 units. 662,000. seasonally adjusted annualized units follows a lower revision at 694 now 672,000 so that puts us up a little over 1% how does that stack up 662 actually is the weakest number going back to the first number of the year in january. but to always get more color on housing let's aim east to the state of virginia for diana olick. >> rick, i'm sorry to say i'm not surprised at this number

we saw mortgage rates jump pretty dramatically in april these represent contracts signed in april, not closing. so folks out shopping for homes like this in the month of april. we also saw from the mortgage bankers association that mortgage applications to purchase a newly built home fell in april month to month, and they usually rise. so that inventory number going up to 5.4-month supply, much higher than the existing home inventory. but, remember, new homes come at a price premium. and as buyers get squeezed by higher mortgage rates they may not be able to put down as much for a newly built home the builders are benefiting from that lack of supply on the existing home side it's really the low end the market needs so many homes and the builders are focussing on the high end we're ban hour outside of d.c. these are going at around $700,000 very big homes but very far out. that's where you have to go to

get the less expensive homes, but even here, still expensive >> thank you diana olick our road map for the hour starts with a mixed day for retail target among the factors weighing on stocks here as several major retailers report earnings >> plus, regulation rollback the president set to sign that law to dismantle parts of dodd/frank and comcast is going to go head-to-head with disney cnbc's parent in the advanced stages of preparing an all-cash offer for large parts of 21st century fox. big morning for retail as sarah said tiffany had a blowout quarter. lowe's and target did miss their targets. let's get to dom chu for more. >> we're going to start with the good news. the stock surge in tiffany right now. a lot of folks around the world decided to buy those things in little blue boxes. profits there handily meet analysts estimates

folks did go for the higher end gold and silver pieces that helped drive a lot of sales. a $1 billion stock buyback program doesn't -- probably doesn't hurt the case here on the bad news side of things, target missed the mark when it came to analysts expectations. target's ceo said the sales in temperature sensitive categories, including patio and gardening gear, grills and seasonal clothing got off to a slower start due to weather but that the trends recovered rapidly as weather got better. and then lowe's which is higher after america's second biggest home improvement retailer came out with lower profits than expected sales at established stores also grew at a lower rate perhaps a bit of a relief rally after yesterday's losses on the heels of the big announcement of jcpenney's ceo getting tapped for the top job at lowe's. i just step offend the earnings conference call. outgoing ceo robert niblock did

address that off the bat on the call he made a statement praising mar rin ellison saying he has a deep appreciation for lowe's culture so they addressed the elephant in the room right away we'll see if investors start buying in as that july 2nd start date approaches. back to you. >> they are buying in today with the stock up nicely. dom, thank you news that he's jumping ship from jcpenney to lowe's. marvin ellison posting a video message for jcpenney shareholders today listen >> the one thing i did not do as chairman and ceo was grow the stock price. this is the number one responsibility of a ceo and something that i did not deliver on and as i prayed about my future and where god wants me to be at this point in my life, i think it's appropriate for me to step aside, get back into home improvement retail and allow the board to bring in a new ceo with some fresh ideas

>> let's discuss retail. jan niffen and jpmorgan's chris. jan, did ellison just jump a sinking ship >> yes, he did he went to the second best player in the diy space. unfortunately he's up against a triple crown winner in home depot so i'm not sure how well that's going to go >> where he spent 12 years himself. >> and probably wanted to run and didn't run and so he's moved on to lowe's now. i was a little surprised when he showed up at penney's quite honestly and knew he was really strong in the other side of the business it hasn't gone particularly well at penney's. penney's is a struggling -- i'm not going to blame marvin. i think he did all the right things i think penney's is sort of a busted entity at the moment. it makes a lot of sense for him to go back to lowe's whether that will work well for lowe's or not, i don't know.

i think home depot is the winner in that space. will continue to be. they have all the professionals. they're the strongest player i'm surprised to see lowe's up so much today because i didn't think their numbers were good. >> the comp slowdown was there, but then again, so was the weather factor krir chris, do you agree with the market take on this? sell jcpenney and sell lowe's? >> marvin just traded in a 92 camera for a 2018 mercedes it's a much better industry by far. a duopoly. 50% market share department stores are structurally challenged. penney's doesn't have great real estate it's a great trade for marvin. today's stock movement is relief it was down yesterday people expecting comps to be worse today. they didn't lower the guidance and that's driving some relief as you look forward, the question will be, when marvin comes in on his first conference call in august, do we have to reset the margin structure lower

and rebuild from that or does that occur at their december analyst day. >> interesting they didn't lower guidance in preparation for that let's talk about other movers. tiffany seeing strong gains. strong comp store sales. is this the return of tourists into the united states or is it something that tiffany is getting right now about the product? >> both of those we heard from macy's the tourist was back mastercard talks about the tourist being back so i do think that helps them a lot because tourists is what drives upper end businesses in america. also they're doing a better job. >> yet the dollar is raise again. i don't know how long they can count on that. >> i don't either. >> which could be a problem. >> chris, it feels like generally retail has been a big loser over the past few years. this quarter there's some standouts. is it overall better health of the u.s. consumer, or are we just starting to see these turn around strategies take place at some of these big retailers? >> i think the home improvement

space has been the fastest growing space. grew about 6% the past two years. lowe's has underperformed that but look at target's results today. look at walmart last week. walmart doing over two comp again. target doing a 3% comp again on the heels of 3 1/2 in the fourth quarter. put that into perspective it was the best holiday since 2005. core retail up 6%. so i do think the consumer is in a much better spot for someone like target to put up that level of comps is very encouraging. the big question, and i also think that these retailers are becoming more competitive to amazon with multiple fulfillment options. target is a great example of that for the stocks going forward, you have to lap that record holiday. and right now a lot of these retail stocks are heavily weighted to the fourth quarter are in purgatory because at this point one so small relative to

the year what you do today really doesn't matter. we want to get some visibility on back to school to assess the holiday outlook. >> chris, you just did a big report on your sixth on amazon and the impact on other retailers. you make the point that a rising consumer is helping to narrow the gap between ecom and bricks and mortar isn't the narrative that you can do pretty well but still get bruised in the face as we see from some of these gross margins? >> carl, exactly right it's an extensial risk you've seen great retailers like home depot and target basically say we won't get margin expansions flat is the new up for target, one reason is it they did disappoint on the gross margin as you look forward, the big question for someone like walmart is, especially with the flip card losses is, can you actually see the earnings growth

that the market is expecting that the consensus is expecting when you have the package food and food space becoming much more competitive and amazon, obviously, with their aq acquisition of whole foods making a big push to grab the consumer share wallet. >> to come back to jcpenney for a moment a very small market value, but tens of thousands of employees some of them multigenerational anything you can offer them in terms of hope for this sghp any strategy you can imagine that could conceivably give them momentum >> if they call me to run it, what am i going to do? >> yes >> you'll have to continue to close some stores and you'll have to continue to move online and it's a very expensive process. and they really don't have the money to play in the game. it's expensive for everybody this existential threat comment is a good one. keep invest, keep investing, do more business but your roi goes down

when you're a troubled retailer and not a maximum taxpayers, those that are running at a much lower tax rate and reinvesting in the business and given lower prices are beating your brains out. i don't see how we fix penney's in that environment because kohl's is going to win penney's and sears is going to lose macy's is going to win bozkov's, dillard's, they're going to lose. there can't be that many winners when it's winning online the rest of the business has to give market share, and they give it to online, mostly >> okay. before we finish this conversation, i need to ask you about bernie sanders the senator has a point about amazon he's making on twitter. amazon founder jeff bezos wealth increases $275 million every day, meanwhile, amazon workers have to rely on food stamps and public assistance just to survive. this is what a rigged economy is all about. amazon responds saying it pays

$15 an hour wages. the average hourly wage for retail in this country is actually $13.20. >> you know what i like about that he's not beating up walmart which is what we did for the last 40 years because the walmart family became extraordinarily wealthy and they beat us up on what we paid walmart workers and yet the walmart workers were making such just as much as anyone in retailing and had as good of benefits is it a problem we have low paid workers in america yes. is amazon a problem? no amazon is a solution just like walmart is a solution. people live better because they buy stuff cheaper. >> not a rigged system if you can create 500,000 jobs. just a preview for what we'll hear from in the midterms. >> i didn't vote for bernie and i couldn't vote for him if he was running. just so you know >> thank you always a pleasure. well, this morning, comcast made public what we've been reporting on for months as a strong possibility, highly

likely, namely that it is going to make an all-cash offer to disney's deal to acquire the fox assets that disney signed up to acquire earlier this year. they have yet to do so they will wait until judge leon rules in the case, of course, doj versus at&t/time warner. they expect he'll rule in favor of the companies allowing that to move forward. that would remove at least the seeming antitrust objections to a potential transaction for comcast to acquire those fox assets you can expect to see the actual bids some time after june 12th not long after most likely as i reported yesterday fox is likely to try and set its shareholder meeting fairly soon and may take place as soon as the middle of july giving a month time period to when disney would be able to go back and forth in terms of potential battle for control of those fox

assets that said, comcast wanted to get started now. starting to message to fox shareholders message to the murdoch family. message to its own shareholders about its strategy and why it feels so strongly. and strongly is how it feels i told brian roberts, the man who runs comcast, is very much focused on what he believes is a generational asset and one that he desperately wants to own, largely because of the international assets also because the ownership of hulu, giving potent yelly a direct to consumer offering to comcast. of course, disney is very much focused on its own future for that direct to consumer with its two over the top offerings for entertainment and sports what occurs from here, well, a lot of this will be designed to put pressure on fox shareholders to turn down the disney deal also designed to put pressure on the murdoch family to come to the table. to meet with brian roberts, the management team and say what can we do to make a deal happen

here, despite what would be lesser tax beneficial characteristics of an all-cash offer. maybe they can overcome them, although it seems unlikely because any cash offer at all for those fox assets would have the effect of making the fox spin taxable to shareholders they are going to put in place the regulatory protections that disney is offering and perhaps even more. of course, a battle here in terms of the anti trust ramifications of the disney deal and comcast deal regales regard judge leon rules will comcast be willing to go far there and have language that says we'll assume all of the liability for having to sell if we're not allowed to own them, having to sell potentially the cable networks if we're not able to sell them or even the studio if we're not able to buy that as well so we'll see but it's going to be an interesting and sharp battle that conceivably will fox fox

shareholders in an advantageous position, unless, of course, disney and comcast can come to some sort of agreement between the two of them. >> you keep bringing that up is that because you think that's what's going to happen >> i think in some ways you can point to it being the likely option as opposed to them both going into this all-out war. but that seems more likely right now as where they're headed, carl when you look at it, and what comcast wants and what disney wants, as opposed to going to war and perhaps having disney's deal turn down, it would seem to be certainly -- >> why do they both want it so badly? >> it's potentially a generational asset and it's the way you'll be able to fight against net flix, apple, amazon, facebook and google >> a lot more to come on that front. david has that covered congress passing the largest rollback of wall street regulations since the financial crisis we'll talk about some of the winners and loses or that. stocks off the lows of the day

dow down just 50 today "squawk on the street" is back after sht eaa orbrk. d. oh, not so fast, carl. ♪ oh no. schwab, again? index investing for that low? that's three times less than fidelity... ...and four times less than vanguard. what's next, no minimums? ...no minimums. schwab has lowered the cost of investing again. introducing the lowest cost index funds in the industry with no minimums. i bet they're calling about the schwab news. schwab. a modern approach to wealth management. philip rob and robbi don't care if anyone buys anything in their stores they found a new source of data. in the treacherous world of data security and the online assault on brick and mortar retail, will their concept succeed?

for more watch "your business" weekend mornings on cnbc

mark zuckerberg's european tour continues he's meet with french president macron in paris. karen joins us from paris with details on those meetings. >> reporter: i think mark zu zuckerberg is hoping to move on

from his apology tour after apologizing last night and facing a grilling in brussels by lawmakers. today has been more friendly a summit hosted by the french president emmanuel macron who is seen as one of the most tech-friendly leaders here in europe they were treated to lunch here at the elysees palace. they've moved on to discuss things from disruptive technologies having an impact, tech literacy for all and privacy front and center here in europe as new regulation comes into place later on this week. but earlier on, the french president quipped there's no free lunch he's seeking certain concessions from some of these tech executives, namely more tax and also increased access to some of the technology what's happening on later today, one on one meetings with the president. the longest one will be with mark zuckerberg. that will take about an hour later on and slightly shorter

ones later on a short meeting with ibm. some key meetings coming up. worth noting executives from the united states have come here in a large turnout. some of those have already served up concessions this year. facebook has tried to prove that it's a good corporate citizen. its investing here in france it has pledged to double the number of ai scientists it's invested in a start-up and invest in an ai lab. but ibm broughta 1800 jobs it has declared >> on that front, antitrust is front and center in tech and media. eu lawmakers asked zuckerberg if it's time to break up facebook yesterday. and then the news this morning, comcast is preparing an offer for fox arguing its deal would have less antitrust risk than disney's offer joining us this morning, columbia business school law

professor and author of the book "the curse of bigness -- antitrust in the new gilded age," tim wu what the microsoft antitrust case taught us is his latest article in "the new york times." what is antitrust telling you right now? >> well, there's a fever right now to -- there's a lot of concerns about bigness, i think. and consolidation. and i think that's the reason we're seeing so much more attention to these things. people are surprised originally they thought the trump administration was going to be quiet and let things go. they've been chugging along full steam. what's going to happen >> it's hard to say. no one thinks the government's trial has gone well. everyone thinks we're talking about at&t/time warner everyone thinks the judge has showed things but you never

really know. the judge will try to do one thing to have them settle on the eve of things but things do look like they're going well for the country. >> based on your study of antitrust law right now, to david's earlier report, which has a better shot at passing the authorities? comcast, fox or disney/fox >> if i was an antitrust enforcer, i think a lot more to dig into with comcast. first of all, there's these vertical issues. the at&t/time warner case doesn't set precedent. there may be more to dig into on the vertical something that haesn't been mentioned is the sport side of things nbc owns a whole bunch of regional sports networks combining the fox sports networks, potentially mergers to monopoly in certain markets. >> also espn on the other side >> that is true. i'm not saying disney is irrelevant in the sports market. the regional sports networks are

more similar sometimes they lead to the combined company having total domination of certain markets and that would lead to the -- >> there's a willingness on comcast's part to divest those they are acknowledging there were at least six they would not be able to own you think the studios in this day and age whether it's disney and fox together or universal and fox, do you think that matters to anti trust regulators anymore? >> i think it does they go by the math. they look at market shares you add up the numbers it's a 5 to 4 or -- depending how you want to count it this is the reason the board rejected it in the first place there's a lot more to dig into with comcast than fox. than disney. >> do you think our policy is being colored by the europeans or not

>> that's a great question antitrust enforcers are competitive. some people thought, oh, maybe we went too easy on google or maybe that was a mistake there's this idea that maybe they should fire it up mostly the pressure is domestic. i think people, it's an age -- trump came to power saying he was going to be a populist, a nationalist. in some ways, enforce the laws against big business it's come back on the left, obviously. but sort of a hunger out there people were saying we need to break up the trust sometimes it may be good for some of these businesses i think some industries become too consolidated for their own good it's good for profit but competition matters, too maybe we're in a age of high concentration. >> sometimes the criticism is -- antitrust is always fighting the last battle and, in fact, its new media. it's the googles, the netflix.

that world trying to compete >> i think anti trust plays a very -- almost its most effective role when it's disciplining some of the big tech companies trying to block out other tech companies like microsoft. that was an important investigation. like ibm looking way back they put the brakes on ibm's domination maybe it's time to look at facebook or google that's just gotten a little too big choking out some of the innovation >> you tweeted you're mulling a run for new york ag. still doing that >> i am still mulling. i think this is a really important time, switching to politics for state law enforcement. antitrust among others you need people who are going to be very tough and act as a backstop to the trump administration >> if you make up your mind, you've got to come on and talk about that tim, thanks. they are number 20 on the cnbc disruptor list. peloton is reinventing the way you exercise at home the ceo will be joining us this

hour on "squawk on the street" with the dow down about 52 points

keeping an eye on the

banking sector as the house votes to roll back sections of dodd/frank the xlf is off on the news the president did tweet earlier. big legislation will be signed by me today. let's bring in chris katowsky to talk about what this may mean. >> thanks for having me. >> you cover large cap but everybody is talking about the impact on regional small banks, loan growth, deal making where are we going to feel these effects first? >> to the extent you lift the cap and you allow more consolidation in the industry, which this -- these tweaks don't go directly but that would be a good thing if you think back about the financial crisis, the worst offenders for the most part were these midsized banks and investment banks like bear,

lehman, indymac, wamu. they either had a geographic or product footprint too limited. if you think about it, the solution because let's sell them to the bigger, more stable companies. and i personally think bigger, more stable companies are better for the system and it's not an accident that in most parts of the world, you end up with four, five big banks and maybe then some smaller banks. that's the way it is everyone in the world. if you think about it, that's the way it is in other industries it's lowe's and home depot have most of the volume in hardware walgreen and cvs is drug stores, right? always the big three in the auto company. a handful of media companies why should you expect to have 5,600 banks running around >> talking about big banks and the strength, well capitalized u.s. banks we're getting headlines on deutchse potentially laying off

workers. barclays how much do we ignore weakons the european side? >> i don't think you ignore it but there are a whole set of issues there delayed recognition of problems certainly on the part of deutsche that were -- and probably not ever a great strategy they just seem to value bigness over profitability for many years. so i think quite honestly that, for the time being, is more of an opportunity for american banks than it is a risk. and if you look at the share of, say, trading revenues, the big american banks, the european banks have been giving share every single quarter for the last four or five years. >> yeah, that's been a gift to some degree for the big u.s. players. thank you. we'll keep our eye on the impact of the legislation let's get over to sue herera

with a cnbc news update. >> good morning, everyone. here's what's happening at this hour secretary of state mike pompeo appearing before the house foreign affairs committee this morning. in his prepared remarks, he says the u.s. will walk away from the north korea talks without the right agreement. >> our posture will not change until we see credible steps taken towards the complete, verifiable and irreversible denuclearization of the korean peninsula. >> a group of foreign journalists departed by train to watch the dismantling of the nuclear site the train trip was expected to take between 8 and 12 hours followed by several hours on a bus and then an hour hike to the site because it is deep in the mountains. philip roth, a prenement in and controversial figure in literature has died of congestive heart failure his most famous novels include

the human stain and american pastoral he was 85 years old. you are up to date that is the news update for this hour over to jackie d. for the eia data >> you can see crude prices are under pressure because of the bearish report from the eia, a build in crude oil inventories, 5.8 million barrels. a build in gasoline of 1.9 million barrels. this is the time of year demand rises. we'll have memorial day weekend coming up. we shouldn't really be seeing builds at this time. more draws to create product the second reason is some headlines hitting the tape that opec may consider raising its output because of problems that it's observing in venezuela with its production june meeting coming up all eyes on that crude prices are trading 71.31 right now. back to you at post 9. >> thank you, jackie deang liss. the deal making president saying no deal

trade talks moving along but disputes reports that his administration will ease sanctions on zte pompeo making some comments on 'lge topic as well wel t some details next. dow is down 100.

welcome back to "squawk on the street." i'm sara eisen with carl quintanilla and david faber. one hour into trading and stocks are lower across the board s&p 500 down 0.3%. tiffany, ralph lauren and lowe's leading the way higher target at the bottom of the list some concerns about italy as well with those bonds getting slammed. the euro back to november lows and stocks down 1.5% the president seeming to undercut his trade team yesterday announcing that no deal has been made with china or telecom giant zte. eamon javers watching this with some details

>> a little like a game of deal or no deal around here trying to figure out where the trade team is going to come down. my sense of what's going on is the president is tolerating a little bit of dissension in the ranks among his economic advisers who fall on very different polls in terms of china trade. the president allowing a little bit of strategic uncertainty to slip into this process until that june 12th summit with north korea. the president very focused on getting a deal there he needs the chinese in order to do that. perhaps some unwillingness to antagonize them between now and then a tweet from the president offering his thoughts on where things are going this morning he said our trade deal with china is moving along nicely but in the end we'll probably have to use a different structure in that this will be too hard to get done and verify results after completion no word on what the president means by a different structure specifically but one of the challenges has been in all of this that the white house wants to stop the chinese from stealing american

companies' intellectual property that's very difficult to verify just by the nature of theft itself if someone is stealing from you, they aren't necessarily going to tell you whether they're stealing you have to go and verify that and that can be difficult. another tweet from the president this morning also a little cryptic here on the automotive industry the president saying big news coming soon for our great american auto workers. after many decades of losing your jobs other to countries you have waited long enough. i asked white house officials what that refers to. they are not willing to announce whatever it is the president has in mind until the president is willing to announce it a little tease from the president of something coming on the auto front at some point in the near future, guys. back to you. >> a lot of tweets to digest today. eamon, thank you coming up, the price of privacy. spinning company peloton bringing the exercise class into your home. for consumers, will the convenience outweigh the cost? just wop question we'll ask peloton ceo, number 20 on the

disruptor st 'lbeig bk.li well, it's earnings season once again. >>yeah. lot of tech companies are reporting today. and, how's it looking? >>i don't know. there's so many opinions out there, it's hard to make sense of it all. well, victor, do you have something for him? >>check this out. td ameritrade aggregates thousands of earnings estimates into a single data point. that way you can keep your eyes on the big picture. >>huh. feel better? >>much better. yeah, me too. wow, you really did a number on this thing. >>sorry about that. that's alright. i got a box of 'em. thousands of opinions. one estimate. the earnings tool from td ameritrade. welcome to holiday inn! thank you! ♪ ♪ wait, i have something for you! every stay is a special stay at holiday inn. save up to 15% when you book early at hollidayinn.com

save up to 15% when you book early but we should be seeing ymore range of motion., i'm fine. okay, well let's see you get up from the couch. i'm sorry, what? grandpa come. at cognizant, we're uniting doctors, insurers and patients on a collaborative care platform, making it easier to do what's best for everyone's health, every step of the way. you may need more physical therapy. ugh... am i covered for that? yep. look. grandpa catch! grandpa duck! woah! ha! there you go grandpa. keep doing that. get ready, because we're helping leading companies see it- and see it through-with digital.

netflix is already up more than 70% this year one trader betting the sock could soar even higher find out what had them so bullish on tradingnation.cnbc.com more "squawk on the street" after this

all right. time to get to the cme group in chicago and join rick santelli for the santelli exchange. rick >> thanks, david like to welcome my european and all that is global guy, andy brenner. thanks for joining me today. >> rick, always a pleasure to see you, buddy >> all right i look up at the big board i see that 30-year bonds are well under their significance price of 3.22. tens under 3.03. the original breakout point we haven't traded below or closed below since we closed above it what's the catalyst for some offing this buying

do you see something globally that might lead investors to be more preoccupied with u.s. treasuries >> what a segue. it's called italy. since the new italian government started to be formed and they've talked about not paying the ecb $250 billion as well as their -- in their game plan starting up a dual currency known as bots as well as not wanting to live up to the european standards that they agreed to in their treaties, we've seen italian ten-years widen out about 70 basis points and two years about 65 basis points. a lot of people say, well, it's only italy same thing happened in greece. let me tell you the difference >> aren't they the largest bond market europe >> yeah. and the fourth largest in the world behind the u.s., japan and china. you have to take what's happening in italy seriously this could be a major event for the dissolving of the eu it won't happen, but

nonetheless, you have to be concerned. you have to be watching this >> all right so in this corner we have the bond market of italy in this corner, we have the emerging markets with turkey at the top of the list. now showing the 20-year chart of the turkish lira almost hitting five it is unbelievable how this strength in the dollar and some of the issues you've described seem to be hurting the emerging markets in a big way can you give us more granular detail there, andy >> absolutely, rick. turkey is the headline today last week argentina. it's really about all emerging markets. close to $250 billion equivulent bonds maturing between now and thee end of next year. the big four of china, mexico, brazil and argentina that's a lot of risk and with that kind of amount of money maturing, emerging market have been in a tailspin and we

don't think it's over yet. part of it is the aggressiveness of the fed and the talk they'll raise another three times this year we'll know more about that once we see the fomc minutes but i don't think they'll shed any new light about what we already know above what we already know >> andy, thank you the globe is getting to be an interesting place, especially if you're long some of the u.s. markets. thanks for joining us. sara, back to you. >> rick, thank you let's send it over to jon f fortt with a look at what's coming up in the next hour >> content is extremely important in today's economy frank rich is going to talk about that plus, mark zuckerberg gave some testimony yesterday in europe. a lot of people thought he got off easy we'll dive into what he said and didn't say coming up on "squawk alley.

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welcome back to "squawk on the street." i'm dominic chu. markets are taking a little bit of a hit one sector bucking the trend is utilities. american electric power, also

xcel and centerpoint energy. all up more than 1% in early trade as interest rates start to fall sara, back to you guys >> dom, thank you. number 20 on cnbc's disruptor list is pellaton, the tech fitness company shaking up the industry as they grow domestically and look to expand into an international market we are joined by the company's ceo and co-founder john foley and should disclose our parent company nbc universal is an investor in your company welcome. >> thank you thanks for having me. >> we were talking about that investment do you consider yourself a fitness company or more of a media company? >> it's funny. i say we're at the nextus of fitness, technology and media that makes it a special experience for the consumer at home. >> yet, you're telling $2,000 bikes for people to have in their homes. >> we are. >> how is business >> business is great we're more than double the size of the company every year and announcing today that we just --

we're investing in a $40 million fitness facility we believe is going to be the best digital television streaming studio in the world with four fitness studios under one roof in midtown west we're streaming classes -- 12 classes a day to our bikes, 12 classes a day to our treadmill, think of boot camp and circuit camp training live from that facility and two other studios stream nug products we will announce in the quarters >> are people buying the treadmills, $4,000 for a treadmill? what do orders look like. >> it comps against a 12 to $15,000 treadmill so it's an incredible value and we offer fitnessing for $150 a month you can get one of these treadmills. i love that circuit training, boot camp workout because it's full body, just as good of cardio as an indoor cycling class but you get the full body workout that the classes do. whether you want a peloton bike

or tread, they're fantastic workouts >> the plan to do them in the home, right. the plan is not to have live studios in all major markets. >> that's exactly right, carl. we have stores in major metropolitan areas we announced we will have four stores in london by the end of the year, two stores in canada as part of our international expansion, but those are retail stores, showrooms for checking out the products the studios are here in new york city, although we will have a studio in london for time zone coverage in europe and for foreign language coverage which you have to do as a media company as you know. >> soul cycle, i guess is a competitor, even though they do more of the class thing, has been ru mored to ipo for years, i think they filed back in 2015. you've been raising money through the private markets, have more than a billion dollar valuation at this point. what's the long-term plan? are you looking toward an ipo? >> we're interesticonsidering. any high growth companies of our size think about options it's discussed no plans as of yet.

>> are you profitble >> we are profitable, weirdly. it's a beautiful business model. our investors are happy. yes. >> weirdly profitable. weirdly to be profitable did you not expect to be >> for a company that's growing 100% year on year and we're so young, four years in the market, of the list of 50 disrupters i would bet that the majority are not profit pable. >> it is i agree. >> a third of russell companies had negative profit last year, so it's not uncommon what about servicing all these bikes? when does that get to be a headache or something you have to outsource in a big way? >> in mare lel to selling bikes we're building a global logistics division that delivers our bikes and use that same delivery platform to then service them if there's any issues there aren't issues with the bike right now because it's a simple machine, very few moving parts so the sexiness is in the

software and content the bike has a pretty simple system so we're not having maintenance issues that said with a treadmill, with a motor, we think there might be more service issues and want to make sure we're delighting our customers so we will use our -- the investment in our logistics, peloton sprinter vans, people on the streets in the major metropolitan areas that can stop by and service your bike or treadmill if there are any issues we are a subscription digital content business model and we want to make sure you're happy riding on your bike or running on your treadmill. >> 100% year on year growth, it's incredible but what do you say to those who point to a peloton or fitness cycle and say it's the latest fad. >> think about cycling and running, efficient ways of getting your cardio. we believe the programming, one reason why we love live classes every d every day stream them from new york, we care about the quality of the content the quality of the content needs

to innovate every year but the bike hardware, cycling as a way to get your heart rate up and running and weight training to get your heart weight up are tried and true we don't think there's any fad going on with peloton. >> one last question, do you track like new home creation, household creation, or is it more rural because those are the people who wouldn't want to drive to get to a studio. >> that's a great question we sell a bike to every state every day. if you live in west chester and have a big house and the money to get a pellaton bike because it's more convenient to work out from your home if you live in north dakota you have to have a peloton bike. we're finding great success rural and urban. >> all right thank you for joining us, john. >> thank you. >> we'll keep our eye on you number 20 on the disrupter list. john foley the co-founder and ceo of peloton coming up later on "power

lunch," the ceo of thinx, feminine hygiene product innovator at number 37 on the cnbc disrupter 50. that's at 140 p.m. later today >> when we come back, dow has added once again to its losses down 136 not far from session lows and the s&p back to 2710 amazon is expanding its reach again. the nation's largest home builder betting alexa will soon be standard in its new homes facebook making a similar move into home services today we will take you inside the new smart home model when "squawk alley" starts in a minute.

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a.m. on wall street and "squawk alley" is live ♪ ♪ good wednesday morning welcome to "squawk alley." i'm carl, with jon fortt and david faber sticking around for another hour and joining us from los angeles, robert, the founder and ceo of the hertvec group and investor on the hit series "shark tank. good to have you with us. >> good morning. >> let's get to facebook mark zuckerberg being criticized this morning by eu lawmakers over his lack of answers