♪ >> live from new york where business never sleeps, this is "squawk box." good morning welcome to "squawk box" here on cnbc we are live from the flaz dnasdq market site in times square. i'm becky quick along with andrew ross sorkin joe is off today filling in, we have kevin o'leary. he will be with us -- >> you should bring us some wonderful earnings, mr. wonderful. >> i love bringing wonderful earnings >> let's see >> eli lilly hitting on our show this morning we have a lot to come. let's check with the u.s. equity futures. already you see the dow looking at triple digit gains. the dow indicated up by 101 points s&p up by 13 the nasdaq is up by 48 comes after a mixed day of trading yesterday. the dow ended down by 14 points. it was the fourth day in a row that the dow has seen lower

numbers. that's the longest losing streak since march. nasdaq was down yesterday for the third straight day we did see the s&p ending higher for the first time in three sessions yesterday as we mentioned, plenty of earnings to keep fueling things throughout the course of the show overnight in asia, you will see the nikkei ended up by 0.9%. hang seng was up by 1.25%. check out the shanghai, it was higher by 2% if you look at what's been happening in europe, some early trading, mixed picture looks like the dax and ftse are up by a third of a percentage point. if you check out treasury yields yesterday, the ten-year yield just missed hitting 3% still managed to get to the highest level since january of 2014 this morning it's sitting at 2.964% couple big stories to tell

you about. alphabet beating on the top and bottom lines ad spending was up, but costs also jumping more than the street was expecting the stock has been seesawing since the results came out after the bell we will try to make sense of where this is headed big day ahead for earnings here's what we'll be hearing from we have eli lilly on tap coca-cola. travelers. united technology. 3m and caterpillar and verizon we'll bring you those numbers. then united airlines, its ceo taking a big pay cut last year he received 9.$9.56 million. that's a lot of money but nearly half of his compensation from the year before. he also told employees that he suggested the company's compensation committee not give him a bonus at all the airline also announced the

current chairman will not be seeking re-election. all of this coming after a tough year for united on the pr front most recently with the situation, the fatality of the dog. >> in the overhead bin >> that dog is still dead. >> that dog is still dead. >> it is >> let's talk president trump. president trump's pick for secretary of state got a key approval yesterday the senate foreign relations committee advancing mike pompeo. there are now enough votes in the full senate to confirm pompeo this week, which would allow him to attend a nato summit on friday rand paul changed his mind and ended his opposition to pompeo's nomination after he received multiple assurances from president trump and pompeo about his views on the wars in iraq and afghanistan. we are thinking about the bush family this morning just seven days after the passing of his wife, former president george h.w. bush has

been admitted to a houston hospital a family spokesman says president bush has an infection that spread to his blood but sha he is responding to treatment. we'll bring you updates as we get them. let's talk about the broader markets. also implications of rising treasury yields. joining us is david leibowitz, and jim tierny thank you goth for being here today. let's talk about the higher yields i'll call this a jump ball higher yields is a good thing or a bad thing? why are rates rising >> i think it's a good thing the economy is doing well. we're getting back on the path to normalization it will not crimp corporate profits, valuations, or economic growth all healthy. >> i think importantly the reason that rates have risen is due to the real component.

that's signal that better economic growth is being priced into the market rather than inflation risk, which is what immediately comes to mind. >> jim paulson put out a note yesterday saying is there a whiff of stagflation here? are we seeing higher rates with a little bit of economic stalling >> to me, that was more of a first quarter story. the consumer pulled back, manufacturing got tepid. but we think there will be a nice rebound in the second quarter. i'm not sure this is a stagflation fear i think you saw a softening in economic growth at the same time that you saw things like the prices paid index and the philly fed surv fed survey shoot higher. i think that's misguided i think we're looking at a year of relatively strong growth and inflation which will not be problematic until later there 2018 >> jim, you do see that happening but also commodity prices that have taken off

you have trade issues pushing these things higher. >> short-term noise, over time this will normalize. i'm not overly worried about commodity prices >> kevin, how about you? >> let me ask about the question i care about the most. let's say you're managing pension money, you're 5% to 7 % in perpetuity, at what point does the ten-year become competitive? 3% was abysmal 3.5% is abysmal. what is the number i should be concerned about as an equity investor that would be a competitor for my dollars? >> i think the number is 4%. this is just noise until we get close to 4%, we're not worried about it. >> when do you think you'll see

4% >> at least 2019 >> yeah. i think that's a fair point. my models are pointing lower, maybe 3.5, but i think a range is the appropriate way to think about this if you assume a 3.5%, 4% ten-year yield, and 2% inflation, you're talking about a return of 150 to 200 basis points with an annualized volatility of 3%, 4%, versus what you will get from equities, 3.5%, with an annualized volatility of 15 plus. >> let's go to the triple b investment grade market if we got to 3.5% in the next 18 months could i get 6% in the triple b >> that's a fair question. we have seen the -- >> that's competitive to me. i moved away from equities, getting 6%, now you have something of interest to me.

i think the question is what is the relationship between rates and spreads looking like going forward. historically it's been negative. more recently positive the bigger question is where are we in terms of the default cycle. people are pointing to 2020 as being a big year in a spike for defaults you have to take into account the credit risk that will build here over the next couple of years as the fed continues to normalize. >> i love how you think about that yesterday we had the north carolina treasurer on. he was looking for ways to goose the performance that the fund could see. he just recently said we'll have to take down expectations. because i think it's north of 7.25% that had been for 50 years. >> the minute i see institutional capital -- >> start to flee, yeah because you think that's an air

pocket that stock prices hit >> i do. if i can get 6% on a triple b for 40 months, 50 months, i would allocate to that. >> the pensions have had nowhere to go but stocks for a long time >> but it's been a long time since triple b got you more than 3% i think i had hair the last time that was the case. >> if you look at company fundamentals in the equity market, they're great. there's no incentive to move away from stocks google last night, 26% revenue growth that's a great growing company >> we have six dow components that will be reporting before the opening bell this morning. these are some names, everything from coca-cola, utx, caterpillar, what do you think that tone will set for the short-term >> our expectation is for this earning season to be solid operating earnings on a year over year basis should finish up around 25%

i think where this shakes out, we have seen the multiple fall earlier. that puts us in a mid to high single digit return range and coming back to your fixed income point, if you use this year to take advantage of strong earnings growth, by the time you get to the end of 2018, we don't think 9 econothe economy will h overheated so the rotation between stocks and bonds is out on the horizon. but i'm not sure today is the time to make the move away from equities and into fixed income >> jim >> i think equities are the place to be. if we go there, that's not that much money in bonds. you have earnings growth in 2018 and decent earnings growth in 2019 the market is just not expensive for that kind of growth. >> thank you

>> big tech was a big focus at yesterday's sohn conference in new york leslie picker was there. >> there were a lot of tech names brought up investors sent shares of those companies higher after fund managers pitched them as stock ideas at the conference. shares of box saw the biggest move while box is known more traditionally as a cloud storage company, purchased by enterprise customers, chamath palihapitiya said it will be one day be poised to be a leader in artificial intelligence. box closed up 11% higher after that presentation. one trade that became a topic of conversation throughout the remainder of the day was gundlach's pitch to short facebook while going long on oil and gas etf. it was a curious pair trade and one he described as risky but said the idea stemmed from his

idea of more regulation around facebook >> outside of tech there were long investments in dr horton and mckesson david einhorn said he was short assured guarantee over its puerto rico exposure assured guarantee fell in after market trading on those remarks. can we talk box -- >> that statement itself >> no, not on the statement itself >> that statement, you can understand why a company would disagree with an assessment like that that's a bold faced he knows nothing statement. what was the chatter on the box call >> it was interesting. everybody was surprised to see the name box as the company he was pitching for the first half it was all

about artificial intelligence. he laid out this stack of where he sees artificial intelligence going and penetrating into the ecosystem of silicon valley. he put names on there like nvidia, like google. we thought he would pitch long in nvidia or google. no, it was box >> i don't get that one at all box to me is a commodity storage play what it has to do with ai is a long way where it's justifying that earnings it makes money on a rental commodity basis. >> where are you on dropbox? >> i use dropbox we use it as a standard platform we found it easier for employees to use dropbox there is nothing proprietary about what they do should a microsoft, dpoog agoog

a.m.s a.m.son -- amazon push into that service it will be crushing. >> you can use google apps, google cheats, google that, microsoft has also pushed into it it's called office 365 the idea that somehow these are all commodity products, i'm not so sure about that there's a clear differentiation between -- i use office for certain things google for certain things but also a dropbox customer. >> to me, there are great services and great stocks. tesla is a great service i would never buy that stock >> so you would use tdropbox bu not own the stock? >> the only reason google has not taken that space back or microsoft is a matter of focufo. they would rather be proprietary

on a new technology for a longer period of time visit dropbox and watch the employees. what was the ai piece that chamath talked about >> he said in terms of the stack he laid out, which is the construct of how he views artificial intelligence, at the top of that stack was applications he said box is best poised to be the application of choice for artificial intelligence. >> why >> it's kind of unclear exactly how box specifically and why box specifically would be the application that people would use. he said he estimates 90% of gross margins will be from artificial intelligence products in terms of the exact r & dashgs they're doing now to get into this field, that's unclear

that's something i'm not familiar with. but, you know, it's an interesting hypotheses i know the former head of pr went to social capital recently, former head of pr at box went to social capital recently to run brand and strategy there >> i know you have liked energy as a potential play. what did you think of gundlach's double call where he likes energy, but wants to short facebook >> i like that guy i do not see any correlation with those two you know, the whole facebook dilemma, the debate going on, the thing we should concern ourselves with as an economy, all of these businesses that are sitting at 5 million, 10 million in sales can't live or acquire customers without social media platforms. the analogy is to look at why

europe doesn't have anything equivalent to google, facebook or microsoft they regulated themselves out of the gate i am not -- i'm such a believer that the market will take care of the issues around security, data, all of that. i have also come to the conclusion, no one gives a bleep about this issue in the new economy. this whole thing that people care about their data is -- that are 30 and under, they xespend their hole day twhole day -- myo the regulators is do not kill the golden goose of efficiency if you can't acquire customers on social media and you're selling leg warmers or garments,

you're screwed >> i'm with kevin, i think if you're right about the way people feel about this -- >> i am right. >> if you're right, i don't know there will be -- i don't know if the pressure, it will be there >> there's nobody at home at massachusetts saying stop the madness, my data they don't care. they get back home to their constituents, they say what do you care about it's not my data >> i feel like regulators in washington don't always follow popular demand >> you may be right about that that's a risk to our economy the acceleration of where the jobs are created you don't want to take this tool away from them you get europe, france, switzerland. they have your regulated themselves, that's my issue. we'll leave it there leslie picker will be wonderful for the next three hours we'll talk to him more.

when we come back, today's top water cooler stories, including a development deal for an nba star. and get ready for a flood of corporate earnings we'll bring you the numbers from eli lilly, coca-cola, 3m, caterpillar, verizon and more. that's starting in the next ten minutes or so.

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♪ we'll be monkeying around, but a strange case to be decided in a federal court this monkey stumbled upon a wildlife camera and snapped some selfies, which the photographer published. peta sued claiming the photographer infringed on the monkey's copyright because it had taken the pictures but in a blow to monkey artists, the 9th circuit court ruled that the monkey and all other animals lacked standing to hold copyrights if you know a monkey, snap all the pictures you want. >> it wasn't his camera.

>> this is a legendary image here's the test. if the monkey's allowed to open an account any bank anywhere, she have proprietary rights to that image to monetize it. if there's no platform where he can hold an account in good standing, he can't have the copyright. >> maybe that's what the court decided. >> how do you give this monkey a credit card. >> bananas >> maybe there's a solution with bitcoin. >> but let's say you -- let's say you had a monkey actor don't you think you should be able to get the rights to the monkey >> the contract is with the animal trainer i've seen that on many sets. you basically purchase that right, you're guaranteed a certain performance, otherwise you don't pay. they bring five dogs that look the same, the dog does the trick. there's a cost, an enterprise to train those animals. the monkey took a selfie -- >> monkey stole his camera

>> the image itself has mega data in it that says on that moment, in this location -- >> it was the guy's camera. >> you should be fighting for monkey rights for their own accounts then you could solve this problem. another animal business story for you. a giraffe escaped its enclosure at the ft. wayne children's zoo. she ran around the nonpublic parking lot while employees tried to corral her. eventually she went back to her barn on her own after about two hours of running around. she just needed some time out. love giraffes. >> pretty. >> no thw this is a tough one. the planet has been the butt of joke force years, but now -- jo year, that uranus smells bad scientists outlined their methods for identifying the

presence of hydrogen sulfide in the man nplanet's atmosphere. my children love this planet >> uranus. >> depending on how you say it there you go >> how is that information use to an investor >> that's a good question. >> because one day people will want to live there elon musk is listening to this carefully, trying to think through the permutations >> that would be discount housing for sure golden state warriors point guard steph curry may not be appearing in the nba playoffs, but he just finished a different kind of sweepstakes. he inked a deal with sony entertainment. >> all these golden state guys have done so well, half of them

a venture capitalists now. it's fascinating to see this business development so many of those players -- by the way, relative to the other cities, you think in l.a. more players would have deals or new york it's san francisco >> you have to create something that works it's really giving up option rights for cash up front i don't love it. >> you don't love it >> no. >> you would advise steph he has made a mistake >> his brand will always keep growing. he's a huge equity asset in the league why tie yourself up? i worked for sony. i'll take it back. sorry, i didn't mean it. when we return, a lot of earnings to tell you about eli lilly expected to report after the break. a first on cnbc interview with the company's ceo, david ricks up next, phil lebeau in the world's largest car market where luxury runs hot.

on the streets of beijing it is not hard to find luxury cars and suvs while sales of high-end models may be slowing down in other parts of the world, that's not the case in china where the battle to be tops in luxury is getting more intense i'm phil lebeau in china, that story coming up. - i love my grandma. - anncr: as you grow older, your brain naturally begins to change which may cause trouble with recall. - learning from him is great... when i can keep up! - anncr: thankfully, prevagen helps your brain and improves memory.

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"squawk box. let's check out where we are dow up about 144 points if we opened up now nasdaq up about 62 points. s&p looking to open up about 17 points higher. eli lilly out with quarterly earnings reporting profit of 1.34 per share, 21 cents above estimates. revenue topping forecasts and also raising the full-year forecast >> looks like they're now looking for 5.10 to 5.20 on an adjust the basis for the full year estimates were at 4.88 that's a big increase in guidance >> i'm trying to understand whether that futures number on the screen is accurate it looks like it's off about 2.3% we will dig into those numbers try to understand what is going on there eli lilly's ceo david ricks will be joining us at 7:15 eastern time this morning. the battle for luxury auto brands is beating up in china.

phil lebeau is in beijing and has more on that >> here in beijing and all of china it's all about luxury autos. this market continues to be red hot. especially for the german automakers look at the top three luxury auto brands last year. these are annual sales in a lot of countries you don't have full line automakers with 600,000 in sales, that's along with audi and bmw. what is dwrooifing th indrivings 2.6 million in luxury auto sailings because we're seeing growth in the tier 3, tier 4 cities, cities that most people have never heard of in the united states, that's where the luxury automakers are seeing dema demand up 16% last year that's good news in the united states for people who work at the bmw plant in spartansburg,

south carolina a they export more than 80,000 vehicles this year expected to export about 90,000 suvs from the u.s. to china. remember the vehicles sold here coming from the united states come with a far higher price tag. take the gle, built down in alabama. you buy one, a base model in the u.s. starts at over $52,000. look at the price in china, just over $122,000. general motors, we will be hearing from them later this week, their earnings they are, depending on who you talk with, either number one or close number two here in china this is a big market for gm. continues to be a big market cadillac, while growing, has a long ways to go to catch up with the german luxury brands in china. back t back to you. when it comes to luxury, that's a big deal in china

i think we may have lost phil. we'll get back to phil later in beijing. we'll hear much more from him about what's happening in the auto market there. alphabet beating the street with the first quarter results the tech giant profit, $9.93, well above estimates revenue surging to over $31 billion. the stock, you can look there, it is up now joining us to break down the results is michael graham, managing director and senior analyst am comport the question mark, if there is one, they're adding costs at a rap pit clip >> yeah. the beat on the bottom was driven by a one-time thing if you take that out, they had lower margins than we were looking for. they had 27% property revenues

quarter. great revenue results. but all that revenue growth is coming from lower margined sources. one of the biggest drivers is youtube. the margins they earn on youtube are lower than on core, google search and margin search has lower numbers than desktop we downgraded the stock last june, we expected them to underperform the f.a.n.g. but outplay the market that's what we've seen it's a good stock, but relative to some other choices in the internet sector -- >> you think relative to the other choices. what is your basket of choices >> we compare alphabet to facebook, netflix and amazon >> you would take the other three before google or alphabet? >> i would in the other stocks you have more visible and reliable

growt growth >> even facebook you think that? >> i do. facebook has issues on the data front. they have to work through those. going hall some of those same issues i do think facebook and google win the compliance imperative which is greater for data initiatives, enforcing more privacy. those companies can weather that storm better because they have more resources >> you don't think there's an argument that google is already prepared for it, that they put in a lot of the stuff in advance of all of this in a way that maybe facebook has not >> i think google is probably a bit ahead. the ceo on the earnings call last night said they were preparing forks gdpr in europe o quite some time. facebook probably as well. >> mr. wonderful, what do you do >> a couple years ago when we learned the structure of google was going to be split into

alphabet, give us more transparency on other costs, the stock has underperformed ever since that announcement. is it because we now realized many of the cash investments never pan out in this model? is that really what's going on here so many things the company does that we hear about, glasses, vr stuff, all cash burn, then we never talk about it again. the company has done a good job on being more cost effective, the overall expenditure in terms of dollars is low. it has become small relative to the core business. you're right, those other bets are losing money, but the

magnitude of those is smaller. i agree with you i think the reason why google's stock has flat lined here is because they're doing a great job growing revenue, but core desktop search, which is the business google started with, is one of the best business models invented and got insanely high margins. everything else they're getting into is lower margins. >> can i flip the restructuring market around on you if you look at amazon, if amazon was as transparent as google effectively, would you like it more or less i think there's some kind of mystery, special sauce premium applied to amazon in part because we think there's stuff in there that could, you know, shoot the moon kind of stuff >> transparency. >> might be shoot the moon stuff in google. but we're now more worried about

it because we've seen the cash burn >> transparency for the sake of transparency doesn't always work now you exposed how the sausage is being made. it's ugly and complicated, sometimes nonsensical. that's what you did to yourself when you made alphabet out of google in the old days, it was earnings, margins, and it's growing. now sausage is on the plate every day and it's ugly. where are you at on this dual voting thing >> google doesn't give a lot of cash back to shareholders. you have this dual voting structure which is not shareholder friendly facebook has something similar i would say part of the reason amazon way outperformed google is because amazon has much broader growth prospects

e-commerce is a small portion. digital ads, search ads is a big portion of the ad market there's more room to glrow for the e-commerce side. >> michael, thank you. another look at shares of eli lilly. the company coming in with better-than-expected earnings on the top and bottom line, and raising guidance for the full-year. you would think that would propel the stock the stock is lower, down by 2. % after an fda panel yesterday voted to back a lower dose of a rheumatoid arthritis drug rather than the higher dosages that the company was looking for. the panel voted 10-5, that's not a slam dunk for the fda. we'll get the chance to talk to

eli lilly's ceo, david ricks, about all of this. he will join us first on cnbc coming up in just a bit. also our guest host at the top of the hour, barry sternlicht he has a lot of different deals taking place now things he's been watching to see in real estate we'll get his view also of the broader economy. and david ricks as i said earlier will be joining to us talk about the earnings report. and later, geoff lewis of the elite founders fund started his own venture capitals firm. he will tell us where he's investing. that's at 8:30 a.m. eastern time you're watching "squawk box" on cnbc

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welcome back let's look at the u.s. equity futures at this hour you can see things have been picking up steam even before we hear from some of these big dow components dow futures indicated up by 136 points this comes after the dow ended

down by 14 points yesterday, that was the fourth session in a row that we've seen lower numbers for the dow. things indicated higher this morning. s&p indicated up by 17 points. nasdaq indicated up by 58 points we have three dow components that we're expecting in the next ten minutes or so. utx, coca-cola and travelers we'll watch those numbers closely and bring them to you as soon as they hit keeping an eye on the ten-year yield which came close to 3% we'll continue to watch that through the morning. strap on your seat belts, because it's time for the executive edge this time we're talking cars one of the largest ridesharing companies could be planning an ipo. china's didi is in talks for a multibillion dollar offering that could take place as early as this year didi launching its ride hailing service in mexico. when we talk about the ipo,

we're talking about a 70 billion, $80 billion ipo. >> more than uber? >> i think higher than uber. if they pursue an ipo, it means they're taking on uber, not just competitively but also getting to market first. >> any idea where they would list >> unclear could be in china -- >> to get 80 you have to list on the big board. does this make you go back and second guess taking travis out of the game when he was opening up china he was spending all of his time in china, fighting these guys because he felt this was the market if this 80 billion is true, it is the market. >> but he traded the china -- his china market, he said it was his choice he said i can't do this. i'm better off taking a piece of -- he owned a big piece of this company

they'll take -- >> my point is the auxiliary markets are gone if you give 80 billion to didi, they own asia, and you allocate the north american economy and maybe some of south america to uber >> but that means you gave $16 million to uber. >> that's compared to the long-term value -- if you're willing to give this $80 billio valuation, investors around the world think this platform is one of the most valuable created by ma man. >> the problem is uber is burning through cash flow so quickly and continues to do. >> netflix is burning through cash >> but netflix and amazon said this is our plan and investors bought into that uber has serious problems if they continue to come back and ask for money. >> the minute you stop trying to

acquire customers, you go cash flow positive. it's good the market is talking $80 billion ipo, it means thel teslas, and amazons, they are correct. we still have give me these stories like didi that i can dream the dream, and i'm willing to pay a crazy price >> maybe that's a reason uber should have gone public a long time ago >> didi does not have uber to compete with in china. there are some competitors, but not nearly as feerierce as it should have been >> is that collusion at some point? you say i won't compete in your markets, you won't compete in mine, we'll own a share. >> my point is always test

yourself by saying when i take my entire net worth and put it into didi stock now, would you do that? >> you know me i wouldn't put my net worth in one company. >> all of a sudden you want cash flow earnings? shame on you this is what i ask myself every day. this is not an investment, it's a speculation. a very big one that means the markets are healthy for that hype. >> with the exception of the great company known as comcast >> i'm closely tied to comcast >> i own the stock, i'm talking my book. one of the best stories. >> coming up sh, the first stat visit for trump. we'll tell you what's on the agenda when president trump meets with the french president today at the white house we're coming gback in a moment

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white house. eamon javers joins us with more. eamon? >> reporter: good morning, becky. it'll be a full day of pomp and circumstance in washington, d.c., today as the president hosts his first state visit with president macron we'll see a full dress state dinner this evening. macron arrived in washington yesterday. it all began last night with a dinner between the two leaders at mount vernon. the two leaders and their wives got a tour and held an intimate dinner at mount vernon last evening to begin discussions macron on his arrival to washington laid out some of what he says will be on the agenda here here's what he said. >> during the state visit, we will have the opportunity to discuss a lot of bilateral issues and to discuss about our security, about trade, and a lot of military issues important for

our country and beyond our two countries. this is a great honor and i think a very important state visit given the moment of our current environments >> reporter: trade and tariffs will be on the agenda here between the two leaders. but also on the agenda and probably front and center here is the state of affairs on staying in the deal. the president has a self-imposed mid-may deadline to either fix the deal or get ut of it we'll see whether the french leader can persuade the president of the united states to stay in the iran deal or come up with measures that might improve it in his view the french leader very much here hoping a warm, personal relationship can lead the president of the united states to stay particularly because of that north korea negotiation which is going on at the same time there is some concern that if the united states were to get out of the iran deal, just at a

time it's talking to north korea about a nuclear deal of its own, that would send the wrong message to the north korean leader, becky. who might say it's not worth making any deal here at all. >> very touchy subject thank you. we'll talk to you soon when we come back, earnings alert, everybody we've got reports from caulk cola, united, travelers, harley-davidson. we'll bring you the reaction as soon as they hit and starwood capital's barry sternlicht will be here. "squawk box" will be right back. once there was an organism so small

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dow drivers report the names setting the tone for today's trading sessions straight ahead plus the ceo of eli lilly on the company's quarterly results and what's driving drug prices that interview just minutes away >> and the ceo of sotheby's on finding value in art and whether there's a bubble brewing in collectibles the second hour of "squawk box" begins right now ♪ live from the beating heart of business, new york, this is "squawk box. >> all right good morning, everybody. welcome back to "squawk box" here on cnbc we are live from the nasdaq market site in times square. i'm becky quick along with andrew ross sorkin joe is out today but in studio for the remainder of the show is barry sternlicht. he is with the starwood capital

group. kevin o'leary is with us today as well. he's with us for the entire show before we get to all of that, though, let's look at the equity futures. dow up 138 points. this is before we heard from any of the dow components we are starting to hear from right now. s&p up by 16 the nasdaq up by 55. lots of earnings just hit the wires. travelers out. earnings came in at $2.42 versus the $2.68. revenue better than expected $7.3 billion versus the $6.7 billion the street was expecting. plenty of other earnings out as well meantime, coke earnings just hitting the wires and guess who is here. sara eisen on set. she's got the number >> my first time on this set here's the deal with coke. it's a good quarter. 47 cents a share beating

estimates. here's the highlight on what they're going to be proud of in this report. organic revenue growth of 5% it's hard to find that in consumer staples these days in the food and beverage companies. that is the new ceo james quinn who has promised to turn this company around and is already seeing results here's one interesting tidbit as to what drove the growth diet coke in north america saw -- >> wait a minute it's because of the flavors they have now right? >> they just launched it he broke it down into three categories i just spoke to quincy about these results. some of the people coming to diet coke are people who always drank it some are actually millennials that are discovering the brand because they are interested in the flavored sparkling water >> they have mango flavors what are the three new flavors they look pretty good. black cherry or something. >> i don't know the flavors. but they're looking at flavored sparkling and flavored diet.

it's creating excitement for this category when many of us were writing off diet coke in north america. they saw 3% overall volume growth which is sort of he measure you want to look at when it comes to these companies. then as far as geographies, coke is all over the globe. they're having a better time in emerging markets they said brazil stopped declining. and coke zero continues to grow in double digits since they relaunched this brand. so they are successfully attracting people -- new people to the brand they're spending a lot on marketing. >> somebody in the control room says it's ginger and blood orange >> ginger drinks are everywhere. >> you could have hot vending machines with that

>> they're talking about carbonated sugar water would go to zero. that's not the case. somehow it's finding a resurgence with the millennials who talked about this being poison i own this stock because it's a great cash flow story. >> you like dividends. >> i love dividends. looks to me they can grow dividends with this kind of news 5% is huge >> yes >> anything in my lifetime over 3% would be amazing. but there's other stuff in this mix that's growing as well >> actually one of the reasons europe was the strongest volume in revenue growth for them this quarter is because they relaunched the infused tea brand. they're diversifying into water, sparkling water, teas, coffees when it comes to coke, this is what the previous ceo put in place. smaller packages, they're trying to brand it as an indulgence for people and less as a regular

part of their day where we used to guzzle coke all day long. >> what about cannabis infused cola in places like canada i heard that story yesterday i thought that was fascinating >> they are for the first time looking at getting into alcoholic beverages for a company that has only done nonalcoholic for so many years coke has done better than pepsi this year by a significant margin this year and it is gaining shares in beverages. it's got the snacks. that's where the growth is for them it'll be interesting to see the north american beverages given coke has come back here. >> the stock is up by 1.5% thank you. >> thanks. we do have a few other dow components out with more travelers, let me walk you through that revenue came in better than expected $7.3 billion versus the $6.7 billion the street was looking for. they're talking about high catastrophic losses for the quarter.

$1.01 a share on the diluted earnings with that that includes the two nor'easters here also tornadoes and hail in the south. then the mudslides in california i'm not sure if the street said under all of the issues that they would have -- especially with the mudslides in california, a second first quarter in a row we have seen high catastrophic losses take a look at that stock. it's down by about a dollar. dom chu has been following all of this. dom, i know you've been digging into utx as well what do you see? >> we are looking at travelers you mention the $2.42 nap is the net income per diluted share we are looking at core income per diluted share. $2.46 per share versus the estimates for $2.68 per share. you mentioned some of those catastrophic losses. they did say net written premiums which is the proxy for revenue at travelers and other

insurance companies was a record at $6.824 billion. if you look at that compared to the estimates it was a beat there as well. perhaps a bit of a miss there on one side of things with regard to the overall eps or core income per diluted share one thing i also want to bring up, i noted in travelers here, was a 7% rise to the dividend payment they're going to make. now going to be 77 cents per share per quarter going forward. the firm notes there's a compound annual growth rate in that period. those travelers shares do down 0.75% i would note, though, very light volume just about 750-some shares traded so far. we'll keep an eye on travelers so far you mentioned other loss estimate numbers they went through. also want to bring your attention to united technologies we are seeing a beat on both sides here i'll note the stock is up almost 3% but again thin volume.

4400 shares total of premarket traded so far. we'll take you through some of the numbers here if you look at the earnings per share on an adjusted basis, estimates there. the revenue side of things, $15.2 billion. that beats the annual average of $14.6 billion. but where you are probably seeing a bit of that optimism come into play right now is with regard to the full year 2018 earnings per share guidance which they have then raised to a range of $6.95 to $7.15 a share on average analysts were looking at $6.07 also want to point out -- sara mentioned diet coke for coca-cola. they did see commercial sales up also 16% at the utc aerospace systems. they also saw some equipment orders at utc climate and

controls and security. they raised -- they increased 10% organically. the loan kind of may be downer on this whole thing is otis with the orders down over the prior year so that all together you have that down moving travelers right now united technologies up 3% we'll continue to dig through this and bring you more. but those are some of the highlights we see for right now. >> okay. dom, we can say we've been looking at a strong dow futures this morning it looks like it's up even a little more. right now looks like the dow futures would open up by 144 points some other headlines to bring you this morning housing in focus this morning's economic calendar coming out this morning. the reading on home prices expected to show 3.3% increase an hour later the march reading on home sales. then what could be a contentious annual meeting set for today in

des moines, iowa that's where wells fargo ceo and shareholders are meeting we will see whether he accomplishes something today and facebook has released a rule book for the type of posts it's going to allow prior to this facebook only had a brief version of what it called community standards this was available for public consumption then take a look right now. in studio with us for the remainder of the show, how do you say it hotelier he's a real estate mogul he runs all kinds of things. famed investor as well barry sternlicht it's always great to see you thank you for coming in. >> i can explain coke, by the way. it's all the dark and stormies and moscow mules being sold.

moscow mule is a hot drink >> really? >> yeah. i know this from the sales in the hotels who knew should have bought the stock if i was smart. >> you are the perfect person to have here today when we are watching so closely what's been happening with interest rates. and with yields on the 10-year pushing towards 3% for the first time in four years why do you think this is happening? is this a good economy is this something that concerns you? what do you think? >> it's the number one question for investors. i mean, for us, totally fix sated on rates and what they're implying in the shape of the yield curve. if it was a normal recovery, you would expect a more normal yield curve. i think there's two reasons why rates could rise the first was a happy situation which was the economy was getting better wages were picking up because we have low unemployment. rates that rise because of a healthy economy are probably okay they're good for stocks and

probably good for real estate. because at the end of the day, investors care more about rent growth and property than they do about minor shifts in interest rates. and 50 basis points, 3.5 isn't going to impact your long-term projections. especially since in this environment actually spreads are coming down. so if i borrowed at 200 over whatever libor was, i'm over half of the increases in rates have been absorbed by the spread compression. on the other hand, if rates go up because of political noise, because there's a buyer strike, too much supply of bonds in the market, not enough buyers. you know, i think what the government did was very risky and i think it's being reflected across the entire investment spectrum -- >> what the government did in terms of cutting taxes -- >> the $1.3 trillion tax cut and then a $300 billion spending bill i would say it was fiscally irresponsible. and i think that is spooking

people that rates could run away we spent last year about $263 billion on interest expense. on $15 trillion, that's like 2% or something like that if rates go to 4%, that would be $600 billion of interest expense. it'd eat up $300 billion of discretionary spending you could come up with a scenario that's not zero that we wind up having to print money to pay interests on ever larger deficits. >> what are you doing about it >> personally i'm short rates. like everyone else in america. and i'm actually short against my exspoe sure in our real estate assets. the one thing i can control in the bond market. we're being more defensive and looking at more income streams on properties. we shifted probably our attention overall offshore >> i noticed that. >> we've been much more active in europe than we are here >> austria

>> germany, austria, the nordics, sweden. >> barry, can i go to your comment being fiscally risky to do a tax cut we were mired in a sub-3% gdp growth in the previous administration i'm not defending the political aspect of it, but there's now discussion of being well over 3% in the next two to three years >> we're waiting for it. >> okay. but if that's the case and there's two reasons i think the tax cut was imperative "a," we were not competitive with european rates at all and lots of capital was moving and inversions were occurring. but if we get to 3.2%, 3.3%, 3.4% gdp growth, you've paid for 60% of -- >> i don't think he had the problem with the tax cut i think it was combined with the spending increases >> somebody's going to have to get to entitlement reform. >> those are two different issues >> but they're hand in hand. >> we're going to go to trillion dollar in deficits just on

entitlement spending >> were you fine with the tax cut before you saw the new budget that came out >> i was surprised at the scale of the tax cut it was bet the ranch we have to grow. if we grow -- >> snnot personally most of these people are paying more tax it's just corporate. >> we don't pay more tax >> i am personally in new york, new jersey, connecticut, any of the salt states you are going to pay more >> you haven't felt the full impact of that yet. >> no. but i've had people run the numbers. i'm going to pay significantly more >> i want it to get down to 28% so we're not finished cutting taxes but the corporate move was interesting. >> and what congress has said is they had to change the individual situation with taxes so you could pay for the -- >> you go from 37% to 28% and i assume if you think what is already fiscally irresponsible, you would be beating the drum harder or no

>> no. not until we see what happens. it also goes to immigration. we need labor. if we're going to grow this economy, we need those half a points of growth we get from immigration. you look at the economy right now, i think you'd have to say don't you think it's weaker than you would have thought >> i think we have two more years of increased enhanced growth in companies who have only their revenues domestic you haven't seen it yet. those are going to be jobs created. more jobs in >> but the general economy, i mean, you see it in consumer spending people are nervous i think they're glued to their tvs. it's the longest running sitcom or drama or whatever you call it, it's very busy i think it's very unsettling i've been doing investing for almost 35 years, you know, it just feels the ground is a

little mushy in the united states it's less secure even discussions of trade wars you know, it's just -- >> are they wars or negotiations >> we don't know yet, right? >> yeah. right now they're negotiations they're unusual, but they're negotiations >> this is going to be a good conversation >> we're going to continue this dialogue when we come back, the ceo of eli lilly david ricks is going to be joining us then later tad smith is going to be hanging out with us talking about a new online tool to find out if something is valuable and get an estimate of what it's worth. i have a lot of stuff in the garage to ask him about. stay tuned to "squawk box" here on cnbc. finally. hey ron! they're finally taking down that schwab billboard. 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.

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really? and these kids, and these guys, him, ah. oh hello. that lady, these houses! yes, yes and yes. and don't forget about them. uh huh, sure. still yes! xfinity delivers gig speed to more homes than anyone. now you can get it, too. welcome to the party. welcome back to "squawk box" this morning eli lilly out with first quarter results just a short time ago. better than expected earnings and revenue. joining us now here first on cnbc, lilly's ceo david ricks. good morning >> good morning. how are you? >> we're good. and i imagine you're very good too. when your earnings came out, we were surprised because you beat on the top and bottom line and the stock seemed to go lower, oddly enough i think that was on the news from the fda yesterday on this arthritis drug we can talk about in a moment. but it has now ticked up higher.

i think it's up about 3% this morning. give us just a quit overview of what happened and then we'll dig in >> well, as you said, we had a very strong quarter with 9% revenue growth and minus 5% on costs yielding a large beat and significant growth on the bottom of the statement the company's performing well against our priorities which start with launching new products we've launched nine new products in the last three years. hope to launch six more in the last year and a half this is really the beginning of a new phase of growth for us and driven by new innovation for patients with serious conditions >> is there a specific drug that's going to take you there >> our largest new drug is trulicity. it had another strong quarter in q1 it's on its way to become our largest drug but we have i think an interesting part about our company is we have many ways to grow we've got new drugs in cancer, breast cancer. just had new data for liver

cancer as well we've got products for rheumatoid arthritis there's a broad stable of growth drivers for us that's why we're optimistic about the next many years ahead in terms of growth to the company. >> speak to that yesterday it has weighed on the stock. the food and drug administration voting this advisory committee voting yesterday against approving a higher dose of this rheumatoid arthritis drug you have with incyte >> that's right. it's approved in 45 countries around the world for patients suffering with rheumatoid arthritis. this application has been held up a bit at the fda. the fda uses these committees to inform their decision making about what to do and yesterday we had our review with this advisory committee we were pleased they supported

the efficacy of both doses in the final vote they supported positive risk benefit for the lower dose but not the higher dose again, it's just one in. -- input to the fda. we hope to launch in the u.s., really the last major market to launch, this summer. and that's one of this broad stable of products we have >> quickly on that, the panel voted 10-5 against the higher dosage, the 4 milligrams some people said it would severely limit your business opportunities if you only go with the lower dosage. accurate perception or no? >> it is an important dose when we look at our performance outside the u.s. where this drug is doing extremely well and really transforming the lives of patients with this condition, there is more formula gram use than 2 milligram use so it is an important part of the long strategy. that said, we need to work with the fda. this is one input for them

we hope to launch the drug this summer >> how much of the increase that you're seeing, you raised your guidance for the full year how much is because of tax implications and how much is stronger sales and stronger markets? >> it's really a combination of many things. a 29 cent raise, significant raise just coming out of q1. the most important component are these long duration, long-lived new products so the nine products we've launched in the last three years are driving top line performance for the company. and in q1, we also face the head wind of a number of patent expirations and still held that growth we put in place a broad program to invest more in r&d and be nimble in the face of a less certain world ahead. and those programs are paying off as well with the cost control that i mentioned earlier. so it's a combination of those two things more sales, less cost. it intends to improve the earnings picture >> congratulations on the

earnings we will keep an eye out on what comes next thanks when we come back, get ready, get set, go we've already heard from three in the past hour we've got a few more coming up in the next few minutes. we're going to bring you all the numbers and market reaction in just a few minutes and then later, sotheby's ceo tad smith will be discussing the upcoming auction season in the company's new online tool. stick around "squawk box" will be right back. you know what they say about the early bird...

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all right. we've got some earnings coming out right now. welcome back to "squawk box," by the way. verizon shares are moving right now. they are just about 2% to the upside on 24,000 shares worth of volume we are seeing earnings come across for verizon of $1.17 per share. that beats estimate of $1.10 revenue also $31.87 billion. we're going to dig through these numbers a little bit more and give an idea what is building those in the premarket session for now we are seeing a positive move for verizon we've already heard from coca-cola, travelers and others.

we'll have a complete rundown of all of this morning's movers coming up a the break. check out what's happening with futures at this hour strong upside for the dow which could slate to be open up 130 points we'll keep an eye on all those and the earnings merafr ovs te the break. "squawk box" returns after this break with more breaking earnings news. once there was an organism so small

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you know what's not awesome? gig-speed internet. when only certain people can get it. let's fix that. let's give this guy gig- really? and these kids, and these guys, him, ah. oh hello. that lady, these houses! yes, yes and yes. and don't forget about them. uh huh, sure. still yes! xfinity delivers gig speed to more homes than anyone.

now you can get it, too. welcome to the party. ♪ good morning welcome back to "squawk box" right here on cnbc we're live at the nasdaq market site in times square let's focus on the stocks. dow components reporting this hour we've got coca-cola and united technologies beating on the top and bottom lines united technologies raising its full year forecast travelers' earnings missed forecasts on increase of the number of natural disasters. another earnings report on this morning, we have home builder

pulte group. revenue also topping forecasts as new orders results powered by an 18% jump in new orders. then harley-davidson with that internship, right? that summer internship where they give away the bikes the topped estimates on the top and bottom lines i don't know if you saw that yesterday. also full year forecasts for the shipping company once they put in the numbers they've had a tough go of it becky? >> all right just looking through some of the numbers, we have a lot of dow components reporting caterpillar out with earnings. raising its full year 2018 numbers now saying that it sees earnings per share of $9.75 to $10.75 for the full year street was only at $9.28 nap is an increase. the 2018 on adjusted basis, that would compare with that. strong numbers already out dom's digging through some of these. you see caterpillar shares up.

>> if we look at some of the caterpillar numbers here, you mention the shares up now by about 1.5% -- now about 3% on 30,000 shares worth of volume. digging through there like you said, the $2.82 on earnings per share is now comparable to the $2.13 you mentioned here $12.85 billion revenue beats the estimate you mentioned the forecast numbers. $10.25 to $11.25 is the full year forecast here $9.28 by comparison. so those caterpillar shares now moving a bit with regard to those numbers especially because of that forecast for full year profits. we're also taking a look at what's happening right now with shares of other ones as well just recap what's happening with verizon. shares are on the move right now about 2.2% to the upside 40,000 shares worth of volume as well as we're digging into this, some

of the highlights we're pulling out here, they do mention they added about 260,000 postpaid additions. also the total revenue growth of about 4.7% there the wire line side of things, internet ads as well those are some of the ones we're watching caterpillar on the move. verizon on the move. all the ones andrew did with regards to earlier, coca-cola, united technologies and travelers. a lot to dig through right now >> dom, let me tell you quickly on caterpillar, too, if anyone is wondering why they're raising their outlook so much. they say this is primarily because of growing demand for products and services. they say on their first quarter results they see higher demand across the regions that's why they're raising this. a lot of people have said numbers are strong, it's because of tax reform and other issues

that does play a role with c caterpill caterpillar, but this is a demand picture it's been awhile since we heard things like that with caterpillar. you think about the strong signal for anybody who's trying to figure out what's really happening with the economy and why we're seeing higher interest rate barry, you do have concerns about this when you hear this, what do you think? >> synchronized global growth. the global economy has probably not been better. in fact, we're the laggard right? i mean, china, all mining is coming back. commodities are coming back. so that's a very powerful number that's a billion dollar surplus on the revenue side in the quarter. that's pretty impressive we'll see whether they would be target number one, probably, of a trade argument

i think otherwise the stock looks cheap. and i'm sure they have a good balance sheet. i'm curious. do you have any idea of what their offshore domestic sales are? >> 47% >> about half and half >> yeah. just like the rest of the s&p. you know, the thing -- they are the ultimate infrastructure index because if you're going to build a road in china and then construct all around it, this is a key component. and so it was just a few years ago this was the number one short, if you remember and the stock got lauslaughtere. now it's more than half -- >> they have a lot of international competitors. korean company they're just doing very well. >> that stock's up by about six bucks this morning >> i own the stock i'm extremely happy with the verizon results too. >> you should retire >> sorry >> everything you own is up

today. >> i own dividends i own cash flow. i think it's coming back into favor. even you talked about the nervousness. you're going to covet cash flows. that's what matters. these are all cash flow stocks >> and they're not expensive >> what i own are coming back into favor people saying i like the warm and fuzzy feeling of getting a check every quarter. >> guys, i want to bring up to your attention, we have 3m results out. it's broken a trend we've seen with positivity. we are seeing shares right now off by about 2.75% in the premarket. on very light volume but we want to bring the headline numbers $2.50 with earnings her share. that matches the estimate out there. the revenues come back better. $2.278 billion just some of the highlights with

regard to what they're saying. on a geographic basis, i know you were talking about the global markets and whatnot total sales for the europe, middle east, and africa over there by 3m group, they saw 10% growth 4.3% growth in latin america and canada and 3.5% in u.s. organic local currency sales also with regard to 3m, they highlight they've paid out to shareholders they've repurchased about $937 million of their own shares during the quarter 3m one of those companies that has been engaged in share buybacks those shares down by about 4% on light volume something else to keep an eye on as we talk about some of the diversified conglomerate types that may be more of the global proxy for how business is going all over the place we'll watch 3m for sure. >> additional headlines on caterpillar. as we were talking about that broad rowth, that broad demand they are seeing around the

globe. they are saying seeing broad based growth in all regions in 2018 they're also seeing sales into oil, gas applications, that's increasing in 2018 and they see minors increasing in the year. of course they're so much more attuned to the purchase they made several years ago too >> this could be this year's boeing that's what i'm starting to think. because it's firing on every cylinder in every sector it is the go-to name so -- and maybe a dividend increase coming in here. these are fantastic cash flows. >> not mentioned in the release, but certainly something we can hear. >> let me encourage the board right now. >> we'll take a look at those shares caterpillar shares up by almost 5% want to run through these other stocks we'll do that in a moment. but after these dow components, this is now six we've heard from this morning dow futures now indicated up by over 164 points above fair

value. we had come into this with sharp futures anyway, the dow was up by about a hundred points. with all you've heard this morning, you know those gains are even higher. 164 points above fair value for the dow. s&p futures up by about 18 and nasdaq up by 53. united technologies beat expectations up by 2.6%. travelers missed on the bottom line but they did have strong revenue and they talked about some higher than expected catastrophic costs maybe higher than the street had expected with a couple of nor'easters, mudslides in california, tornadoes and hail in the south that's off by 2.5% coca-cola beating on the top line and the bottom line and also talking about organic revenue growth up 5% that stock indicated up 1% more on all of these stocks coming up in a bit sotheby's introducing an online tool for the masses robert frank is here >> becky, we're also going to

tell you about a painting that sotheby's unveiled just moments ago in hong kong that could sell for more than $150 million we're going to talk to the ceo sotheby's tad smith right after this break

welcome back to "squawk box," everybody. let's get to robert frank. he joins us right now with a special guest. >> good morning. sotheby's announcing moments ago in hong kong it is putting a painting valued at more than $150 million up for auction in may. joining us is ceo tad smith. welcome. >> thank you, good morning >> what makes this painting worth estimated over $150 million? and does that mean we're getting near a peak or a top in this market >> well, this one is a masterpiece. you may recall last november i was here telling you someone else had a great masterpiece a year ago i was telling you about a masterpiece. this is going to be a masterpiece and it will absolutely do beautifully. from a crucial artist. foundation of modernism. and it's a spectacular painting. >> we had a modigliani nude that sold for $170 million a few years ago. it's not crazy to think.

this coming may which is the big blockbuster sales in new york, we have over a half dozen pieces that could sell for over $75 million. >> it's true >> i've never seen that before in my lifetime does that worry you? does it feel like that's sort of peak cycle alarms going off? >> no. it doesn't worry me. it's one of these things where there's a lot of people with a lot of money that care about trophies frankly, remember, the supply of great masterpieces isn't growing. it is largely shrinking. for example, the masterpiece we're putting up is one of the greatest pieces that remains in private hands. so the supply is not growing, particularly strongly. >> can i ask you a question about the premise of the investment this will be $130 million? >> $150 million. >> so i have that and want to make 5% a year on it in relatively safe asset class, maybe half in dividend yield,

fixed income, whatever am i going to get 5% to 7% on this piece over the next 20 years? >> i can't tell you what you'll do over the next 20 years. but in the last 20 years art has largely outperformed -- >> but does it include the storage costs? when i hold bouillon, i have to pay for the storage. when i buy a painting like this, i can't hang it up in my cottage. >> we hope you will hang it up in your cottage. >> where do you store a piece for $150 million >> on the wall people put it in their homes >> what does that cost to insure and otherwise? >> i don't own one, so i couldn't tell you. >> these are important questions. >> i don't disagree. people are buying art because they love it and they want a piece of history >> the last time we talked about this, when you had something like this up for uction, you said you knew i think who the buyers were, right >> yes. >> no, no. my question is for this particular piece, are there five people who are -- >> oh, there are a lot of

potential buyers >> but i assume you have identified in advance and there's some back channel conversation -- >> of people we think are likely buyers, yes, we do >> right >> sure. >> i'm not suggesting -- >> including institutions and museums that may want it >> including museum. although this is pricey for a museum unless it's sponsored by a patron >> i would say that's true, but if you look at that painting that christie's sold for $450 million, the da vinci, they didn't have the eventual buyer on their radar >> came in randomly? >> not randomly, but they didn't know about the person that ultimately bought it >> it was the saudi, right >> yes middle east buyer. so yes, they know and they like to get comfort it's certain people but it's often a surprise. tad, i want to ask you about this online estimate tool you have it's fascinating typically people are very intimidated by the art market, by sotheby's and christie's. but you have a service where people can digitally send you a

photo of something in their house or they inherited and you will send them an estimate back. >> we will >> how does that work? >> that's so cool. >> it's like antique road show >> that's so cool. >> the issue is getting more supply it's not finding demand, interestingly enough if we can get more supply out of your vaults, off your walls, into the market, liquidity goes up and we'll have the demand to find it. >> so it's a customer acquisition tool >> it is but it -- >> is it a.i. or human beings doing this >> initially it's manual >> i'm going to send you pictures of everything in my attic. >> you were saying something about your garage on my drive in we'll check it out >> can you tell us about the artist he died broke. >> he did. >> he was a drunk ard.

>> he was. he didn't end well i think it was meningitis. i think it was 1920. most of these paintings of the great nudes were done just before the war ended 1917. ours is 101 years old. he's an incredibly special amazing artist that transcends this painting could have been done a week ago. >> does this add to the patina of -- >> for sure. art is a representation of history and our culture. >> i love this stuff. >> you mentioned the last piece of art was sold through sort of not in secret but to the -- >> yeah. >> so my question is the chain of ownership how important is that to you and how do you actually monitor and make sure that the people who are on the phone are actually the people -- or do you care >> we care a lot because whoever is buying it

from us cares for two reasons. one, they want to know what they're buying they have title to and it's clean. and second, they want to know the story because the chain of ownership will often be an indicator of the authenticity. also there's a patent of who n owned it and why rockefeller, for example, is an interested one because he was known to be a great collector. yes, it matters a lot. that's an area for also for technology but block chain so very interesting things are coming in the art world both with block chain and understanding the clarity and authenticity >> christie's together with sotheby's, more than $2 billion is going to sell in early may. beyond anything i've ever seen which worries me a bit >> are you a bidder? >> no. >> just remember -- >> just a spectator. >> just remember 59% of the things we sold last year were under $10,000. there's something for everyone >> all right tad, thank you thank you, robert.

coming up, stocks you need to watch ahead of the open on wall street. take a look at the futures right now. dow up about 154 points. nasdaq up 50 s&p looking to open up 17 points higher ♪ today is a good day to make a plan for your financial goals

and your everyday ones too. pnc can help. we'll be with you every step of the way. let's start today.

you know what's not awesome? evgig-speed internet.. when only certain people can get it. let's fix that. let's give this guy gig- really? and these kids, and these guys, him, ah. oh hello. that lady, these houses! yes, yes and yes. and don't forget about them. uh huh, sure. still yes! xfinity delivers gig speed to more homes than anyone. now you can get it, too. welcome to the party. let's get back to our guest host this morning. barry sternlicht is here of starwood capital chairman and ceo i want to talk tech. we have this sohn event

yesterday and he was speaking about box. where are you on box >> you know, i heard some of -- >> you like a lot of the tech names. >> yeah. that's not my power alley. when i saw didi wants to file, we can talk that >> you like uber you've always liked uber >> yeah. i'm an investor in didi. >> they're going to try to go public ahead of uber >> didi is profitable and uber is not at least on paper >> why >> they're a monopoly. uber lost a lot of money because they drove international and didi didn't bother they focused in china. and they dominated and then uber threw in the flag. they gave up in a state owned country, didi's the winner there's a lot more people in china than the united states it's not that hard >> so you think didi wins the game in china. do they come to the u.s. >> i don't know. i doubt it >> you don't think they try to use their currency to buy lyft

>> they could buy lyft, yeah lyft is cheap. >> uber and lyft both lose a ton of money as they battle it out for customers. at some point being if uber is going to get an $80 billion valuation because some in the last rounds were up there. >> 68 or something like that >> do you think it would achieve more if it listed in the united states >> uber? >> yeah. >> did you think spotify was going to be worth what it's worth? >> no, i didn't. that's a good point. >> these are names at a hundred times ebitda you've not seen growth. >> when and if airbnb goes public, would you buy into it? >> i prefer airbnb to uber i think uber is -- it's a very political situation. globally putting drivers out of work imagine when they go to driverless cars. right? how political that's going to be if you look at who drives all

these taxis. >> airbnb, they hit or help us. >> is it you like it or don't? >> i would say they do both. they're adding rooms but they're also charging -- >> they're going to get hit by regulations too. they're going to have to start paying taxes the way hotels do >> you can't rent an airbnb in our building in florida. they don't want people staying w these apartments. >>e'll talk more about that in a moment when we come back, more of the dow components with earn aings today.

earnings, earnings, earnings six dow components out with results including coca-cola, verizon, and 3m. a run down of the numbers and stock reaction coming up stocking jump. futures point to a triple digit gain 90 minutes to go until the opening bell plus billionaire real estate investor barry sternlicht sounding off on the markets and the economy. >> rates that rise because of a healthy economy are probably okay they're good for stocks and they're probably good for real estate >> the final hour of "squawk box" begins right now. ♪ live from the most powerful city in the world, new york, this is "squawk box.

>> good morning. welcome to "squawk box" right here on cnbc we're live in times square i'm andrew ross sorkin with becky quick. mr. wonderful is sitting in for joe "shark tank's" kevin o'leary. and barry sternlicht is here for the hour after an earnings parade, take a look at futures now. we are trending up in triple digits dow looks to open up 151 points higher nasdaq up 49 points. s&p would open up around 17.5 points higher. let's also show you treasury yields as we eked closer oh, there you have it on the 30-year. but on the 10-year which is what we care about. $2.973%. our top story this morning has to be earnings in the flood we have seen already six dow components among the big reporters this morning let's get you caught up on a few

of the highlights. first up, verizon. 7 cents better than expected with an adjusted earnings number for the quarter of $1.17 a share. revenue also beating forecasts verizon added more wireless customers than expected. fios number, 66,000 adds for the fios connection. then probably the biggest winner of the morning in terms of the sentiment you're hearing from this company has to be caterpillar. caterpillar up 4.5%. the heavy equipment maker beating on both the top and bottom line. talking just about strength across the board just about every market they're delivering to, they talked about strong demand. that's why they raised their earnings pretty significantly for the full year. they're now looking at an adjusted number of $10.25 to $11.25 a share the street was only at $9.28 that's why you see that gain

of $6.81 right now also let's look at 3m. it came in with numbers that matched the forecast quarterly profit of $2.50 a share. revenue beating expectations the company did guide a little lower for the year that stock off by 3.4% most of the big reports we've gotten have been positive. 3m is one of the few standouts this morning >> shares of coca-cola, topping expectations expansion to newer brands are helping drive sales. don't miss coca-cola ceo james quincy with the gang on "squawk on the street" at 10:00 a.m. eastern time this morning. also united technologies beating on the top and bottom lines. raised full year forecast. revenue beat estimates but earnings missed on the increase of natural disasters let's get over to dom chu at

earnings central this morning with the rundown >> all right, guys so you made it through all of those dow components obviously driving what's happening with the futures market let's bring you up to speed on other earnings movers outside of the dow jones industrial average. we're going to start off with shares of eli lilly. the drug maker up by 1.75% in the premarket session. this after earnings came in for lilly at $1.34 per share revenue $5.7 billion versus $5.5 billion. they also see their full profits $5.10 to $5.20 beating estimates. those shares up right now. also turn to what's happening with harley-davidson a lot of focus on this company given recent weakness in sales they've seen over the past few quarters those sales up by 2% now on thinner volume earnin

earnings beating estimates the shares also moving higher as well and then we'll end on one of these stocks that's been showing a lot of signs of life these days defense contractor lockheed martin up on premarket this after the defense contractor which is the biggest pentagon contractor by far if you look at those numbers, lockheed martin $4.02 a share. $3.40 was the estimate they've also raised their 2018 guidance they see about 50.35 billi$50.3t $51 billion in terms of the overall revenue picture. also the 2018 full year earnings $15.80 to $16.10 that kind of area beats. those shares up by about a percent as well. some of things to watch for, lockheed also said their sales growth, a lot came from a better

f-35 sales they also modernization programs of the f-16 falcon and f-22 raptor also helped results on the sales side >> thank you for that, dom our guest host this morning barry sternlicht is with us again trying to make some sense of all this. i want to go back to the conversation we had in the last hour where we were talking about whether we were in a trade war or we were in a negotiated context. you seemed to indicate the world is a bit murky right now >> it's a different kind of negotiation. i mean, it's very noisy and -- >> thus far investors i think have actually decided that it's noise. that actually it is a negotiation. >> you know, i don't know if that's right one of the bank ceos said under obama it felt like eight years of water boarding. i thought it was a good line i think we all felt that way he said if we asked for help, he

would offer it to him but he acted like we cheated. >> who told you that >> one of the bank ceos. i'll leave names out of this i think that relief in business was the initial euphoria in the stock market less regulation. i think we all agree because we own the crystal company, for example, and we import from france into china. we pay 50% excise taxes on there. we can't compete right? so there's no question forget about just u.s. exports there's no question of the playing field hasn't been leveled. >> because of china. >> because of china. but you have to be careful because they do own $3 trillion of your debt and they have supported your growth by financing your growth. right now they're not net buyers at least not directly. they were buying through belgium. >> i thought their holdings went up >> they have no choice and the trade deficit with china has exploded

and it is a level playing field. for that i think it's more tactical you would get into a big room and negotiate quietly. it's very tough if you know the chinese persona to punch them in the face and ask them to back down china is thinking we're strong, you're weak. you have to $20 trillion deficit. we have surpluses depending how you measure that i think they're -- you should be careful what you ask for if they can successfully transform themselves into a domestic consumption economy, they'll not need to buy our debt we kick everyone in the face and we become the island nation of the state, somebody's going to have to finance. we're not rich country right now. we're rich in ideas but fiscally undisciplined. >> we're rich in market size and to cut off the chinese production of consumer goods to the u.s. market is also suicide on the other side.

>> well, it's kind of humorous i in a way hope trump succeeds because everything people buy at walmart and everywhere else, shop on amazon, will go up in price then they'll see what a trade war really does, right you'll see inflation pick up because we can't manufacture the stuff here we don't have -- >> if it is negotiation, why not say, o okay, it's not a traditional presidency everybody gets that now. we've been through it for more than a year. so why not just focus on policy? i'll give you an example i don't recall any modern administration getting as much out of north korea as we've now got in the last four months. we actually have a situation where missiles were flying over japan just five months ago and now we have a dictator, you can call him crazy if you want, basically starting a negotiation saying i'll stop sending missiles i would like the respect of the global community i'm going to give credit i'm sorry. i'm not trying to -- >> if you get it done, it's a great accomplishment >> so why can't we celebrate the

policy out of the machine opposed to saying, oh, there's a story about a porn star and all that i don't care about that stuff. it just doesn't matter anymore the policy looks interesting the tonality of the policy is getting better >> the other stuff only matters -- >> why does it matter? >> it matters if you believe it distracts from or prevents from some of these policy issues taking place >> it requires a different discipline as an investor. that's what we're focused on if you're able to filter out the noise and say to yourself, i don't care about this 24-hour news cycle regarding anything, i care about the policy at the end of 90 days then you're a happy guy. >> if you told me you thought as we were talking about earlier that somehow costs in this country need to come down, right? you want costs in this -- >> you always want that, but i don't think you're going to get much more out of the margins

>> you think the mueller investigation is going to create lots of problems -- >> every presidency has a leech investigator on them whether it's clinton it doesn't matter. that's part of being president >> i'm about the process as well as the end game, so for me there is consequences to how you get to the results north korea if it actually happens as we hope it will is a great accomplishment how we got there i'm not sure was the obvious way, but it does have -- >> but i'm asking you -- >> it's like watching sausage being made you want to eat the ingredients or the end product you want the end product i watch the process. i don't want my kids to watch the sausage being made i'm happy with the end game. it's not how i want to raise a child. every act has a consequence. you know, we are -- there are allies who don't know whether they're our allies that creates a weird dynamic

and in my view it is affecting the u.s. economy right now >> my bigger concern is long-term. the problem becomes as we do these negotiations in nafta and other places, mexico and other countries are looking for other partners along the way then you're not as strong in your negotiations. >> this is a joke. right -- can i my father ran a manufacturing company in the united states he had -- he was manufacturing flash lights and disposable batteries. he got an account with walmart and they said they wanted that for $2 not $2.15 what did he do he went to china he couldn't make it with domestic labor >> that's negative >> american consumers pushed manufacturing to low labor markets. >> what's wrong with that? >> nothing but don't be upset about that. we caused this trade imbalance >> i'm not upset about it.

>> we drove out of the united states it was what american consumers demanded you walk in a nike store, my sneakers this weekend are $120 they were $120 30 years ago. it's all because of cheap labor. >> the imbalances, let's take automotive let's go to just the outcome recently in south korea where we have these massive tariffs on input product and then you could buy a kia in california with no tariff that's no wrong. now it's been corrected. policy, lots of noise, lots of noise. really don't like the process. policy outcome, very good for the united states. >> i think you do it that way. i think you say, this is not fair in this regard. this is not fair in that regard. you should just take it, di sssc it france protects their agricultural base. >> they're talking about that right now at the white house on dairy. right now they're talking about that i think the outcome is going to be o when you start squeezing

the toothpaste tube, you may not get all the tooth pace -- toothpaste out but you will. i don't think the process is going to get better, i think it's going to get worse. i think it's going to get much more noisy everybody saying we're going to change these metrics you may not like it. but think about what it looks like >> you do have to be careful about embarrassing people. >> i don't think this president worries about that at all. >> okay. we agree on that >> yeah. >> let me ask you then as an investor, though, given that you like the outcome issue -- >> they're all my clients. we just raised a $7.5 billion fund, more than half the money is offshore. i mean, they're asking, what do we do here and that's bad >> sit tight and enjoy the ride. >> that's bad for business though they're uncertain about committing more dollars to the united states. ultimately that can't be good for the country.

they're, like, really, really nervo nervous. who's going to replace chinese investment to the u.s. if oil stays at $55, you'll see that >> are you talking specifically real estate or beyond real estate >> beyond real estate. i think they're nervous. >> because you think of the tech stuff? what are you thinking about? >> yeah. america first. we got our guard up. they're not going to buy our port, the supplier to the port. >> have you talked to chinese investors who you've historically did business with that said i love you but can't do it right now? >> we've been -- yes i mean, they're not committing capital to -- of course they're not -- >> what is their alternative >> well, they're investing in other parts of the world >> yeah. >> india, europe >> which one is safer? >> they just want to see how this plays out >> which economy has more potential in growth in the next five years than the american >> china >> okay. but they're already there and

they want diversification. >> india india is interesting >> so you think the indian investment would be a safer bet -- >> no. no, it's not safer >> i would take government regulation up the yin-yang >> but it's part of the growth profile. look, we're a great country to invest in it we just have to be friendly. >> okay. a lot more with barry. when we come back, $10 billion worth of art all in one place. artsy is a website and app that lets you buy and sell artwork. there's a list of star studd ed investors including barry sternlicht more on this when we come back this farmer's morning starts in outer space. where satellites feed infrared images of his land into a system built with ai. he uses watson to analyze his data with millions of weather forecasts from the cloud, and iot sensors down here,

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coming up, twitter ceo jack dorsey, reddit ceo alexis ohanian. they're backers in an app that lets you buy and sell artwork. we'll talk about that next and investor jeff lewis has backed companies like lyft and hq trivia. we're going to find out what's on his radar at 8:30 eastern

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our next guest started his company as a senior at princeton university back in 2009. it's been very successful. it's now a well known platform in the art world with an impressive cast of investors to back it as well including our guest host today barry sternlicht joining us now is carter cleveland. he's the founder and ceo of

artsy. it's a website and app for art enthusiasts whether they're selling or buying or trying to discover new works thank you for being here >> it's an honor >> i tried to quiz barry if this is a disrupter for the markets or auction it's none of those what is it >> that's right. the art market is very big it's growing quickly but it's fragmented. what artsy does is aggregate from around the world the top galleries, museums, auction houses, put it in one place and make it easy to learn about that art or buy it and eventually even sell it so you're right. we're not actually competing with industry. that's actually what makes us different from a lot of the other online players in the art space. instead of competing, our main thesis is what the consumer wants is selection they want access to all the art all around the world instead of creating another online auction house or art gallery, we created a platform

that aggregates all that inventory into one place >> so you're almost like an amazon for art >> exactly we aggregated $10 billion around the world. >> do you own it is it on your balance sheet? are you simply an agent? >> no. so we don't own any of the art we have a pure platform position if you want to see what's currently hanging at galleries in hong kong if -- we have a phillips auction coming up in two hours on artsy. you can bid in >> if i buy on your platform, what's your business model how do you make money? >> people pay a subscription fee to be on artsy we encourage bids. if you want to work through artsy, we get a commission on the sale >> price is fully transparent, by the way >> yeah. >> oftentimes you probably look up art, i'm sure you've looked up good art online trying to figure out the prices. it's a rd to find prices oftentimes it says call the dealer >> their estimates are usually from the house let me explain how useful this is for a consumer.

i just built a house, right? i'm looking for art. i've got a wall eight by ten i want an eight by ten piece i can say i'm looking for a large paint eight by ten it scans 150 galleries over the world for a piece of art that is that scale so i don't have to go to sotheby's and find all those pictures i thought were gigantic were this big. >> how many people have thundershower problyour problem? >> or i want to say i want milton avery it alerts me there's one coming up for sale. >> the biggest challenge is acquiring a customer and maintaining a customer sounds like your customer is the gallery paying the subscription fee. you call them up yourself and convince them to do it because the consumers don't pay anything for this, do they? >> not unless they buy something on the auction >> no, but that actually does not increase their price you can use artsy -- >> but you are going from

existing platforms to pay fees >> galleries and auction houses. but it never costs the consumer anything more to use our application. >> it's fun. again, i'm buying furniture. they have a couple furniture auctions coming up i've already placed four bids. i told my guy ifs they go beyond this -- i'm just going for a couple chairs. >> if you know you're losing, can you bid up >> yes in realtime. >> and you're able to put another bid over them. believe it or not, nobody thought anyone would buy art online now about $5 billion of the market is transacting online we're seeing that grow quickly as a customer being able to browse all the world's art in one place is so convenient and able to complete the transaction. >> it's not all super high end stuff. there are cheaper prices >> absolutely. our average price point is around $10,000 but the vast majority of works are under $5,000 >> it's an interesting idea. thank you very much for being

here again, the website is called artsy. >> thank you for having me >> it's cool try it got empty walls he needs to fill >> get a mogdiliani pencil drawing. coming up, we'regoing to talk to tech investor geoff lewis on set afterhere t bak back in a moment at the marine mammal center, the environment is everything.

we want to do our very best for each and every animal, and we want to operate a sustainable facility. and pg&e has been a partner helping us to achieve that. we've helped the marine mammal center go solar, install electric vehicle charging stations, and become more energy efficient. pg&e has allowed us to be the most sustainable organization we can be. any time you help a customer, it's a really good feeling. it's especially so when it's a customer that's doing

such good and important work for the environment. together, we're building a better california. ♪ good morning, everybody. welcome back to "squawk box" here on cnbc we are live from the nasdaq market site in times square. i'm becky quick along with andrew ross sorkin and "shark tank's" kevin o'leary. we also have barry sternlicht. but first shares of shire are on the rise again they've gotten another proposal from takeda. shire did not specify the value of the latest offer but says it

is considering its position. that stock is up by 4.3% amazon may soon be delivering packages to your car it's begun a new service on 37 cities aimed at members of its prime service who own newer gm or volvo vehicles. eligible vehicles can get packages put in the trunk of your car if it is parked in a publicly accessible place. all right. not sure what i think about that that's weird but we will be getting the latest data on home prices in just about half an hour. the case shiller report is expected to show a 3.3% year over year increase in home prices compared to the increase in january this is like amazon delivers packages to your home and leaving them inside instead of in the back. i've had fears of somebody in the back of the car when you get in the car that's creep y i >> little weird. check out shares of alphabet earnings coming in at $9.93. revenues also surging to $31 billion. speaking to cnbc about recent

reports that ads were running on certain youtube channels that promote white nationalism and nazis. we've been focused on youtube and content making sure youtube offers the best experiences for users and make sure there is no abuse. softbank is among investors pouring $2 billion into the manbang firm that the fund raising brings the company's valuation to more than $6 billion man m manbang said the funds would be used to recruit talent who's the fellow we had on do you know what i'm talking about? >> yes, i do >> who -- i'm going to get it in a second our next guest believes that a narrative mirage may be blanketing silicon valley seducing investors to invest in the same companies

h he's here joining us right now, geoff lewis. founder at bed rock capital. he was previously at founders fund good to see you. >> good to be here >> we've got a lot to talk about. >> sure do >> can we start -- we've been talking a lot this morning about this didi potential ipo. i know you've been looking at the car sharing world. >> first investor in lyft. >> what does this mean to uber and lyft, frankly? >> you know, i would say that all three of those companies have actually executed exceptionally well it turns out one of the popular narratives in silicon valley for a long time has been all of the top markets tend to be these winner take all or winner take most type markets. it turns out that actually the ride sharing market may be one where there can be multiple winners. i'd say it seems it's breaking down on a regional basis didi has been an absolute formidable competitor.

if you rewind two, three years ago, it was uber was going to dominate the entire world. they were going to dominate every market around the world. now you see didi has crushed them in china. grab crushed them in southeast asia lyft has done an incredible job in the united states of gaining market share all three of those companies have been narrative violations against the earlier narrative that uber was going to dominate everything. >> is that an exceptiecutional ? or something else at play? you could argue they owned the market and then competitors came in every market you were talking about. >> i think execution plays a big role the other piece is capital one of the things that has evolved over the last few years is turns out for more of these operationally intensive businesses, capital is actually a big barrier to entry the fact they've been able to raise so much capital, i think came as a surprise to uber now with the entry of the

softbank vision fund, i think that dynamic is just getting more and more intensified where a company that can raise the most capital has a good shot of capturing the market >> are you a believer in masa and what he's doing? it was a huge number when he first came out with it, people thought it was crazy. nobody ever liked to have big funds because they were worried they couldn't make a return off of it. has he somehow flipped the model? >> i think he's massively changed the dynamic. i think when these things shift, they shift far more profoundly than people realize. it takes a long time for these to play out. i think it's absolute brilliant. you now see every other venture capital firms are trying to raise these larger -- >> is it possible? what's a reasonable number >> i'd say you can't compete at this point you have to compete asymmetrically the model will work if he gets into a few of these breakout companies. if you believe that most of the value is going to be created by

technology over the next 10, 20, 30 years and if you believe they're going to be able to get into with these large size positions a number of the top breakout technology companies, i believe the model will work. >> why do you think he did it and nobody else did? no, i'm thinking peter thiel your former partner knows this space better than anybody. there's a lot of people in that space. >> he had his parent company to back it. he put up half the money and subordinated it to the other capital. he said i believe it so much, i was going in there that was a big bet to get the saudis to participate. we've seen what he's done. enormous bets. it's only facilitated by the size of these companies today. in the old days, we didn't have $60 billion start-ups. we didn't have $20 billion companies in the venture space that were still private. so now you can do it, it's like an entire round being done in upround. and we'll see how the bets lay

off. >> is that a good thing o for a bad thing? >> it's reinforcing the dominance of these giant companies that are really the fangs, i guess >> a lot of them are going to end up failing but it's going to take a long time for them to play out >> we'll see what the net return will be on the fund. some will work and some won't. >> it relates to softbank but it relates to the idea of just even foreign money coming into buyups some of these tech giants. thinking of the qualcomm deal that sifius got in front of. because the saudis are there and there's a lot of other international investors. how do you see that playing itself out >> you know, don't have any great insight on that specific dynamic. i would say that there's just way too much capital in general at the growth stage. i think there'll be few winning investors. i believe founders fund is going to be one of them. we are trying to compete at the

early stages where these guys aren't competing >> if you take any fund, i don't care if it's yours, and an investor puts their money into play, i think is seven-year period would be a reasonable extension. so i get my quarterly statement and you've got a 8% ownership in some private very risky high-tech company. my question is when does the investor say there's no proof of value here when you're betting around $80 million on $80 billion valuation. when does that come home to roost? because, you know, i've been watching this now for about eight years saying when does the mark to market come? when is the chicken coming home? because i think a lot of these valuations are complete b.s. and it has to come back to cash. what do you think?

>> completely agree with you on the level that a lot of the valuations are complete b.s. and at the same time for the truly transcendent companies, most of the value ends up being created 10, 20, 30 years into the future if you're -- >> you have to live that long to realize. >> you need these long time horizons i think you see fund lives getting longer and investment periods getting longer actually i do believe in the sort of buffet philosophy that in the best companies, you want to get in and want to forget about them >> where are you on the issue of privacy in silicon valley? facebook, obviously, peter thiel was involved in that and even the underlying business model behind, like, hq, right? it's an advertising business target the advertising what do you think is going to happen >> privacy is obviously incredibly important i think it's an important thing that this discussion is being had right now between these ceos and the regulators

ultimately the question is do consumers care >> that's the question we've been having this debate for a long time now. do you think consumers care? >> i am currently agnostic, but i used to believe they really cared. now i'm a lot less sure. if you look at -- >> you went the opposite way >> that can't surprise you >> is it generationally? the kids don't care and the adults do? >> i think it might be a generational thing, but certainly if you look at the way these things might end up getting regulated where it's disclosed in europe with the gdpr, what ends up -- what data gets collected and how it gets used >> that european regulation stifled innovation give me one example of a successful tech company in europe in any of the mega-platforms now they have stifled themselves out of the game. >> they have as of now, there's not a successful example in europe >> you could get losses -- >> you don't want to be europe

>> i wouldn't count germany out in tech. >> show me an example of not -- >> i don't invest in tech in germany. >> there are a number of emerging companies there's number 26 in germany it's a great company there's transferwise in london and uk it's a more nascent tech scene but gdpr hasn't been fully implemented yet. you can't blame that >> before i let you go, got to get your thoughts on cryptocurren cryptocurrency you were in it early >> very early in 2013. continue to be bullish on bitcoin. it's the only one where there's a clear use case at this point as of store value. and i'm skeptical of the others. >> are you bullish at these prices >> i don't want to give folks investment advice, but i'm still bullish on it. i think people need to understand the actual -- understand the actual technology there's still a lot of scaling challenges with bitcoin ahead.

that's the big risk. can it continue to scale but as a store value, it's a story there. >> great to see you here >> great to be here. >> the company you were thinking, convoy, right? >> convoy! love convoy. love that guy. >> you need to have the flex port guy on. ryan peterson. they are, like -- convoy is a subset of what they're doing >> we didn't talk about wish >> we should have talked about wish i think long sales have been pumping it up. >> we'll take you to breakfast or lunch and talk about that >> thank you, geoff. right now as we head to a break, a quick programming note for you. on thursday our special guest will be famed short seller jim chanos that starts at 7:00 a.m. eastern time right here on "squawk box." by the way, check out the yield on the 10-year 2.988% we're almost there almost there almost 3%. we'll be right back.

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welcome back, everybody. let's get back to our guest host this morning barry sternlicht who is starwood capital's ceo. we started the program when you joined us talking about yields and what that means for investors. particularly for real estate investors. let's talk about the markets you see, places where it makes sense, places it doesn't you've got everything from apartments you own in the united states to retail investments and then stuff you're looking at

>> well, start with real estate. with kevin we were talking about venture. i mean, we're the opposite right? we are current yield he likes dividends and cash. we like current yield. so our -- you know, we're able to return half of our goal on 20% return we can earn 8%, 9% currently so the risk of theory s ror rore residual -- today i think it's my favorite asset class. not really since i invest in all the asset classes i'm not really selling my book. because we're pretty defensive in this environment. and the lack of clarity actually inhibits new supply. >> why do you -- oh, because of lack of new supply that's going to be built and come on? >> yeah. the banks have been fairly disciplined. we just saw a deal in miami actually where they don't b want to -- they have no tenants they want to build a spe

building in the old days, that's the way it should work you have to have a project with an end user. the market in the united states is pretty solid. and probably the right asset class right now. but in places like nashville or austin, texas, or atlanta or portland nervous about the dominance in that market. even though some markets will be overbuilt, we don't -- new york is kind of like you mentioned soft we don't know about long-term tenant demand in manhattan short-term we're not 30-year investors. we're like five to seven year holds. >> cap rates in your industry are at your lifetime lows in pretty well every asset class. >> yes and no. >> you've enjoyed that while rates have gone down for 20 years. i know it's now the 11th sector. i know it's raised to being an asset class. but in your life, you have

never -- pick any asset class. i remember buying that on a cap. and now it trades at 3.5%. how can that ever get any more value? how can it possibly get better >> well, the yield, the cap rate on a property should reflect the cost of borrowing, right >> but going up. >> yes, so cap rating probably will back up, right? but again, i -- europe property markets are probably more stable they're harder to add new supply to and rates have historically held much tighter than in the united states so there is -- every time the stock market goes up, the pie gets bigger and institutions have to put 10%, 15% of their assets in real estate. so there is demand for bond e kwif -- equivalent yields. i wouldn't buy a four in new york, but 10-year bond was 2%. now it's going to i a proechapp.

and right now construction costs are rising across the united states both with labor and terms. i was spriessed by the earnings on pulte this morning. those were great we're seeing 7%, 8% increases in cost in housing. and it's hurting margins that's why prices are going up but there's not a lot of construction in the united states you know, hotels got overbuilt in new york and in miami but had an unbelievable year the market is not robust in hotels it gives me pause. it's part of the economy -- >> so for institute allocation once you become an ninvestor in the s&p, it's going to keep pace with the market returns over the next five years with the bonus of cash flow being part of the return >> a lot of people aren't selling right now. so the number of assets for sale

in the united states has plummeted because no one knows what to do with the money. it's really a scary thing. a lot of money looking t ining invested in funds like ours. you'll see the public markets are playing your game. they're saying rates are going up real estate values are going down the stocks performing pretty badly. you're seeing companies like lasalle put themselves up. we have three in europe now. >> austria. >> two austria. >> one swedish apartment housing company. we're looking for safe, stable, high cash yields for our clients. and they're looking for diversification like berlin office may be one of my favorite investment markets in the world. rent in berlin about a quarter of london. and germany is, obviously, a bigger economic power house. doesn't have to deal with brexit tokyo terrifies me over built but, you know, london office is

an issue of demand what is going to happen? what is the fall out from brexit which hasn't happened yet. i think the real estate market and apartments, you asked about apartments we're back to to making a million households in the united states and about 60-40 buy in rent and that -- >> 80% buy and 40% rent. >> yeah. that number was going down more renters were coming into the market it's reversed the last couple of years. the apartment healthy as it ever has been. >> and getting 8 or 9 current. >> we'll have more on that and discuss that wh itjim cramer who will join us live from the new york stock exchange after this

time for the stat of the day crude surged over 10% in the last two weeks after a similar

a busy morning for earnings. check out the stock moves. travelers and 3m among the names in the red this morning. we want to get to the new york stock exchange jim cramer is hanging out trying to make some sense of these reports. what's the most interesting one on your list this morning? >> i think caterpillar is

terrific it's firing on all cylinders and you've got oil and gas you have infrastructure. obviously, if there's any issues with china, you won't have these kinds of numbers i have to tell you, andrew, i'm not sure how sustainable everything is. you get the big jumps up and then people go upon further review i have the 10 year or president trump. people are tempering what would normally be huge upside surprise chasing. i think we have to be aware that the chasing has gone away in this market. and people would rather sell than buy. >> where do you land on alphabet given that the earnings were positive yet big costs. >> okay. i like alphabet very much. this is really an expectations they have to spend they got to catch up with amazon cloud. they don't have it when is the department of defense go with amazon than alphabet i would say if ruth were to have guided dramatic spending and

able to do a great job and dramatic spending waymoe and we're in a spend mode then the stock would be up. if they said, listen, we're going to spend, you know, go up to 30% spend and came in at 27, people would take the stock up a hundred points. >> jim, we'll see you in a couple of minutes. also, we should help you promo i'll be watching it. exclusive inrvteiew with james quincy at 10:00 a.m. and serve with confidence that it's safe. this is a diamond you can follow from mine to finger, and trust it never fell into the wrong hands. ♪ ♪ this is a shipment transferred two hundred times, transparently tracked from port to port. this is the ibm blockchain, built for smarter business. built to run on the ibm cloud.

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our guest host this morning has been barry sternlength what do you want to wrap up with >> you have to be optimistic on the country. it's noisy politically but i'm optimistic that good will come of all of this i think we step up i think the marches and parades and people's engagement, my children's engagement. i think technology is going to change the face of our country and health care. i think health care will help entitlements because we'll have healthier lives. our clothes will talk to us and tell us i should have more

bananas in the breakfast i travel the world i invest everywhere and, you know, this is the greatest country. and next time i'll bring on this guest who was a personal trainer who built a health care company and sold it for 38 times i got to brick him next time. >> you're the ultimate guest host we appreciate you having you here. >> thank you. >> we'll see you back here. >> yeah. >> you were wonderful. >> i enjoyed it. you learn something new every time i enjoy this show. >> absolutely. now time for "squawk on the street." see you tomorrow. ♪ good morning welcome to "squawk on the street" i'm david. i'm with jim