Row today. Something the s p has not done since january. We got earnings from home depot, walmart, qe accelerator, oil settling back below 60, but ten year close to the highs of the year. Housing starts are a nice up side surprise. Walmart missing expectations. Depot beat and raises guidance. One Speciality Retail down dramatically, urban out fitters coming in below us. Thats the major Culprit Online business expenses. Despite carl icahn wishes, the dream of an Apple Television is reportedly dead. U. S. Comps below consensus. Ceo says they need to get better consistently running great stores. Home depot beat expectations. Citing a more normal spring across much of the country and continued recovery of the u. S. Housing market. Depot raising their fullyear guidance to stronger than expected start to the year. They are saying. With starts surprising today, people are saying maybe it was weather after all. I have to tell you i think there is a shift going on in the country. I had athena on last night. They bought ann taylor. Apparel is in the dumps. The home depot number is remarkable. I was looking for a good number. I got a great number. Urban looking for a good number. Got a terrible number. Walmart looking for a bad number, got a bad number. We are look inging. We go to home goods. Home goods offers a rather amazing price point. This was her best effort yet t tjx. We segregate it and say walmart this walmart did sell 115 billion worth of stuff during the quarter. Its important to mention as a percentage of overall retailers who were public thats large. Walmart is still retailing to a large extent in this country. The most frequently visited store of any kind including restaurants, you name it in the country. There are larger lessons to be drawn. Home depot, enormous, important. Urban outfitters maybe not so much. No one is saying we had a solid First Quarter. We need to continue to get better to consistently run great stores. Doug mcmillan and i are on the same page. We need to get better to run consistent. Thats all. Theyve got to be more consistent. I dont know how they do that. I am glad i am not running walmart today. I find it is a battleship. Its so hard. Its more than a battle ship. Its a convoy of battleships. It is the combined fleet that went against lord nelson. The combined fleet was crushed. I tweeted out walmart u. S. Comps 11. Kroger 6. Dollar general 4. 9. They are getting their lunch eaten by other supermarkets. Comp Sales Numbers are a shape. Traffic is good. They have to reinvent. Traffic is okay. Up 1 . They are up 1 . I think are not that happy. Warren buffett said people are unhappy when they are at whole foods . I think they are unhappy when they go to walmart. There is a tone of unhappiness for some people where they spend like crazy. Home depots numbers. When you compare it to everybody else, i dont know. I went to walmart last year i have to admit i found it was confusing. Didnt know where to go. Not better. My recent trip to walmart didnt feel better. They are investing in that. Going to spend 1 billion raising wages, investing in tech. Next year at this time walmart will be better. My problem is there are some guys doing a great job. Urban outfitters said i wasnt as bad as urban. Open down 15 this morning. Misses by a nickel. Comps up 4. Anthropologie didnt do well. They said may did better. Distribution problem. Yes. Im trying to say this stock being down this much is a mistake. However, this is the one that had the highest expectations. Why . The Company Created them. The company told us and they said we are very surprised what happened at the end of the quarter. This is not going to clean up immediately. Theyve got a big buyback and will buy back stock. It is amazing 14 days 199 store division it takes this whole thing down. Missed opportunities in few key silhouettes, fabrics and price points. Disappointment and bit of a surprise we had a stronger comparable performance going in april. It is jarring and thats why people are fleeing this thing like rats on a ship. People are saying the pressure is on lowes. Estimates and comps there are 6. 1. They have an easier comp to work with. They have to narrow the gap between them and depot. The chart able trust sold lowes. I think im going to say why did we do that . They at this point are trading in parity. Its one where they seem to get it right. I think a lot of it is what dave jaffe told me. This is what people are doing. They are spending on lowes. Really breaking out. Doing well. When i go to lowes, i find lowes to be refreshing beautiful, fantastic, hispanic push that is working very well. The aisles are bright. The people are helpful. When i go to home depot the flats are gorgeous, the plants are terrific. This is their season where you do your planting. You get good weather last weekend. You are going to have another good number. I like lowes. I wish i didnt sell it for the trust. What do we make this hard goods versus apparel dichotomy and whether its real or somewhat imagined . The likes of zara or h m. There are winners within that larger universe. We keep coming back to this theme that apparel is not doing particularly well. People want to buy skechers shoes. Nike doing well. Dicks had a decent number. Under armour. I think there is just something that says clothing isnt of value right now. What is value is to make your house, the Housing Starts back to where they were 1960 this morning. September 1960 had the same numbers. I do think that spending on your home is being viewed as positive. The u. S. Budget was under 100 billion annually in 1960. Just so you know. We were building 1. 2 million. Baby boomers, like me. This is an extraordinary amount of money people want to spend on homes. Im wondering whether apparel theme is really we are missing something here. Or they are buying more. That kind of retail. I am very confused by apparel. I have to go with jaffe who says we are starting to see maybe a bit of a turn toward apparel spending, but the country is not spending an apparel. The country is spending on saws and fertilizer. Tomato plants. Good to know. On the broader markets, we are going for four days in a row up. Havent done that since january. I dont like the set up. Interest rates higher. Ecb saying they are going to front load qe. I was shocked. And our futures spiked. What is that about . What they are trying to do is get the euro down. They are trying to take our international sales. The futures people ive been using the sonny corleone reference. Sonny at the end brought the horse to michael. I feel like these hedge funds went to college to get stupid. It is bad the ecb wants to have the europe lower. Good for europe bad for our companies. Are these people so obtuse, to mix a shawshank metaphor with a godfather metaphor. You are the king of pop. The king of pop . Will we do animal house while were at it . Michael jackson passed away a while back but here he is. He had great numbers. Autonation . Do you count this as a breakout . If i were in a basket of International Stocks i would say here they go more than europe. I like a bit of momentum. Yesterday was biotech and financials doing okay. A lot of these International Companies are doing well. These are not the scenarios. Ibm is most referred to the kurns ki. What about the 10year german bund. Most people cant get that. Thats not true. You can probably pull that up. Oil coming back down. I like a set up where the dollar is not strong. If the dollar is not strong i think we go higher. If the dollar is strong you take us down. I spoke to the head of the wichita federal reserve. I know they dont have one so this is a fictional guy. San Francisco Atlanta fed showdown is getting interesting. It is. Rates are going higher. Air is thin in colorado. It appears you might not see an apple tv. Take another look at the premarket. Premarket. Apple scrapped plans for ultrahigh multidimension television sets. Story came out after carl icahn released the letter to tim cook saying he expected the company to release a television next year. A lot of analysts Piper Jaffray saying we give up. Its not going to happen after all. This is a company that needs to say what its going to do. If you talk to somebody who supplies them you say listen dont ask me about apple. I think this company could do whatever it wants. Its got a staged rollout. A lot on its plate. Its got watch which is worse than expected. Shut up guys. You have no idea. People can say whatever they want. People say anything they want. Although the reporting here from the journal which they use the carl icahn letter as a jumping off for the various iter rations. The reporting does seem to be specific enough referring to various efforts they made and Different Things they had and decisions they made. We all know its an extraordinarily competitive environment. Margins can be very low. They need to make a leap of some kind in terms of value proposition. You are so right. When you look at the hard goods lines of these retailers, you always see that televisions are bad. On the list of deflation, its always the worst performing product. My buddy got one of those 140 inch tvs. It was broken. Trying to lug it back. In the end they were like how much well pay you 100 to take that tv. Tvs are the worst thing in a store to sell. You give away tvs. I got a toaster when i opened at citibank. They install tvs. Dimon can install tvs. He can do it all. What was your take on icahns letter. This company has so much cash. I think it was better sent to gm and ford. The guys are adamant the car play is not a great initiative. Apple has not addressed it headon. I thought apple should buy harman. Go buy harman. Navigation becomes extraordinarily important. Napping . Mapping. Have you ever taken a nap in your life . When im driving . In general. No. I was up at 3 30 to check the german bund. Well get cramers mad dash and count down to the opening bell in a moment. Well take one more look at the premarket. More squawk on the street. E street. Automotive innovation starts. Right here. With a control pad that can read your handwriting, a widescreen multimedia center, and a headup display for enhanced driver focus. All inside a redesigned cabin of unrivaled style and comfort. The 2015 cclass. At the very touchpoint of performance and innovation. Good. Very good. You see something moving off the shelves and your first thought is to investigate the company. You are type e. Shorten the distance between intuition and action. E trade. A lot of people feel they have good play bad play. They now have ten titles that sell more than 5 million units. That is a good modernization. Border lands was good. Nba was very good. Evolve their new game was quite strong. Better than expected. Next year they guided down. This stock. This is o been linked with a company that can do no wrong right now. I think thats correct. They are not getting enough credit for their Cyber Security unit. I would not sell this stock. I would be a buy on weakness. We dont talk about it. Its been around a long time. Its a good company. Dont sell that stock. You heard him. Opening bell a few minutes away. Lots more squawk on the street coming back. Ming back. We live in a pick and choose world choose choose choose. But at bedtime . Why settle for this . Enter sleep number. Dont miss the memorial day special Edition Mattress with sleepiq technology. Sleepiq tells you how well you slept and what adjustments you can make. You like the bed soft. Hes more hardcore. So your sleep goes from good to great to wow now we can all choose amazing sleep, only at a sleep number store. Save 500 on the memorial day special Edition Mattress with sleepiq technology. Know better sleep with sleep number. You are watching cnbc squawk on the street. Opening bell 1 15. Lots to work with today. Walmart missing on expectations. Home depot beating. Youve been saying got to get the dollar to come in. Now youve got to get the euro at twoweek lows. We want the dollar. This market will not sustain in advance without the dollar going lower. It needs the International Stocks. When we see rates go higher jpmorgan go for a move here. Regional banks have been strong. They are not enough. I think remember, johnson j, big exposure to a weak dollar. We need some Keep Health Care going. By the way, the month of may, although we are not obviously nowhere near done shaping up to be the second best month of this year after that poor february we had. Buy in may. I told you. Buy in may, go away. Housing is going to ramp here. These Housing Starts and what home depot is saying housing is where to be today. The s p fills in the a the top of your screen. Down here launches of two etfs. Have we done dicks yet . I had this guy on last night. He does largest chains. Nycc, my country club. Told me not to worry about golf. Dicks has a golf problem. I want to try to exempt it. This is not a play do not sell under armour on this and do not sell nike on this. Golf is pulling it down. Foot locker reports this week. Golf is not growing. There are a number of closings. I want to say its one an hour amazing rate. Thats why they are making some of the holes this big around to make it easier to play. Im not kidding. Judge, they are trying to up the effort. And the extra point move back. Theyll let you play frisbee golf. Whatever you need. Its amazing times. That was a game you had tiger and jordan speith is exciting. Do people want to get out. House and not care of the kids. I like you speak for me. Thats very helpful. I could just sit here mute. No one was looking for this. The stocks were telling you coming into this weekend. The best stocks in the book were leggett and platt. Lennar is a big number. This is why home depot is doing so well. Wanted to come back to yesterdays deal. We didnt get a lot of big deals this week. They started the day up after the announcement they would buy pharmaceuticals in the private equity firm. They are up today. This is an important theme to watch. Endo one of the smaller rollups, if you will. Valeant and activists amongst the bigger ones. Its all part and parcel the same thing. You have a lower tax rate as a result of having inverted. Endo activist. Valeant as we well know. I thought it was interesting that the response to the market was not a positive one yesterday. If that were to continue just watch. You and i talk a lot about, both on camera and off, what this enormous wave of consolidation that is being led by these companies. I thought the stock might be up. They need a higher end offering. Dress barn and lane bryant and that it didnt matter. I thought that reversal was key. If you wanted j j to do a deal you wanted them to think the stock would go up as back to when it decided to pay for pharmaceuticals. Lets keep an eye on that. Abbvie. Just got married. Had a nice big wedding. Liberty warehouse . I think they had jewel play. Very nice. You didnt have jewel. I didnt need jewel. No you didnt. And there was lots of joy in the room. I didnt need jewel. Jewel. A couple of upgrades. Mastercard Pacific Crest to overweight. A bunch of new services. Something about europe doing well. This was a group i was concerned about, candidly. They had such a big run. I like everything i hear about mastercard. Home depot doing well. The cfo talking about how may was very strong. People worried about the progression. How is may doing . Urban out fitter said may is better. Maybe there is a hope here. Urban is down six. If may is strong that would be a very good sign for the u. S. Although immediately, i have to talk about San Francisco versus atlanta feds are going to duke it out. The fed heads are all going to talk about how they are going strong and may retail sales being strong. Maybe well be saved by the close with worldwide currency. The San Francisco fed wants to double seasonably adjust q1, which they say is a much better number than the number we got. Stick to baseball. We need the phillys fed fanatic. Get that stripe on the right hand corner. Panera. There is too much couplelove for panera. Got to be careful. The last few numbers were that the that good. Jack in the box reported a great number and that stock got hit. Red robin is doing very well. And the shack is unstoppable. Shackmeister. You made this point. 38 million per store. Is that all . Yeah. You wont rest until there is a shake shack starwood . Marriott. Have you seen marriott lately . No. Art created a lot of wealth. Vacations, that time share business. Marriott is an inspiration how much you can make if you are a great manager. He comes on tv and is a well spoken guy. We dont talk about marriott enough how good they are. With the exception of ebola, its almost a straight line. Interesting you mentioned the rcl. Those stocks got hit by the ebola scare. If you look at the charts, that was their last buying opportunity in the 21 day people period where you were waiting for the incubation period. Fantastic buyback. They are opportunistic. So was apple. I wish icahn gave them more credit. We are getting breaking news. I want to get to dom chu. This is from the department of justice. Six people have been arrested including chinese nationals and professors, among six defendants with what the doj call espionage espionage. They have alleged to have stolen valuable technology from two Avago Technologies and sky Work Solutions to benefit a peoples republic of china university. This all happened on may 16th. Its a 32count indictment. It had been previously sealed and pertains to the six individuals engaging in economic espionage to obtain u. S. Trade secrets. The department of justice do say the defendants leveraged their access to and knowledge of sensitive u. S. Technology to illegally obtain and share u. S. Trade secrets for the benefit of china, National Security division will continue to relentlessly pursuit and prosecute defenders wherever the evidence leads. Charging six people with economic espionage. They allege stealing trade secrets from these two Tech Companies to benefit Chinese Companies as well as their universities. Back to you guys. Incredible. Skyworks and avago. Three years ago we did a special cnbc report of Cyber Espionage which focused on intellectual property. They will do it through cyber means and detailed in many forums. They indicted a number of people previously who were in china. They also do it the Old Fashioned way. Theyll try to steal stuff by taking things or paying people off or anything else. Those are all allegations. This is a war thats going on. We were very much undercut in terms of trying to stop it by the revelations from mr. Snowden. That hurt our effort to get the chinese to cut it out which they have not. And who are skyworks and avago . They are the brains in the apple phone. They are trying to recreate apple, and i say to them good luck. Those weakening futures, down 20 points on the dow. Bob pisani is on the floor. Those housing start numbers are great news for the economy, great news for americans. Not good news for the stock market at the moment. Take a look at the s p futures. Right when those housing numbers came out, the dollar weakened. Bond yields jumped up and we lost 3 4 points on the futures about 8 30 eastern time. April up 20 . Not all multifamily. Single family was strong. These are eye popping numbers. Fantastic numbers. Great news for the economy. Home builders are up. No surprise there. A few percentage points. Hovnanian, horton lennar. Did you hear the ceo of home depot . Stronger than expected start to the year as we experienced more normal Spring Season and continued recovery in the Housing Markets. Comp 6. 1 . I heard people talking about 7 . How do you go from 75 to 120 . Theyve been phenomenal for years. 25 , 20 , 15 . Talking about a company with 86 billion in sales. This is not a startup. These are phenomenal numbers. People argue it justifies the forward pe ratio. Building products having a great day. All off these numbers as well as the numbers from the starts. Want to talk about two new products launching today. One at the New York Stock Exchange. They are launching a big coin index. This is the First Exchange calculated index, realtime prices of bitcoin based on the coin base exchange. Well keep an eye on this and see if new products are invented around it. On the nasdaq, accus shares spot vix up class, then you can do a down class, inverse performance of the vix. Ill be interviewing robert waely who invented the vix. Is volatility an asset class . He invented the vix. Volatility as an asset class. This may go a little bit of ways to make it easier to invest in volatility. Well talk about this this afternoon. Bob pisani. Ten year a shade below 2. 3. Have you ever heard that expression an accident waiting to happen . Treasuries for weeks have been data point away from a big selloff. Theyve been looking for any excuse. We can talk about housing and how wonderful it looked. Look at the previous two months and think about all the data that didnt rebound from the winner. If there is one area that makes sense that cold weather would have kept activity down it would be housing. Housing has the type of snapback all the other data points like retail sales havent included. And what happened to treasury rates . Boom they popped. This is something to Pay Attention to. You are going to hear many say the economy is wonderful. Rates going up. I would say thats not exactly the real flavor of what happened today. Look at intraday of 10 open the chart up to mid december. Bund didnt spring back the way ours sprung back. The reason. There used to be a time on trading jackets where it used to say free markets for free men. You can ponder that as the ecb springs up maybe front loaded maybe back loaded with maybe one notion to mind to weaken the euro. They were very successful as you see on this chart. If you look at two day, it jumps out at you. Bund yields were in response to that. Its the Interest Rate differential. If you want to move rates, move your currentcy. Our relationship between bunds and 10s. We often talked about how this chart had support around 150 basis points. 10s minus bunds. Thats where it helped and jumped back in the high 160s. Mr. Draghi may have success keeping the euro down. Hence rates down. Our curve has a different idea. Thats the dynamic you want to Pay Attention to. Many traders think we can go back to 190. Back to you. Thank you very much. When we come back matt maloney has the food delivery website. How to customize your apple watch if you have one. Walmart responsible for almost all of the dows losses. At chase, we celebrate Small Businesses every day through programs like mission main street grants. Last years grant recipients are achieving Amazing Things. Carving a name for myself and creating local jobs. Creating more programs for these little bookworms. Bringing a taste of louisiana to the world. At chase, were proud to support our grant recipients and Small Businesses like yours. So you can take the next big step. Ideas come into this world ugly and messy. They are the natural born enemy of the way things are. Yes, ideas are scary and messy and fragile. But under the proper care, they become something beautiful. More and more, data is visual. In fact, the number of mris has increased by ten percent a year. And a radiologist might view a thousand images to find one tiny abnormality in shape, contrast or movement. Because its so challenging a Research Project is teaching ibm watson to see. In the future, it could help clinicians spot key patterns quickly and precisely. Ibm watson is working to make healthcare smarter every day. Automotive innovation starts. Right here. With a control pad that can read your handwriting, a widescreen multimedia center, and a headup display for enhanced driver focus. All inside a redesigned cabin of unrivaled style and comfort. The 2015 cclass. At the very touchpoint of performance and innovation. Let barista and customers select songs played at shops. Spotify will be purchasing stars from starbucks. They will incent new subscribers in the form of stars and this will be the first of many that we believe will create a significant new Revenue Source for the company, but most importantly, incrementality in terms of new customers coming through other brands and other companies. Using the currency of starbucks to Likeminded Companies that might use the currency like spotify, but maybe a costco or chipotle or whole foods. When he said Likeminded Companies where points might be worthwhile, watch this. Its like they develop a country like a country, a currency like a country. Its starbucks. You can use them elsewhere. Its something to watch. Howard is technologically savvy. If i can use my starbucks points at whole foods, i would like that. 10 million members. If i go to panera and upgrade and say i use my starbucks points. You can use your rite aid points at macys. I didnt know that. This is the new cross promotional thing. A lot of people have starbucks stars. Travel has been doing it forever. Thats where we are going. It involves technology. Im still waiting for tim cook to call in on my watch. Im telling you, he is going to do it. Not just mad money. I look forward to that as well. Well get to stop trading. Hello. Dow is down nine points. [ male announcer ] your love for trading never stops. So open an account with schwab. And when a market move affects, say a Cloud Computing stock youre holding, we can help you decide what to do. With tools that help you see how market activity is affecting your positions. So when the time comes to decide whether to scale in or scale out. You can make your move wherever you are. And start working on your next big idea. With xfinity from comcast you can manage your account anytime, anywhere on any device. Just sign into my account to pay bills manage Service Appointments and find answers to your questions. You can even check your connection status on your phone. Now its easier than ever to manage your account. Get started at xfinity. Com myaccount time for cramer and stop trading. There is an upgrade for xilinx. There is still percolate for semis. There is talk about a big deal coming in this group. Avago making a deal with skyworks. This group is so red hot. Its transcending anything right now. Another group that is red hot, the regional banks off this housing start. Fifth third upgraded. Not my favorite bank. You go with key or maybe go with First Horizon. Theres lots of good news in the semis. Lots of good news in the regional banks. I think people are going to be surprised how well this mbia deal will come. Big deal. A lot of stock being offered. Housing, house semi semi. Those are working. Whats on mad tonight . S. A Company Called wix, an israeli company. Then american airlines. Doug parker one of the most exciting ceos in the company. Theyve got a big integration coming. I had to go to usair. That is about to change. There was some bad interaction. Doug parker is a thoughtful man. Maybe he can get it going tonight on mad. See you tonight mad money. When we return speaking of financials Jpmorgan Chase meeting about to get under way. Grub hut ceo matt maloney. The design evolves the engineering advances. But the passion to drive a mercedesbenz is something that is common. To every generation of enthusiast. The 2015 dream machines, from mercedesbenz. Todays icons. Tomorrows legends. Visit the dream machine event today for up to 3,500 towards purchase. My feet felt so heavy at the end of the day. They used to get really tired. Until i started gellin. I got dr. Scholls massaging gel insoles. When theyre in my shoes my feet and legs feel less tired. Its like walking on a wave dr. Scholls massaging gel insoles, im a believer good tuesday morning. Welcome back to squawk on the street. Sara eisen, simon hobbs and david faber. Walmart disappoints. Our road map. Retailers, some of the biggest movers of the day. Seeing solid gains. Up today. Meeting in detroit. Well talk about how to play the big bank. Well start with gdp. Controversy swirling around the way its been reported. Steve liesman has been in the forefront of that story. A firestorm interrupting the economic world whether gdp has been reported correctly. First quarter gdp has been persistently weaker than the other quarters over a span of three decades. The correct seasonal adjustment puts it at 1. 87 . Barclays studying it. Arrives at the same number 1. 87 . Barclays says some specific factors like europe or Severe Weather can explain some of the First Quarter weakness. Macroeconomic advisors one of the most followed groups out there. Studies the issue and finds what economists call residual seasonality. Reduces First Quarter growth by 1. 6 over the past 20 years. What is residual seasonality . Its a fancy term for we dont know. Seasonal patterns that remain after adjusting data for seasonal patterns. In response to the cnbc story in april, the bureau of Economic Analysis said they are studying the issue and hope to announce some changes and response in july. The mounting evidence is that the weakness is overstated by something that is wrong in the data. In academic terms you just heard a review of the literature. Yesterday we were talking about how weak the quarter was after the first. We found a lot of q1 is in state construction and local level and nonresidential structure. A lot is construction which might be related to weather in part. If we look at the last couple of years, we had over 200,000 jobs per quarter in q1. We have very good construction hiring. If if the San Francisco paper is correct, its q 3 where you still could get more payback from q 1, not q 2. What does this mean for the fed raising rates and what does it mean for investors . S. This fed is afraid of everything. Im not sure the fed is going in september. Ive got it on paper going. I dont have faith in it. If it bounces back theyll say what about q 3 . We only have about 8 of the we only had 8 of the known data for q2. We dont know anything about the quarter yet. Gdp could be 1 it could be 4 . We had a historic almost unprecedented surge in the u. S. Dollar. People are trying to figure out how that is impacting growth. Its not that you reject the weakness in the data but the dollar. Simons question is a good one. Its a bad way to run a railroad and its very difficult to invest. For investors, the reason why they have to react to the data is because its the best available they have for whats going to happen in the economy. Yet they know there is a problem in the data. They know there will be a Second Quarter rebound. What that tells investors is get a view of the world and stick to it unless there is overwhelming evidence the other way. Just to be clear here. We focus on the employment reports which had been poor. An economist took our report and would overlay the jobs report in no residuals in any of the employment data. That is a better gauge of whats happening. The bigger question is whether or not Growth Numbers are lagging the jobs numbers. There has been a disconnect. If we look at the growth not the 250,000 change but growth in employment the last two quarters relative to gdp, employment is running faster at the fastest pace since 1979 which means productivity is plunging. Productivity growth is weak for a lot of reasons. Its not that negative. To me they are sending us the right message. The economy is better than the gdp numbers suggest. This fed is probably going to wait yet for more data and be more cautious. That creates a world where the worst thing you can do is move early. You may disagree with that. You are right. They are trying to make a decision raising rates. First time. I guess it will be nine, ten years in the face of very uncertain data in the midst of a ware. This fed always has more data it needs to see. I find it hard to believe a couple of rate hikes will slow a 16 trillion economy. cd,il this fed will wait. A lot has to do with treasury yields. If you look at economic surprises, we had the worst set of data relative expectation since 20112. Treasury yields are at the high of the year. I think the treasury market is for sale. Good to see you both. Home depot topping estimates of customers spending more on home repairs. Can you glean anything from all the retail earnings weve gotten as far as the health of the u. S. Consumer . Yeah. I think so. The consumer in theory should be doing better today than they were a year ago. They are just not spending it. The incremental disposable dollars at traditional retailers. They are spending money on homes, cars Health Care Technology online. When they shop they are shopping respect smaller formats like the Dollar Stores and less in the big boxes. That would be one of the tangthe take aways im seeing. 7. 1 in the United States. Is it something specific to home depot is . It the category . Is it the execution or just the environment for spending on your home . You had pentup demand. Housing is recovering. You are seeing affordability in home goods. Walmart gives the positive sales in the u. S. Saw positive traffic. Is it enough to get an underlying sense of improvement for walmart in the United States . I dont think so. They were cycling negative same store sales. Traffic was up about 1 in the quarter. Its down slightly at sams. Weak there. Im not thinking theres been much of a change. If anything, it looks more like what they did in the Fourth Quarter when they surprised to the up side was a little bit of a oneoff, an anomaly and they are back to where they were much of last year with generally weak performance. Is the overhang here on this sector that we just havent seen the boost that people were looking for in terms of cheap gas prices or the real meaningful rise in wages that people are expecting, especially in the low income consumer bracket . Where are those factors . We are seeing fits and starts with the consumer over the last several quarters. You had a good Fourth Quarter. This one is shaping up to be spotty. I think the consumer is making deliberate choices where they spend. It is clear they are not spending savings from lower gas prices. They are paying bills. And in walmarts case they have specific issues, as well. I think youll see Dollar Stores taking share. How much of what we are seeing comes down to Customer Service . Walmart on record is saying service has taken over the last few years. Looking at home depot. If you walk in home depot on 123rd street there are a lot of staff to help you with Home Improvement ideas and find what you need. Therefore the belief you can achieve what you want to achieve. At the end of the day, Customer Service is important. I think home depot figured that out under frank blakes leadership and will continue here. Doug mcmillan is putting in effort. The longterm narrative is good. Theyve got a lot of work to improve. My neck of the woods i can go to three different walmarts in 20 miles and have three different experiences. They are focused on that. When youve got 4,500 stores its hard to turn that overnight. That is a goal they are working towards. Shorter term it has been disappointing. Tj max put out good earnings. Better sales, raised guidance. Is that where the opportunity is or is that an execution story also . I mean i do cover it and i cover ross stores which is the number two player in that space. Its been a very good space. I was surprised by the strength. Theyve got great value to the consumer and that trend continues. Its a mish mash of retail results. Up next jpmorgan and Goldman Sachs up about 2 in the last week. Jpmorgan had its highest levels 15 years. Find out what you should be doing with these big bank stocks. St. Its one of the most Amazing Things we build and it doesnt even fly. We build it in classrooms and exhibit halls, mentoring tomorrows innovators. We build it raising roofs, preserving habitats and serving americas veterans. Every day, thousands of boeing volunteers help make their communities the best they can be. Building Something Better for all of us. Jpmorgans annual Shareholder Meeting under way today. Net revenues steadily declined the past five years. Lets bring in the bank analyst at gugenheim securities. He joins us at post nine. Good to have you. We are pennies away from alltime highs. 67. 17 is where we need to be. They had a pretty good quarter. You are neutral. Im still neutral which has to do with the structural disadvantage at jpmorgan. I think you are right. The recent rally in the stock reflects expectations about continued strength in capital markets. Of course the fed action on the horizon. Do you think the rising rate environment we are in ten year will bring in some flow . Looks like that. The regional banks are on fire. They are seeing a strong rally. That would be your first choice . Well i think we are still a little bit in name by name land because of valuation and number of credit factors. Regulation weighs on the large guys more. Name by name specifically what would be your favorites on the regional front . On the regional front, the name i like is smaller bank called First Horizon which is the analogy to citigroup restructuring of three four years ago. Among the big guys we prefer Goldman Stanley over jp and citi. What was your take on housing today . The team weather got a victory today. If you believe it was the weather that slowed down things you were proven right today. A strong rebound. Of course we are in the seasonably strong period of year. Yeah, that should help drive some of the mortgage flow. Doesnt have a Balance Sheet impact for the banks, but helps the income. Wells fargo is trading at ap alltime high. Wanted to get your thoughts on this pay issue. Shareholders voting on it. Interesting that isf and others came out against the jamie dimon pay package. I pulled out a quote from the proxy firm letter. This was to split the role of chairman and ceo. In consideration of past concerns and risk oversight and legal concerns and current concerns with ceo pay, shareholders should benefit from the greater oversight that could be realized by an independent board chairman. Do you agree . I think this concept of an independent chairman and independent executive has definitely been something a lot of individuals have put forth. At jpmorgan it never got traction. We could debate whether its a better structure or worse one. Even with the issues of complexity we are seeing in banks right now . I think its hard to draw a conclusion. Half the big banks have an independent chairman and half the big banks dont. Arent we expecting the legal challenges this week . What about the idea of splitting up jpmorgan overall which resonates with some of the Shareholder Base . You can understand the motivation for the discussion. If you split up jpmorgan it will be three or four incredibly large organizations. Im not sure we get to the point of reducing systemic risk. I think if you break them up they end up being the largest bank still. That is saying something there thank you. Good to see you. Coming up googles rumored buy button could become a reality the next few weeks. What does it mean for the stock and results . Will google be able to compete with amazon or alibaba . Financial noise financial noise financial noise financial noise by the time Police Arrive on a crime scene they could have little to go on. A vague description. A single piece of evidence. A partial plate number. With an app from ibm officers can now access over a billion police documents to find hidden connections and identify potential suspects. Ibm analytics helps one hundred thousand officers work smarter every day. [ male announcer ] at northrop grumman, weve always been at the forefront of advanced electronics. Providing technology to get more detail. Detect hidden threats. See the whole picture. Process critical information and put it in the hands of our defenders. Reaching constantly evolving threats before they reach us. Thats the value of performance. Northrop grumman. The iconic tour kicks off in chicago where we find our own kate rogers. Good morning. We are here in chicago at the firstever iconic tour. This is the first stop on a three city tour that will take place throughout the year. Its always an interesting time to be an entrepreneur. Right now is no exception. Weve seen levels of optimism on main street on a steady uphill climb. Business creation levels have been stagnant. We are seeing Venture Capital funding is lobsided. We are seeing cash thrown at the ubers of the world which dominate headlines. There are people willing to take a chance. One man founded the life is good tshirt companies. He is one of the great speakers on the stage. And the grubhub ceo matt maloney and activist marlo thomas. And they cannot wait to hear what mark cuban has to say later today. Stay tuned. Thanks. When we come back stocks at home backing off their highs after Housing Starts jumped to their highest level in nearly 7 1 2 years. [ girl ] my mom, she makes underwater fans that are powered by the moon. She can print Amazing Things right from her computer. [ whirring ] [ train whistle blows ] she makes trains that are friends with trees. My mom works at ge. Good morning. Im sue herera and here is your cnbc news update. Prince charles meeting with the leader of the Irish NationalSinn Fein Party in ireland. Its the first time they met. The encounter took place at the start of prince charless four day visit to the republic of ireland and northern ireland. Six people were charged with economic espionage and stealing trade secrets. The Iraqi Military is sending reenforcements towards ramadi as it prepares for new offenses to retake that city from isis militants. Iraqi army and Police Vehicles driving four miles east of the city. Isis took full control of ramadi on sunday. The department of transportation will make a major announcement this afternoon regarding takata air bag recalls. That recall has triggered a criminal investigation and lawsuit in the u. S. That is your cnbc update for this hour. Lets get back to squawk on the street. After three Straight Record closes for the s p s, backing off that just a bit here. It is flat. Lets bring in art cashin and talk about the action in bonds, commodities, he is director of floor operations with ubs. Housing starts rising to a sevenyear high is the force today. And permits were strong. The future looks reasonably bright. The contractors are out getting permits to build as many houses. The composition was also good. It wasnt multifamily, it wasnt apartment houses being built. It was a big supply of individual homes which is what we need to get the Housing Market turned around. Interesting we are seeing bigger swings and moves in bonds selling off with yields higher. The dollar getting stronger. Oil coming off recent highs, yet stocks are going nowhere. Its a walmart factor. Its been a key drag on indices particularly the dow. Traders are disappointed that this breakout we are having has not been celebratory. Its been incremental. They are doing it in baby steps and not jumping out. Stocks have a lot of energy here. It looks as if we hit these records and people couldnt give a damn. Nothing seems to matter at a moment. It will matter when it matters and we are waiting for that up or down. The energy is not selfevident. It is compressed energy. It cant do it. Traders are more than a little frustrated this move has been incremental rather than bursting out. You would have thought you see Short Covering coming in. We have broken out of range. Better cover my shorts. You would have seen sideline money come in and its time to come in. The train is leaving without me. None of that occurred. Thats been quite frustrating. Its potentially caught up there. Are you fan of double seasonal adjustments . Not really. I think the San Francisco fed has to have a long talk with the atlanta fed. Like they are on opposite sides of the country. No question about it. Based on how things came out, the atlanta fed at least knows where the formula is. Well wait and see. I think that the market indicates things are getting better. Weve got as sara pointed out, yields moved up. Financials are in the lead. That is on yields. Thats on the hope that the steepening curve, if Housing Starts and other things are going to come in much better than the fed will probably move in september or reasonably timely. That means our rates are going to be going up. At the same time you heard from the ecb they are going to double down in the next two months. Front load and back load. Can stocks handle it . S thats the big question. Thats the concern. Bizarrely, if you look at the yield on the ten year its got a kind of head and shoulders formation. The shoulders are at 2. 3 . The head is just below 2. 4 . The neck line is 2. 1 . If we were to brick down below 2. 1 , that would suggest on purely technical basis that yields might go much much lower. The fear is if we go back up through 2. 4 it negates everything. Can i ask you about the link between those yields and what happens on the equity market . There was some chapter about the discount rate the way you value benchmark isy going lower and value. Is that real . Is that real . Its a text book approach. Markets have ways of ignoring all slogans and text book approaches. It drives me crazy to hear people talking about if the fed begins to tighten and they compare the past. In the past that worked out fine. That meant the economy was getting better. We have never been at zero Interest Rates for years at a time. This is a different world. Alice in wonderland we are moving into. We talked about the dow close k is on pace to be the narrowest ever. Somebody responded if cashin were here he would say never short a dull market. Does that line stand . It does unless. I dont think any of those things hold up fully. Lots of strength on the dollar here . Its always the currencies you worry about. That is where the most activity is. You want to compare it. In particular to the euro rather than to the yen. Its the ecb versus where the fed may be. Thats critical here. Opposite directions. Art cashin thanks as always. A reported plan by google to introduce buy buttons on its mobile search results making it easier to immediately purchase on your smart phone. Will google better compete with the likes of amazon and ebay . Good morning, colin. I guess the issue here for a lot of people is the sea change in the way which google operates. It will host these pages itself. Retailers may be able to advertise on them but it will take the credit card information and store it it will take the addresses and store them. The retailer will only get a fee and wont get the traffic to their site. Will they keep retailers onboard with this . I think they will. There are several reasons why it makes sense for google to test this buy button. Number one, from a users perspective, it may be more convenient to purchase products directly from the search results page as opposed to clicking through the apps or mobile websites. From the retailers perspective, benefit from more transaction. Also there is the issue of competition from amazon. Google helps to balance that competition. As you mentioned for google there is tremendous benefit from the data as well as competing more aggressively in e commerce. You can understand they want to make it as easy to buy on amazon or ebay but repositioning google do they become the web hosting company, not like amazon, but a complete down the line solution potentially for some of these retailers . Why keep your own back Office Operating if google can do it for you . Well from to some extent retailers are accustomed to advertising, alibaba, this is the model for their marketplace. Secondly as you mentioned before google will share key customer information with retailers. The transaction al pages on google on the app will look like they are branded by the retailer to some extent. From googles perspective, they pace face this competition from amazon, alibaba and apple. There are buy buttons popping up everywhere. They need to be there. Is this going to work. Should i be concerned google will have more information about me what i buy, my credit card information . It does seem unsettling as the king of search everyone uses for everything. I think what weve seen on amazon, amazon is able to customize the pages, recommend products, our shopping behavior. In some respects, google will better personalize search results for consumers based upon the information they will gather. Well have to see. We are fairly optimistic it will prove successful for certain kinds of products. What does it mean with the other relationships they have . The Online Travel agencies. They are the biggest advertisers on google like the priceline and kayak, so on and so forth. If suddenly you are going to buy directly doesnt that cut out some of those big advertisers . That is a difficult relationship to manage isnt it . I agree with you. Its a tricky dance. However, be google itself is not selling anything. Its a marketplace model. So they are selling on behalf of their partners their advertisers like Online Travel or mazys. They are selling on behalf of those partners. It should help increase sales to customers to detract from the value. We see 20 upside from these levels. Google is very well positioned in mobile despite a lot of fears to the contrary. Google will prove the value of mobile advertising as they convert global search to transaction. We think youtube enterprise the other tail end of their business. Thank you for the analysis. Thank you. When we come back top apple analyst has been betting on apple tvs for years. What does he say now there are reports there will never be an apple tv . Hell join squawk alley live to talk about it. The network that monitors her health. The secure Cloud Services that store her genetic data the servers and software on a mission to find the perfect match. And the mom who gets to hear her daughters heart beat once again. Were helping organizations transform the way they work so they can transform the lives of the people they serve. When stocks hit an alltime high, does that mean its time to sell . A surprising trend. Well tell you that on tradingnation. Cnbc. Com. Adingnation. Cnbc. Com. With a trading specialist just a tap away. Whats on your mind lisa . Id like to talk about a trade idea. Lets hear it. [ male announcer ] see how schwab can help light a way forward. So you can make your move wherever you are. And start working on your next big idea. Can a business have a mind . A subconscious. A knack for predicting the future. Reflexes faster than the speed of thought. Can a business have a spirit . Can a business have a soul . Can a business be. Alive . Financials leading the market higher. Dom chou with more. Financials are standing out as a top s p 500 sector. Among leaders, regional banks. Huntington, suntrust and fifth third. Wells fargo leading financials higher. One of the bigger banks out there currently trading at alltime highs. Wells fargo as well as regional banks stand out in todays trades. Lets send it over to chicago and Rick Santelli for the santelli exchange. Good morning, simon. My special guest my chicago, illinois muni guy. Thanks for taking the time not only to be my guest, but my guest here in person. Pleasure to be back on. Since the last time so many people in the area like to read your blog. Its complicated information. The Illinois Supreme Court ruled against an agreement, maybe you can explain why that changed the landscape and sped up the time line. Moodys came out following that downgrade. Moodys downgraded them to junk. S p followed. Fish followed later. So here we have a Municipal Bond prices on our hands here in chicago. Now the way i see it there is going to be a variety of payments that are going to have to be made by illinois and chicago, basically if the latter part of 2015 but especially 2016. If the Supreme Court of illinois says you cant tinker with contracts with regard to benefits, there are only two other outcomes they have to make legislation which allows it or cities that cant afford it have to default. Those are the only two alternatives. Thats it. The Illinois Legislature could and should pass a law allowing municipalities to go bankrupt. That is would the governor wants the chicago board of education to do. Mayor rahm emanuel doesnt want that at all. We dont want to start fire storms here. Those are the two outcomes. If you dont make a payment, you are in default and rating agencies have to decide what is technical default, what isnt. Most likely is light grease. People that are owed these payments by the municipalities city or state, are most likely going to come to terms to allow more time or come up with way to adjust the scheduling. Wouldnt that make sense . It has to be extend and pretend until the Legislature Passes a law allowing municipalities to go bankrupt. There are a number of cities in trouble. I dont want you to name any names, but ive seen the four, five cities. If you think about the 2011 tax hike we had, we look back in hindsight, 11 cents of that dollar tax hike opt rating expense and discretionary, whatever the budget called for, but 89 cents went to pensions. This dynamic will hamstring these smaller cities. This isnt going to work for them. Discretionary income will be gone for all the services lights, garbage, police am i correct . Absolutely. 89 cents went to pensions. This is 2011. The pension deficit if you had another tax hike this will move into smaller and smaller territory. Absolutely. Complicated. We only scratched the surface. In about 15 minutes, you go to cnbc. Com well continue this discussion and well get more irreverent. You want to be there. Rick santelli. Thanks. When we come back california still in the middle of a serious drought. The Technology Industry is responding with a system that can recycle 2 3 of the water used in your home. Here at td ameritrade, theyre always working. Yup, were constantly making thinkorswim better. Like a custom screener on your desktop, that updates to all your devices. And you can share it with one click. Wow. How do you find the time to do all this . Easy. We combined every birthday and holiday into one celebration. different holidays being shouted back to work, guys i love this times of year. For all the confidence you need. Td ameritrade. You got this. Is tjx is up 4 prsz in early trading. The retailer reported a 5. 8 rise in Quarterly Sales as more customers visited stores and the Company Expanded its offerings. Tjx raised its fullyear profit and Comparable StoresSales Guidance encouraged by bargainhungry shoppers visiting the stores. The New York Stock Exchange is getting into the bitcoin business. Launching a brand new index today. Bob pasani on the floor with more. Im excited about it bob. Its giving a certain imhim tur to bitcoin. Its called the nyse bitcoin index. The First Exchange calculated and disseminated index for bitcoin this is the nyse getting behind it and its sort of acknowledging its real and that customers are interested. It gives a realtime price of bitcoin based on the coin base exchange. So the issue for me is whats next here . Theres a whole universe of customers that might never have seen bitcoin data. Now the nyse has a feed that goes out every day of stock information, part of their global index feed. It this will be in there right now. Its likely a tradeable product will be created and there it is first quotes there. 237. 03 up 1. 75. I think if you want more information on this, they have a nice web page they created, nyse. Com indices. For more information on that. And i again, guys i think youre going to get a tradeable products built around this fairly quickly. I know thats the goal. Back to you. Big step thank you very much. Bob, as california suffers from one of the most severe droughts on record Home Builders are working to find ways to make houses more waterefficient. Our diana ulich is live in lancaster, california with more. Good morning, carl. And youre looking at it. This is the first new inhome water recycling system. Brand new technology. Just certified by the california plumbing board. About six weeks ago. And being modeled in a kb home it comes from a Company Called nexus ewater, based out of australia. Heres how it works. It pulls the soapy water from your house, your shower water, your sink water, your dishwasher water nooxt this tank. It is not your toilet water, repeat not toilet. It then takes it over into a treatment system. Cleans the water and then you can actually use that water to flush your toilets or for irrigation. And obviously irrigation is a huge part of whats happening in california. Now, what theyre Say Something that you can actually reclaim twothirds of the water in your house. And in droughtstricken california, the Home Builders are very interested in this. Our mission is really to raise the water efficiency of homes to a whole new level. And theres really no way that you can do it the way we do it. And so i think its just as important as solar panels or maybe even more important than solar panels because theres really no substitute for water. Now, nexus has sold the technology to kb home it costs between 8,000 and 10,000 per home to install. Obviously california builders are under a lot of pressure to build the most waterefficient home possible. Some water districts like in irvine recycle through their pipes, but that water does not go directly back into the houses. Now the ceo of nexus ewater says it could be a 15 billion industry, he says costs will come down. But in five years hed like to see the system in every newly built home. Kb puts it standard in 52 homes in san diego and are looking to put it into more homes as well. Theres also an app. Can you track your water through your house and how much youre recycling right there on the app. Really interesting technology. Were going to have more on it Online Realty headline tech. Cnbc. Com. Lets welcome jon fortt to the program. Remember the Apple Television rum that are wouldnt quit . The last analyst who was holding out on it has finally thrown in the towel. And weve got the ceo of grub hub live from chicago and the tinder cofounders we caught up with coming up on squawk alley. D. Taking a look at the major indices rights now, the s p 500 is flat. But beneath that youve got movers especially in retail. The best performer on the s p 500 right now is tjx, as dom pointed out. Tjx coming out with better results. The worst performer on the s p 500 is Urban Outfitters which came out with disappointing results and guidance weakness in the an throw pollgythropology sales. Weve lost 60 a barrel on crude as a result of some fairly bearish notes from goldman. Julia boorstin with a quick news flash. Taketwo stock sharing this morning after reporting earnings after the bell yesterday that topped estimates. Driven by stronger digital sales, the company also issued guidance that was far stronger than wall street analysts had expected. Now, revenues did fall short of expectations. Stock also announced it will increase stock buyback plan. The shares up 15. 5 , back to you. Another doubledigit mover on earnings. In the meantime happy birthday to squawk alley. Take it away guys. Good morning, it is 8 00 a. M. At apple headquarters in cupertino. 11 00 a. M. On wall street where a year ago today squawk alley went live. It is almost 8 00 a. M. Out west at facebook headquarters in menlo park it is 8 00 a. M. At starbucks headquarters in seattle, washington. It is 8 00 a. M. At netflix headquarters, tesla headquarters, its 8 00 a. M. At google headquarters and apple headquarters in cupertino, cupertino. It is 8 00 a. M. At fitbit headquarters. Almost midnight at alibaba headquarters in china. 5 00 p. M. At the mobile World Congress in barcelona. 8 00 a. M. At cnbcs new one market headquarters. Squawk alley is live