box" begins right now. ♪ ♪ >> live from new york where business never sleeps, this is "squawk box." >> good morning. welcome to "squawk box" here on cnbc. i'm michelle caruso-cabrera and joe kernen. becky quick is off. u.s. equity futures at this hour are negative. they suggested dow would open lower nearly 89. overnight in asia, down across the board, nikkei lower 1.5%. hang seng lower. shanghai lower. european equities are negative this morning as well. the dollars stronger this morning. wti is lower.

45.88 for wti. so still talk about the possibility whether or not it is going to 50. brent is 47.53. natural gas is 208. >> janet yellen won't completely rule out negative rates but the fed chair also saying that the tool would need a lot more study before it could be used in the united states. our comments coming in response to written questions from a congressman following her testimony on capitol hill. and jeffrey gundlach telling an investor web cast he sees some hawkish rebellion showing up. he calls yellen the biggest dove. 50% chance of only one more rate hike this year. he can see the s&p going to 1600. on today's economic agenda couple of things coming up.

april retail sales and the producer pricing index both out. sales expected to rebound after a decline in march. then we're going to get may consumer sentiment and march business innervate ris. >> retailers have had some problems this week. >> i heard. >> you missed a lot here. did you see some of the people we had on this week? >> i heard. >> your buddy sidney blumenthal was on. >> i heard i heard -- he described me as his little friend. >> like almost a little marco. i did one liberal --. >> viewers so kind. they tweet me.

-- i heard. >> [ inaudible ]. >> big week. >> guy that jamie called. >> a jerk. >> right. >> is jerk a word? it's half of a word isn't it? >> i said rim job radar when they did that. [ drum roll ] >> and he turns red. i don't turn red. >> announcer: this awkward momentum has been brought to you by joe kernen. >> we used puts earlier which is is also something that can a is -- meaning right. >> it's not nice to say that. >> it's an anatomical yiddish term. >> i didn't know that. >> you didn't know that. >> i just knew that it was a

derogatory term. >> everybody here knows. everybody else knows here. you want to talk retailers. you want to get out of this? you're back and it's like i can't believe this. what time it? >> also this -- can anybody use yiddish? >> why -- >> i don't know. i'm just curious. there are certain things -- >> i think you're allowed to call someone a schmuck or a puts or something like that. >> a mensch? >> i don't know. i'm just throwing it out there. >> you're saying maybe i shouldn't use because i'm -- >> i'm not saying that. i'm just throwing it out there. i don't know what the rules are. >> real quick. seinfeld, they have done everything on seinfeld. ♪ remember the jewish dentist converted to judaism and then all he did was tell jewish jokes. and and -- this is not the same

thing as calling someone a schmuck. >> it might be. >> are you -- >> shares of nordstrom getting slammed this morning. it is the latest retailer. i'm not gonna ever use -- it's your stuff fine. you use it. >> i'm saying de blasio got in trouble for his stuff -- >> totally different. >> mean about that being late that thing? >> i'm just saying -- >> oh i god i wouldn't bring that up. >> i'm just making the observation that people have different sensitivities. >> -- pc. >> i don't know. >> -- to be very worried about the rules. >> i don't "squawk box" not to be a safe place. >> this is the safest of places. >> microaggression on you today. i'm sorry. never again. schmuck, no none of that. it is the latest retailer.

post a huge miss on both the top and bottom lines. the higher end department store also warning on sales. and at the same time -- >> holy smokes. 17% in pre market. >> we got to look at -- if we go a little long -- was that -- that might be this week michelle. >> no i think that 17% is right now. the -- >> right. how about a year. probably the high -- >> brutal. 51% down. and look at that leg, wow. >> retail at dillard also reporting first quarter earnings and profits that missed forecast and expectations. same store sales also slipped. that stock is also under pressure this morning. there you go again down 14%. said that in the top of the show. lot of these stocks down 15, 20% in a week. >> whether it's avmz or something bigger.

>> little bit of both i think. >> markets down today and i wonder if they are starting to wonder -- >> other day disney was down. comcasts is above where it was when disease said that. so maybe it helps to have all those cable operations and the distribution side. but that day, disease was down. you could equate the losses in the dow pre market. and the dow didn't change but by tend of the day it was down over 200 points. >> the futures board. wonder if as we see them down across the board for negative open is this spill through from concern about the retail sector? joining us is seth masters. and joe zeedle.

>> please answer my question. >> europe down too. any concerns here? >> if you step back the retail story shouldn't be much of a surprise. we've seen these retailers with very little pricing power. what we're seeing is the real retail sales growth is being eclipsed by nominal retail sales growth. ski think data a couple of months ago is first time we've seen that and plain english it means the number of units sold is growing faster than the number of units plus price. >> so it is deflationary. >> yeah. >> makes this point all the time the cost of things being bought is going down so sharply. imports from china, etc. feels like lately it's been

dramatic. is this amazon sucking up market share because the consumer has dramatically shifted its style of buying? >> i think a lot of things coming together. as we see it we are in a relatively slow economic growth environment with very low inflation and that dun help. on top of that there are some structural changes in demand. so you are seeing people buying more online. the distribution of income is shifting more to the tails. we think some of the dollar stores are actually attractive now because they are growing relatively even as the retailers in the middle of the pack are slipping. and also people are buying different kind of things. experiences more than objects. all of that is a shift. i think the key thing we're seeing is a lot of volatility swings up and down in the market overall and huge rotations within the market and that is

going to continue. >> and what does that mean? and why is it going to continue? >> i think the reason you are going to see that is lots of structural long-term issues are lurking out there. central banks are trying to fight them but as the central banks are pulling back their stimulus, that means that the underlying problems are becoming more visible and that is an issue of course in -- >> -- market in that case? >> no quite the opposite. i think you have to pick your timing. markets when they swing up and down a lot around a low return will have attractive entree points but the challenge is do it when the market is falling and actually become less aggressive when they are back up. >> very erudite way to say buy low sell high. >> right. >> we're bullish on the market.

and the markets are highly cyclical. energy, financial, materials. these more cyclical sectors and small caps we think drive the market higher and the reason is earnings. that is something we haven't b been talking about the s&p basically wrapped up its season. and we're seeing this trough and earnings recovery. and stipically when earnings start to recover the most cyclicly sensitive stocks benefit the most. small cap, energy, financials etc. they are going the best when earnings start to reflat and looking at what's performed or out performed since february it's been those sectors we're kind of following that playbook. >> we got a big tech corporate news story. apple investing a billion

dollars in the chinese ride sharing service. didi chuxing. the deal comes amid months of speculation ann about apple's auto industry interest. the company has hired automotive experts and although the firm is just looking to focus on the incar experience some wonder if apple is looking to build self driving cars. didi has like 99% market share in china totally overtaking uber. puts uber in a box. i think it is -- that is on taxi sharing and private car driving -- they own a huge part of the market. the question is whether apple can actually be in the chinese market. whether this binds them in a better way. or by the way whether it creates all sorts of not anti-trust issues in china but whether i could see uber start screaming in the united states and other regulators that somehow apple is

going to be trying to help these other guys. >> when you look at these investors -- china's investment corporation. a lot of chinese companies to me there could be a political whiff to this. to be alongside -- >> -- >> -- line them with the chinese government in china. >> -- great for them. i think it's great. -- >> what is the intention? is the intention political or -- >> -- combination of both. i think it is a great move. the question i have though is whether uber is going -- when something bad happens to uber in europe or the united states they are going to somehow say that if didi does business elsewhere, meaning if they start doing business here, then don't you think that uber is going to say this platform is unfair and apple is -- >> we'll find out. >> talk about apple. i was going to say hasta la vista to a trillion dollar

market cap. but i'm not sure. can i use spanish? i was going to seika say qe sar sara --. >> andrew, what am i. >> get me a taco bowl. >> what am i allowed to? >> get that joke? >> yes i do. next time you hear something really good happen in your life do not expect to hear mosul tov. i would not want to steal any of your proprietary phrases. the carnage in apple continues. i hope there is nothing in here. there is a lot of these foreign expressions. shares of the quid pro quo. shares of iphone down nearly 20%. joining us to talk about what's

ahead, robert baird analyst will power. not even gonna talk about that. -- i love it. i think your parents are cool. no way i would ever change it. now let's talk about what's you are our all time high priced target on apple was and how embarrassed you feel at this point. >> in this business long enough there is also some humble buy. good calls on apple and some probably not quite as good. >> -- [inaudible]. >> this is the political season right? texas two step. i'm based down in dallas. >> were you ever at 200? >> i was never at 200. i this i we've gotten close to 150. >> only as high as 150. >> we were in that range i believe. >> between 180, 150. all right. we've been over this enough. everybody got caught up in it. including the dow jones industrials. >> i'd never been on the show a

year ago. this is the top. if you get added to the dow it is only the downside. it was sage advice. >> that was the final thing that spelled doom but just the idea that at 750 billion everybody had a double on the stock and that would have been 1.5 trillion and we've seen this again and again and again in technology and it just seemed like that would be some heavy lifting. and then you do $50 billion a quarter or whatever it is in revenue. like that is your birthright for the rest of your corporate life, you are always going to be able to sell that much? that is not easy to do. >> they are still living under the shadow of the success of the iphone 6. victim of their own success. >> at least six months ago said who gets to a trillion first. and she said straightforward google gets to a trillion long before apple and here we are -- >> google get there is before amazon too? >> to pick one.

i don't know if we -- >> amazon was probably 250 salesmen. it's 380 or something now. even before she was on. it vaulted into something where you would talked about that. yesterday we had walter isaacson on also earlier this week. steve jobs is special. is that starting to become apparent? scott wapner said you don't need to replace dimaggio with mickey mantle but it would be good to have a solid.300 hitter. >> i think hoe is. tim cook. he's navigated the waters. has he been good -- >> baseball analogies okay? >> did you play baseball? >> -- >> i don't know. >> fossil's results earlier this week which of course i don't cover but look at an industry that apple's already disrupted and despite the fact they --

actually a very good product but at the end of the day doesn't move the needle for them. but that stock is priced for the -- >> needed something other than different size and -- >> absolutely. look sony has a product out there. the sony view which i thought apple would have. >> does it go below 80? >> well the go 90 product -- >> does the price of apple go below 80? >> see the clients are listening. listening -- >> we don't think it goes below 80. if we thought it would -- >> you have never downgraded. >> we have at one point. we think consensus estimates are still too high. question is how much of is that already in the stock. fiscal 2017. street has them up mid single

digits. we downgraded the stock actually in beginning of 2013 and it was already on its rear then. with apple you are either trading it or taking a true longer term view. >> this deal, the billion dollar investment. >> a little out of character for apple to go out and make an investment. talk about this back staining with your previous guest. they have all this cash overseas so this actually for them is a way to deploy cash and inject themselves further into that chinese eco system. >> political deal or something larger strategically. >> i think probably partically political. -- >> -- didi out of china and elsewhere? >> i couldn't even speculate on that. i suspect it is focused more on the chinese market. >> we call like dan ernst and

brian white and other analysts it's auto body, this is ed. they see cnbc calling and -- >> -- so thin too. probably workout every day. probably don't eat too much. >> one question about your number though. does that anticipate any kind of breakthrough happening or doesn't even matter. >> you still have this tough growth compare. and so we're not assuming new products so if the iphone 7 comes one big positive surprise. >> i'm talking about something wide wild. >> no we're not assuming a new product. >> lauf hyper loop. >> we want hyper loop. >> thank you for having me. great to be here. >> a monorail. every city. >> every city needs a monorail.

>> paid for with taxpayer money right? >> yes. >> that nobody rides on. >>. coming up shares of bank of america falling more than 17% this year. brian moynihan explosion to wilfred frost about the bank's perfornce and we're going to show what he had to say next.

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wilfred frost joins us now. >> hello again. yes i sat down with brian moynihan and we know from q1 earnings that march saw an improvement from january and february. i asked whether that improvement had continued through april and may as well. >> if you think about it from markets activity, trading activity what these guys out there are doing it is strong as march and continue to improve. if you think about from investment banking some deals aren't getting done and it is coming along but takes longer to restart. >> asset quality was also important in the first quarter. i asked whether that had spread from q1 to two and whether it had spread from the energy sector into others. >> we've seen -- the activity in

our commercial portfolios is still strong. from a credit quality is still strong and oil and gas frankly is mitigated because of the obvious issue of prices have changed. and you are working through things. quite a calling in our company is very strong. and continues to remain so. >> so quite a resounding response. certainly on asset quality saying they see nothing in terms of the issues they saw earlier. despite that bank of america shares still down year to date 14%. the next is see car in june. and for more on that and polit ticks and environment is full interview is available on cnbc pro. >> late for you because it. >> late for me made it on the second hour of closing bell. >> that's 4:00 in the afternoon. >> when you get up at 2:00 a.m.

it feels like. >> 7:00 or 8:30 in london. have you switched to this time zone yet haven't really because you are still on london time. >> still on london time. although this weekend i'm going back to the uk. >> i know you are. let me know if the woolsly for you. >> that's very kind. my favorite restaurant. i'm not going into the london. i'm be in the countryside this weekend. >> ooh. sorry. yeah, exactly. you're so cool. he is. i wonder if brian moynihan knew who he was. >> what do you mean who i am? i'm a cnbc -- reporter that is what he knows. >> -- could be the same thing someday. >> -- [inaudible]. >> -- broadway play about it. >> i don't know if i would get nominated. >> thank you my friend.

all right we're going talk. the donald says amazon has a huge anti-trust problem. i this i it has something to got the washington post approximate or something. >> he's upset about the washington post is one piece of it. so i saw the lead story in the journal the health law and other setbacks so i read that. and i then i went to the washington post front page. house gop -- but i wanted the analysis from the leading newspaper. the thought leading number. the "new york times." so i've gone into it. and i'm on page a-1, nothing. 2, 3, nothing. i did find out about these birds ♪ ♪

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welcome back to "squawk box." it is now time for today's executive edge. we're talking about the intersection of business and politics. donald trump saying amazon has a huge anti-trust problem. the presumptive republican nominee telling fox news the online retailer is a monopoly and getting away with murder tax wise. also saying amazon's ceo jeff bezos is using that paper, the washington post not to tax amazon like it should be taxed. amazon isn't commenting. >> whether to attack donald trump or not. >> what's that guy at -- i can't

remember his name? he's like one of the worst. but he said that jeff bezos needs to prove that he's not a conservative before he's allowed to actual buy the washington post. >> -- >> don't say anything. allen sloane. >> yes. that's the guy. >> but i think a very nice. >> i'm sure you do -- >> -- got to prove. >> sure. dot to prove -- >> i didn't hear that. >> -- flaming lefty you are going -- >> -- >> but if this conservative. he these to outline what his views are -- >> is this recent? >> you can find -- i'll get it for you. >> during the purchase. >> during the purchase. needs to prove that he's not a right winger to buy the washington post which would, you know, take a left wing paper and maybe turn it into the middle. >> more of a libertarian of sorts. >> bezos -- >> we need those outlined before you get approval to buy one of

our crown jewels of liberalism. >> -- [inaudible]. >> i do to. ridiculous to read it that's why i made the point. >> guy who's not hands off. mark cuban. imagine if he owned a newspaper. mark cube seas, says trump is t friend you shake your head at. the guy at the bar who will say anything to get laid. >> yep that was the line. >> what? >> this was the line. >> i was going to print this out because i got it for you. but that trump has tapped into the mistrust of government and that's why he has so much support. you know guys like that.

i was sickle once. i knew there was nothing you could say. so i didn't even attempt to. you try a few times and you realize you are groveling -- groveling is not attractive and it happens enough times where you say i'm not gonna do it. anyway, facebook is detailing how its trending topics feature how that works. after the report this week that claimed -- i know people were shocked at this that the social network down plays conservative news. >> heartbroken. >> heart broken and shocked. in a new blog post facebook says a series of checks and ambulances involving both algorithms and humans ensures that the stories trending aren't biased. i feel much better. the story links to a 28 page document facebook uses and mark zuckerberg plans to talk in the coming weeks.

>> -- you wrote a conservative book. >> i did. >> we both did. >> really my daughter. that was her -- >> you did not. >> i'm in the middle. i don't even know what's going on. i'm over here and you guys are over there. >> -- >> to camera right is what you are. coming up. helping customers connect on social media. what executives are doing wrong these days and how they can actually improve their tweet snaps and facebook posts as we head to a break a quick chaek at european markets.eck at european markets. ♪ there's nothing i do ♪ i've been looking for a girl the call just came in. she's about to arrive.

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you can never get enough of it. change the way you experience tv with xfinity x1. welcome back. u.s. equity futures are kind of mirroring what's happening over in europe this morning. down 61 -- 63 points. yesterday looked like a positive session. it was on the dow up 9 but that

selloff in apple didn't help the nasdaq. retailers were also week again yesterday so we are in kind of a rebuilding mode here. after that 200 point up day was followed by a 200 point down day. obama administration issues guidance to every public school district to allow transgender students to use the bathrooms that match their gender identity. guidelines will be i should issued in a letter. does not carry the force of law but is considered a specific threat schools who don't comply could face lawsuits or throat financial aid. found over the management platform hoot suite. i have an account. and new for coming in.

we ask this all the time. everybody thinks they want to have a better social media presence especially executives and ceos often who watch the show but nobody really knows mow to do it. they want to be authentic and want to do it themselves. what are they actually suppose to do? and how much time does it take to be good at this. >> you have to play with it. and this is i they lot of the time where it can be a challenge. twitter facebook instagram snapchat and it is an era of exploration right now. >> how much time do you think you physically spend mind share of a given day sending stuff out. >> i would not be average in terms of the world. i probably spend two hours a day, you know, looking at what's going on in social. working in facebook, twitter, snapchat and other social

channels. >> so spending two full hours. >> and you are a the social media ceo. i can't imagine having to spend. >> even have i to spend a half hour. >> too much. >> too much unless you think there is a director roi to it. >> if this was 94 to 99 we'd be having a conversation around e-mail. websites, they are table stakes now. it is a core competency ceos need to have. so play it forward to today. there is a transformation going on. that is huge shift and people need -- >> so break down just for the audience which social media sites you think actually work the best. so twitter going downhill, uphill? is it necessary? instagram, facebook? break it down what do we need? >> every social channel is relevant and important. >> so you have to do all of them. >> you don't have to do all of them. you have to figure where your customers are and where they are spending time and you have to get connected. >> you spend a half hour a day.

>> i think i spend at least a half hour a day. feels like a half hour too much. >> twitter accounts. >> twitter is the media talking to the media which actually if you are a ceo and need to talk to the media maybe not a bad thing to do. >> -- scrolling -- >> -- feel dirt and cheap when i'm done but yeah. >> his company makes it a whole lot easier. for those who don't know what it is you can populate a lot of different places all at once and -- >> but i only have one place. >> you only have twitter. >> but now you could theoretically. >> you could have different key words set up to listen to different key words and different journalists and. >> tweet deck? >> we're not competitive with our social networks. our products. so we have twitter, facebook, instagram, others. >> all can feed through. >> feed in through us and we really just help curate and make those easier. we have 846 of fortune one

thousand using our products and a lot of power users on the way to that. >> you are a unicorn now. technically. however as you know fidelity just wroen down its investment. now public investors dealing with private. >> they also recently wrote up their investment. >> so they wrote it up too. are you providing them with different information. >> they get pretty limited information. they did a broad average looking at public markets and then applied it to the private market. it probably was maybe a little heavy handed. >> little heavy handed. >> you gonna go public? >> we're talking about that. potentially in the future. we're just building a great company right now. >> mark cuban said companies weight way too long to go public. go too public. if you wait too long it's a

waste. >> good advice. i appreciate that. we're looking at what's going on and building a great company and talk to customers and just building. >> i know your a devevotee of standing desks apparently. >> >> yes. >> is it good for my back or better? some people say standing too long. >> sitting is the new spomoking >> sugar was -- >> not the treadmill but i do a little wobble board sometimes. >> what i'm at your desk. >> yeah. yeah. i think everything in moderation. i don't think it is 8 hours a day. i think you do it for a while. sit down, stand up and moderation. >> one of those balls to sit on. >> i have one of those too. variation. >> those work because your core because you're moving all over. >> do you have a mat? some people have a mat. >> what do you need a mat? >> buzz you're going stand five hours it makes it a little

softer. a whole thing going on. the stand up desk sort of eco system. nice to see you. welcome back. >> -- over there -- >> no mats that e. >> but at least you get up. >> make your employees rich now. go public. coming up the rally in gold, 20% this year. and why they are expecting gold to strengthen even more. and later the retail rack. among retailers. take a look at all these. we're going discuss what's going on there.

a world of negative interest rates, slow global growth, driving demand for gold to record levels. the precious metal soaring over 20%. crude also recovering up over 10% the last month. joining us to breakdown the moves is dennis gartman, good to have you here. the world gold council yesterday saying demand is at an all time high. except jewelry demand is at a low. what does that mean to you? >> well it means -- as you said the demand for gold is very

strong and i think you are seeing people move away from one currency, from all currencies on balance out of the yen, the ruble and moving to gold. one currency against another. you bought cable, you sold dollar mark. the bought the dollar mark, you sold the lira. >> people don't what the mark is but that's okay. >> i understand. we old guys remember it, though. >> keep going. do what you have to do. >> it's all right. i have been bullish of gold not in u.s. dollar terms but primarily in yen and euro terms. now i'm turning fundamentally bullish of gold in dollar terms. i am not a gold bug. i don't think the world is coming to an end but i think inflation is picking up at the margins. you are starting to see strength in the grain markets and strength in the livestock markets on a consistent basis. you have the monetary authorities almost everywhere except for perhaps the united

states saying that they're going to do what they can to expand reserves in the system. all those things being equal, all those things being summed up, have to argue for stronger gold prices. gold has been strong for the past several months. likely to continue. >> the move could actually be emboldened even more if the fed gets gu-- gundlach today sayinge thinks it's unlikely they'll raise. people are saying it won't happen at all. that would theoretically help out gold. >> it helps out gold if you see commodity prices in general continue to rally. thus far the problem has been that people, because we have negative interest rates, people have been taking currency out of their banking accounts, holding it in cash. and cash is deflationary. you have to actually end up seeing the cash going back into the banking system and being reservable and lent. that will spawn inflation. that's what the monetary

authorities want to get. we have had inflation at extraordinarily low levels. i think they'll start to expand. >> what do you think in terms of the price of oil? >> it looks like it wants to go from the lower left to the upper right. over the course of the past several weeks you have seen the term structure continue to bullishly, you see the difference between the spot rate and the forwards. as long as it is narrowing you'll probably continue to see crude oil want to move higher. demand has been higher than people thought. supplies had been reduced. over the course of the past month and a half i have had to turn bullish because the trend has termed upward and the term structure, something i watch closely, forced me to look at the market from a bullish perspective. >> is it purely technical or is there anything fundamentally out there that you're looking at as well in terms of the rivalry between the saudis and iranians? is that off, is it on?

it will still keep supply high. >> if there is a constriction of supply, the problems are taking place in venezuela and the problems that not enough people have talked about taking place in nigeria where you have a new splinter group, the avengers, who have bombed some pipelines and oil facilities. and the continued political dissension in libya where two groups who we thought would allow crude oil to be exported have continued to fight with one another and have stopped those circumstances. you have constrictions of supply which have led to higher prices. those constrictions of supply are likely not going to go away anytime soon. >> i was shocked to see how rapidly oil production is falling in venezuela because they are such a disaster of a place. >> it's a failed -- a failed state completely. and it's failing even more. it's amazing what's happening down there. >> thank you, dennis. good to see you. >> good to be seen. thanks for having me on.

colorado businesses that sell marijuana brought in more than $270 million in the first quarter of the year. about 170 million was for recreational pot sales. the other 100 million was for medical marijuana, that is according to state revenue data. march sales alone generated $3.5 million in tax revenue slated to go toward school construction projects. last year colorado marijuana businesses sold nearly $1 billion worth of product. check this out. a problem with the checked bag screening system at sky harbor airport in phoenix left thousands of bags grounded. officials had to use alternative screening methods including canine methods to make sure the bags were safe to fly. the bags piled up. they were eventually moved to a special-event parking lot and driven to nearby airports to be screened and flown to their destination. the system was fixed late last night but not before 3,000 bags

were separated from passenger flights. >> good thing it doesn't rain much there. mcdonald's is giving fresh beef a test run in 14 dallas locations. this means that the company's signature sandwiches, the bacon clubhouse and the double quarterer pounder with cheese will be made from freshly ground beef replacing what if you didn't know were frozen patties. if rolled out nationwide going fresh could help the fast-food giant stand up to the likes of shake shack and in-and-out that tout their fresh, never frozen beef. burger king in finland receiving an award for installing an in-restaurant sauna. at the spa guests enjoy meals while wearing burger king robes

and playing video games. eventually there will be tablets for customers to order electronically from the sauna. >> you can always do that over there. >> get a massage? >> they're all of the fast-food restaurants are nicer over there. >> i do not want to sit in the sauna with you two eating burgers. >> come on! you do. >> we're waiting for the naked restaurant in london, it's now 35,000 people. >> no. >> it is. >> you eat naked? >> yeah. >> really. >> it's just for the summer, and you don't have to be totally naked. there is a changing room. you come out. >> where is this? >> the waiting list is 35,000. you can't get in there. >> you just have to -- >> you could probably get in. you could get a table near a waiter. coming up, our guest host for the next two hours, private equity capital player barry

sternlitz. he joins us on the set. tokyo-style ramen noodles. freshly made in the japanese tradition. when you cook with incredible ingredients...you make incredible meals. get your first two meals free at blueapron.com/cook.

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united we stand. donald trump's meeting with gop leaders bringing the party supposedly closer, but paul ryan stopped short of saying, i do. takes a big shot at retail giant amazon. we'll talk politics, markets and mar with ceo capital barry sternlicht. it's friday the 13th. retailers are getting slashed. [ screams ] >> macy's, kohl's and now nordstroms putting up their worst sales since 2009. is amazon to blame? we'll break it down straight ahead. squawk heads to the back woods. >> hell yeah. >> discovery's moon shiner is

here. second hour of "squawk box" begins right now. ♪ it's friday, i'm in love live from the beating heart of business, new york city, this is "squawk box." ♪ thursday doesn't even start ♪ welcome back to "squawk box" here on cnbc, first in business worldwide. i'm michelle caruso-cabrera along with joe kernen and andrew ross sorkin. becky will be back next week. the futures at this hour suggesting a negative open. might be negative feed threw from retail. dow opens off 52. s&p lower by 6 and the nasdaq lower by 13. the price of oil is lower this morning by 65 cents. 46.05 for wti. brent 57.44. this week has not been kind to retailers reporting quarterly results. this hour we'll get numbers from other familiar name.

jcpenney expected to post a quarterly loss of 38 cents per share on revenue of $2.9 billion. in other retail news tiffany's saying its chief financial officer is resigning effective may 20th. luxury goods retailer now beginning a search for a successor. he was -- he had joined -- he is joining, rather, to leave to another firm. so far unnamed. we don't know. before joining tiffany he was cfo at insurer signa. >> honda reporting a quarterly loss. nearly $860 million loss due mostly to costs related to the recall of vehicles containing takata air bags. apple investing nearly $1 billion in the chinese ride-sharing service. tim cook saying the stake in the uber rival will help apple better understand the crucial chinese market. the deal comes amid months of speculation about apple's auto industry interests. the company has hired industry

experts and it says it is looking to focus on the in-car experience. apple shares dropping below $90 a share yesterday on concerns about slow demand ahead of the next iphone launch expected later this year. tech giant suppliers have tumbled on demand worries. watch out for how stocks like jabil circuit and broadcom and sky works do in today's session. donald trump and paul ryan issuing a joint statement, calling their meeting a positive step towards unification. the speaker of the house stopped short of endorsing the presumptive gop nominee. john harwood joins us now with more. john, watching it yesterday, i'll tell you the kind of conclusion that i came to. you knew full well they weren't going to walk out and ryan say, i'm endorsing him! i watched reince priebus and other people, the way they're sort of managing this situation.

iff was almost impressed that they, you know, they're not like keystone cops. the way they handled it almost looked like they were professionals and by the time we get to the convention, looking back, if ryan does have more meetings and does finally come out and do it and lindsey graham continues to make overtures, almost looks like they handled it the right way. is that possible, that they could do that? >> i think they did, joe. i think this was a very good outcome for the republican party. >> shocking! >> it was smooth. it defused the tensions, though it didn't eliminate them. as paul ryan said, that's going to take some time. here is paul ryan. >> this is a process. it takes a little time. you don't put it together in 45 minutes. so that is why we had, like i said, a very good start to a process and how we unify. >> here are some of the key numbers that are relevant to the resolution of that process. first of all, there are seven

republican senate seats up for election in states that president obama won twice. that makes that the trump relationship sensitive for those members on the ballot. there are about 50 house seats where members are either actually vulnerable or potentially vulnerable because of the composition of the districts because there are open seats with people retiring. we will be watching that. republicans are likely secure in the house, but that's not certain. finally, 90 is the proportion of republican votes that donald trump is going to need. the last four republican nominees have all gotten over 90% of the vote. in our polarized system you need number unanimous support within your party to compete. donald trump lately has been moving closer to that number. he has had some success the last couple of weeks in consolidating republican votes. in april our nbc "wall street journal" poll showed him with only 72%. now several polls have shown him in the mid 80s. we'll see if he can get up to 90, which is what he needs to do, guys. >> a couple other things that i

thought about, john. maybe flash the commentary. no. we don't need to do that yet. now both sides are -- it's kind of funny. the two sides are arguing about who is unified and who is not. the republicans are trying to say isn't it ironic we know our nominee and you don't know yours and that there isn't just a disunity on the republican side, there is some disunity on the democratic side because hillary still has to deal with bernie on the left and she has also got the general election coming. one thing that bugged me yesterday, john. i saw one of hillary clinton's ads that said trump is preaching unity, and it kept showing all these violent demonstrations and police like putting people in head-locks. i thought, wait a second. those aren't trump supporters that are -- that are ryoting. they're people sent by bernie sanders and occupy wall

streeters and people sent by the democrats. how can she put that out as trump causing -- i have sent these people over to riot but it's trump's fault. that's a bad ad. tell them it's not going to fly. >> the rationale for that is that donald trump has been a polarizing figure. >> that's what i thought of right away, john. i know i am not alone. >> i get your point. it's a fair point. but of course, the reason that there is republican opposition remaining that donald trump has to overcome is because he has been polarizing, because there are a lot of republicans who know that, to grow the party, they need to do better with latinos and better with women and that's the nature of some of those protests and we'll see whether or not -- >> it's hillary. >> what's that? >> i would just run what i just showed of hillary dancing. >> candidates shouldn't dance. remember when the "shark tank" guys danced?

remember seeing cuban? >> joe, does trump dance better or worse than you. >> i am like kevin kline. i here music, i want to dance but i only move my little finger. >> you do move like that. that's why you don't. >> i don't eat on tv either. >> michelle, have you seen him dance? >> i won't dance. >> no! >> nobody has. nobody has. i've killed them. >> thanks, john. more perspective. this guy can cut a rug. for the white house and the best candidates for the market. how are you doing my friend, barry? good to see you. for the next two hours. barry sternlicht, chairman and ceo of capital. you are a bachelor. you are single digit, right? >> index. >> i don't know about dancing. would you dance if -- unless you were -- >> occasionally i've been known to dance. occasionally. >> he is a dancer. >> maybe after -- >> it's the way he holds his

shoulders. >> you can dance if you want to. >> you got $52 billion. more stuff going on. love to talk about real estate, the economy and everything else, but i also, in recent years, have loved talking to you about politics. >> really? i didn't notice. >> yeah. so you just heard all that. are you -- are you leaning one way or another? what do we need in this country? >> are you declared? >> i was thinking about what i was going to say. i know donald really well. i know hillary. and i think the first thing you have to say is what created donald. how did he get here, right? i said the last time i was on the show i think he is a product of this president, obama. >> i agree. >> he is really right. right from the start, with make america great again, we love winning, we just love it. we love when osama bin laden gets taken down, when we win the hockey game. he tapped into a deep vein. we're cheerleaders. we want to know who the hockey team is who won, the basketball

team. we're an optimistic nation. obama basically apologized for us and we're tired of apologizing. >> i want to know, do you trust donald trump. >> this has been great theater until he got here. at the moment both candidates -- we know -- we think -- she has had to go left and she's going to have to go to the middle. >> who do you trust? >> the standard deviation in both candidates is pretty high. >> that's what i'm asking. >> we don't know. >> that's what i'm -- >> you know, i think they're both capable people. i think -- i think it's going to be -- i think donald has to give us -- issues. we have to talk about things that -- we can be winning but how do you define winning? >> have you ever done a business deal with donald trump? >> no. >> why? >> it hasn't really -- opportunity hasn't arisen. >> if one did, would you? feel completely comfortable doing that? >> well, i think with both candidates it would be challenging.

>> i was about to go to the other side. you've given money to hillary clinton? >> he wrote the book, the art of the war, right? >> you might have a better deal dealing with the clinton foundation. i don't know. do you have any things going on? it would have been better when she was secretary of state. when she was secretary of state you probably would have done a little bit better. >> in 24 states the middle can't vote, right, in the primaries. and i think who wins is going to take those votes. right? i think -- i am kind of an independent voter. i can go both ways. most of my colleagues are physically conservative, socially liberal, we don't really have a party, so whoever appeals to us, is who we vote far. >> there is a libertarian party but it never gets far. >> it doesn't. i have a fascinating stat that the average viewer of cnn is 61. do people watch the young turks? 2.7 million.

none of your guests or me watch it. and they're voting. these are the kids. my son. he watched the young turks. he is the one who told me that stat. they're listening. >> who is he voting for? >> i don't know. he is in berlin for the semester. i don't know. i haven't really asked him. i am afraid to ask him. i think a lot of people might sit it out. both of these candidates don't have high approval ratings on their own. a lot of people are saying -- the good news is the nation is going to pay attention. in the first debate, which will have greater ratings an the super bowl -- just got back from germany, israel, london. every one is talking about this. asian investors. everyone is talking about it. this has been great theater but it will come down to actually -- i think the nation has to rise up -- words of jeb bush -- and focus on what do they stand for? it's not enough to throw barbs at each other and if she moves far left where the nation isn't and he changes his positions a little bit. i am waiting to hear exactly. i could be supportive of either

candidate if they go to middle. we have real issues. serious issues. we haven't talked -- entitlement reform? i don't think it's come up in the last five months. >> isn't the fundamental problem that nobody trusts either candidate? as you said -- if they come out with this exact position, they'll have a position today and then will have a different position a week from now. >> i don't know what to tell you. i think we have real issues. we don't fix our education system, we can't get jobs. we won't have a strong economy. if we don't get energy independence we' always be relying on foreign cap -- >> the first debate, one of the things donald trump says we're a country of winners and we're acting like losers. why are we doing it. >> >> i love it. >> he changes his message on many things but that core message is very simple. >> very powerful. >> he is a nationalist versus a geopolitical guy. i think we need to return to --

>> how do you feel about that as a business person? >> you know what, that's a dangerous assumption, right. >> you can err on one side. >> if the chinese don't buy our debt, we're going to have to do qe 17, right? and you're insulting the chinese. i agree with him. we pay large import duties to china. but i think there is diplomacy and then there is a stick. in business you have to use both. you know, this -- but it is working with the great -- because we don't feel like we're winning. he is absolutely right. with stagnant real wages. >> do you think he would be a better negotiator on those points because he is tougher? >> i think a lot of it will be who he surrounds himself with. the vice president candidate he chooses is important. somebody that's a real important. >> we had a guy on from morgan stanley who said business investment is hurting right now.

it doesn't -- just get through january of 2017 and, didn't care who it was. couldn't be worse than what we have had. >> business investment is down like 22%. >> couldn't be worse. even if it's hillary. >> he wants obama to be gone. >> business leaders. it's not even obama. you just need to know what the new rules of engagement are. >> but that's what i am trying to get at. everyone says, oh, we can't wait until january, then we find out the new rules. guess what. it's unclear what the rules will be. they might tell you the rules today. >> it's congress. >> it won't be easy to change everything overnight. congress will be a break on most candidates, right? we'll be in grid-lock. business leaders can deal with grid-lock. but the range of outcomes if you're making capital investment decisions today. >> from the perspective of someone who wants to bring in capital to this country, right, right, you would love all the sovereigns to put more money to

work here. which candidate is more attractive from that perspective? >> i think there is no question hillary is more attractive right now. >> i don't think -- >> no, no, no. >> who wants corporate tax reform? money is already leaving this country. >> no, no, no. the point is -- they need, they don't know donald. he says a lot of different things, right. mosel mostly not positive to foreign investors. >> cut corporate taxes, bring the $3 trillion back that's over there. right now you are having money exit this. >> there is no common sense in politics today, right? no common sense. there is a wide swath for common sense in the political arena. >> capital is not being treated well here as is. >> forcing us to keep our cash offshore really is a dumb idea. >> that's what i'm talking about. >> you like infrastructure. you like infrastructure spending, right? >> oh, yeah.

big-time. >> so -- but for the most part -- >> i hail from the great state of connecticut. >> the republican party for the past eight years have said they don't want to do any infrastructure spending. >> they wanted to do keystone. >> the spending happens but the infrastructure doesn't. >> the reason donald is the candidate is because republicans blocked infrastructure spending and blocked taxes on the internet because it's a new tax where amazon is killing retail and they don't pay taxes in 25 states. >> we want to talk about that in a little bit. >> is the internet still a start-up? you have to subsidize amazon in 25 states but not taxing the sales? we need revenue. level the playing field. it's interesting because i think it's wide open. i don't know what's going to happen here but i would never count donald out. he has certainly surprised a lot of people. it was easy to call this guy

little and he has little hands, here is lindsey graham's phone number. let's -- let's hope the conversation realizes to a level of substance. >> it's not. >> i know. i'm worried it won't. >> there is a lot of material. >> there is a movie coming out, too, "hillary's america." right? >> at the end of the day, donald has a chance to define himself going forward. he has been all over the place. it's worked. he has gotten $2 billion of free impressions from the media. crowded out every other candidate. he is a brilliant tactician. >> already this morning. hillary is going to fight for air time every step of the way. >> hillary has bernie to deal with. when she turns her machine on she is much better organized and has a bigger machine than he does. >> on trump with amazon, he made this -- >> the antitrust. >> do you buy that? does it make sense to you? >> what was he referring to? i didn't see the context.

>> a little murky. do they have too much market share and does he control the "washington post." >> the "washington post" is the second -- >> i don't know if he was relating it directly. >> they wrote some bad pieces about him, obviously. not surprising. >> i recently heard jeff speak. he was saying he didn't make the mistake of promising wall street earnings. and he got to keep this -- >> amazing thing. >> -- built the cloud services which are just the -- how that happened is amazing. because it isn't about selling books anymore, right. and it's pretty shocking. he is disrupting the retail spectrum but it's still on the margin. it's just a small part of the business. >> barry is here for two years. >> i forgot this. harwood is the biggest dancer. if he is at a party where there is dancing -- we need to bring him back. >> he dances? >> he is the dancer. he is a wild, crazy. >> you should have a segment. you haven't done that yet. a dance hour.

>> dancing with the cnbc stars. rough week for macy's, kohl's, nordstrom. a look inside the rout and if it's stilling bigger troubles in the economy. later, mortgage rates dropping to a three-year low. what impact will that have on housing. ceo of the mortgage bankers association joins us to talk real estate in just a bit.

nordstrom is the latest in a series of disappointing retail earnings. now raising concerns over the health of the overall consumer. courtney reagan joins us with a look into the retail wreck this week. >> that's right, michelle. i think it's fair to say that this week has been a retail wreck. i'm not sure it means that the consumer is not healthy. macy's, kohl's and nordstrom, worst results in 2009. dillard's worst in six years. macy's and nordstrom cutting the first year earnings forecast. kohl's didn't update and that's probably the wrong move. department stores have shed more than $5 billion in market cap and we haven't started trading today. nordstrom's shares plunge dz 22%. they'll lose more when trade begins. macy's lost 18%. jcpenney shares only down 13% this week. the government retail sales report is due out in an hour.

it's actually expected to show a healthy increase thanks to steady job growth, low gas prices and strong gar sales. consumers are spending, but less on the merchandise that department stores sell. total clothing sales have been declining over much of the last decade. so the total amount of clothing sold is getting smaller. and it's getting further divided. fast fashion retailers, e-commerce brands like h&m, zara are taking share that used to go to department and specialty stores. amazon too. amazon now has seven of its own private-label clothing brands. but selling clothing is not that easy. just ask nearly any retailer. i think amazon has a challenge on its hands when it comes to apparel. >> thank you for that. while barry is here. how many malls do you own? >> 24. >> how are they doing. >> >> what's going on. the consumer is kt aing totally

irration. the 22% drop. the consumers are doing the same thing. in the crazy climate people say, i'm not going to spend money. i'm going to wait to see what happens with this political situation. savings rate has gone up. all that came out of that. everyone said i'll delay the purchase. this is temporary. i agree with his comments earlier. i think the good news is that we haven't fallen into a recession frankly. business spending. you are a ceo and you're making an investment, you don't know what your tax code will be. this election has -- is crazy. you don't know what's going on. you just wait. wait is a recession, yet we didn't go into recession. we went to half a percent gdp growth but not recession. i'm fairly bullish on the economy in january. february and march. because they're going to spend -- americans love to spend. if we feel like we're winning, we'll spend money. i think this is temporary and it's a shift. people going to restaurants, they're spending money differently but the dividend --

>> you have to wait six months from now. >> yeah. >> what is surprising, people don't understand, is that apple falls -- apple is important to the mall industry. if there is an apple store in the mall the rent with be $100 per square foot more. i think it's a good stock. it's not a major position for me, and i think -- >> you had someone on last week -- >> you're 24 -- >> you're 24 malls. up 2% in sales year to date. >> how many shoould you close down? >> none. >> all good ones. >> a guy said the other day that a third of all the malls should be closed. >> the bad ones are dying. the tenants are changing. >> we have a hard break. we'll continue the conversation after -- when we come back, are

home buyers hitting a wall? ceo of mortgage bankers association joining barry sternlicht to discuss. the ceo of sugarland. here to talk about the revolution in white lightning. squawk returns in a moment. real is touching a ray. amazing is moving like one. real is making new friends. amazing is getting this close.

real is an animal rescue. amazing is over twenty-seven thousand of them. there is only one place where real and amazing live. seaworld. real. amazing

among the stories front and center. not a lot of stories make me nervous. this one does. another malware attack affecting the world's banks. swift, the organization that runs the international banking system said the latest attack targeted an international bank getting access to bank codes. earlier this year you'll recall hackers stole $81 million from the bank of bangladesh's account at the federal reserve bank of new york. mdp reports hardware sales fell in april and software sales dropped 21%. 8:30 a.m. eastern time april retail sales. first month of the second quarter. very interesting. as well as last month's producer price index.

jcpenney is out. it's posting a first quarter loss of 22 cents an share. there is an adjusted number here. i'm kidding. 32 cent loss. the regular loss was 22. adjust it and it's actually 32. maybe there was a gain of some sort. >> terrible report out a week ago that they couldn't even make some of their payments to people. >> this is above expectations, though. [ laughter ] >> i mean, that's -- 32-cent loss is not as bad as a 38-cent production. the sales number, 2.81. that's below the 2.91 that people were expecting. same-store sales down .4%, which i think is probably pretty good for jcpenney. and the 3.4% growth. maybe it's not good. when we do macy's,'s one thing. nordstrom another.

kohl's another. >> you have jcpenneys in your malls? >> yeah. you know what's working for them. s sephora inside their stores. that's working for them. >> your malls -- are we over-stored in the country? >> sure. >> the problem is some malls are too big. you can't find tenants. if you bring in a big discounter, it destroys the small stores that make up the mall. it's really interesting. this is -- it's going to be -- it's going to just evolve. the bankruptcies in retail are normal. they happen all the time. i grew up in connecticut. we had a retailer called cal door's that came and went and was it bradley's? >> yes. >> there is a hot jewelry chain called pandora. not the music server. they can't get enough of them. the retailer has to pick up his

game and the mall owner has to create activities in the mall to pull people into the property and do things you can't do online. >> the teenage girls are the bulk of your shoppers in a mall. everyone is nervous. this is not surprising. i think it's bullish. i think the fact that we're not negative in gdp with this sluggish investment is good. you know who quadrupled spending is the government. states and local municipalities are spending money but only a quarter of what businesses are spending. it's helping and it will get better if we get out of grid-lock in washington and start to spend money on infrastructure. the chinese have overspent on infrastructure and we have amazing interest rates and can't get anything done in infrastructure. in connecticut they want to pass a bill and they'll sequester the money to do the toll roads and the democrats won't make the language tight enough to leave it in the lock-box so it just fixes the infrastructure. they will have to lay off

people. a crisis is a great thing. it will fix things. in connecticut they had to lay off teachers and other public pension workers saying, we're not going to let you raise a hundred billion to fix the highways. >> we had a crisis. it didn't do so well. >> if you listen to druckenmiller, the fed -- >> he wants to spend money. >> he wants spending that will actually work. it hasn't worked at the federal level. >> a lot of money. >> he wants to spend a lot of money. >> so bond deals that goes directly to roads -- >> bubbling over with enthusiasm. don't you want a public-private partnership at least? >> i think the government should do only the things the federal government can do, right, like defense. >> exactly. >> major infrastructure. invest for the future that private businesses can't do. there are some things we can't do. >> how do we make it so 90 cents doesn't as always fall into the

cracks. >> the government is a giant company with a lot of excesses in a lot of places. >> even democrats talk about public-private partnerships where at least the purse strings are controlled by someone -- >> i love it. i love it. i'm good with that. >> yeah? >> why are you pointing at me? >> nothing. >> something going on? >> she wants to see you dance. >> coming up -- that's harwood. i've seen him dance. harwood. he shakes his gray hair. shake shack spiking in trading after hours. a closer look at the burger chain's earnings in sales. the numbers and their business barometer. took at u.s. equity futures. down less than 50 points.

welcome back to "squawk." report out this morning from the mortgage bankers association showing that mortgage applications for new homes decreased 11% in april. joining us with the data is david stevens. mortgage bankers association president and ceo. it's not good. >> you have to look at the overall trend. we peaked earlier this year. home applications typically reach their peak in march or april. march was the peak for this year. >> it's seasonal? >> it is.

we're still up 15% to 20% year over year. home sales will continue to rise. new home applications will continue to rise. overall housing demand continues to be relatively strong. >> you don't see it as a grand slowdown. >> no. if you look at household formation data, we're creating 1.2, 1.4 million new homes annually. >> bear says the uncertainty about the election is hurting investment. could consumer spending with hurting home purchases as well? >> we're still seeing growth. there is a lot of variables that will affect the demand. i am not sure uncertainty is holding buyers back. i think cost of inventory. >> you own a lot of residential. >> i'm wildly bullish across the specter. i am the chairman of try point. eighth larger home builder. we started a couple years ago. it's more labor constrained

supply. housing prices, probably the sleepiest, best sector of the economy. up 6% year over year. our apartments -- we have almost 84,000 apartments today. year over year rent growth 6%. >> wow. >> where do you see growth like that, right? >> then we have colony starwood homes. >> explain that. >> just reported on monday -- >> we're talking about how -- >> -- and it comes up 10%. >> people talking about how the country is going to hell in a hand basket. >> no politician can screw this up. our demographics of 80 million millennials. they go to apartments, marrying later. more single family house holds. they'll shift into homes. it's a fact. >> the red tape, you know what the cost is to bring a unit to market today. >> tripoint is not building houses with airbnb suites in

them. >> janet yellen said she likes low rates. so do i. i wouldn't expect anything differently. >> our forecast is for rates to rise. we do like certainty in markets. the uncertainty variables create all sorts of distortions. we forecast mortgage rates to rise over the 30 years. >> if rates rose, i think people would say i have to buy now. they can afford these homes. the guys are building, especially low-end homes, are doing great. >> that's where the stock is short. we need to build more entry-level housing. same in the rental market. >> we don't need class a new york city homes or san francisco. made famous in the back woods of appalachia, the business of moon shine is booming across the nation. the owner of sugarlands distilling company joins us

along with dare mains from the show "moon shiners" on discovery. things could get interesting, like white lightning. be right back.

we're hot, hot out here. >> we're likely to have liquor out of this thing. >> i would say we will. >> here it comes. ♪ >> that's good liquor. >> hell yeah. >> that's a held of a strain of liquor coming out of there. >> hell yeah. a clip from discovery's reality show "moonshiners," the business of moon shine emerging from the back woods. once known as the bad boy of spirits, it's been tamed and taken upmarket. tennessee based sugar lands distilling company bringing you the unaged corn whiskey into the world of wine style tastings and celebrity backed products launching hooch. joining us is the owner of the distillery, ned vickers, wearing a suit and digger mains, star of "moonshiners" who is appropriately dressed for this and all occasions. good to have you here. >> good to be here.

>> what you do on tv, it's not legal, is it? >> not necessarily, no. >> how do you get away with making an illegal product on national television in which there is hundreds of hours of tape and you're sitting here. >> my lawyers say something about hearsay evidence. i don't know. i guess they have to put you and illegal alcohol in the same spot at the same time. >> i see. you don't ever do that. >> i try not to. >> excellent work. >> i try. >> moon shine is hot? >> it is. absolutely. we opened two years ago. we're now in 21 states and 24 by the end of the summer. q 1 up 30% over last year. >> that's volume? dollar volume. >> dollar volume. >> i never knew there were so many kinds of moonshine. butterscotch, gold moonshine. the base is always corn? >> not necessarily corn. sometimes it's rice and other spirits. it's -- if you can get something to ferment, you can make alcohol from it. >> right. so my question about moonshine

was i never associated it with a type of liquor but a legal status more than anything. right? moonshine is meant to be illegal. >> well, that's the mindset i always had. that it's got to -- nobody is going to buy liquor that's produced in a legal facility. i had to eat crow. i was totally wrong. it's a rage! i would have never in my life believed that it would be at this point that it is. i feel honored to be one of the people that's brought it from heritage moonshine, the way it used to be in the days of my predecessors, to where it's at today that it's artisan liquor. >> the important part is we worked with people like digger to develop a recipe that is authentic and just like what they were making back in the woods and brought it out so everyone could enjoy it. >> my father told me never drink moonshine because you could go blind. look at you! i love that face. what? >> they say everything to make

you afraid. >> what my mother told me -- you would have to walk me in here today. >> i didn't go blind. i thought moonshine was like 150 proof. >> right! >> is that like grain alcohol? what's 150 proof? >> typically coming off the still -- and digger can speak to this -- you're looking at about 110 proof. >> 110. some of this is 70. these are mixed? >> they're tampered down. the old-timers would have said ta tamper tampered. unaged bourbon is what moonshine is. if you're going to pour that you'll want a little pourers or you'll get it everywhere. >> did you make real moonshine on the show? >> next question, please. all i can say is i'm not going to waste any mash. i'm not going to say i made anything but i'm not going to waste any mash. >> do you drink it out of the

mason jar? >> absolutely. that's the way it's meant with be drank. if you want to drink it out of the cup. it doesn't pour -- >> it doesn't pour augout of th mason jar well. >> are you using a straw? >> how about my coffee cup? >> the butterscotch is real good in coffee. >> it's outstanding in coffee. >> the butterscotch is great melted with some butter and put on your pan cakes. >> this is delicious! >> we are from the same area. one of the things that we did when we started this company was we went out and actively sought moonshiners. some were willing to -- >> you had this idea,and you found -- >> absolutely. >> i was the guy that, piff! >> was he on tv yet? >> yes. >> he was an early find. >> some of the others were harder. >> i'm right next to gatlinburg. >> you want to buy in? >> totally. >> come on down. >> you could sell this --

>> is this a very american thing? is this like jazz and country music? >> it's 100% american. whiskey text was the first big political controversy. >> is this a long line of family? >> no, sir. my daddy absolutely hated the fact that i made liquor. >> he is called a pappy, isn't he? >> my father. >> do you know anyone who was in the business? >> oh, yeah. popcorn sutton, the notorious moonshiner that unfortunately took his own life rather than go to penitentiary over making liquor was a dear friend of mine. >> was that in tennessee? >> yes, sir. >> what year was that? >> 2009. >> he was up in the woods? >> mm-hmm. >> we didn't make liquor out in the woods. we had buildings. and that's what got him caught. one of them caught on fire.

unfortunately. but by that time i had retired. >> how long you been doing this for? >> this time -- >> what he doesn't actually do? >> how long have you not been making moonshine for? >> about 30 years. >> it's been a business for you? that's how you made a living? >> no, not necessarily. i probably about broke even now with the show and the alcohol sales, popcorn had me in debt and what i had wasted along the way. to me it's -- i classify it like indian artifacts. i used to walk fields looking for arrowheads and bits of pottery. to me this is our heritage along with the fact that the american indians that were in the land before we were, it's just heritage. >> sounds great. >> we hope you get really rich now making moonshine and being on tv. >> i appreciate that. >> did you just take a picture of him on tv? >> i did. i'm posting it on twitter. this was a great segment. we loved it. >> i'm glad you did. you would have liked it a whole lot better if you got you a big

horn of this moonshine. >> i'm going to try. this morning's top movers, the list of stocks to watch. later the owner of wish to challenge walmart and target. ♪

this is, you know, talking about a golf swing here. let's look at some stocks to

watch. nvidia reporting quarterly profits up 46% from a year ago on increased demand for the high end computer graphics chips. allergan. talking about business and finance at goldman. goldman cites an improved business model and stronger balance sheet for the drug maker. mobile technology provider mobileeye struck deals with two unnamed auto makers to provide self-driving car systems. the deal calls for the company to be part of an effort to fu y fullyautonomize. to make cars fully autonomous by 2018. >> if you had to read right now we'd have to wait until probably

8:00. i told you about those bars. they're so good. >> the pumpkin. best out there. >> unbelievable. protein. five ingredients. >> they're not bad. not all the junk in the other bars. >> all this -- all these chemicals. no chemicals. rx bars. >> there is not a single chemical. it's like made of something not from this earth. >> it's all chemical! jcpenney out with quarterly result. closer look at this week's brutal retail wreck. we'll talk to you after the break. ♪

you wouldn't take medicine without checking the side effects. hey honey. huh. the good news is my hypertension is gone. so why would you invest without checking brokercheck? check your broker with brokercheck.

market alert. the dow on track for its third straight weekly decline but could new numbers on the consumer and inflation change the game? market moving economic data just 30 minutes away. retail wreck! nordstrom shares slammed on weak sales. and downbeat outlook. new this morning, jcpenney rolls out its results. donald trump calls out amazon. we'll tell you why the presidential hopeful says that jeff bezos has a huge antitrust problem on his hands. the final hour of "squawk box"

begins right now. ♪ boom! here we go ♪ >> live from the most powerful city in the world, new york. this is "squawk box." ♪ welcome back to "squawk box," here on cnbc, first in business worldwide. i'm joe kernen along with andrew ross sorkin and michelle caruso-cabrera. becky will be back on monday. and we're counting down to two big economic reports this hour. weekly jobless claims and the producer price index. futures right now are indicated a little bit lower, but you would expect that on friday the 13th! andrew. some people are afraid of it. >> because it's friday the 13th. >> yes. >> so, tell you some other things you might want to be a little bit afraid of. >> the word of the day is. >> word of the day is -- on wall street is. >> what is that? >> you think this is a joke. >> whatever word is on the screen, that's the word. >> that's on the screen.

>> paraskevidekatriaphobia. >> we're going to move on. the question is do investors actually fear friday the 13th. >> you're not going to try to say it? >> no. the s&p 500 has been positive 63% of the time on that date while the dow is positive nearly 70% of the time. michelle. i was looking the word up on google. appleal investing $1 billion in the chinese ride service didi chuxing. tim cook saying the stake in the rival will help apple better understand the crucial chinese market. there has been malware attack. >> future apple cars through them. >> could be a lot of reasons for it. politically directed lending is

always problematic. affecting the -- maluaware attacking swift, the latest attack targeted an unnamed kergs bank somehow getting access to valid bank codes. this year hackers stole 81 million from the bank of bangladesh's account in the federal reserve bank of new york. a global crude supply eve overhang could last until next year. stocks to watch. jcpenney, it did post a smaller than expected loss. sales below estimates and the retail lowered its full-year growth profit margin guidance. as a result, the stock is down 77 cents, or -- which is more telling -- 10% because it's a $7

stock. 10% drop in the stock. but it only takes 76 cents to do that. nordstrom earnings missing the mark. company is cutting its full-year outlook after instituting bigger discounts to clear out excess inventory. shake shack beating the street on top and bottom lines. this is one i think, sorkin, we were talking about being right about something. i think you're right about this. >> you didn't believe it when it came public? >> i didn't believe it at the nearly $100 price. >> it's 36 now. trying to tell you you were right. >> thank you. i appreciate that. >> you're welcome. god almighty. do you remember that you said -- >> yes. it was hard to support those prices. >> it's down 70%. if you had shorted that you wouldn't even have to work today. >> still not exactly cheap. >> do you have shake shacks in your malls? >> yeah. actually not ours but i've been to a couple. i went to a shake shack in

kuwait. in a mall there. >> do they have good burgers there? >> it wasn't that big of a line. >> the restaurant chain raised revenues and sales growth forecast for the full year. dillard's earnings falling short of estimates. third consecutive quarterly decline in same store sales and nvidia reporting a 50% rise in profit. i just talked about this. chip maker got a boost from strong video game demand. honda citing a fourth quarter loss due to the takata air bags. honda lost $860 million for the quarter. >> dow fluctuating between positive and negative territories yesterday. ending the day barely in the black. dom chu joins us. he has more on the negativity in the markets and the cross-currents. dom. >> paraskevidtrika phobia. i brought it because because joe

brought it up when we were talking about the number 13 horse nyquist at the kentucky derby. i remember seeing it out there. let's talk about what's going on overall with the market cross-currents. like you said, the retail earnings have not been great. at least the outlooks haven't been great and the stocks have been getting hammered. we have seen with the s&p 500 the tight range overall. we can't seem to get out of the range between the 1890 issue here. that's since february. see the highs? we have only been trading at a very tight range just for the past month or two. only about 600 points for the dow overall as well. if you look at some of the push and pull, tug of war that's developing, why markets can't seem to go down or up, there are a number of reasons why, too many to count. let's put up some of the cross-currents in the market that have people talking at least a little bit about why things are not moving one way or the other. you have a great earnings season, not really, right? things are down. it's better than we thought it was going to be. at the same time, fed

uncertainty. maybe the two pulling in opposite directions. you have a weakening dollar. that should be a good thing for the multinational big companies in america. that's maybe a good sign. on the other hand you have the technology, financial and health care stocks, the three biggest sectors in the industry, all lagging in the overall market. maybe that's a bad sign. then higher oil prices. we have been talking so long about how oil is supposed to be driving the market. it's a good sign when oil prices go higher. maybe that's a good sign. at the same time you have the u.s. election risk coming up here, and nobody knows what will happen. as we talk about the reasons why the market is doing what it's doing right now, there is a lot of fear in the market about the unknown. all these guys here are pulling in opposite directions, guys. that's one of the reason the market is stalling out at these levels. back to you. thoughts on the global macro lens. drags on the u.s. economy and drag. m&a is down.

ipos are off. >> everybody is down or getting busted by the justice department. >> by the wayewe have to talk a starwood marriott. what are you doing as a function of all this? >> we're cautious. on the investment profile we've bought $8 billion of apartments in the last six months, but we are being cautious. we're looking through the wreckage. we like this. we like uncertainty. >> are you saying we got a 10% down, 5%? or you say we think it will be flat. >> the u.s. economy? kind of like what you see. it will pick up after the election, i think. household formation is good. housing will be okay. apartment rents are going up. there are pockets of weakness. new york city is weak. san francisco is turning over because of the tech bubble bursting -- or deflating. >> have you putting any money -- >> we've bought, nashville is strong. seattle is strong. denver is strong. portland is on fire. southern california. florida is pausing because of

the exit. long time we like it a lot. you see in the property markets the results of the tax situation or the taxation of states. the states with no taxes are winning. i was in texas yesterday. austin is a million. they're getting all these companies and plano is doing great. dallas is doing great. houston is -- has got the oil situation. the housing market is soft but not terrible. and there is no yield in the world, so property is a great place to invest right now. if there is inflation, you get a free call on inflation. you know what, it's interesting, in europe with brexit coming up the transaction volumes have cait crated. i think this is actually good. that the economy is actually positive. i thought, with oil crashing, we might go into a recession. and we didn't. i thought it would be now. i thought we would see a recession. and we didn't. i am actually surprised. you kind of new businesses would stop spending.

you knew consumers would go, buy the shirt tomorrow. nordstrom's and jcpenney. that's women's apparel. the biggest category. they're waiting and they're buying technology devices and doing other stuff with their money. health care. >> car sales are great. >> car sales is really good. surprisingly good. there is a shift in consumer -- i was thinking about amazon and their impact on retail. there is a great shift online. and look at restoration hardware. people even buy furniture online. their numbers are not so great. people are use pausing. actually restaurants are good. leisure is not terrible. we own 600-plus hotels. the numbers are not bad. >> your former company, starwood. >> yeah. >> getting taken out by marriott. what do you think of the deal? >> i think it's a really good deal. >> what did you thing of enbang trying to get in there? >> i was surprised they dropped the way they did. i mean that's -- one of the problems the chinese have in

american markets is they have a reputation for kicking tires hard and walking away. that didn't help. i imagine the government said stop. >> you think the chinese government said stop. >> yes. an article came out in the "wall street journal" about who is enbang and where did they come from, where does the money come from? they went a step too far. number one buyer today for property in the u.s. used to be the canadians by a huge factor. year-to-date it's been the chinese by eight to one over the canadians. it will be interesting to see whether the money continues to flow to get out of china. if you're worried about china, the money will come out or the government slams it shut and says stop investing offshore. >> you distinguish between the individual buyer who is desperate to get their money out versus enbang who has to have government approval. >> it's hard for individuals to get their money out. we had some retail residential property in new york city. the chinese buyers are -- with the corruption scandal, they

don't want to move money around. they're nervous. all the stuff, the crack down in china on corruption. all of it will pass and the world will resume a more normal pattern. >> what do you think of san francisco and new york city where we are now? >> they're soft. new york city is rolling over in every category. rents will go down in new york city. >> what are we looking at? >> office rents. >> both office and residential? >> yeah. residential is already cracking hard, at the top. even multi-family rents are down in new york. >> what about florida? >> florida is strong still in the rental. in miami. the condo market is definitely -- people -- it's exactly what you are seeing. people are just waiting. there is no sense of urgency right now. people say, i don't know what's going to happen. so that waiting, if you own property, you cut prices to try to induce them to buy something right now. >> i think miami is like that except it's all about brazil which is having massive issues. >> yeah. even there, long-term you have to be bullish on that, i think.

because the -- the neighbors, argentina, peru, colombia, they're right in their fiscal policies. the brazilians have gone left and it's not working. they have to behave their like neighbors. peru is going like 4.5%. brazil will -- it will be quite a storm. a something-storm but it won't be that kind of storm, at least not on tv, but it is -- it could be -- could get really ugly and we're happy we kind of avoided brazil and the rush to brazil. watch money, though. money is flowing. it's the flow of capital now around the world that is really impacting things. japanese investment in the u.s., there is where retail is coming. almost $7 billion into the reit stocks. $7 billion searching for yield out of japan at the u.s. property market. if that slows down the reits crack. this has nothing to do with fundamentals.

this is people -- >> i was reading about that the other day. >> no return on the capital from japan. we're buying efts, not the stocks. >> we'll continue the conversation with barry sternlicht. donald trump argues that amazon has a huge anti-trust problem. we'll tell you what he has to say about jeff bezos. stay tuned. you're watching cnbc. first in business worldwide.

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welcome back to "squawk box" this morning. donald trump saying amazon has a huge antitrust problem, the presumptive republican presidential nominee telling fox news the online retailer has a, quote, monopoly and getting away with murder tax-wise and saying jeff bezos is using the "washington post" to not tax amazon like it needs to be taxed. he says he's assigned reporters to attack him and other political enemies. amazon is not commenting. i want to say amazon is one of the great american innovations and we should be supporting that. i don't believe for a second that bezos is assigning the stories. >> we should tax amazon like every other retailer. >> maybe. if you think that's why they have an advantage. i have an advantage because i

don't have to go to the store ever again. whether they tax it or not. >> absolutely. it's an incredible company. incredible. >> speaking of one of the losers. jcpenney posting a smaller than expected quarterly loss. revenues falling short. retailer lowering the full-year profit margin outlook. here to break down the numbers. you see what's happening in the stock. down 10%. off a small number. they say that even though sales were not as expected they'll maintain the full year. do you believe them? >> you have to give them credit right now considering how big some of the other department stores have guided down this year and jcpenney has by and large kept its guidance, been true to its word of saying they're going to grow free cash flow, which they did last year. you give them the benefit of the doubt. >> what's going on in retailing? is it because we're at this tectonic shift where the whole world is like me saying why do i

bother to go to a store? or is there something wrong with the american consumer? >> i think it's good timing to talk about this right after amazon. amazon had strong numbers in the first quarter. qvc, the bellwether in tv shopping. they had a strong first quarter. seems like when you look at macy's, kohl's, nordstrom, the weakness across the board from such large players, it's hard to think there is not something going on with the consumer but the online retailers are doing okay. >> how do they get back to strong growth? is it decreasing the number of stores to focus on fewer spots in fewer places? what do they do? >> i'm not sure there is a way to get back to consistent, sustainable top-line growth in the department store channel. there is a consistent share shift to e-commerce. a lot of the best private-label brands are vertically integrating and going direct to consumers. i'm not sure it's a challenge to

grow out there. more stores need to look to what penny's is doing, drastically reducing expenses. >> this has been such a bad week for retailers, the contrarian says right now is the time to buy? anything look good here even as we look at all the carnage? >> i like tv retail. the diet companies have been doing well. weight watchers and nutrisystem have had strong first quarters. the department stores, that's been tough for a couple of years. >> decline of 50% in one year. you don't think there is any turn on any of these? >> we'll see. you know, a lot of it remains to be seen. >> what are you buying? >> qvc, weight watchers, hsn. >> none of the traditional retailers? >> we're looking towards new, online, focused retailers. >> some contrarians would say that was an even better sign. keep that between you and me. >> all right. >> you have a question, barry?

>> mall occupancies are record highs. it's kind of hot, right? you would expect massive vacancies and it's not hard to find -- i think we've done 12 deals with h&m in our malls in two years. we're retenanting them. everyone has to get better at things. you're taking out that -- what was the crazy italian -- sbaro. you're putting a new constant in the food court. we took out ashley's furniture and put in a movie theater. you have to actively work the assets and get people off their couches to go. it's an experience. millennials are about experiences. if a mall doesn't create an experience with the high school choir, the parades and the art. you have to make people want to get off the couch and go. things that are really interactive, they're working because people are seeking community. the mall, the retailer, has to

figure out how to get people that -- with great service. you have to go there. she says you look spectacular in that. you can't get that online. >> when i look at jcpenney, if they didn't have sephora, what would it look like? >> it would be tougher. and you have seen movie theaters, fitness centers. it used to be that the big anchors would the traffic drivers to benefit the properties in the interior of malls. now you are seeing malls needing other traffic drivers. >> how big do stores need to be? they're using them as showrooms. lulu lemon, i went into the store to buy the shorts and they said, it's on sale online. like, what are you doing? why would you do that? >> get them in there. >> some retailers are being short-sighted, i think, though, about -- you know when you pull

out of a market you lose your physical store, the sales go down. the store is a marketing tool for the brand. whether it's -- like i am on the board of estee lauder. they are opening a lot of stores. they see everything. the department store, which is a collection of other people's brands, if you want hilfiger underwear, you just go online to get it. you don't have to go to the store. department stores in general don't matter in the retail landscape. it's walmart, amazon, and everything else. walmart is all of retail. >> right. mr. furman, thank you. >> thank you for having me. coming up, the obama administration planning to issue guidance to public schools about transgender students' access to restrooms. as you know, north carolina's bathroom bill draws more controversy. brian moynihan calling for a

repeal of that law. we'll show you what he said when we return. flrb [ beep ] but you'll be glad to see it here. fidelity -- where smarter investors will always be. if only the signs were as obvious when you trade. fidelity's active trader pro can help you find smarter entry and exit points and can help protect your potential profits. fidelity -- where smarter investors will always be.

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. obama administration issuing guidance to every public school district to allow transgender students to use the bathrooms that match their gender identity. it does not carry the force of law but is considered an implicit threat that schools that don't comply could face lawsuits or lose federal aid. this on the back of north carolina's controversial bill.

bank of america ceo brian moynihan spoke out to cnbc's will fred frost on this issue. >> we've been clear that this ought to be repealed. we have 200,000 teammates and 50 million customers. we run the company to be the greatest place for people to work. we -- our own employees are worried that a law like this will impact them. even though it might not affect them personally in a sense of who they are and what they do, it affects their teammates. they've been clear with us. we'll continue to monitor the situation. we hope it solves. >> amid the legal fight between the federal government and north carolina over the state's batroom law. breaking economic news. retail sales and the producer price sxeindex. s&p 500's winners and losers. >> it was wonderful. >> bravo. >> i love that. >> it was great. >> pretty good. >> it wasn't bad. >> parts of it weren't very good. >> i didn't like it. >> it was terrible. >> it was bad.

>> awful! >> boo! >> boo!

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we're just seconds away.

18 seconds. now 17. i can't keep doing this or i won't be able to read anything. from the producer price index. we'll have that from leishman. the futures continuing down 63 points. ten-year not worth looking at usually. rick santelli has the numbers. rick! >> 1.3 is the month over month change in advance retail sales. boy, that's a much better number than we were looking for. last month remained down .3. let's go through the internals. stripping out autos and that's up .8. strip out autos and gas, up .of. the control group used as inputs, over twice expectation of up .4 and up .9. positive revisions on both of those. ppi for april, up .2. .1 cooler than expected. strip out food and energy, .1 as expected. if we look at the final demand there, it was unchanged.

so all in all, if you look at the inflation data, it's about as expected. you could argue a tad cooler, though cpi next week may be a better number. and of course, all of that gets more focused, say many in the back row, on services versus products in the manufacturing side. how is the market responding? especially the retail sales? well, we were down about 65 in dow futures. we cut that in half. that actually makes sense. if we look at what's going on in yields, joe is right. hovering around 172, 173. that's about where we are, though you could argue that we are moving up a few basis points, selling off a bit, which isn't necessarily bad news. yields are pretty low, almost challenge the 160 handle. if you bought threes on tuesday, tens on wednesday. you have to look at your position. other than the 30-year, everything else is under water, especially the tens. came out at 171.

hovering around 175. michelle and the gang. back to you. >> steve liesman, the retail sales number, the first month of the second quarter. >> yes. >> does that put to bed the concerns about the q1 -- >> no. i was just saying from "the lord of the rings," the quest for a second quarter rebound was hanging by a thread. if this number came in lousy it was -- you were going to have to give up the ghost on the second-quarter rebound because the evidence would go the other way. this is a good number. it's more than expected. it's not incredibly broad-based. i would like to have seen more strength throughout the economy. >> especially when you exclude autos. >> that's a good number. the control group, the number that flows into gdp up a strong 0.9%. that will flatter or help the second quarter gdp numbers. let me give you some of the details. 3.2% on motor vehicles. the way the government data works, michelle, we know there were strong data sales.

it's never entirely clear if that's going to flow in through the retail sales number. gasoline station sales up 2.2%. not necessarily good, but it's part of the spending that's out there. now, here is what's interesting. the big debate out there, is this a shift in consumer spending? >> yes. >> -- or is it a down-shift in consumer spending? let me show you what's been out there. the lousy retail numbers we have gotten. general merchandise stores up 0%. department stores up 0.3%. non-store retailers, which includes your amazons and your internet and your catalogs, up 2.1%. >> wow! >> so it's arguing -- i need to see the details. it's arguing for a shift rather than a downshift. courtney reagan nieeeds to put that into -- >> it's a spread. >> it's a big spread. yes. up 0.5 last month in a weak environment. what you're seeing here is this

thing -- barry had fascinating comments about why amazon gets a free tax ride in 28 states. will we work to equalize that. republicans hate new taxes. i do too but the question is whether or not -- everybody likes equalization. barry, do you have thoughts on the shift versus downshift? you are in the cat-bird seat when you see the consumers coming in. are they spending or is it a matter of they're spending online? >> i am surprised they're spending at all. >> why? >> the saving rate is going up, right? no. i do think they're hoarding cash, waiting for a clearer picture of what's going on in the political climate across the country. i think people are nervous. i think this kind of -- this kind of divisive politics, the extremes with bernie on one side and, you know, ted cruz on the far right, it's just discomforting to americans. they say i don't need my sweater today. i don't needna another bathing

suit. the whole climate induces paralysis. >> the trouble with that is it gets to be self-fulfilling. it's a pretty good backdrop for the consumer right now. stocks had a nice rebound. housing prices continue to rise. there is employment. whether it is at a low wage or not. a low-wage job is better than no job at all. plus, you have the savings rates are there if people want to spend. >> it's good. wages are going up. we're raising the minimum wages, which i am not opposed to. i think -- i think real wages are rising. employers -- employees are benefiting more from their profits. i think, from this -- i don't -- i was expecting robust growth in the united states. >> lord give me 2%. >> on a global basis we look gorgeous. we're really hot! imagine if we had a leader in washington. >> i want to shift gears -- >> that was for you, joe. the gratuitous comment. >> i like how you said, you know, republicans don't like

taxes. i don't like taxes. >> that was very revealing. >> want to highlight. >> republicans and i don't. >> a democrat or a republican. >> nobody knows what you are. >> you're down the middle. >> nobody has any idea what you are, steve. >> what is the ratio of the two numbers? so the new channels -- the online versus -- i think -- >> it's still only, i think, 15%, 12%. it's small. >> that being up 2 and the other -- >> month to month, though. it's not year over year. the year over year growth on that number is 10%. it's growing much more strongly. >> no question people are shopping online but they're still going into stores. i have a place now in so ho. i walk around on saturday. it's unbelievable. people are teeming out of stores. >> it's the right stores. that's another issue that's been mentioned, right. all the millennials move downtown into the urban environments and the chain stores are not necessarily there. the places where they're shopping may not be the places that show up. >> that's not quite right

either. we're actually moving back to suburbia. as the millennials get older they move out. there are huge waves of demographic changes affecting everything. millennials only need two pairs of jeans. they don't want 12. two pairs of jeans and experiences. we collected 12 pairs of jeans. they're a different generation. i wish i was part of their generation. >> the boston fed president had this to say when it came to fed rates and speculation. one cost of higher -- of staying too low for too long involves the potential of very low interest rates encouraging speculative behavior. and he goes on to say, one area where i have some concern in this regard is the commercial real estate market. do you agree, barry, with the boston fed president that there is speculation going on and that it is spawned by rates having been too low for too long? >> that all goes to the yields on properties, right. no question people are paying aggressively for great assets because there is no alternative for capital.

to the extent cap rates, yield on properties, are related to interest rates, he is right. the core fundamentals of the property sector haven't been this good in the united states in 20 years. most every asset class is in balance and rents are rising. i was chastising my guys about a building we didn't buy in cambridge. rents are up 15%. in places like oakland rents are up 7%. uber moved over there. hotel sales are still positive. retail in our malls are up. >> there was no building that went on. the rates were really low. and i sat around with a bunch of real estate guys. it was like, no, anybody is building anything. we're buying stuff. >> it's picking up. but it's not picking up enough in certain markets and the rents are going up. he is right. we have created an asset bubble. do you really think rates can

rise aggressively when the global rates are so low? the dollar will go through the ceiling. >> did you say uber drove prices up? >> uber moved the headquarters to oakland. they're building a building. everyone followed them. san francisco is horrible. >> it's like going to brooklyn. >> it's the brooklyn of san francisco. >> who knew? >> oakland is hot. we missed it. we missed part of it. portland is kicking ass. seattle is on fire across every sector. it's sort of the austin, texas, of the pacific northwest. that's amazon driven. microsoft is doing okay. boeing used to be -- seattle flu off the face of the earth. not anymore. now it's all things amazon. >> thank you, steve. >> pleasure. >> great to be on with great people and a great guest host. talking about amazon, when we come back amazon beware. e-commerce start-up wish looking to be the biggest shopping mall in the world and it's all on your phone. the ceo of that company coming

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welcome back to "squawk box." here is what's making headlines. update on a story we told you about earlier. tiff tiffany's chief financial officer has resigned effective may 20th. he has been named the chief financial officer at newell brands, the former newell rubbermaid as of june 8th. sorry you haven't made your

famous joke. >> which one? >> honey, come watch the show because -- >> oh, yeah. honey, ralph got a new job! three people in the world know who ralph nickaletti. we made you say it. the ceo is moving from one place -- >> we like ralph. >> honey, honey, get out here, quick! they're telling us where the new cfo of newell rubbermaid is going. >> ralph, come on in. he has an open invitation. two more economic starts due at 10:00 eastern time. the government will release march business inventories and the university of michigan -- >> honey, march business inventory -- >> this is unfair. jeff gundlach says the fed is facing a hawkish rebellion with more fed members warning of the dangers of low interest rates. gundlach says there is a 50%

chance that the fed will only raise rates once this year. >> the other 50% is not at all. >> apple investing $1 billion in the chinese ride sharing service didi chuxing. tim cook saying the stake will help apple better understand the crucial chinese market. uber ceo responding tweeting, my girlfriend owns apple shares, which makes her adidi investor. #shaking my head. #thanksalot, tim. we talked a lot about amazon this morning. we talked a little bit about walmart. maybe both those guys should move over you have to meet a company called wish, the largest shopping mall in the world that happens to be on your phone. wish features 200,000 stores that add 400,000 products a day. now, the $3 billion shopping app services 5 million customers daily and grew over 200% last

year. wish is backed by pretty good names including tech investors like yuri milner and peter tiel. he is here because barry sternlicht is an he investor. the ceo joins us now from francisco. peter szulczewski. wish's co-founder and ceo. a former google search executive. barry is with us as well. thanks for waking up early with us, peter. >> yeah. no problem. thanks for having me. >> explain what you are trying to do. i understand you think there is an opportunity to create a $3 trillion marketplace on a phone, effectively. >> yeah. i think the exact number was a trillion dollars. our mission is to create the largest, most convenient and affordable shopping mall in the world, like you said. we are doing that by putting it on customers' phones. we have over 200,000 stores. offering over 40 million products, and it's extremely

convenient. it's directly in your phone. you don't really have to go anywhere. >> so what -- what's the business model exactly? should we think of you as e-bay? e-bay without the auction portion? or should we think of you as an amazon? you don't do the fulfillment yourself. what's the best comparable? >> actually neither. so we think that the most successful companies in e-commerce were very focused on intent. they all start with a giant search box. you come in and you want to buy a 70 inch tv or a new knife set for your kitchen. we're much more like a shopping mall. so our original hypothesis was, when we started four years ago, what is shopping going to look like on the phone. where the screen is much smaller, where people tend to not want to type as much, the session links are shorter and where consumers want to derive some kind of entertainment value every time they want to use our phone. in our experience, anytime we

put a search box in the app the engagement goes down by about 38%. that showed us early on that consumers weren't interested in searching. they are interested in browsing around and impulse shopping. >> what kind of stores are in your online mall? >> we started predominantly with fashion and accessories. now fashion is only about a quarter of the sales and we have moved on to makeup, to beauty, home decor. >> i'm on the site right now. this is a site for girls. to me it looks like it's a site for girls. nothing but girl stuff on here. >> so actually the majority of our consumers are female. you must have logged in as a male -- or it detected you as a -- >> it knows i am a female, right? >> how did it know? >> maybe my name? i signed in with google, so google probably knows and it tells it, right? >> it might not.

okay. sure. yeah. >> back to the business model. you take a piece of every transaction. who is doing the distribution. when i said which stores are in the mall, are they brand-name stores that we know about or smaller stores that are just providing product? >> two parts of our hypothesis were let's focus on the smartphone and let's focus on solving the big matching problem of which consumers want which products. we have 240 million registered consumers and about 40 million products. and every time you open your phone, without having the chore of actually putting in a search query we're supposed to show you something that you're likely to be interested in and actually buy. the part of the hypothesis that we didn't get right until launching the product was that this works extremely well for value-conscious consumers. the millennials are less focused on brand. they're looking for a good value. that only works if you vet the merchants well. a lot of the brands are small

brands that you haven't heard of but you can vet the content by looking at the performance and ratings and reviews and even pictures and videos that the consumers upload of the products. and by sharing those across the platform. >> anything i put in my bag here is 14 to 21 days before it arrives or 21 to 25. that's a long time. >> you don't do fulfillment, right? the vendors do the fulfillment? >> that's correct. we help along the way. we're doing some supply-side fulfillment deployment meaning that we're ag ge grating on the supply side. we're starting to do forecasting and trying to figure out how much the products will sell in various regions. over half of our sales come in europe. >> sorry. i was going to ask you about europe. where are you strongest in europe? where is shopping online become? i have a guess. where is it strong and where is it not taking hold? it varies by country. >> so basically -- yeah, varies by country a lot. so very strong in the u.s.

very strong in canada, australia. those are not our biggest areas. our biggest areas are western europe. western, central europe, scandinavia. that's where we're the strongest. the consumerlot. so getting payments portion correct is really important. for instance, consumers in germany, denmark, sweden, they're not going to use credit cards online. that's just something you learn the hard way. italy is cash on delivery, so you have to deploy various methods to get this right across the continent. >> the uk is a lot like us, right? >> correct. >> peter, we want to thank you for waking up early. we wish you all the luck in the world with this thing. >> thank you. thanks for having me. coming up, the death of tv may be greatly exaggerated. why the broadcast networks are very excited about this year's ad sales. the details coming from hollywood next. first as we head to break check futures this morning. improved a little bit after that number we got at 8:30. you're watching "squawk box" on cnbc. might be that guy moving rubbermaid. first in business worldwide. playing for the usual phil?

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welcome back. in media news the annual

broadcast up front sales period starts on monday and old fashioned television business may be looking better than it has in years. julia boorstin joins us from l.a. with more. >> andrew, this year's up fronts when broadcasters pitch their new lineups to ad buyers will be the first time in five years that broadcasters secure more upfront ad dollars. a 5% increase in dollars and 10% increase in prices. there is a benefit from political ads and olympics, plus less inventory thanks to ratings declines and a number of cable networks including viacom and turner cutting back on commercial time. even nbc's "saturday night live" will be reducing its ad load. les moonves says additional dollars are coming back to tv amid efficacy of certain formats. and gardner's andrew frank agrees. >> few media can match the kind of impact, the kind of sight, sound and motion the tv delivers

for an advertiser, particularly advertisers that are -- that care about their brands and care about their image. it's very hard to match that kind of impact with a digital banner or research app. >> now, tv ads are becoming more high-tech. nbc universal, cnbc's parent company, viacom and turner in particular are all using data to more narrowly target ads, to guarantee, for instance, the number of potential buyers of mid size cars that a potential ad will reach. so there's always a bell between networks for eyeballs, but now the networks are better positioned in their battles with other ad formats. michelle. >> good to hear. i like it. julia, thank you. coming up, barry sternlick's call on the white house, and later don't miss inge thulin will join me on "power lunch." stay tuned. you're watching "squawk box" on cnbc. we are first in business worldwide.

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with a single click, then simply select the best candidates from one easy-to-review list. and now you can use ziprecruiter for free. go to ziprecruiter.com/offer2 our guest host this morning, barry sternlick of starwood capital, chairman and ceo, so overall it's a pretty good time. i guess all around we get -- >> i'm really worried, but --

>> i said in terms of, you know, we've come through what i think has been a difficult time for the private sector. that's going to change soon enough. and we're at a market that's almost at 18,000. i mean, after your "new york times" magazine piece this is not the best of times? now you don't think it's the best of times? make up your mind. >> no, i was saying the feeling on the set has been -- it's been very negative. >> i think the u.s. economy is in better shape than probably people think. it's feeling better now, but i think it's a loaded spring. having said that i'm angry at central banks, not the j.p. morgan banks, the central banks they have with just printing money tried to pave over the lack of governments fixing themselves, fixing the real fundamental issues, labor force mobility, wage growth, it's really bad. it's become the pan panacea is

hurting. it feels fake and makes us nervous. i do want rates to go up, i don't know how they go up in a world where there's no rates. >> thank you, sir. >> you're welcome. >> great to have you. fun two hours. make sure you join us on monday. "squawk on the street" begins right now. ♪ good friday morning. welcome to "squawk on the street." i'm carl quintanilla with david faber and michael santoli. retail sales come in better than expected despite this week's ugly department store earnings which do continue today. we'll get to that. german gdp rises by the fastest in two years. ppi with its first gain in three months but just shy of expectations. roadmap begins with another brutal day for retail earnings.