tv Squawk Box CNBC June 4, 2019 6:00am-9:00am EDT
tuesday, june 4, 2019. "squawk box" begins right now. ♪ ♪ wake me up before you go go don't leave me hanging on like a yo-yo ♪ ♪ ♪ wake me up before you go go live from new york where business never sleeps, this is "squawk box. good morning, everybody. welcome to "squawk box" here on cnbc we are live from the nasdaq market site? times square i'm becky quick along with joe kernen and andrew ross sorkin. let's take a look at the u.s. equity futures they are up about 160 points for the dow. s&p futures up by 17 and nasdaq up by almost 50 points this comes after a day where you once again saw the s&p and naz dick down, i think they have been down 86 the la of the last sessions some pretty major declines over the last six weeks or so the nasdaq at this point is in
correction territory for the year to date we are off just over 10.2% from the highs set in early may, but you are still talking about gains about 10% year to date so very big spikes that we saw from january off of the very lows back on december 24th but still a lot of questions swirling about what is next for the markets, a lot of that because of what we saw in treasury yields. and we'll talk about that. but in the meantime, take a look at what happened overnight in asia you will see that the nikkei ended flat the hang seng was down about half a percentage point and then the shanghai composite down about 1% and in europe where there is active trading taking place across the continent, green arrows there too the dax is up by almost 1% the cac and ftse up by close to 0.0 # 2% in the treasury markets, this is a huge story that markets have
been watching. yesterday yields of the 10 yeen fe yield fell below 2.1%. this morning yield is sitting right at 2.1%. a lot of fed talk swirling you had bullard yesterday saying that he thinks a rate cut could be in the works and we'll be hearing from fed officials today talking more about some of those issues >> stock market yesterday if you looked away, it would be down, you look back and it was up. up 50, 60, 70 points sometimes and then go away five minutes and then be down 60. and then facebook news came out mid even a afternoon and that threw everything >> yeah, amazing to see the dow finishing in positive territory. >> what do you think will really happen >> house democrats too >> i don't know, i think that it will be a light touch hopefully. >> we've been talking about this intake lengellectual exercise f
long >> i think there are two issues. the ftc and doj, that could be a light touch. on the other end of it though, whether you think -- whatever you think congress and senate will ultimately do they really can't do anything -- >> except embarrass the companies. they can make people come forward and that can in turn nsh publ increase public perception >> i thought you were going to go to all the conspiracy theories about trump with at&t and cnn and "washington post." >> thank you for raising that. >> oh! why do i do this because i know you >> but that comment from the president was not a helpful comment. >> i know. >> because it really just suggests that we're into new territory here >> but i'm talking about with "washington post," amazon. and then you've got republicans in the house and senate which
are just mad at facebook in general because they think that it is all social media is -- you know, james woods -- >> here is the thing >> part of my life is missing if i don't get to see what he tweets he's blocked from twitter. >> james woods is blocked? >> he is blocked from twitter. >> you will claim that facebook is influencings election >> no, i'm not claiming that, i'm just claiming non -- >> the president will try to influence the unduly influence the election by putting pressure on "washington post" and other organizations and cnn through at&t the whole thing is now -- >> none of these companies want to be in the position of -- >> i'm just sad that when you get to married, that is the best ring that you could get? did you find that at a construction site? show people that wedding ring. >> this is not my wedding ring >> it looks like a bolt that you found on the ground somewhere. >> you know what, i was going to talk about this ring there is technology in this ring
and i want to talk about it -- >> i didn't know the technology. it looks like a thrown away bolt at a construction site why do you wear it on your wedding finger >> because it is comfortable there. can we talk about the president? >> you're not going to show it >> no, now that -- >> you got some kind of a deal are you a sponsor? >> no, it is like a 20 minute conversation just to get involved in this technology in the ring but we have news let's go to london >> i can't believe you're not going to show that thing all right. this is my read. and i can go to it when i want >> okay. take your time president trump is facing some backlash from both parties in congress over his proposed tariffs on mexico. oh, my god, it turned bright purple it is a mood ring. >> it is not a moods ring. >> bright purple republicans are reportedly in talks about whether they will vote to block the tariffs.
cramer was saying that may have been because of the market rally at the close if republicans decide to block it -- anyway, if they do, president trump could potentially declare a second national emergency and that would bypass congress and then impose the tariffs to try to force mexico to try to stemg the til stem the tide of illegal immigration. they would like to negotiate something this week. >> i think a lot of people would like to negotiate something. >> mulvaney says they are going on >> you want to talk bun chartered territory, this is new territory to have the president fighting back and forth with congress about whether he has the authority for emergency powers on these issues >> and it has gotten to the point where i mean, remember mexico was going to pay for it, maybe this is his way to say all right, you are going to pay for it >> except this would be tariffs on the american consumers. >> part of them.
i still don't know how that works exactly. >> well, it means we pay more -- >> some gets absorbed, some gets switched >> if the pa pay so he is undern pressure, maybe it goes away through some of that >> what is parlor? is that some kind of social media website? >> i don't know about that >> is that where he hangs? >> someone just said he is on parlor i'd like to try to -- there were times i was like whoa, i wouldn't retweet that. he doesn't have a job right now on tv. >> so therefore he has no filter >> exactly less than even we have >> which is hard >> it is we want to get to london president trump meeting with theresa may and business leaders this morning willem, thank you for indulging us
good morning to you. >> i'm afraid i don't have a mood ring on, but certainly there has been a meeting just around corner from here between the prime minister, the president and some top business leaders from both the u.s. and the uk they will be back here on downing street in a few minutes time but just to bring you some of the conversation ahead of that business round table, we heard from theresa may highlighting the depth, scope of the u.s./uk trading relationship, worth around $240 billion last year. she pointed out u.s. companies employ around a million people here in the uk and the same the other way around on your side of the atlantic they talked about the need for a bilateral free trade agreement that of course has been incredibly controversial for theresa may who has failed to get her own brexit deal through parliament here three times. wochbts sti one of the sticking points is whether the uk would stay in the customs union. if that were to happen, it would be impossible to forge their own
independent trade policy but trade will be one of the top items in talks here in a few moments time with both meeting alongside their respective cabinet members. and president trump at that round table said i think that we'll have a very substantial trade deal it will be a very fair deal. i think it is something that we both want to do. we'll get it done. he said to theresa may, who is expected to form allegely resign on friday, i don't know your timing, but stick around and let's do this deal >> willem, thank you we'll be watching a lot going on across the pond. coming up, we'll talk about the potential antitrust investigations that dragged the nasdaq into correction territory. i thought it was interesting they said that it wasn't specific to the companies, it was about the size of the companies and the market dominance in their life. i mean those are totally different business models. and they are all in the crosshairs bizarre. as we head to -- >> weird to see it all play out
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sfw nasdaq sliding in to correction territory yesterday, 10% below its record close back in early may this is as federal antitrust regulators and lawmakers laid the ground work for investigations in to big tech companies through a series of agreements, justice department now has authority over any potential antitrust investigation into google and apple and the ftc taking the lead on facebook and amazon. but it is google and facebook that appear to be the first targets. and yesterday the house judiciary committee says it is investigating competition in digital markets. and broader markets are still worried about falling yields around the world. the trade war growth and what the fed will do to make everything right again and whether that option is really gone joining us now is andrew slimen, senior portfolio manager of morgan stanley investment management
and julian emanuel at ptig so your viewpoint is kind of nuanced. beyond likely for us to see a second 10% correction in the s&p within nine months, never handled since 1940, right? >> yeah. >> and the recent developments put us in a vulnerable position. >> sure. i mean, even wants a correction, right? market was up almost 19% through april. everyone wants a correction. and then you get a correction, oh, i didn't want it for that reason so i think that you are getting a pull back. the reason that you don't have two 10% corrections is because everyone got so bearish after the first correction, they neff actually got back into the market so the percentage of bullishness is so low right now. >> welsh somebody got back in the market >> i think it is corporate buyback. but institutions, the percentage bulls is very, very low right now. so i think that that is why you
don't get a second 10% correction because there is not enough people to pay it. >> at the same time you're surprised s&p is down only 7% considering alter innate trade so what do you -- >> i think we're in the range. >> we're in the range of bottoming, 2650, 2750? >> yesterday was a very significant day because what you saw is the losers that had already sold off, they stopped going down the value stock financials and the last things to sell are the things that people have made the most money and which is software stocks, tech, the big tech stocks. >> is there a change with these investigations in to technology? >> that could be very true absolutely that can cause the rotation into the things that were the most sold off this is exactly what happened december the things that rallied were all the risks bottomed and started to work into the bottom.
financials work, energy work, industrials. that is what happened yesterday. so i think that you could get a rotation you needed a catalyst to cause the rotation and i think that you are seeing it. >> and as we watch four people standing on a porch and now they are no longer standing there >> 10 downing street that is where the president is going into the meeting with the business leaders and theresa may. >> and the first lady and president trump. very well-known porch. you can tell without even seeing the address. i asked santoli that yesterday, does did seem like the selling kind of drying up. we'll see. all we need is one more -- put tariffs on canada or something i don't know juli julian, you'll be on "fast money" tonight 5:00 >> you work a full day.
>> and tomorrow night. back to back so i don't know if i can come in on thursday. >> time and a half >> no. anyway -- >> i know, shameless i'll tweet that out. no, but last night, you were actually on with me on "fast money. >> i had meetings at 5:00 p.m. >> dvr i know you have the cape ability. so last time you were on, you were pretty bullish and you still are i think.so last time were pretty bullish and you still are i think. but there is a wrench in the works with mexico tariffs and now you are willing to con he'd seed that lower may come before 3,000. >> we think so.he'd seed that lower may come before 3,000. >> we think so bigger picture has not changed we think ultimately you will get to 3,000 at the end of the year. >> higher maybe? not anymore? >> not as much >> you thought maybe 31 or 32. >> frankly, i think that there is a surprise that we're going after mexico in the way that we are. there is probably a surprise
certainly what we heard in chicago yesterday there is a surprise that the trade war in general is as entrenched as it seems to be. and i think that the fed is coming cognizant of that and that is why we think that they will cut rates. but we think there is work to be down sideways and the rotational selling we think that the bond market has overdone the case for growth slowing down. stocks don't reflect it quite as much and so for us, the places that are vul nefrnerable in a market that is waiting for better news are the ones where people have hidden utilities, consumer staples, again technology is likely vulnerable simply because the government has put a spotlight on it. >> people think that the law of diminishing returns you now fno fed action but think of the return we got
for just pausing a full rebound. do we get anything for a quarter point or half a point cut? >> we have to remember that when the fed cuts, it usually cuts more than once and so from our point of view, if you look at the market, two months ago we were on squawk, we made the case for two cuts this year and it was very out of consensus. that is much closer to consensus now. and in fact if you look at it yesterday what is interesting is the probabilities for a cut in june which we don't think happens, and the proebts fbabilr three cuts in december so we do think there is something there that will ba backstop the markets >> the positioning is so negative that i think a fed cut would help the market. >> one of your boys, wilson at morgan stanley, he is -- right one of the most negative do you listen to him
>> we argue all the time he is with morgan stanley investment management. >> he is a chief strategist. >> he is putting out research. >> you just blow off his -- >> no, no, i think he's been right. we were due if a pull back and we got it. >> he is 2750 by the end of the year >> i think we are due for a pull back >> does he pay attention to your numbers? >> yeah, absolutely. we argue all the time. >> that's good that is how you arrive at a decent -- julian just runs the entire place, doesn't have anyone saying no to him. mrs. julian. >> there you go. the ultimate report. >> exactly julian and andrew, thank you both >> i appreciate it i'm not sure what i appreciate it, but i'm appreciating it. coming up when we return, a lot more on squawk we will talk fallout from the trade war and why the latest
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puppalright, alright. ion. what's going on? my owner got a new puppy. my name is tiny. nobody cares. welcome back to "squawk box. today's executive edge, trade war between the u.s. and china is causing big money concerns for universities across the nation robert frank has that tory >> good morning. well, chinese government
yesterday issuing a rare study abroad alert to chinese students in the u.s posing a threat to the more than $14 billion a year that chinese students contribute to universities and the u.s. economy. chinese ministry of education saying its students are now having trouble getting visas to attend or return to school in the u.s. and that they should, quote, strengthen risk assessment for coming to the u.s. now, there are 360,000 chinese students in the u.s., that is triple the number in 2010. and because they pay full tuition and cost, major universities have become dependent on those dollars a growing numbering of chinese students are already shifting to australia, canada and britain which have been more welcoming >> it is helpful for the u.s. to have people in china who understand the united states and people in the united states who understand china it is better that we know each other well and not use the students as pawns. >> the university is lobbying
washington to tone down the hostilities. yale's president saying that the tensions have, quote, and he woulded a sense of unease among many international student and scholars here at yale. he says i write now to affirm yale's steadfast sxhimt aiteadfo international students but now they no longer see a u.s. grieve to a path to a u.s. job. so $14 billion a year. if you actually look at u.s. exports to china, i would argue education is by far the largest, beating out aircraft because it is 14 just in the tuition. yet in real estate where it is over $3 billion a year that the chinese buy in housing for students, it is a huge industry. >> how much of this do you think is just a money story in terms of the impact on the universities versus the larger almost generational issue? i'm not thinking about what steve schwartzman has done in
trying to bring american citizens to china, you might lose a generation of people who go -- >> absolutely. there is a thought in the white house that since a lot of chinese students here are in research programs, that they are stealing technological research from these universities and it is better not to have many of them here. the other side of that of course is what the universities say which is that we want the best of the best from around the world wherever they will be, plus there is the money. >> plus there is the money schwartzman by the way at m.i.t. is doing something different, which isramping up m.i.t.'s artificial intelligence activities and creating an entire school for artificial intelligence there that was woven through the rest of the school because he is so concerned about how artificial intelligence is really being led in some ways by the chinese at will this point. he wants to make sure american research doesn't fall behind >> but financially, you could argue that the chinese students which are paying -- at nyu which is the largest number of chinese students, they pay the full
$72,000 a year, that of course subsidizes everybody else. >> how many spots do they take >> 8,000 so there is that too >> robert frank, thank you when we come back, a flood of calls out this morning on uber after the post ipo quiet period ended we have a full rundown straight ahead. and let's take a look at yesterday's s&p 500 winners and losers through the at&t network, edge-to-edge intelligence gives you the power to see every corner of your growing business. from finding out what's selling best...
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on the dow up about 160 points rebounding a bit this morning. s&p indicated up about 17. that would put it back above 2750 and nasdaq was down significantly yesterday. i don't know why it is up today. nothing has changed. but rebounding a little. lost 120 yesterday, up about 49 today. and uber will be the stock to watch today it marks the end of the quiet period for banks that underwrote the company's ipo last month that means likely to get a floods of analyst calls on uber. i imagine by the way that they will be positive calls two dozen wall street banks can now initiate research. ba barclays with overweight and i think overweight and buy are the same thing these days. sun trust also initiating with a buy and a $56 price target and btig in additiitiated with y
we'll continue to bring you those reports. i never know how much weight to give to these reports. news just crossing, uber says it is currently under a federal income tax examination and also by various state and foreign tax authorities. so forle being folks will be wt and box shares plummeting. the company reported a quarterly loss of 3 cents per their, better than the street estimated, but box lowered its guidance for the current fiscal year ceo saying it is longer for the deals to close that stock down close to 17% u.s. lab testing company quest diagnostics is reporting a large data breach. the company says that an unauthorized user gained access to 11.9 million patient accounts between april of last year and
march of this year the compromised data includes credit card numbers, patient account information, medical data and social security numbers. quest says that the breach came through a billing collections vendor this is just another one of the many, many data breaches that we've seen out there but again, this is with data that could be very sensitive medical data i think that they say that none of the test information was actually compromised, but what are the end results of these things and why do people ask for information that they can't protect? social security numbers. why do you have to give some of this information away? you walk into a doctor's office and you can't not give your social security number >> the conundrum is what kind of standardized information you could create that would be an identifier for you that is the hardest part about this >> i thought that's what a social security card was if you're going to ask for that information, how do you protect did and make sure that anybody who breaks into your accounts didn't take it >> that is the question.
and the flip side -- >> what responsibility do you have for protecting that information. >> and then the question is what is the liability when you don't. so we'll see what happens to quest and everybody else coming up when we return, a live interview with the man who won the bid for the charity lunch with warren buffett. we'll tell you how much he paid and why the lunch could be, well, awkward. plus we are waiting results from tiffany, the company should give us a win de dow into how coanafctg e feinth mpy.
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♪ may ba my baby takes the morning train, he works from 9:00 till 5:00 ♪ welcome back, everybody. warren buffett has compared bitcoin to gambling in las vegas and rat poison and now he will be talking about it over a stake. joining us is the man who placed the winning bid for just about $4.6 million for the annual charity auction for lunch with warren buffett and that allows you to invite seven guests and justin announced yesterday that he plans to include block chain industry leaders in which group. justin, thank you for being with
us today good to see you. let's start this from the back end. how come you decided to bid for this lunch, what made you do it? >> you sure, i think there is three reasons behind the bid first of all, i have been a long time believer for the value investment strategy. and i also make lots of fortune from warren buffett inspiration. so basically i just want to pay back to warren buffett for his inspiration. second thing is we are focused on the san francisco charity so that is why we also want to donate to the foundation for its endeavors in san francisco community charity. third, basically i want to
become the bridge between the institutional investor and also finance institution, traditional investor like warren buffett between the crypto community and also blockchain industry so that is why i also want to bring seven leaders of the blockchain industry, communicate with warren buffett about blockchain technology and the opportunity behind it. >> you said that you have admired mr. buffett, you have made money off of his wisdom and advice were you bothered by some of the comments he's made about bitcoin in particular when he started calling it rat poison squared? i mean you've made most of your money in this area >> yeah, definitely. basically -- first of all, i have been a long time believer for the value investment strategy at the same time i have been
doing the business in the blockchain industry for so long. so that is basically i'm thinking warren buffett just don't have the right force for the blockchain industry news and he is misleading by the media most of the time so that is why we want to have lunch with him, communicate with h him. in the ten years since 2009, how much the progress we have made and also the blockchain industry right now is really big. even the facebook, jpmorgan starting to look at the opportunity to start a stable point on their blockchain as well >> blockchain is much broader than just bitcoin. do you think that you can change his mind about hbitcoin? >> i think that it is too much for us to change his mind on bitcoin in just a three hour lunch. but definitely we will offer him
a different opinion on bitcoin and the blockchain technology. >> have you decided who you are inviting to this lunch >> we haven't decided yet. but definitely we have lots of the people represent the whole industry i have some people on the list, i haven't talked to them yet for example like founder of the light coin and also founder of binance and other mining leaders. >> obviously you are very respectful about this. not everyone in the industry is. is there any change that mr. butch at the time wou buffett would change your mind about things >> i don't think so. first of all, i like the value
investment strategy. so even doing lots of the crypto stuff, but still i invest in a lot of the companies fitting in his strategy and also at the same time, because you know warren if you have buffett is 60 years orlando than me, so i want to learn about the younger generations are doing. >> justin, thank you for your time we look forward to talking to you again. justin sun >> have fun at lunch i want to be a fly on the wall tiffany out with earnings of 1.03 per share coming in one cent above estimates but revenue was slightly below street forecasts and same store sales decline of 5% was worse than the 1.2% slide analysts had been expecting tiffany did increase its quarterly dividend by a 5% and you are looking at that stock up pry fe-market about 3%.
when we come back, we'll dig into the president's tough negotiating taking ticks and whether tariffs are an effective way to get deals done. right now as we head to a break, let's take a quick check at the european markets up across the board. dax up by almost 1%. "squawk box" will be right back. [ slow dance music plays ] ♪ sfx: record scratch music (plays throughout): [ 'watch me walk' by spencer ludwig ] yo dj, can i put in a request? ♪ don't have no sass about this ♪ ♪ i'm on my way i'm on my way ♪ ♪ can't take no class about this ♪ ♪ i'm on my way i'm on my ♪ like this! ♪ this is a moment you plan for. to start your investment plan, find an advisor at massmutual.com sfx: [ mnemonic ]
welcome back president trump facing backlash from both parties in congress over his proposed tariffs on mexico eamon javers is in washington with more on the president's trade tactics and what they mean >> yeah, good morning. the president is in london today meeting with the british royal family and the prime minister. he had a business round table this morning with theresa may. yesterday it was all about the pomp and circumstance, bells and wh whistles today more down to earth and focused on business. at the suggested tha
the united states and uk could find themselves in a trade agreement. here's what he said. >> so we'll be working on that today and even a little bit tomorrow and probably into the next couple of weeks. but i think that we'll have a very substantial trade deal. it will be a very fair deal and i think that this is something that your folks want to do, my folks want to do and we want to do and we'll get it done >> the president acknowledged that he is not likely to be doing that deal with theresa may who has announced that she is stepping down as the british prime minister but the president suggesting in a joking way stick around for a couple more days and we'll cut this deal. he says he is ready to do a bilateral deal between the united states and the united kingdom, the question is when that could happen. it is all complicated by the picture of brexit. so no real time frame on that one. the president will spend a little more time in england and then he is going over to france
for the 75th anniversary of d-day on june 6. >> very quickly, holding these talks with may, when is her last day in office? >> she is in her final days,yea >> it's very close at this point, it's pretty much ceremonial this is an official state visit. we saw the pictures of the president yesterday alongside the queen. this is about cementing an alliance much more than doing a trade deal, but the president at least sort of tipping his hat to the possibility of a trade deal here, if not engaging in the hard-core negotiations. >> eamon, thank you. for more on the president's trade negotiating tactics, hoover institution research fellow lanhee chen what do you think? first of all, let's start with what eamon ended on, the idea of a bilateral trade agreement between the united states and the uk >> well, a lot of that's going to depend on where the uk goes with respect to brexit if they don't make that determination soon, it's going to be very difficult for the
united states to negotiate a bilateral fta. we already do have a series of what are known as mutual recognition agreements in place, one in particular relating to the pharmaceutical industry that would continue, essentially, current eu trade practices with respect to the uk on those issues indefinitely until there is an fta, but we're not going to be able to get an fta hammered out until they know what they're doing with brexit so, this is, at least, i would say, several months, if not several years out. >> we've talked an awful lot about facebook and how it's in the crosshairs now for some of its behavior and tactics, but if you think about trump's trade policies, some of it is the same way. he's got some of the same sort of ideas -- move fast and break things, try and make things happen do you think that we are going to look back, let's say ten years from now, and think that these tactics were successful? >> well, i think the question is how we define success. in the short run, the president's focus has been, you know, can we get mexico to the table, for example, on immigration, can we get china to
the table on intellectual property and industrial policy and if the solution is a sort of short-term-type deal or something that addresses, for example, the trade deficit, the answer might be, yes, we might actually have some sort of short-term agreement, but the question is at what longer-term costs? so, for example, with the case of mexico, have we compromised the ability to do a larger deal, like the usmca, compromised it with mexican constituencies in mexico as well as in u.s. with the congress, because of the president's desire to get a shorter-term deal, let's say, on immigration? so, the jury is still out, obviously. the president's success bar could be raised or lowered depending on what set of issues he wants to look at in terms of accomplishing a deal, whether short run or long run. >> let's throw china into the mix, because it's a little confusing, too he's looking for longer-term progress on some of these things and to critics, he would say, look, we haven't gotten anywhere with years of patient negotiating. they continue to take advantage of us. how will we look back?
how will we determine whether this was successful or not >> well, if the president is able to, indeed, make progress, not necessarily on the current account deficit, because that's a relatively -- >> smaller. >> -- thing to solve, yeah if he's able to turn china away from its dyed in the wool policies for joint ventures for u.s. companies or ip theft -- if he's able to get a true compliance regime from the chine chinese, if the chinese are willing to put in place real controls that demonstrate compliance with a deal, particularly around ip protection, that would be a huge accomplishment and there's no question that previous administrations have tried a patient engagement tactic that hasn't always worked and so, the president's trying something different. we can only hope for success, but obviously, the thing that complicates china, as you know, is that there are huge geopolitical questions that are national security oriented, not trade oriented. >> and that's what the other side of this equation is for a long time, we've been an economic peace treaties with
these countries as a way of trying to prevent war. do you think there are going to be any unconsidered fallout, anything that's maybe not anticipated that happens as a result of breaking up some of these deals? >> well, you know, on the geopolitical side with respect to china in particular, there are huge situations and threats looming on the horizon whether it's what they're doing in the south china sea, whether it's their activity with respect to our allies in japan and korea. there are all sorts of reasons to believe that the chinese are looking for regional, if not greater than regional, ha gemny. so, there are all sorts of geopolitical reasons and i think the president is probably right to consider those questions as he evaluates what we do on the trade front. that's what makes this china situation so complicated it's not just a, hey, let's work out a trade deal it's, hey, let's work out a trade deal in the context of geopolitical competition i think i'd argue, unlike any of the united states has seen in many years. >> lahnee, thanks for your time.
good to see you. >> thank you. coming up, our guest host, scott kupor, managing partner at andreason horowitz, weighing in on potential tech regulation, private versus public valuations and more plus, the coverage on uber has moved the stock this morning up over a percent earlier as you can see now, it's actually down over a percent we're going to talk with one of the analysts behind one of the new calls later in the show. stay tuned "squawk box" on cnbc is coming right back the ai i want? well, insurance it's all about trust and speed. i need it to guide this analyst to customize flood coverage for this house. so that this team, can inform this couple, that their payment will arrive faster than this guy. hey. ♪ ♪ so whether i'm processing claims due to this fine gentleman...
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big tech under fire. companies in the sector could be facing increased regulatory scrutiny guest host and tech investor scott kupor of andreesen horowitz is here. and sounding off on the future of boeing. >> we always know we can get better and that's what we're committed to. >> discuss leadership at the company. plus, calling on uber. [ honking >> what are you doing? >> a number of new analyst notes out this morning we'll bring you the calls and talk ride-hailing. >> smokey and the bandit do i even have my lights on? >> as the second hour of "squawk box" begins right now. ♪
♪ i like the nightlife baby >> announcer: live from the beating heart of business, new york, this is "squawk box. good morning, and welcome back to "squawk box" here on cnbc i'm joe kernen along with becky quick and andrew ross sorkin, who is currently in kind of an average mood, from what i can tell it's a nice sort of a greenish -- he's got a little mood ring that -- it was purple earlier, when we were talking about all the tech investigations going on, right >> we're going to talk a lot more about the tech investigations -- >> that gets it purple. >> then we can talk about the presidential investigations as well, if you want to get -- >> yeah -- >> so here we go. >> then it starts flashing, when we talk about trump. in studio with us is scott kupor, managing partner at andreesen horowitz u.s. equity futures are indicated up about 146 points this morning, and we've got the nasdaq rebounding, up about 16 i'm sorry, up 42
the s&p indicated up about 16 this morning here's what's making headlines at this hour fiat chrysler's proposed deal to buy french automaker renault is running into new opposition. activist hedge fund ciam has written to the board of directors saying it is strongly opposed because the terms favor fiat chrysler and offer no premium for giving up control. vw's chief executive met with robert lighthizer monday, according to reuters the proposed tariffs would impose costs on volkswagen since they accounted for half of vw's sales last year. no word on outcome of those talks. and a mixed quarter for tiffany, earning $1.03 a share for the first quarter. that was a penny better than expected revenue and same-store sales were below estimates, though, because of currency headwinds and what tiffany calls dramatically lower spending by foreign tourists
we heard yesterday from marriott ceo that they have also seen a reduction, at least in chinese tourists coming to the united states, not knowing if it was because they felt less welcome or because of the trade talks, but tiffany shares are down this morning. >> i think they're probably connected. i interviewed hilton yesterday, same story you heard the same thing over and over again, just about the number of chinese stores coming to the u.s. as a meaningful problem and challenge for us joe? the justice department and the ftc have reportedly begun splitting up regulatory jurisdiction over the biggest names in tech. it's like a feeding frenzy and that is hitting the faang stocks hard. dom chu joins us now with more do you think they were arguing no, i want to go after -- what's with these people? i guess that's their job, go after a successful company. >> when's the last time you did a fantasy football or baseball
draft, joe because that's what it felt like to me. >> exactly. >> you have two sides -- i get amazon, well, then i get facebook, if you get facebook, i get apple, if you get apple, i get alphabet it seemed like a fantasy situation, but it was interesting, because if it really did go down like that, it sets the landscape bigger and poses bigger risks analysts are coming out with at least some commentary. and generally speaking, we'll say this -- it was a wreck yesterday, but things are a bit different now because the skeptical commentary about any real game-changing element to these regulatory concerns in mega tech and retail stocks may have hit them harder than some think. for example, shares of facebook are up fractionally on just around 50,000 shares premarket after losing 7.5% yesterday. analysts at rosenblatt, for example, said that they are reiterating their buy rating on the stock and they're keeping their $242 price target. they say that while headline risk has now become more elevated, they see the likelihood of a forced breakup
of facebook as low since the competitive landscape in digital advertising won't change all that much, even if they do that in a hypothetical scenario, break up the company also, watch shares of amazon, up fractionally just around 15,000 shares of premarket volume the e-commerce and cloud computing giant lost over 4.5% yesterday, but analysts at baird viewed the risks of large-cap tech company breakups as low but moderate risks of antitrust action short of a breakup, and then relatively high risk of regulations around privacy and security so, a bit of a rebound today there. then we'll end on shares of alphabet, the parent company of google they are up just around 0.33% or so, roughly 5,000 shares premarket after losing over 6% yesterday. we'll balance out a bit of the commentary here with a more cautious stance coming from the team at moffettnathanson they say until more is learned about what the potential antitrust inquiries really do mean, facebook and amazon shares are what they called dead money.
they cited what happened to microsoft stock after the european regulators went after it back in 2008 and 2009 so kind of an interesting look at some of the commentary out there this morning. >> thank you, dom. we're going to continue this conversation now we're going to talk more about what could be facing these global tech giants our guest for the hour, scott kupor is here and has a new book out. the author of "secrets of sand hill road. it comes out today so we're thrilled to have you on pub day, as they call it in the business but i want to get to this issue, because there's a lot of news that's been made in the past 72 hours in terms of this idea that washington is dividing up the four big giants and is going to attempt to go after them what do you -- you know these companies probably more than just about anybody if you were a regulator right now, is there something you would do >> so, i think the real question here is, you know, as you know, under the regular antitrust rules, there's always this question of is there some conduct they're doing that's bad
or is there some consumer harm and i think the challenge with all these actions is really identifying what the consumer harm is, right we've got the simple examples, which is, you know, we know there's been yelp and google, there were issues around changes in the search algorithms that impacted that. zynga/facebook is probably the most obvious example where you had a company so dependent on facebook as a platform but i think the real challenge the federal regulators will have is identifying what that consumer harm is, particularly in the face of the fact that you've got a very, very robust kind of venture and new formation company market so it's not as if we've got slowdown in -- >> let me ask you, as a venture investor -- by the way, you have some connections to some of these companies. >> facebook, our partner is on the board of -- >> i don't know if there are any other disclosures necessary. but the reason i'm thinking of this from a venture perspective is some people say, either you have to look at it differently -- today, if you were investing in a company, the chances of that company ultimately going public and becoming an independent company
that competes against a facebook, an amazon, an apple, or ultimately gets acquired by them -- >> right. >> -- meaning as a strategy. >> right. >> right how do you think about that when you go into it these days? do you say to yourself, they're going to outdo those four companies? or do you say, if we're successful, they're going to buy us, and that's success and the question is, if that's success, is that really success or is that a problem from a policy perspective >> yeah, look, i think it depends, right so, it's true that, look, if you're going to go square against amazon in, i don't know, some basic commodity good, that's probably not a good investment to make, but we've seen companies like chewy in the pet store space -- we were investors in zulily in the women and children's clothing -- there are transgenital companies in the path, but they provide at least a distribution channel to jump-start some new businesses our companies rely on facebook ads and google searches to get their businesses off the ground. that's not a good long-term strategy because that's
expensive over time, but i think that's the real question yes, there's a question that no one's going to fund a direct google search competitor, but i think there are market forces out there that allow you to take advantage of the platforms and in particular -- >> is there any part of you that thinks that the antitrust code, the law as constructed and understood today, should be changed? because that's the other piece of this that is being at least discussed. >> yeah. i think it's a good discussion i guess the question is, to what to change to what? so, you know, what -- at some point, either you have to do something bad or you have to create some level of consumer harm so, if there was some theory that said, look, venture capital investment is drying up because these companies are making it impossible for new companies to start -- >> if i told you that google advertising or facebook from an advertising perspective ultimately was a tax on american consumers -- >> right. >> -- right? and that that tax should be a lower tax if there was true competition in the marketplace -- >> that makes no sense, though i was thinking -- >> scott -- >> but those are just words, though and here we are -- >> i'm making an argument --
>> here we are having another -- let's have the discussion. let's have universal health care and universal basic income it's insane, but let's have the discussion but yesterday, i was thinking -- >> joe, the other side of the aisle, if you will, also wants these investigations to happen, too. >> but here's what i was thinking i don't want to move into the euro, you know, entitlement state view of antitrust and -- i was thinking yesterday, we were talking about google maps and google and how everybody uses them and i'm thinking, if you took google maps away from me, i would be affected. >> right. >> i do use google to search it's always free to me now, maybe they're stealing my stuff and i don't know about this and i have no privacy and all that, but at this point, it just seems like prices are being driven down, consumers are benefiting from all this, and -- >> i thought -- >> and you can't do it because competitors aren't able to come in or -- >> but that's the question -- is there a change in the way the government is going to be viewing these things is it going to be --
>> let's have the discussion i don't want to be more european in any way except the rich, creamy sauces and the wines. >> i thought you were going to make an argument about freedom of speech and the fact that there's no other platform -- >> no, i wasn't. i was going to argue that everything's getting cheaper and cheaper and i love all this stuff as i move into your world of technology. airbuds. i've got all of it >> the same thing you mentioned, andrew, is this is an amazingly bipartisan issue i think we're living in an interesting time where in some respects, you've got a republican administration actually driving this -- >> you don't like the "washington post." >> huh >> he doesn't like the "washington post." that's why -- >> no, but -- >> it's really interesting -- >> teaming up with the congressional -- >> it's really interesting you have two issues i think that are binding republicans and democrats right now. they all are after china and they're all after tech it's remarkable to see how bipartisan these issues have become. >> does that change the way you operate and look at companies? should you be thinking twice about what investments you're going to be making >> i think we have to think about it we're making investments for seven, eight, ten-year time horizon, so it's hard to make changes based on political
issues or even broader macro issues, but yeah, i think we have to think about it we know that kind of tech is going to be regulated probably in a different way over the next 10, 20 years than it's been over the past 20. >> what do you think over the freedom of speech issue, or you look at the nancy pelosi video there was a lot of consternation about that there's consternation on the other side that james woods apparently is not on twitter anymore. >> well, that's just for me. >> you know, what do you think the responsibilities -- or not -- should be of these quote/unquote either platforms or media companies or, describe them how you'd like. >> i'm probably an outlier on this i am a very strong libertarian and my view is, look, we should -- we've got to get all speech out there and unless there's stuff that is just incredibly, you know, bad, i think you've got to let it out there. >> you've heard the goose and the golden egg and everything. let's see, microsoft was here. google, oh, yeah, that was here. apple, oh, yeah, that was here facebook, oh, yeah, that was here uber, oh, that was here. but over in europe, they have --
>> s.a.p. >> they've got s.a.p they've got -- help me out here. they've got -- help me out help me out here who do they -- the point is, don't kill the -- >> forget europe, talk to me about communist china and call me. >> yeah, where the american dream lives for $10,000 a year. >> the question is what kind of environment do you want for start-ups? >> that's the question >> how about pharmaceuticals how about biotech research how about any research and innovation is happening here, my friend. >> here? not in china >> some. the average gdp in china is $10,000 a year why don't you move there, see how you do. >> call me maybe more with scott, here for the hour. >> that's where the american dream is alive and well. there's a few internment camps around, too, but it's great. tiananmen square oh, we went off the air. well, when we come back, a flood of analysts initiating coverage of uber this morning. the man behind one call will join us after the break. that stock is down by about 7
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♪ freeze frame, freeze frame, freeze frame ♪ welcome back to "squawk box. take a look at the futures this morning. want to show you what is going on ahead of the market we're about 2 1/2, a littleove 2 1/2 hours away dow jones looks like it would open higher, 158 points higher nasdaq looking to open about 40 points higher. s&p 500 looking to open about 16 points higher. becky quick. when we return, investors can expect a number of analyst calls on uber this morning, now that the ipo quiet period is over we're going to hear from canaccord analyst michael graham right after thisbreak and get his call on uber. and later, boeing's ceo doing damage control yesterday right here on cnbc his comments on the future of the 737 max and the company are straight ahead "squawk box" will rhtac beig bk.
from $50 to a high of $80, although most price targets have been in the 50s. every call from this morning has been a buy or an equivalent rating joining us right now to talk about his call is michael graham he is senior equity analyst for the internet at canaccord genuity. errs initiating a buy rating and price target of $55. >> yeah, thank you the fundamental story here is we just think uber is going to be a much bigger company in several years than it is today, and that's really predicated on their core business, which is ride-sharing we just think that's going to really alter the personal transportation market over time. when we look at our model for uber, we see that we only expect them to have as customers about 7% of the smartphone users in their countries by 2023. we think that's a very conservative number and that's going to be a lot bigger over time anecdotally, we don't know anybody who's not using ride-sharing more and more these days, so we just think that's the core then you layer on some of their
other businesses uber eats is a fantastic business that has also got a lot of room for upside restaurant delivery is only 10% transacted online in the united states, and that's the market that's the furthest ahead out of all the countries. so we just think they're in some big businesses that they can execute well on. >> what do they have to do to turn a profit on ride-sharing? because right now they're subsidizing every one of these rides that gets taken. >> very importantly, the pricing in the u.s. in this business seems to be getting a little bit better what you saw in 2017 and 2018 was lyft came onto the scene in the u.s. and started really ramping up in more and more countries, and there was some aggressive price competition going on what lyft said on their earnings call the other day was in they are seeing a more rational pricing environment. uber echoed that on their earnings call last week. and so, you know, i think that's a really good thing. when we initiated on lyft -- >> did they show you any numbers to make you think that or is it
just them saying they think people are going to stop discounting? >> this morning on uber, we have some data we gather, a tracker on sort of the rides and the price of a ride in six major cities across the u.s., and we see that uptrend happening over the last couple of months, so that's sort of where we're getting some of that conviction. >> so you think part of it is that both companies are now public and both have investors to answer to and can't be losing $1 billion a quarter like they have >> i think that's part of it. >> or uber has, i should say, not lyft. >> but i think the bigger thing is both companies feel like a duopoly or something close to that is a good way to go after this. >> what about a third competitor, like elon musk >> clearly there are going to be more competitors trying to come into the market. you know, what we think is that these are two-sided networks that you have to build up in local geographies in local cities it takes a lot of capital and a lot of time to do that and then you have to have a lot of data and a very smart
platform so that you can price rides at the right price, get the car to the right place at the right time very complex so, we think that it's going to be harder for new entrants to come in and compete effectively against uber and lyft in the u.s. and then uber and their principal competitors in other countries as well. >> when do you expect them to actually turn a profit >> well, 2023 is when we're modeling ebitda profitability -- >> four years from now. >> yep. >> that's a long ride. >> it is a long time you know, it's very -- it's not uncommon -- it's not dissimilar to what we've seen from companies like amazon, right and one of the companies that -- >> well, amazon wasn't losing $1 billion a quarter in the meantime. >> that's true i mean, uber's got some big losses ahead, but what we think is that investors are ultimately going to come around to the idea that uber's well positioned for growth and that they're going to be able to execute on all these things and really be one of the growth darlings in the tech sector going forward. >> what about all of this new
focus on technology? i realize that regulators and congress are not looking at uber as part of this big group, but if you have the situation, as scott has pointed out, that you can expect a different regulatory environment over the next decade, does that concern you when you are focused on just having a growth company and hoping for profits down the road >> it's a little bit concerning for that, you know, facebook/google/amazon group you know, clearly, there's a lot more heat on those companies than there has been historically i do tend to think they're going to get through it. you know, one of the things that we've seen with the tech giants is that when you get new regulation, like gdpr in europe was a great example -- these companies are so well equipped to just figure out the right way to navigate through that so unless you get really dramatic action and, like, divestitures and breakups, it tends to be sort of manageable for the tech giants. i don't think uber's goingto necessarily fall into that antitrust category they're going to have some legislative issues on other fronts, but i don't think
antitrust. >> scott, you're a lyft guy. >> yes, we are a lyft guy. >> you're full on lyft. >> yes. >> how long will you stay in lyft now that it's a publicly traded company >> i don't know, is the honest answer in general, the way our business works is once something is public, our lps look to us over some view where they're going to go over a long period of time, or we have public managers -- >> what do you make of the argument that both companies stayed private far too long, the amount of growth opportunity already took place in the private market, the entire sort of audience demand opportunity for, in terms of investor demand, was completely tapped out in terms of every private wealth guy at morgan stanley and at goldman sachs and blackstone and t. rowe, meaning there wasn't some new investor class -- >> yeah. i think that's true -- so, it's more true with uber, just because the sheer amount of capital they raised was up a lot
higher and there was much more of a retail distribution they did leading up to that i think if you look at the growth, the big difference to me right now between lyft and uber is, lyft has very significant growth in the core ride-sharing business uber, you know, is very, very focused on some of these ancillary businesses i'd be curious, michael, how much you think the story is uber eats and the non-ride-sharing businesses, in comparison to the moderate growth. >> i think they're slightly different stories for investors. we are bullish on lyft, a buy rating on the stock as well. definitely a more contained investment profile and probably will get to profitability significantly sooner than uber will you know, then you take uber is more of an amazon-like model where they're trying to be global and sort of be all things to all people over time. so, i do think they present fundamentally sort of different investment profiles going forward, but i think both companies are well positioned. >> michael, thanks for coming in it's good to see you coming up, boeing's ceo,
dennis muilenburg, defending the aircraft maker yesterday right here on cnbc >> we followed our certification processes, but we always know that we can get better, and that's what we're committed to >> and we will get reaction to that comment, much more from crisis management guru eric desenhall of desenhall resources. take a look at u.s. equity futures, all solidly in the green, at least this morning mi rhtac congig bk.
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max and getting the aircraft back in the air. >> i, frankly, don't think this is a pr process or an advertising process. this is about safe travel, and we're investing in making the max as safe as possible. i think the improvements we're making on software, the improvements on training and education, the improvements we're making around how we communicate, that's what's going to matter. and as we get the airplane back up and flying and flying safely, that will rebuild customer confidence >> let's talk more about the message from boeing's ceo. joining us now, eric dezenhall, ceo of dezenhall resources did he already pay you or something, eric? are you a client -- or is he a client that's exactly what you said he should be doing, right, what he just said? >> if he were, i wouldn't be able to come on your show and talk about it. >> right. >> but look, i think he did as well as you can do in these situations i mean, what happens when you get a ceo ready for a cnbc interview is you go to a big-box
pr firm, they train you to be boring, and that's the point that's why you hear -- >> is that what happened to all of them? >> well, you hear the buzz words. safety is our number one priority we're committed. >> you said this is not -- in the notes, you said this is not a pr issue. >> right no, he's absolutely right. >> although it's hard because everything's pr nowadays with social media and everything else -- >> but not first. >> you say the most important thing, fix the problem needs to be the focus, it needs to be on engineering. when the plane gets back in the air with no incidents, there is the solution to the crisis all this pr -- one apology is -- why do 300 apologies or -- >> well, yeah, i think that the difference is this -- look at this as emergency room triage. when you have a patient wheeled into the emergency room, nothing matters until the heart is beating again, and the heart here is engineering. and i think that there is a tendency when something is also a pr problem, to overanalyze the
ceo's interview, to say they need to be doing more -- more advertising. 100% of apologies are declared to have been mismanaged. somebody always says, they weren't contrite enough. >> i have someone sitting right next to me that said that, andrew will you tell eric how -- andrew was totally watching the guy he's a robot he doesn't have any empathy. he hasn't called all 338 families he's totally screwed this up right from the start, right, andrew, basically? >> my feeling has been that the cbs nterview, even more so tha yesterday's interview, was not as human and you needed to be and maybe goes to the point that eric's trying to make -- >> he's an engineer. >> -- which is the point is for them not to be human, but that makes no sense to me. >> no, i didn't say don't be human, but i think that there's a tendency to expect an apology or a tv interview to be so spectacularly compelling that everybody forgets about the crisis remember, you're dealing with an
engineer you're not dealing with george clooney or somebody who is trained, or bill clinton, even, somebody who is very much gifted in that area i mean, in my business, we are given the client we are given. and if that client is an engineer, you help them do the best that they can do within their capacity and no, do i think that he is a warm, touchy-feely guy no, but i would have never expected that going in the next best thing when you're dealing with an exciting crisis, is to make it unexciting and the way to do that is to be somewhat boring, which is why you hear the buzz words safety is our number one priority, as if somebody out there is going, is it? is it maybe their number four priority transparency safety is our number one priority i mean, all of these things get repeated, which is what they're trained to do, even if it does not erase the crisis >> and you think that this approach is going to stand the
test of time because my point was, i don't -- it's all pr now. i don't -- how quickly this thing spread -- i mean, it's trending on twitter -- he wasn't nice, he didn't cry. i don't know. >> but that's not controllable that's not -- twitter is not controllable and the fundamental swindal of my business is if you hire me, i am so clever that i'll be able to erase twitter that's a big lie i think where we're going eventually is more and more ceos of high-profile companies will be more in the vain of marketers, more people who are trained with somewhat acting skills i am seeing this all of the time, but the thing is, is when you become the ceo of a big company, you don't know what your crisis is going to be or if you're going to have one so, what happens is you have an engineer who is thrust into a position where suddenly -- >> eric, the point -- >> -- they have to have acting skills. >> i think we're missing --
there's a believability factor, that you just don't believe. it doesn't matter whether they're an engineer or they're something else the whole thing -- you don't trust them because they're operating like robots. and i don't think that's because they're an engineer. >> oh, i think a lot of it has to do with what your original -- what the prominence of your training is. i just think, andrew, your expectations of what a ceo's capability can do is different from what my 35 years tells me -- >> i think if you're running a company with thousands of people, there has to be some level of humanity and you have to have some level of genuine trust that the other person on the other side of the camera, in this case, you, or if it was dennis muilenburg or whoever it's going to be, is actually telling you the truth and not just reading you lines. >> i agree, but we're dealing with imperfect situations where you can't suddenly, when you have a crisis, replace the engineer with somebody with obama or reagan's skills in 30 seconds -- >> eric, i think this is all counter, though, because what really matters is what happened,
and there are still continuation investigations. >> that's right. >> there is still going to be something that has to be answered and it doesn't matter what you teach them or don't teach them to do or say. >> exactly right. >> this is english class versus math and science we're going to find out what happened, then there will be investigations, then there will be additional investigations to uncover who's to blame. >> and when it's fixed and the planes are safely in the air, the problem goes away. that is one, two, three, the alpha and omega. that is everything, not how somebody held their head in an interview. >> right >> hmm you went from clinton to obama, and then kind of insulting there -- >> hey, i'm really on it today i can name a lot of presidents. >> bill was good he was but see, i'm not sure that the sentiment really matched the outward show, eric is that really what -- i mean, i remember the thumb and the teary eyes i think he's looking up in the lights half the time, though -- >> my planes are very safe maybe that's where we're going to go. >> oh, my god, andrew, would that work for you?
>> i think andrew would find that very compelling >> i think you're probably right. i think you're probably right. but i do understand, though, that the -- i'm worried about boeing, if the converse of what you said -- god help us if they're -- i mean, i really hope for everyone's sake, people on the flights, people for boeing, people for u.s. manufacturing, that there are no more incidents and this fix is permanent and we go back another ten years without a fatality that's what we hope for, right i mean, that's the most important thing. these interviews, no one's going to remember any of those, especially if -- >> well, that's right. it's just like when the pharmaceutical company has a difficult time, what's the solution the solution is a new blockbuster drug and the solution when you have a safety issue with a transportation company is to not have safety issues that is really what the focus should be. the other stuff, while we can debate how well a ceo handled an interview, it really comes down to, if the planes get back in
the air and absolutely nothing bad happens, everything will go away. >> do you remember the gold standard in -- i mean, i remember tylenol, and i don't remember -- >> that's a myth. >> right and i don't remember if burke -- that was -- i mean, he's -- i think at this point, there's textbooks that talk about burke's reaction to -- >> even though it's a myth. >> you don't think that was him. think about some of the others how did chipotle do with -- >> i think we're still finding out. >> new ceo. >> with tylenol, the fundamental difference was no one was accusing the company of going into a room and knowingly, willfully manufacturing a dangerous product. >> well, they weren't. >> everybody understood it was a lunatic. i love when my clients are ait canned by a lunatic, because i'm going to win that's different from boeing, where somebody is saying you and your products are bad -- you personally didn't do enough. very difficult to get out of a character crisis versus a sniper crisis >> right so, at this point, five years
from now, this gentleman will still be ceo, in your view >> oh, i don't know about that because it's getting harder and harder to survive a head-rolling contest, because when you have a crisis, what is one thing you can always do? there is a 100% chance you can bounce the ceo and nowadays, whereas at the beginning of my career, that's not what happened, nowadays, boards often do not what's right but what they have the power to do, which is to get rid of the ceo, as if that's the answer sometimes it is, but i think it's a tough fight to maintain your job in a situation like this >> yeah. who could you not come on and talk about >> i couldn't tell you that because -- >> you can't tell me you'd have to kill me. i mean, harvey, somebody like that do you have any good stuff >> harvey? no, no, no i wouldn't touch that with anything but in my contracts, i'm not allowed to say who i work with, and i think that's a good thing. >> maybe we have to just run through a list of ceos asking him questions about it >> yeah, yeah. >> i'll just go back to my clinton impression, if you do that. >> i do one of those, too, but
it's getting dated you know, he's the least of our problems now anyway, thank you, eric dezenhall. we'll see you later. >> thanks for having me. >> okay. coming up when we return, big tech under fire. reports surfacing that names like alphabet and amazon will be facing increased regulatory scrutiny we'll discuss what that could mean for your investments when we return. quick look at futures right now, show you where things stand. we are in the green. dow up 152 points, the s&p 500 up about, we'll call it 16 1/2 potsin moving is hard.
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♪ it's the final countdown welcome back to "squawk box. the justice department has been given jurisdiction over apple as part of a broad review into potentially anticompetitive behavior among big tech companies. wall street, of course, watching all of this closely as the government steps up regulatory scrutiny across the board. wolf research managing director steve milunovich. >> google and facebook are probably at more risk than apple. apple had its worldwide developer conference yesterday and talked about software features and privacy was a big theme. i think from a privacy standpoint, apple is still in a better position. the main issue is around the app store. >> the house judiciary committee launching a wide-ranging antitrust investigation into big tech, covering facebook, google, amazon and more. joining us now to discuss big
tech under government scrutiny, our reporter from the "wall street journal," and our guest host this morning is scott kupor of andreesen horowitz. can we start on apple? and i don't know if apple is the least of our worries, if you will, but -- >> yeah. >> that's your sense >> mm-hmm. >> is that apple is not really on the radar here? >> well, it is a lower priority, right? if there are investigations being built, it's google and facebook first. >> google and facebook first, but i'm starting -- >> is that because of privacy? why, because apple doesn't have the same privacy concerns? >> well, it's because of antitrust. they're antitrust investigations, so those are the ones that people are screaming the loudest about. >> what are the permutations in terms of what you think happens next, to the extent that we're going to model off of history, look at the former investigations that the ftc pursued into google, into facebook, what happens how long a process are we talking about? >> it could be a very long process. if we're looking at history, look at the microsoft case,
right? any of those previous cases were a decade long, at least. so, everyone should just pop their popcorn because it's going to take a long time, and i think it's very likely that google could be first. >> you think google's first? you think there is actually going to be a case >> there is no case open yet this is just a jurisdictional shift, but -- >> we haven't even had the investigation part yet. >> right, exactly. but we've been listening to a lot of complaints coming out of d.c., and we know for sure that the justice department is actively mulling these questions of does google have an inappropriate sway in the online advertising market how do you define the market they're really struggling with that and very publicly asking these questions. >> here's my question to you if you think about the companies that are going to come out and try to testify against google, let's make the list. who's on -- no, no, but that's -- because that's how this works, by the way in fact, marc andreesen was the other end of the microsoft case -- >> absolutely.
>> with netscape you had a number of powerful, but smaller companies, basically make the case that this was a monopoly. >> yes so, there have been companies that have been public already. you know, we've seen oracle and news corp., my employer in australia, be very public about their complaints, so we can assume similar complaints were going to be made in the u.s. yelp, of course, has been a very loud complainer for years about this and as we reported over the weekend, there have been like more than a dozen companies that have come down to the ftc and made these complaints over the last few years. >> in terms of structural -- if there was a structural remedy, because that is what macon typically likes -- by the way, unclear whether he will still be in this role if we're talking about a decade-long process. so, the question i'd ask is, if today you could wave a magic wand and change the structure, what would you do? >> well, everyone says we'd begin by doing, of course, they say you can't buy any more stuff, right so, let's start there. and then if you need to spin out
things, maybe you spin out youtube, you know? maybe the third-party ad business has to be separated from the search business these are some of the things that people have talked about. >> scott, what would you do? or would you >> i wouldn't, but -- >> you wouldn't. >> look, i think there's activity -- i think there's probably behavioral changes short of spinning things out yes, obviously, the yelp scenario was a real scenario, and so i think there's probably behavioral changes you can make to prevent that type of stuff happening in the future, but i agree with what you said, which is, in the short term, i think we know that m&a is basically off the table for most of these companies -- >> for most of those companies, does that spread to beyond those four companies that are named? are there other big companies that are going to not be able to buy things because the tide has just turned against big companies in general >> my personal view is, look, i think there will be more scrutiny of these things, but i don't know anybody else rises to the level of those four. i don't know if you have a different view -- >> i agree, but i heard this morning, netflix must be mopping its brow somewhere in a corner,
but in a slightly different -- >> we were talking about china earlier and it goes to the larger point i think you're trying to make, which is, if you try to slow down the success of an amazon, a facebook, a google, you're still going to be competing against an alibaba, a ten cent and companies that effectively will get even bigger this is sort of the argument, by the way, that the banks made post too big to fail, post crisis, that they needed to remain of size and scale because they needed to compete against these international behemoths. >> and dodd/frank in some respects, those banks have been huge beneficiaries of dodd/frank it's basically kept out competition, particularly in the u.s. i think the bigger question is, do we want an environment favorable towards entrepreneurship and development? we should stop illegal behavior from an antitrust perspective, but look, capital's free flowing. all of the technology's free flowing, and the more difficult we make it to operate here, the more likely --
>> just use microsoft. microsoft, it was about behavior, about making them change things. >> yeah, but that was clear -- >> because of that long investigation, andrew made the point yesterday and i think it's true, microsoft fell behind in a lot of areas as a result. >> but there was clear conduct in the microsoft case. there was at least an allegation that they were tying things together which under existing -- >> same argument's made about google, for sure the bundling is the key issue. >> i think that's a real question, right, yeah. >> yeah. >> how does this change? and i think becky was trying to get to this earlier -- your investment thesis about buying into certain companies early that i think historically you would have said to yourself, okay, we have this great environment because we can get bought by google, can get bought by facebook, can get bought by amazon but now if they're not in the acquisition game, how does that change the sand hill road story? >> i don't think it changes that much, because our default going in is we have to believe they can be stand-alone ip-able
businesses >> you have to admit there's maybe additional margin you give them -- >> we were investors in oculus that was acquired by facebook, and we didn't go in thinking that was the case. but look, had it been a stand-alone company, we knew there was a lot of capital-raising that had to be done so every now and then you get these companies that have -- >> does everybody go to a monday morning meeting at andreesen horowitz and say, you know what, the big four are now off the table in terms of being our saviors? >> it's not a discussion, but yes, i think we have a clear view that it's unlikely there will be room for these folks to do any major acquisitions. it's also the case that we go into the monday morning meetings saying anyone relying on them for customer acquisition, that's a good short-term strategy, but long-term, you have to develop organic methods of customer acquisition -- >> how do you do that organically? i think people have gotten lazy, falling back on these for acquisition -- >> it goes to the fundamental of the businesses if you have network effect businesses or virility, where one business can attract others, it forces us to raise the bar on
how we scrutinize the long-term acquisition plans for these companies. >> can you speak to the issue of, you know, the way this has been divided up between justice and the ftc, there's a view, and i don't know if it's right -- we were talking about it yesterday -- that you might have gotten lucky if you got the ftc versus justice do you think that one is going to be more lenient than the other? >> that was our guest. >> well, the ftc has not done a great job scrutinizing google, up to now. it's sort of been an embarrassment the way they closed that google case in 2013. they've taken a lot of heat for that and have taken a lot of heat for just not having teeth in general over the last few years. so, i think that, yeah, the doj would be a scarier place to be. >> although that also makes me wonder if you're taking heat for having done a bad job in the past, are you going to step it up and be all that more over-the-top aggressive in a situation like that? i hadn't thought about that from that perspective. >> possible. >> before the hour is up, scott,
slightly pivot the conversation, but related to sales of companies and sort of the sand hill road situation, which was, i was going to say , we haven't talked about softbank. >> let's talk about it. >> the story yesterday -- >> reportedly -- >> they were trying to raise the fund and may be now struggling to actually happen how does that change the equati equation because that was another place you historically could have sold to. >> it's interesting, what's happened over the last couple years. a couple years ago, softbank was a class of one there was literally nobody who had that scale what's happened over the last couple years is new players in the space, sovereign wealth funds, lots of other players coming in. softbank is still an important player, but i think actually their importance in the industry as sort of a class of one who can write $500 million-plus checks, that dissipated over the years. >> but the mega fund doesn't -- is that a success or failure, the mega fund? >> i don't know. i mean, i haven't seen their numbers. i have absolute lly no idea i think what's happening, though, is a lot of players who have invested in that are trying to build direct investing arms and this was reported in the paper. if you look at pif, the saudi
group, or the canadian pension group, i think a lot of them have long-term plans to be direct investors so the question is, do i need to do that through a fund or can i get access to those same kinds of deals directly and frankly not have to pay fees and carry i think that's the bigger, potential risk for some of the mega funds. >> go ahead. >> i want to quick -- you saw the market move from about 140 or so up to -- >> 190, yeah. >> -- 190. the china commerce ministry says the differences in frictions between china and the united states should be resolved through dialogue and negotiations, and china hopes the u.s. will stop its wrongdoings and meet china halfway. and i think -- >> that's much more conciliatory than we've heard in the previous rhetoric that's been ranched up. >> and it's only 50 points but we did see a little bit of an uptick in the averages, more than where they were, and it's being attributed to some of those comments >> okay. we want to thank keach and also
scott kupor for being here on pub day of the big book. >> thank you, i appreciate it. >> thanks. when we come back, chicago fed president charlie evans joining us for a first on cnbc interview. lots to talk about given where treasury yields are. later, former council of economics advisers chairman austan goolsby and art laffer will talk about latest on the trade front.
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trump talks trade. the president meeting with british prime minister theresa may amid pomp, circumstance, and protests calling an uber! a horde of wall street firms initiating coverage on the wall street hailing giant as the post-ipo quiet period ends. and we could see new tariffs on mexico in less than a week. so, what's the economic impact and the potential pain for u.s. consumers? senator rob portman, former cea chair austan goolsby, and former trump adviser art laffer will join us as the final hour of "squawk box" begins right now. ♪ the jig is up, the news is out, they finally found me ♪ ♪ the renegade who had it made >> announcer: live from the most powerful city in the world, new york, this is "squawk box. ♪
♪ wanted man good morning and welcome back to "squawk box" here on cnbc live from the nasdaq market site in times square i am joe kernen along with becky quick and andrew ross sorkin and the futures right now are just under -- as far as the dow -- up just under 200 points. 198, 199 points. we might see it happen as we're watching here. the s&p now up there's 200 on the dow the s&p now up 21 1/2 or so. the nasdaq up 54 latest move higher from -- we were up about 140, 150, and some more conciliatory comments from the ministry in china, china commerce ministry, about how we should work together through negotiation and dialogue to reach some type of -- but they also, the ministry also said that the u.s. has to agree to stop its wrongdoings, so -- >> right, but that's still
ratcheted down rhetoric from what we've been hearing in recent weeks, so we'll see. >> it is the treasurys are back -- at least they had been above -- now 2.11%. we're going to talk a lot about those with charlie evans in a moment. in the meantime, president trump is in london today meeting with members of the royal family as well as business leaders and prime minister theresa may at a business event this morning, trump said that the u.s. and the uk would be working on a trade agreement in the next few weeks and said that he expects a very substantial and fair deal. though trump acknowledged it probably won't be with theresa may, who is wrapping up her tenure as prime minister after losing a series of brexit votes, we're expecting a news conference from the president and the prime minister just a little later this hour we will bring that to you live when it happens. okay, and many on wall street have gone from expecting little action from the federal reserve this year to now anticipating one or more interest rate cuts, this as the fed conducts its own latest review of monetary policy. we want to get over to steve
liesman, who joins us with a very special guest this morning. steve? >> andrew, thanks very much. good morning i'm here at the chicago federal reserve bank in chicago with chicago fed president charlie evans. charlie, thanks for joining us this morning. >> good morning, steve. >> so, let's talk about the conference that we're at here. this is one of the fed business conference, part of a broad effort to what, rethink how you guys make policy >> yes it's a long effort going on this entire year. we've had a number of sessions at federal reserve banks in dallas, in boston, and others, where we've talked to local leaders, people in the community, trying to ask their perspectives on monetary policy. what does maximum employment mean to them what does stability mean chair powell has commissioned everyone to look at the long-term framework. it's a good time to do it. the economy is doing well. inflation is getting close to 2% it's a quieter time. and it's a good time to think about our framework, sort of every five year type of effort
do we have the right tools do we have the right communications what could we have done differently, perhaps we have leading academics coming, presenting papers. >> do you think a very different way of making policy lies at the end of this process? >> i think we have to be open-minded about that i know when i think about our current long-run framework, i think it's a very good one i think our dual mandate has served us extremely well i think, thinking hard about what maximum employment really means is very important. thinking hard about what symmetric inflation objectives really mean is important in conducting policy to achieve that over the medium term. i think that benefits the entire country. >> we last had a chance to talk in april and it seems like a good amount has changed since then there are now, well, one new round of tariffs from the president and a threat for another round of tariffs from the president. and the market now is in a sort of almost extreme mode of forecasting coming rate cuts what's your view how do you process these tariff
announcements from the president of the united states >> well, i think we have to be careful in looking at where the economy is and where we think it's going so, it's only been six weeks since we talked last time, steve, and i think the fundamentals for the economy continue to be solid i think the consumer continues to be in a good position labor markets continue to be strong business, business fixed investment is probably not as strong as i would like, and there's probably uncertainty that's impacting that and some of what you're talking about in terms of trade uncertainties, the global environment, how europe and china and emerging market economies are growing or how they might be slowing down is an issue. and so, i think we have to think about that we have indicated we're data-dependent i'm a little nervous that inflation is underrunning our 2% objective. i said that six weeks ago. and you know, i think that, you know, there is a reason to be thinking about the stance of policy i'm pretty comfortable with where we are at the moment in looking at the data, but there is uncertainty, for sure. >> so, a policymaker who's a
little nervous might not do anything, but a policymaker who's very nervous about low inflation might cut rates. are you towards that idea of cutting rates in response to low inflation? >> it's a great question, and i think it sort of gets at the committee's perspective and how we react to the data i, frankly, would be a little more aggressive than most in terms of defending our 2% symmetric inflation objective. i think that one of the messages in some of the papers that we're going to hear about today and tomorrow is what does it mean to hit your inflation objective are there other means, price-level targeting, temporary price-level targeting, over the economic cycle to hit 2% symmetrically? and if you're going to underrun at the beginning, maybe you should overrun that 2%, 2.5% after that and so, myself, i could definitely see being more aggressive, but that's sort of a strategic reaction function question >> i get that, and
compartmentalizing that makes perfect sense. but now the possibility of not only the existing tariff regime with china, but additional tariffs on top of that, and a possibility of tariffs with mexico tariffs, at least in the first order, raise prices. how does the federal reserve cut interest rates in the face of higher tariffs that raise prices >> well, for one thing, we're underrunning our inflation objective at the moment. i mean, it's 1.6% year over year on the core. we've talked about how it's likely temporary, but i also think that we should be overshooting 2% in order to be symmetric. so, i think the magnitudes of the one-off price increases that you would expect to see from a tariff increase are easily manageable and we can look through that you know, the concern would be if you saw very strong increases in prices that somehow were accommodated by monetary policy that led to inflation upwards of 2.5% or more i don't see anything like that i mean, we're so far from that even with a very low
unemployment rate at 3.6%, the economy is performing better and differently than it has in the past the inflationary pressures seem to be not strong, or perhaps absent so, i think some light tilt to accommodation on monetary policy's okay. we're at the low end of what most people think of as neutral. and so, given the economic situation, i think that's appropriate. i do think that, you know, we don't want to get in the way of the economy, and the economy has been strong. and i think that our current setting has been appropriate, but if we sense that there was some greater uncertainty, some softening, we'd have to take that into account and ask are we getting in the way of the economy. i don't see it that way at the moment, but we need to look at the data. >> becky has a question. >> hi, charlie it's good to see you thanks for joining us today. we watch treasuries every day. >> thanks, becky. >> and we're kind of confused. i wonder why you think the ten-year's yielding 2.1% right now? >> well, you know, i think we have to sort of speculate on
things like that the u.s. is a safe-haven flow. i think there's increased uncertainty, other safe haven government bonds like the german bund are also extremely low, and you know, the japanese bond, too. so, i think investors are responding a little bit to increased uncertainty over the international environment, and you know, i think we just have to think about that. that doesn't necessarily mean that the u.s. economy is weakening, but we need to be paying attention to the data >> i want to pick up on where becky was leading on that, which is that the broad spectrum of interest rates are suggesting low inflation, and i suppose weaker growth. how much concern do you have when the federal open market committee says we are being patient for some time to come? and the market now has a july rate cut priced in and two rate cuts this year with pretty good certainty. >> well, i moean, at face value
it means the markets suggest something i have not yet seen in the national data. as i go and have meetings with my directors, as i call around businesses, as i hear a little more if, in fact, there's more nervousness, then i would, you know, perhaps take that -- well, i would certainly take it on board in terms of what that means for the future but i definitely think with inflation being a little bit on the light side, there's the capacity to adjust policy, if that's necessary, but the fundamentals for the economy continue to be solid the consumer is solid. so i think we have to navigate this, think through what this really means. >> one more question, guys at home, if you would bear with me. how do you make a policy when in a tweet, the problem that's created or what the market was reacting to, could go away or it could be back? does that change how you might make monetary policy, if the
proximate cause of what's happening in the market cannot exist tomorrow >> look, we have to be paying attention to data. we have to be paying attention to market signals where they seem to be seeing some things that we're not seeing as quickly. i get that we definitely want to be paying attention to that. but at the moment, nervous about inflation, real side of the economy still solid. uncertainty a little bit higher, perhaps, you know, with tariff discussions and global growth and all of that. so you know, we need to be paying attention we are going to be paying attention and i look forward to our next meetings and the rest of them this year. >> charlie evans, thanks very much for joining us. >> thanks very much. >> charlie evans, chicago fed president from the business conference here in chicago. coming up, an on-the-ground view of the u.s. trade war what's the state-level impact from tariffs already in place? and from the new tariffs on mexican imports that could hit in less than a week? we'll get answers from ohio republican senator rob portman, who says trade supports the jobs of nearly 500,000 people in his
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indicated up by about 190 points for the dow. that is a significant jump from where we started the day we've been in higher territory all morning long, but now, again, you are seeing up by almost 200 points for the dow. yesterday the dow managed to eke out a gain of about four points after being up and down throughout the session obviously still a lot of questions about what will happen next with china and those tariffs and with mexico, but this morning, a little bit ago, we did get a little bit of -- another message sent from china. what was it, the commerce ministry there >> yes. >> just saying, potentially -- >> let's talk. settle this through negotiations and dialogue >> that certainly helped things a little bit market's moving on a day-by-day basis based on what's going to be coming. big question still out there, will these tariffs still be implemented with regards to mexico >> that could back out of -- >> back out of correction territory. it was down after yesterday's losses but this morning indicated up by about 54 points. okay all of this today, all of the
new uber calls this morning have been buy ratings that were the equivalent the highest so far, btig coming in at $80 a share. on the "squawk" news line is walter piecyk, analyst from btig good to have you on the phone. as mentioned, everybody's coming out. the quiet period is over you're at the highest end of this explain yourself >> i think a lot of the focus is on the near-term obviously, there's been a deceleration of revenue as they've kind of penetrated into this, what i would call the taxi market so, when we've approached both uber and lyft, it's really about what autonomy can do for them over the next ten years. this is a technology that can really -- >> but when do you think autonomy is real >> i think it starts to impact their numbers five years from now. so, you have to go out ten years, at least, to see where the inflection point is. if this is something that could reaccelerate revenue, because it
brings the price down to the consumer and obviously brings the cost down to them, so it can reaccelerate the revenue the problem is, i'm sure as you realize, is it's not happening next quarter or even next year, but there will be what they would call geofenced, or specific routes where autonomy will start and that will require the platforms of companies like uber and lyft in order to do that so, to look at this stock based on a 2020 revenue multiple where revenue is decelerating, i just think it's the wrong way to look at it. you either believe in autonomy or not and look, the companies downplay autonomy because it's not impacting their numbers in the near term, but uber's spending $700 million a year on their own autonomy group they've got 1,100 people in that group, and they're not the only one investing. >> right they're not the only one investing. in your report, you say the biggest risk to uber and lyft might also be their biggest opportunity, what is the autonomous piece but the risk is that somebody's going to get there first. >> 100% true i mean, if elon delivers on his
1 million uber taxis next year, that's going to be a problem, especially how he describes them and their ability to drive everywhere lyft only has a million drivers or 1.1 million drivers -- >> if you're long uber right now, are you short tesla >> i think there's probably more to tesla than just his autonomous strategy, right there are people buying electric cars we don't cover tesla, but there's more to that company than that. however, on that point, on his autonomous point, if you believe that elon is going to deliver on a million uber taxis, that's going to be a problem for uber and lyft -- >> but i'm asking you straight up, do you believe it or you don't believe it >> no, we don't believe it at all. i think the way autonomy is going to evolve is in specific locations. let's take in new york i mean, if the autonomous cars there can take you up third avenue, because it works and there's one close to you, great. there's a small situation where they can help save you some money, and obviously create better margins for the company
but if you want to go to a different location, out to new jersey or up into westchester, you're going to need a driver for, you know, several years, because the ride is going to be more complex so, is the user going to switch back and forth between, you know, someone that can give them one specific ride versus all the rides, or are they going to stay within the app that uber and lyft can deliver to the end user >> walter, final question. maybe just help us with this so many banks, big banks, are coming out today with buy ratings. so many of them were involved with the ipo, at least originally some people would say that they know the company better than everybody else, and therefore, you should take what they say very seriously others say they're as conflicted as conflicted can be, and you should take it with a grain of salt which side are you on? >> i think investors should take in everything that they can. obviously, you know, there's conflicts that exist in everything and investors should take in all of the inputs that they can in order to make their
decision >> okay, walter. great to talk to you this morning. appreciate it. >> you bet >> see you soon. when we come back, a lot more this morning. we're going to talk trade and tariffs with ohio senator rob portman. he represents a state that could be hit hard by some of these new tensions with mexico we're also expecting a news conference in london any minute now from president trump and outgoing uk prime minister theresa may. we'll bring you that live when it happens as well ren bchted to "squawk box" rig he ocn
welcome back to "squawk box," everybody. we've been watching futures and they have been improving through the course of the morning. right now dow futures are up about 220 points above fair value. s&p futures up by 23 the nasdaq up by 63, and a lot of this, again, coming as it seems like there could be some more conciliatory talk coming from china when it comes to potentially sitting down for the tariffs and trade talks. and fearing the onslaught of more damaging tariffs, mexican officials are in washington this week discussing ways to hold back migrants from entering the u.s. illegally president trump tied the two issues together last week as he seeks to fulfill campaign promises on immigration and maybe tries to do, you know, to stop some of the crisis on the border just about fulfilling a campaign
promise? joining us, u.s. senator and former u.s. trade representative rob porterman. >> hey, joe. >> senator, all politics are local. i know where you're from we're from the same place. i know you care about ohio, but as an american, you probably have some concern about what we are or are not doing to secure the southern border, and we're getting nowhere in congress. do you at least understand president trump's frustration with what we're seeing on a daily basis down there and that he's now conflating trade and security of the country? does it make sense to you as a former trade rep >> i totally share his frustration, joe and anybody that goes to the border, even sees any of the reports on the border has to agree it's a crisis. and the problem is, we have a broken asylum system and it's too easy to work. >> right. >> those are the two big issues. until we solve those, we're not going to be able to stem the flow, i don't believe, because people are being told by traffickers, hey, we'll bring you to the united states, we're going to charge you a lot of money, and once you get in,
you're in. and you can get a job. so, congress has to fix those two things because the president can only do so much, and i support what he's doing in terms of the border enforcement, but that's not going to solve it if you just have hundreds of people coming over a day because of the magnet of the united states. so i agree with that what concerns me, and as you mentioned ohio, our biggest trading partners are canada and mexico, by far it's not china we send a lot of agriculture and auto parts to mexico you don't want to not do this usmca. that's a really important agreement. this is the new nafta. and it's right on the cusp right now, you know? it's the president's top legislative priority, i was told a couple weeks ago and i think he's endangering it by saying, okay, yeah, we negotiated this agreement on trade, but now we're going to raise tariffs, which is exactly the heart of the trade issue so, i think it's going to be tough. i mean, the day it goes to the mexican parliament to get ratified, you know, we announce we might put these new tariffs on so, i hope we don't do it,
because i think it's going to side-track it in mexico. the agreement won't get ratified there, but also makes it tougher for us to do it here. >> but the president would have to basically back down, in your view, because you don't believe mexico can solve the -- can solve it on its own unless we change the asylum laws if they're unable to solve it, not even just unwilling to -- i mean, they're talking about it right now -- then he's not going to be able to back down -- he's going to want to put these on. it's going to happen, you know, unless mexico does come up with something that's viable. >> yeah. joe, i think there's a couple nuances here one is i think they can do more. if you talk to the experts, they'll tell you they think mexico is doing more than they've ever done, and part of this is they have a pilot program to say, okay, if somebody comes to a port of entry and claims asylum, they have to wait in mexico, which makes a difference in terms of somebody wanting to come here, because they aren't brought into the united states and allowed to go into the community. mexico could do more of that
they're already doing it, but only on a pilot basis. second, they could do more in terms of their own border and we're working with them on that, on the guatemala border. but let's be honest, if people know they can make, you know, 10 to 20 times more coming to the united states, they'll figure out how to get here. it may be by boat over to the florida coast, but it's a long, treacherous journey already, and people are willing to take it. so, that's tough to rely on that but they can do more, and maybe they will announce on wednesday they're going to do more and maybe we can avoid this. that would be good, because it allows us to focus on two things -- one is usmca, to get that done, which is a good agreement. it's going to create hundreds of thousands of jobs. it's great for the economy we don't want to avoid doing that but second, let's keep the focus on china i mean, this is -- you know, i've talked before about having too many balls in the air? this, again, distracts us from where we would like the focus to be by the way, we want mexico's help, we want canada's help, we want europe's help, we want japan's help we want everybody to help us in terms of putting pressure on china to do the right thing. because what we're talking about
with china doesn't just affect us, it affects other countries as well, to force china to play by the rules. >> so, that's the way out. okay you think that's possible? wednesday, tomorrow we hear, all right, mexico is going to do this, this, and this, you know, they're going to do a little bit more, as you called it, nuance then the president says, okay, that's a start, but we, again, need to put some pressure on congress to change the asylum laws you think that -- >> absolutely. >> you think that is going to be what happens, or do you think that they go on at 5% on friday and go up to 25% later >> well, i'm hoping for the former, joe, because i think the latter doesn't make any sense. and i think actually what will happen is if the tariffs do go into effect on monday, which is the first 5%, i do think congress is likely to have a vote, because the president is doing this under these international economic emergency acts, the iepa, which is going to require another vote of
disapproval. you remember that the last time he invoked a national emergency with regard to the border fencing. last time he lost in the disapproval, but then he vetoed it and congress was not able to override the veto. i don't know what would happen here, because last time it was about essentially shifting money from the military construction funding that we had already appropriated into the border, particularly into the fencing. this time it would be about imposing tariffs, which for a lot of republicans, you know, it's a tax it's a tax borne mostly by consumers, most people think, but it's a different kind of a question so i don't know how that would come out so i hope we don't go down that road i think we need to avoid it. i think we can and my hope is that's what will happen tomorrow. >> well, that's a good setup for what we see tomorrow and if you're right, hopefully, you'll come back and we'll talk about it at that point, senator. >> excellent. >> reds will still be five games below .500, just like they were last time we talked. >> hope springs eternal. >> you know, staying five games below and not being 20 games
below is something they've been playing .500 ball, but -- >> yeah, we're doing a little better pitching is coming along, but got to get the bats going. >> yeah, got to get the bats going. dodgers. dodgers, wow all right. thank you, senator. >> thanks, joe take care. >> we'll see you around. coming up when we return, we are going to tackle the tariff debate from a new angle. do they work that's a real question and how long can american consumers and the economy bear those costs? we're going to talk about the issue with former council of economic advisers chair austan goolsby and rmfoer trump adviser art haflaffer incomparable design makes it beautiful.
welcome back to "squawk box" on cnbc, live from the nasdaq market site in times square. here are the stories that investors will be talking about, according to us. they may or may not, actually. renault may be about to give the go-ahead to a buyout by fiat chrysler the automaker's board is meeting today to discuss the bid the french government and fiat
chrysler have reportedly resolved their differences over the offer. one remaining sticking point, though, reportedly, opposition to the deal by an activist hedge fund, which says the deal is too weighted in fiat chrysler's favor. and russia is ordering dating app tinder -- i saw this. i've got to think about this russia is telling tinder to share user data and messages with the government and intelligence agencies. >> what? >> yeah. >> why >> i don't know. it's the latest in a series of moves adopted by the russian government aimed at strengthening control over online services. facebook, twitter, and snapchat are among those that have been subjected to increasingly stringent requirements in russia and i guess tinder's the latest? >> they're not particularly lgbt-friendly. >> in russia >> yeah. you're going to tell people you have to show over your dating history and what kind of messages you've been trading with people? that's particularly concerning >> yeah.
it's a different world, isn't it >> yeah. >> mine wouldn't have been probably too interesting for years and years at a time. >> all i can say is thank goodness i grew up before any of this complete capturing of your entire socialization and your history. think about how we grew up before any of that was being completely -- >> well, thank god the crickets would have been -- >> every dumb thing you did in your life to have posted around forever. >> be like long droughts where joe kernen is. >> shock. >> nothing happening here. just forget -- don't even monitor -- anyway, chicago president charles evans says he would be aggressive in defending the fed's 2% inflation target, said this to steve liesman just a couple minutes ago the u.s. economic fundamentals are still solid. steve's going to have another fed interview coming up, talking to vice chair richard clarida on today's "exchange" starring kelly evans. and latest tariff threat out of washington entering on mexico, but the trade dispute
with china is still brewing. and now we've got a war of words between the two countries. kayla tausche joins us now with more >> hey, andrew there's no quieting down yet the u.s. is hitting back at china, trying to correct the record after beijing released a white paper over the weekend saying the u.s. reneged on talks, not china the u.s. trade representative and treasury issuing a joint statement saying china is misrepresenting its actions, saying, "our negotiating positions have been consistent throughout these talks and china back-pedaled on important elements of what the parties had agreed to. the chinese embassy releasing a lengthy statement in response to separate remarks from secretary of state mike pompeo, calling those comments arrogant and prejudiced and that, quote, whoever attempts to patronize and bully the chinese people in any name will only end up in the ash heap of history. vice president mike pence is planning a china speech toward the end of the month, still to be determined how hawkish that will be, but it does come just before a potential meeting
between presidents trump and xi at the g-20. meanwhile, mexican officials in washington again today sounded a hopeful tone that a comprehensive proposal on migration it plans to put forward tomorrow will help avert those tariffs next week. listen >> the mexican delegation arrives to washington, and we have very, very productive days in order to strengthen the mexican proposal that we are going to present tomorrow. >> we will see exactly what that proposal is comprised of tomorrow, whether it's enough for the white house. meanwhile, republican lawmakers back in session today are looking to find a way to stop these tariffs, or at least blunt their effects, becky you just heard from senator portman a few minutes ago about that we'll see what they come up with back to you. >> kayla, thank you very much. for more about how the president's tariffs, those threatened and already implemented, are affecting both the u.s. and world economies, we bring in austan goolsby, former
cea chair, now with chicago's booth school of business he is touring in support of the late alan krueger's new book "rockonomics." also joining us, art laffer, former adviser to presidents reagan and trump and author of "trumponomics. by the way, he will be awarded the medal of freedom coming up later this month thank you both for joining us. >> thank you. >> and art, congratulations on the announcement of the presidential medal that's really fantastic, and we congratulate you on that >> thank you i'm very grateful for it it's nice. and austan, it's good to see you, sir. >> yeah, good to see you, art. >> austan, also on the book tour you're out on right now, obviously, he was a friend of ours, too, alan. and glad to hear what's going on we'll talk maybe more about this in a moment. but gentlemen, let's jump into what we're talking about today, the tariffs. austan, you've made the point that in the short term, you think that the chinese tariffs are going to cost about $100 billion to the u.s. economy, to u.s. consumers
what do you think happens if these tariffs from mexico are actually implemented next week >> i don't think that they're actually going to get implemented, because i think this would be such an own goal this would be the most self-defeating, self-inflicted wound in modern political memory, because two-thirds of the imports that mexico's sending to the u.s. are parts that go into u.s.-manufactured goods. so, the biggest loser from this is not the mexican economy, it's u.s. manufacturers i mean, tariffs are terrible and tariffs on intermediate goods are even worse so, i think if they were to start escalating and we're in a simultaneous two-front trade war with two of our three biggest trading partners, i think, a, the markets will be in for a rough ride, and b, we're going to be talking about the possibility of recession within 12 months. >> art, what do you think? do you think those tariffs on mexico will get implemented?
>> well, there are three reasons for tariffs, becky number one, to raise revenues, but we haven't really used that much since 1910. i mean, tariffs are a tax on traded products. that's what it is. then they're also used to protect industries, which is what china's been doing with its tariffs and its policies and lastly, it's to change behavior now, we put sanctions on libya we've put sanctions on iran. we put sanctions on russia, north korea, to change their behavior what president trump is doing here is putting on specific tariffs on mexico to stop them from not -- from allowing all of the migrants to come into the u.s. now, i am not a person -- my pay grade isn't high enough to think as to whether or not that's worth it, but it's a very legitimate use of tariffs to get them to change their behavior on allowing immigrants to come through mexico from honduras and other countries, coming into the u.s. so, that's a natural one austan's completely correct on the -- >> on that point, though, just on that point -- we'll get to the damage potentially done by it, but on that point alone, we
just heard from republican senator rob portman who said that in this situation, he thinks it may not make a lot of sense, because if you talk to the experts, they say mexico is doing more than they ever have before to try to stem the flow of those people coming through, doing things that they have never done to this point, including holding people on the other side of the border before they allow them to process and go through i guess if you kind of -- >> and the number of people here -- >> i understand tariffs for terrorism, for iran, for north korea, but this is a different situation. >> well, it's way above my pay grade -- >> and the number of undocumented -- >> i'm sorry, art? go ahead. >> sorry it's way above my pay grade. i don't know whether it's the right thing, but the president is perfectly reasonable in using tariffs on mexico to get them to change their behavior, to slow down the immigration into the u.s. now, i don't know whether it's a worthwhile project or not. obviously, senator portman does not agree with the policy, but to me, if you look at those train loads coming in, mexico i think could do a lot more to stop the illegal inflow of
migrants into the u.s. >> and your point that you were making -- i'm sorry, i interrupted before, art, when you were making the point of what this would mean economically >> well, i think it is a serious thing. i think austan's completely correct on that. i mean, two things tariffs are a tax. and taxes are paid by the people who produce the products and the people who buy the products, and sometimes the tariff is so high that both of them just stop and there's no rade. now, with regard to tariffs, this is not an income tax, this is a product tax and as such, i think it will do damage to both the u.s. and mexico, but i think mexico, given that their exports to the u.s. are much larger than u.s. exports to mexico, i think it will give them a wake-up call as to whether they want to allow those migrants to flow through and again, i don't want to make a judgment as to whether they should or should not allow them to flow through, but it is, if you want to stop the migration, you've got to get the mexican government's cooperation and a tariff on that, those exports, will do just that. >> austan? >> i really think that that's
not true i think, a, the number of undocumented immigrants to the united states has been falling over the last four years by almost 15%, more than a million people so, the mexican government is not sending people here like it's an export these are people going on their own volition trying to escape conditions where they are. if you try to blow up the mexican economy, you're going to increase the flows of people coming across the border you're not going to decrease it. i think it's a mistake to think that way and i think secondly -- >> yeah, austan disagrees -- >> -- the constitution clearly says it's congress' job to set the tariffs, not the president the only thing that heartens me here is i think the president was just firing this off because he was trying to change the subject from the mueller press conference i don't think he -- >> oh -- >> he has done exactly this about mexico before, threatened massive tariffs. and i think since this would be the biggest tax increase on the
american people in 30 years, i think he's going to find a way to just back away from doing this and go back to china. >> art >> oh, my goodness well, i'm not a legal scholar -- >> someone just switched my channel to cnn what the hell happened god, i've just been transported over to cnn, austan! or even worse! >> now, wait a second, joe -- is that joe >> changing the subject -- >> the guy who has not paid off his gambling debt. >> where am i? i'm in "the twilight zone. >> thank you, austan. >> go ahead. what were you saying, art? >> i don't know whether -- the illegal aliens do seem to be a major political issue in this country and people pretty much don't like it. i saw the films of the caravans coming and all that. and austan now is saying these people should be allowed in here that may be true but it's not -- that's not my adjudication, butthe president doesn't think that's good. he doesn't think illegal immigration's fair and he's trying to do something to stem that flow.
and what other policies does he have, i mean, other than threatening mexico with not doing the proper job of stopping these people from going through mexico >> you're arguing on behalf of the president, not based on any kind of economic rationale, but based on the politics of it -- >> oh, tariffs are bad tariffs are bad. >> so you disagree with the president? >> well, no, let me just say that taxes on smoking stops people from smoking. taxes on speeders stops them from speeding. those taxes are bad, too but hopefully, the benefits from getting people to stop smoking and stop speeding will be good, and that's what the president's policies are doing -- >> this is a tax on american manufacturing. this will get us to stop doing manufacturing. and so, that's why this is not a good idea -- >> that is true, austan. >> pass a law. look, if the president wants to change immigration policy -- >> -- taxes, would you >> if the president wants to change immigration policy -- >> but austan, would you get -- >> let austan answer the question -- >> sorry. >> he cannot pass a law -- >> sorry, excuse me. >> austan, go ahead.
>> his ideas -- his ideas are not popular, that's why he can't pass a law you've got two-thirds to three-quarters of the country opposing each of the individual immigration law ideas that the president's put forward. if he wants to confront mexico about its behavior, which as i is, is not the government's behavior -- it's a bunch of individuals -- but if he wants to confront mexico's behavior, he should go pass a law, as the constitution clearly outlines -- congress should pass laws about immigrati immigration. declaring a national emergency and putting a tax on u.s. manufacturers is a mistaken way to go about this. >> gentlemen, i want to thank you both for your time maybe we can have you back next week when we find out if the tariffs have actually been put on but right now i want to thank you both for being here. >> but austan, i mean, art gets a presidential medal of freedom. you get dinner with me at taco bell, so, someone's doing something right -- >> i want to join you guys >> you've got to rethink things.
you've got to rethink things -- >> taco bell is the mexican phone company, you know? >> oh, that's right! i didn't even think -- you know, rosa mexicana, we'll go. there's a couple really good ones here, austan. seriously, i'm waiting, waiting to try to pay off. waiting, waiting, waiting. >> i'll take a five-layer burrito. >> all right we've got to have mexican when you do come back i decided that >> art's book is called "trumponomics" and austan is out in support of the late alan krueger's new book called "rockonomics." coming up, a look at u.s. equities as we head to break, take a look at the scene in london where president trump and uk prime minister, for now, theresa may are scheduled to hold a news conference any pin we'll bring you that live when it happens stay tuned "squawk box" coming right back a little sweeter. y ♪ to give every idea the perfect soundtrack.
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all right, welcome back, under an hour ago. dom chu is here, he's got a look at some of this morning's biggest stock movers good morning >> we are going to start with shares of tiffany just down 3% or so, roughly 100,000 shares premarket value. profit is slightly better than expected, sales were below forecast and sales at a established store location fell by more than expected as frozen
tourists spending starting to slow down. also now watching shares of fox, taking down around 15% over 200,000 shares premarket sales beat estimates but it did not low its full year sales forecast some of those bigger strategic sales. we'll end with shares with beyond meat which are up around 5% or so, over 100,000 shares premarket right now. citing trends and adding alternative meat products to food menu items at fast food chains i traded above or below the $100 mark intraday for three straight days it went public last month. back over to you andrew. >> i want to talk to big tech right now taking a beating joining us right now to discuss the impact on the nasdaq is the latest technical signals that
are coming from seth meyers. the chief equity technical strategist at merrill lynch. >> when we look at technicals a few major developments happened over the last couple of months plenty of tops globally, nasdaq 100, s&p and stock 50 and dow, small caps, just moving back here and taking a look at the nasdaq 100, it broke down from a technical pattern calls head and shoulder top it may be 60.42, maybe could get a deep correction, maybe 15% on the nasdaq that pattern remains firmly in place while below 7300 on the nasdaq when you this i nk of the odds
how do you handicap it >> i am hahn solo, never tell me the odds there is a good shot that you can see it quite frankly, as long as you are below 7300 of the nasdaq 100, you should be able to test that retracement level and that target it does not go well for faang down also and the s&p. tech is the biggest part of the s&p 500. the s&p 500 also broke down from the head and shoulders top that suggests that we could see a 50% retracement down to 26.50 at the s&p as long as you are below 20 for the s&p, that's a anthropologist it is not necessarily a sale june you can see a pull back but when you look at summer season and pattern you can get a rally, it comes off a lower level >> can i ask you a technical
question >> sure. >> when you think of the technicals, how do they interrelate of what's happening in the news over the last five days relative to the tech companies? >> well, tech companies are leadership yesterday was a shot over the ballot, long return we do expect tech to remain leadership. >> do the technicals signa signal -- quite frankly -- >> the answer is no. there are some stocks look like it is going to roll over and some maintains leadership. yesterday was a shot against that >> steven, what i was interested yesterday just because i thought we may breach a couple of levels of the s&p and other areas, technicals can be useful when you have a potential sea change like we had yesterday hearing of all the different governments
including nasdaq investigating the txdot. where do you relie on things and how does it take something like that to show up in the technica technicals >> it depends on stock by stock level. there is certain stocks showing they are at risk for bad news and other stocks that are getting caught up on this. for a technical perspective, what do you do with that you look at where the most recent highs or lows was or the friend lines were and you had your stock placing accordingly just so. that's what happened yesterday on a lot of the key stocks, not even the ones mentioned of the antitrust that the government erased yesterday we have to manage our risk there is the risk, that 100 can pull back deeper >> steven, thank you >> you bet jim cramer joins us now at
the best level we have seen this morning, 227 i don't know whether whether - conciliatory language from the ministry and commerce ministry in china or the notion that maybe this a mexican turf, do you think they go on? >> it is really hard because the president gotten a little arbitrary and difficult to game him. i would say sales report says things are honky-dory, it is hard to go against the groups that guests are talking about. if you think longer term, i don't see much, yes, could google be broken up? it is probably a positive. facebook, is there anything new there? the only thing that's worrisome
is the apple app store they should have bought stuff back they didn't. it is time they pay. i think that's some what unrealistic, they do a lot of business in china and it is a great place to do business for apple. i think that's the one that i really like apple, it is inexpensive. that's the one you have to be weary of >> we were talking about it earlier whether that president's feelings about amazon or washington post or apple, you can filter it down to the doj and ftc? >> sure, i remember the doj was adamant. this is how we stay ahead of the rest of the world that we lost leadership in some things but we have tremendous leadership in digitalizing i think these are democratic companies. i know that sounds odd these are companies that i think
the presidency -- there are certainly games for it if they hire a lot of republicans, they should hire a lot of republicans, that's not the way they do things they hire the best people who ever they are. >> all right, jim, we got about a minute left, boeing's sales force and what else in terms of company specifics. >> amazon is the one that's doing the best that were crushed. that's the one i think has the most ability to rebound, the president hated them for a year. the boring hatred versing the fresh hatred with apple. the house investigation -- all these antitrust implications are litt little over done, i think.
>> that last guest was chilling, was he >> i am assuming it is richard's son. anyway, we got to go >> jim, the president is going to be making his way out -- >> we are taking live pictures from london. there you see the front of london, where melania and president trump entered today with theresa may, we have been waiting for them to come out they'll be talking to the foreign and walking out of the foreign commonwealth at this courtyard. you can see ivanka trump coming in we have an insanely small screen before i saw mike pompeo and secretary of the treasury, mnuchin they're both taking their seats. they'll be waiting for president trump and the british prime
minister and theresa may talking about the potential for a trade agreement between these two nations, it will not be something with theresa may since she's stepping down later this month. there is been a lot here about the common ground between these two nations. we'll hear more about that in a few moment "squawk on the street" is going to be picking up coverage right now. ♪ >> good tuesday morning, welcome to "squawk on the street," i am carl quintanilla with david faber and jim cramer the president and the prime minister of the u.k., theresa may are due to hold a joint conference we'll see what's on the docket whether it is trade or china or any advice he has for them on brexit >> yeah, there is a lot of people say could we do so much more business with britain that it may offset some of the things with brexit. i don't think