guardrails. these are guardrails no, cell phones. >> we're reversing our seats today. >> so you don't blglide off the road and tumble down the side of the road in flames. you need guardrails. >> who is the greatest guardrail is kelly evans. >> that's very fun. and kind. >> are you coming tom snow. >> nope, nope. >> join us tomorrow. "squawk on the street" begins right now. ♪ good morning, welcome to strpt strt. i'm carl quintanilla with david faber and jim cramer. the president meets with ceos at the white house this morning, more tough talk on north korea, putin is now on the tape reacting to syria. europe relatively mixed. oil shooting for six straight up days and inventories after the

bell. our road map begins with trump policy reset. who's who of ceos head i by steve schwartzman returning to the white house with infrastructure spending and tax reform topping the agenda. united doubles down after dragging a passenger off an air flight. the can. is facing a big pr bash backlash. pricing political risk, rex tillerson makes his first diplomatic visit to russia. all in attendance for a strategic and policy meeting with the president and senior ple members of the administration. president trump will make remarks which we'll get later on this morning, we'll see about arrivals and departures, whether or not we can talk to them once on one. infrastructure, tax policy, going to have a business will have a seat at that table. >> this is heavyweight group.

i hope doug mcmillan talks about the notion of technology and what it means for walmart and the border tax means. the reason because walmart hired, huge employer now we're talking about the big. >> biggest employees over 2 million employees. >> i know that walmart say they'll tell you one-third is all they import but i know that a lot of the things they buy are sourced in america but actually have origins overseas. wool mart may become a new voice when it comes to rationality. >> a sear es of meetings between the president and ceo and constant parade. i'm start to hear from corporate america more uncertainty in terms of their view of what to expect. and it comes up a lot of course as you might imagine in conversations i have with people about potential merger and

acquisition activity, certainly if you're a foreign company, think being a cross border deal you're thinking long and hard and may not very well do it. even in the conversations i've been having lately with people who are here, there is a sense after the failure to repeal and replace obamacare that you can't necessarily bank on anything including tax reform. we continue to hear a drumbeat of expectations on what it will look like when we get some proposal from the white house, but these ceos may keep marching in there and talking about things but i'm starting to hear now that there's a little less certainty about what to really expect. >> i don't think that's wrong. i think one of the reasons march was tepid there is a sense, wait a second. we were going full blast here but we may not have that money

coming in from overseas, maybe our tax rate is not going down. maybe the government is not united the way we thought, and there's a kind of an anui. we can have the meetings but in the end there's some sense the swamp is not going down, it's business as usual >> look at nfib, small business at least still elevated levels of that survey but down slightly from march, down on business seeing inventory going up, down on businesses seeing real sales going up. 1% decline on paces. not the torrid pace we saw during the first couple months of the administration. >> it was fine, but it's cooled and this is small and medium sized business that does a lot of the hiring. oil patch still good in terms of

hiring. pipelines as we heard, but no, there's a feeling of well, that was a great honeymoon, but -- >> i think if you're running a large organization or even not that large an organization, you want to know, you want consistency in terms of understanding what the rules of the road are, and you don't have that yet. you've got different reports about different people saying different things, and you have an administration that already is known as not necessarily being on point, when it comes to one point of view, whether it be on economics or foreign policy, and so i think it's worth monitoring. maybe it will even come up today in the meetings that the president has with the ceos. >> i went over the top ten industrials in the country and the ones that have equal to more than 50% of international are doing much better than the ones that are domestic. i think that's important, because we have kind of felt that the domestic was going to

be turbo charged. that's not happening. >> "the journal" asks if everybody's so confident, why are bank loans up 3.8 year on year, while they were up 7.6 in october. >> you look at jamie dimon's letter and looks good and looks like the banks are not as much demand as we thought. we'll get some mortgage numbers. i think when we hear the bank numbers this quarter, what we'll be surprised at, there's not a continuation of people asking for money. >> and you know, while there's always a drumbeat when it comes to geopolitics and oftentimes it doesn't seem to have much impact on our markets, or even on the thinking of a ceo, north korea seems to be some things going on there. you can't dismiss it entirely >> geopolitical not great. when we looked at at sales number, not great. aerospace still very strong, very strong.

major driver of business, trucks, much better, what we want to hear about is construction loans. those had been interestisk in the fourth quarter. those seem to have cooled but we have to find out. wells fargo, the same old, same old, clawbacks. wells fargo, giant american company, we like to hear that business is booming. instead we hear they may make some money but it's from clawbacks although it's substantial. >> it is. >> millions of loans being -- well, millions of accounts open given the fact they were open with very little -- >> let's get to the united story. new developments in the growing outrage over the airline's treatment of that passenger on sunday. ceo oscar munoz defended the action claiming employees followed established procedures and called the passenger disruptive and belligerent. stock was up yesterday, down 3% in the premarket. obviously torn apart by social media, the morning shows today,

late night comedians last night. starting to get more details of how exactly you get these people on the plane, when they probably should have been denied boarding. >> suboptimal situation developing the last line of oscar's letter is, chicago aviation security officers were unable to gain his cooperation, fally removed him from the plane. you read the note, the note is very, it's great for the employees, but with that customer is always right is missing from it. >> that's missing. >> do you think? >> i think mr. munoz got award for the communicator of the year yesterday in terms of, very well-timed. their communicating has been poor. yesterday the story around the same time and we were reading a statement from the night before that was truly lacking in any sort of interest in the well-being of of that passenger. they came out with another statement later yesterday morning or maybe towards midday, which still and then i mean they don't seem to really be saying

what people would like to hear >> no. you know what this is like, when i read this, and oscar is from the railroad business, but this is prereddit. >> what? >> reddit. >> i know reddit. >> there's a generation that looks at very different, i'm not saying it's fake news, it's very real news but my daughters say have you watched the way reddit covered this? you no longer can just look at what abc, nbc, cbs, fox, whatever the major, because the younger person's media is the web. they're not looking at what people are saying on the nightly news. what they're looking at is basically we should be protesting united the cyou nig continental. >> march traffic up three, adding capacity in q1. lot of people wonder if they'll need it. >> american was strict on

capacity. this airline group would have been up big, what does it matter? you can't -- >> jim, is there any chance we get congressional action of some kind based on outrage nationally here that says you can't overbook flights anymore. >> i think they'd say -- >> there is a new process now and you can no longer, that will impinge on the airline's ability. >> also impinge on the trump -- >> make money. >> that's difficult because if you made it so that okay 1,000, do i have 1500, do i have 2,000. you got to stop them before they get on the plane but yes congressional action. this is the thing congress can look good on. who is going to come out and say you know what? i want to be careful, i favor people who are being dragged down -- that's, they have every right to drag people down and have their belly answer get hurt. no. that's kind of a lot of congresspeople are against that. who is for that? i mean there is a congressperson

from united? just has an unpleasant, who put the hand over it, like some sort of, like indictment process and he's trying to cover it up. >> "times" has a nice tick tock they asked other people to get off the flight and they did. >> three did. >> when they came to this gentleman, who shouted after employees says we're going to remove you shouted after her apparently according to one eyewitness account complained he was being single the out because she was chinese. now we have boycott petitions in china going viral. >> this was i think there's just a misunderstanding of how news is communicated in 2017. it is not communicated in a way that, it's communicated in the way where younger people are saying i won't fly united. they don't tend to realize the way the industry broke down was you don't get to pair airlines against another. >> they won't fly you nighted. the next time it's the cheapest

way to get from a to b. >> meantime this one is too juicy. multiple times. this is the video of the year right now. another thing oscar munoz didn't understand. >> there we go. >> to your point. >> wells, chipotle, volkswagen never had a picture like this. >> but pepsico has to be thrilled, wells has got to be thrilled. wells right now, this is like they're probably sitting around saying, woo, thank heavens united dragged this guy because we would be focused on clawbacks. give me video of clawbacks. no video. >> doesn't exist. when we come back the founder of azul, david nleman as his company makes its debut at the nyse. look at the premarket, more "squawk on the street" continues after a short break. so you're having a party?

how nice. i'll be right there. and the butchery begins. what am i gonna wear? this party is super fancy. let's go. i'm ready. are you my uber? [ horn honks ] hold on. don't wait for watchathon week to return. [ doorbell rings ] who's that? show me netflix. sign up for netflix on x1 today and keep watching all year long. jana partners is taking an 8.8% stake in whole foods.

three possible additions to the board including glenn murphy. they previously forced board changes at business toi bristol tiffany and safeway and supervalue, at least some overlap in terms of operations there. they haven't spoken with current whole foods ceo john mackey. shares up almost 10% on the news. it did have the impact, jim, of moving the stock. there is generally seeming a belief that this is an undermanaged company that might benefit from some of the focus that at least jana is looking for, in-store execution, stocking practices, product layout, in-store signage, they can go on and on. >> it has historically been run as if it was kind of our stuff's the best. they have different regional managers, different regions, some of it's duplication.

they are also very community oriented. if you decide to scrap community oriented you'd save a lot of money. they have not done a lot of customer relations work that say a panera has. we'll get to that later. far more important is come on, you got wegman's and fresh market and cost co and target and walmart and amazon and trader joe's. these all happened since the stock was at 65 a couple years ago. guys are coming in. reputation as being high priced, they couldn't get 65 o, 365 off the ground. everybody realized this was great. the final straw when treehouse which does all of the private label decided to go natural and organic. there are some things that you can do that are important to be able to make it so that there's

fewer people working there, and more technology, but what are you going to do about a trader joe's where they line up to get in or a costco which decided to go natural and organic in the last few years of gjim senegal' reign or walmart i asked for rice cakes eight years ago they send me to rice krispies cakes. now they have a whole aisle. >> they have some experience, glenn murphy of course chairman and ceo of the gap, also talking as well about tad dickson, ceo of harris teeter and merrill adler well-known in the sector also. >> can we say glenn murphy had turned around gap, i don't know, i look at gap, it ain't so good. harris teeter, that was the advantage kroger bought harris

teeter, there was undermappi undermanagement there. safeway, they should learn from whole foods about marketing. meredith adler, john mackey could have called him any time and a food critic. get the guy on the phone, what should we make? this is the no the stuff of a super-dee-duper group. glenn just added to the co-chair of lulu. >> you did a show when 365 was launched. you were pretty high on it then. >> well walter robb was i think a great businessman and walter robb is out. what i liked about whole foods was they were going to triple the stores and talk about profitability. instead they took down debt and walked back a lot of stock. >> stock is now 28% down over the last five years, versus the s&p bag up almost 90%. >> the balance sheet is not as good as it was. i totally appreciated 365 the millenials low cost and they haven't been able to get it off the ground but the most

important thing is that everybody decided they want that space. you had to stay one step ahead of everybody else and they didn't an they didn't use the technology. they talk about the affinity plan. think about what starbucks has done and panera. unbelievable. >> sometimes the activist may have some ideas that are worthwhile, oftentimes the company has already considered many of the ideas particular he will within it comes to capital structure. here, day-to-day operations they're talking about. you can also have good ideas and go against the tide that will overwhelm you, starboard and macy's and these guys in qualco qualcomm. >> john mackey is not a guy who will take your call and say i'm switching direction. he's going to take the call and say well, it's going to use kind of you know let's run the united clip again. john mackey is a tough guy,

okay? he's one of the -- walter robb is a very sweet guy, i loved to talk to walter, okay? john is different. >> barry rosenstein is not going to be removed from his own plane. >> true. john mackey is not going to say i'm rolling over and playing dead. maybe they have a european bar, right? everyone always has a european bar these days. >> european buyers, i'm going to buy something and cut jobs? not going to work. >> you got to add jobs. >> stay under the radar, under. >> you got a good point. look if you want to make another point or two in whole foods they better have a buyer. john mackey is not going to take, he listens to all shareholders, yes. listen is one thing. if walter were there it may be something. >> countdown to the opening bell. still have to get to big calls

on disney, on western dig, gold's up 11 bucks, talk about that in a moment.

♪ i'm val. the orange money retirement squirrel from voya. i represent the money you save for the future. who's he? he's the green money you can spend now. what's up? gonna pay some bills, maybe buy a new tennis racket. he's got a killer backhand. when it's time to get organized for retirement, it's time to get voya. thithis is the new new york.e? think again. we are building new airports all across the state. new roads and bridges. new mass transit. new business friendly environment. new lower taxes. and new university partnerships

to grow the businesses of tomorrow today. learn more at esd.ny.gov someone did say disney and unfortunately i was going through my notes, i was going to talk twinkie but disney is a little bigger. goldman goes from buy to conviction buy with a 23% return. the key things two "star wars" four marvel, and accelerating profit growth at espn talking about the different ott services

and the normalization of the nba costs. >> really? positive things about espn and its ability to get on all of the over the top services. >> yes. >> or even the smaller bundles. that is interesting. >> that's kind of a contrary call. >> it is. >> talking about it's not that expensive. reflecting 19 1/2 times. i think the movie schedule has been underrated because what happens is you're in a situation where you have the franchises and marvel will come out and it's going to sell. "beauty and the beast" will sell, "star wars" will sell. people factor in the idea the movie business is what we're going to put out a brand new tie, people will find that. can't be amazon. >> i laugh a bit at buy and conviction buy. we have a buy on it. >> a buy is someone -- >> buy earlier, you know. buy it maybe, now it's really buy it. >> is a buy someone who can be

pulled off the plane and conviction buy someone who stays on the plane? >> yes, conviction buy. everything goes back to the united flight. you are stuck in your seat. >> what are the seats called at the back of the plane? >> fight club. >> we have the opening bell and other things to talk about, don't worry, lots, interesting things, when we come back.

where's jack? he's on holiday. what do you need? i need the temperature for pipe five. ask the new guy. the neguy? jack traed him. the temperature atld negative 160 degrees celsius. that doesn't sound like jack. actually, jack would say, hey mate, just cool it to minus 160 and we're set.

good on ya. oh yeah. that's jack. we cut the price of trades to give investors even more value. and at $4.95, you can trade with a clear advantage. fidelity, where smarter investors will always be. and at $4.95, you can trade with a clear advantage. for decades, investors have used a 60/40 stock and bond model, with little in alternatives. yet alternatives can tap opportunitie that traditional assets can't. and even though they're called alternatives, they're actually designed to help meet verytraditio. that's whynvesco believes people should look past conventional models and make alternatives a core part of their portfolios. translation?

goodbye 60/40, hello 50/30/20. ♪ you're watching "squawk on the street," live from the financial capital of the world. the opening bell in about 60 seconds. busy tuesday, as the secretary of state heads to moscow, already north korea saying it will counter any action by the united states with aggression of its own. putin's on the tape saying the syria strike reminds him of wmd claims during iraq. is that why gold's up 12 bucks? >> i think the north korean situation has got people in t t tentten tent tent tenterhooks. north korea is such a wild card people feel hey it could be this time. [ applause ] people are worried about north korea that typically are not worrywarts. >> right, creeping into the conversation you wouldn't

necessarily expect it to i agree. >> the steam the "vinson" in there and close in on hem. [ bell ringing ] >> there is the opening bell, s&p bottom of your screen. big board atf securities ringing the bell, at the nasdaq it is qualcomm, along with xprize in celebration of their partnership. qualcomm the showdown with apple, making news of its own. >> you can't spend enough time in it, carl, it is such an involved story, this lawsuit they got from apple. we'll do that in the faber report in a bit and keep an eye on that stock. did want to come to another stock that's moving a bit from last week, this is panera bread which is trading above the deal that it already has to be acquired by j.a.b. why? there was a "new york post"

story saying there's interesting and that's not true. i hear 3g initially congratulated them. they have a lot of overlap. j.a.b. and 3g have some of the lps, investors in their funds. j.a.b. is using a consumer fund for part of this but they have the van damme family invested in both, olivier douget, j.a.b. runs j.b. and also anheuser-bus anheuser-busch's chairman. they congratulated them day one and back channels saying it's not true. >> you put the kibosh on it. they're paying above 315. there may be buyers remorse there. >> they didn't run a full process. we did report on it. they got a great price as you said, jim. >> yes. >> i think the expectation somebody is going to overbid are probably not going to be met

with happiness. i'm told from people no truth and 3g back channeled to tell j.a.b. we're not coming. >> when you say no truth that doesn't mean maybe. >> no. that means there's nothing going on right now. >> the 316 buyer that person was ill-advised to take the 316? >> unless somebody else is coming in. these kinds of things people like rumors. they love them. >> it was actually the staff, i had gone for at least five minutes without talking about the united. i just had to get it in there. >> we're not alone talking about united airlines today. obviously we'll watch panera, david's reporting on panera rah, whole foods. panera and whole foods are the subject, throw in more activism of bhp. >> what is incredible is that panera was the best. it didn't need any activism.

it was like panera had the best comp. numbers. whole foods, terrible comp. numbers for a long time. they tried buying back stock. nothing really happening there, but these are regarded as high end. mcdonald's a survey came out this morning saying restaurants survey from piper saying mcdonald's preference remains strong despite signs of increased limited service competition. i never heard -- i happen to like mcdonald's but that's a different thing. chipotle making strides among teens and starbucks, a condition for starbucks the employees parents in china, howard schultz over there, always smart, chinese reverence they show elderly as my father would have attested to, he worked for the chinese at the end of his career. >> starbucks going to start offering some lunch in chicago. you saw chipotle returning to

the national ad market. >> i think that's smart. we're pretty far along in terms of the american community's ability to try to recall what exactly was that, was that the boston college norovirus december 7th of 2015? they tend not to have that level of specificity. because people forget. >> they do. altisse, run by patrick drahi, if you're out there, patrick, looking for an opportunity to speak to you, looking forward to that. why? they're taking public their u.s. subsidiary, they filed to do that, $100 million offering size, jpmorgan, morgan stanley senior active book runner is on. what will be an interesting initial public offering. they own cablevision and sudden link, talking about 5 million or so business and residential customers in total. but when altisse takes altisse

usa public, they will then be able to use it as a currency to continue potential acquisitions here in the states, no the too much they might be able to go after. they'd love to buy cox privately held. i don't believe that family is looking to sell at this point but worth a mention. there is an ipo we can expect in the not too distant feature. >> you ever thought altice was too levered? >> great aspirations for taking costs they were acquiring and sudden link alone they have managed to get the margins up to a level that people had thought might not be possible. we'll see what they're able to do on cablevision. doesn't appear to be all smoke and mirrors. perhaps some surprise there. drahi talks a big game, get rid of everybody over 40 years old. cut everybody's salary, get everybody incented.

we'll see. so far so good and we'll get more detail as we look through the filing. >> it's american airlines is up so thaet's not because they didn't drag anyone, they had good travel revenue seats as opposed to trying to bring it back, straight to france, i'm bringing it right home. >> you nighted is down almost 3%. going to be lowest since late march. western dig another 18-month high as morgue be goes to overweight, to% upside. >> it's important to recognize that i'm sure david can comment, a lot of people felt western digital would get the toshiba flash business but the numbers that are being put across they're so high it would not be advantageous as they say. toshiba buyouts possible but not critical.

yesterday the stock was going down, people realized that one cost western digital a fortune. now they're just raising their earnings estimates and they do believe that the average selling price is not going down nearly as much as they thought for flash and the pc business is stable. they've been talking a lot about the idea of, remember, hpq said pcs are stable. >> the toshiba story is a fascinating one. we touched on it with the bankruptcy of their westinghouse subsidiary in the states, given the cost overruns from nuclear power plant construction. they are selling the flash business. this is an enormous business. the "wall street journal" reporting yesterday fox conn willing to pay $27 billion for it. i have not confirmed that, but i'm going to take "the journal's" word for it. the bankers vod we s involved w looking for 15 billion to 18 billion. you mentioned western digital.

you might see participation from amazon and google. why? they're enormous data centers, the poxes in there and having control of their key supplier being flash is important to them. nobody's going to beat 27 billion but the japanese may be concerned about having a chinese company owning a key business for them, worries about spying and putting things on chips and who knows. >> a lot of people felt they were ruled out early on. toshiba desperately need the money. >> another story toshiba saying we may not survive. if you're the ja. knees government are you going to stop a deal under which one of your former champions is going to go bankrupt? >> no. and that seems like, if that's fox con story is true that's preemptived by. it would wreck the earnings of every other company. >> apple this analyst argues they made ditch dialogue semi. dialogue is down 16%.

we saw what happened when apple said they would make their own graphics chips and that uk firm imagination. >> i think that a lot on this works in cirrus logic are down why the stocks had a big move. there's been a fear in the price earnings multiple the stocks are so low, people feel tim cook is going to say we have our own sound system. we have our own power management. that's not been the case and skyworks has done a remarkable job with them. yes, they control which is why nvidia and amd were going up. they were alternatives that weren't hostage to apple and now those stocks have been red hot and now they're cool and now maybe the money rolls back to them but i don't want to presume because boy, oh my god, is that a united plane? >> that's secretary tillerson's plane. >> that is the secretary of state landing in moscow who by

the way, once again today, takes on russia for being either complicit or incompetent. its distinction doesn't much matter to the dead. >> this made news in russia. he would know because exxon did so much business from russia. so he knows what i think you can say and kind of get a reaction to. obviously people are worried about russia, people are worried about north korea. it feels similar to the 1951-'52 period. where is the xhcommunist chines? we need them to settle with the north korean premier who seems a little bit erratic. >> we get more on the secretary's trip, we'll bring that to you. the dow is down 34.

disney highest since late 2015 today. let's get to bob pisani. >> more defensive names today, reflation off, used to call it risk off. gold's up, what i mean reflation off a little bit, consumer staples up. real estate was up as well, consumer staples just turned negative. the industrials and banks are weak again today. we had a terrible month in the last few days, some big banks down 3%. bank of america down 3%. they keep sinking fractional pieces every single day. elsewhere europe kind of quiet. i would note the luxury stocks are trading well. we reported yesterday, listening to courtney talking about how well lvmh did. they had amazing numbers out after the close so that stock is up double-digit gains across in leathers and fashion and wine and spirits. really just a blow-out quarter.

burberry opening on the upside. we have talked about earnings expected to be up 10% in the u.s. for the first quarter. what people don't know a lot about is europe global earnings are expected to do really well in this quarter and for the full year. it's one of the reasons global markets have been doing so well, for full year estimates we're going to be up somewhere around 10%. to pan europe emerging markets, all are expected to do generally about theer in terms of earnings growth. they have underperformed us mostly the global markets for a number of years, and so this is a very welcome move for people who invest globally in the market. why are we getting this? earnings spurt you might call it? there's a couple of reasons. economic growth is picking up, gdp is better improving. corporate pricing power has improved, commodity prices are up, helping a lot of companies. stocks are cheaper. trading at 15 times forward earnings in europe. 18 times here. 15 in japan. cheaper, and this generally

right now at least at this moment less political risk or a perception of less political risk given the current outlook fort french election, of course, that could change. how is the market responding? generally people have been putting more money overseas so the s&p is up 5% this year, europe and i'm currently hedging and taking out the effectsful currencies to give you pure stock prices. europe 7%, merging markets up 8%, japan up 9% with the currency edge. global markets are outperforming and there's been money flowing into these global markets overall. are there risks out there? of course there are risks. lot of this could change easy. one of the big risks is currently fluctuations. the dollar could have a big impact. political risk could change suddenly and we could get a fade in the reflation trade that's been going on. this reflation trade existed before trump's election. commodity prices started moving up in the last summer before president trump was elected. there is risk on the upside.

none of the analysts have incorporated the trump agenda into their earnings estimates. the market has moved partly in anticipation of that but nobody incorporated lower taxes, any kind of infrastructure. if any of those materialize you could get a second round of reflation trade that's going on. so the important thing is, general optimism on the global economy. speaking of ipos here changing the subject, azul's pricing, 20.06 it is a dual listing. it is opening in sao paulo and here. they're shouting at indications and it will open in sao paolo. 20.06 to 22.06 are the indication. we'll be talking to some of the people involved in that jetblue founder david neeleman very much in all of this.

i said two months ago, finally right on this one, there will be a week we get seven or eight ipos, this is likely it. we had five last week. we'll get a coal company believe it or not scheduled to come, metcoal, producer of m mettalurgical coal. we're down 16 points. david back to you. >> thank you, bob. shares of qualcomm trading down about almost 3%, about five bucks above the company's 52, the stock's 52-week low after late yesterday the company responding to the lawsuit it received in late january from one of its largest customers, that being apple and this is not an unimportant dispute for qualcomm. in fact, you could argue this is the center of its universe, in terms of its business model of both selling chips that act as modems in many ways for wireless

phones, but also collecting licenses on its portfolio of patents related to the development of so much that goes into or has gone into the creation of the wireless phone virtually getting that license fee on every phone sold. back in late january, apple at least according to call come kind of indicated we're done. we don't want to pay as you watch rex tillerson exiting the plane, meeting his counterparts in russia for a series of meetings that will take place there. we'll be following that, you see secretary tillerson making the rounds and shaking hands as he hits the ground in russia. back to qualcomm now. late january apple filed a lawsuit callsome's surging royalties for royalties have nothing do with it. we added cameras and so many other things that increased the price of the phone. you keep taking the same percentage.

that's not fair. you had nothing to do with the innovations. they also filed in the uk and china. callsome dealing with the federal trade comission about its practices, as it fights this multifront war but yesterday we got the countersuit from qualcomm which says the government investigations were induced by none other than apple it induced government investigations of qualcomm's chipset and licensing businesses and knowingly made false statements to government agencies, urged the imposition of extra territorial regulatory remedies and they also say you breached the peace, the cooperation agreement, that the parties had agreed to keep. you have breached that as well. yesterday i did speak with general counsel at qualcomm don rosenberg who said why now? apple came to a point they

didn't want to pay as much any longer. look at the inputs to create a phone and a margin. his claim they saw an opportunity there perhaps to pay less if not anything at all. qualcomm comes back as you might expect. mr. rosenberg saying the royalties payable to qualcomm by the contract manufacturers and in this case the deals are with the manufacturers, with foxcomm, not just apple itself. qualcomm's portfolio of tens of thousands of patents are far less than what apple charges consumers for something as basic as a plastic phone case. not enough time to do this justice of course, jim. such an important case for qualcomm, which has yet to respond to the uk and china, as the ongoing disputes with the ftc and kftc. never great to be involved in litigation with one of your biggest customers. >> no, that's one of the reasons qualcomm to buy nxp was an

important idea. i thought it would be worth more if qualcomm had not come in at the right time to diversify the communications. autonomous cars, they have the most chips in cars and nxp but the deal, david, is a deal that people talking about not closing until the end of 2017, it's 2018. >> you need chinese approval. >> walgreens, rite aid feel. i don't like the deals. people still say that deal may not close. >> i know. let's get to the bond pits and check in with isnrick santelli the cm negotiation chicago. >> good morning, david. we're really trading in this range aggressively. look at the two-day of tens yesterday it looked like we were going to bee line towards 240. here we sit at 232, down from 2.37. this will most likely be the eighth trading session where we'll have a yield close between 2.32 and 2.38. time will tell, interesting thing about 2.32, open the chart

up to december 1st, yes, the low yield close for the year is 2.32, last week, the 3rd of april. november 1st the ten minus twos, under 1.10, glassest since november. is it part of the fed? partially but because our first quarter expected gdp is under 1%. we've had other bouts of this, second or third quarter will make up for it but in the end the average process doesn't seem to take us much over 2%. lingering issue fixed income markets. global sovereigns of the high credit quality have to decipher. if leeact december picture is more aggressive than our picture with regard to rates, hovering above 2.25. contrast that with the issues facing the uk, as they go to divorce court and settle all the issues with the eurozone. look at the guiilt under 1.10.

dollar/yen looks similar. the dollar weakest level since december. above 100 and it's firmed a bit but under 102.20, carl, david, jim, back to you. >> thank you very much. when we come back, david neeleman former ceo of jetblue taking azul public. dow is down 61. vix spikes above 15, a high for the year and gold is now up 10% on the year. back in a minute. (fans cheering) because when you really, really want to be there... but you can't. (cheering) at cognizant, we're helping today's leading media companies create more immersive ways to experience entertainment

with new digital systems and technologies. get ready. because we're helping leading companies lead with digital. ♪ ♪ welcome to holiday inn! ♪ ♪ thank you! ♪ ♪ wait, i have something for you! ♪ ♪ making every stay a special stay. holiday inn, smiles ahead. whether for big meetings or little getaways, member always save more at holidayinn.com

when this bell rings... ...it starts a chain reaction... ...that's heard throughout the connected business world. at&t network security helps protect business, from the largest financial markets to the smallest transactions, by sensing cyber-attacks in near real time

and automatically deploying countermeasures. keeping the world of business connected and protected. that's the power of and. briathe customer app willw if be live monday.

can we at least analyze customer traffic? can we push the offer online? brian, i just had a quick question. brian? brian... legacy technology can handcuff any company. but "yes" is here. you're saying the new app will go live monday?! yeah. with help from hpe, we can finally work the way we want to. with the right mix of hybrid it, everything computes. [and her new business: i do, to jeanetgo. jeanette was excellent at marrying people. but had trouble getting paid. not a good time, jeanette. even worse. now i'm uncomfortable. but here's the good news, jeanette got quickbooks. send that invoice, jeanette. looks like they viewed it. and, ta-da! paid twice as fast. oh, she's an efficient officiant. way to grow, jeanette. new. get paid twice as fast for free. visit quickbooks-dot-com.

>> time for cramer and stock trading. >> jpmorgan talks about why they loved eli lilly. it has a lot of good things coming, the pipeline is terrific, the top pick in the first quarter. they replaced j&j as the number one name all the big institutions want to own. fantastic balance sheet, lots of good stuff in the pipe.

no longer just alzheimer's. any time a dip the buyers come to lilly first, not brist bristol-mye bristol-myers, not j&j, astrazeneca, no, they go to lilly. >> it was worth it just to hear bristol-myers. >> people still think that's in play. >> what is tonight? >> i have the fastest medical robotics company that is the fastest growing one and not the one you think. obviously it's a tease. >> getting good at those. >> i do a lot of teases because i'm doing writing. my nephew cliff mason and head writer and only writer and i have been cranking since 3:30 this morning we've been cranking. >> that's in addition to the workout. >> yes. well you know. >> see you tonight. when we return a lot more from the president's meeting with ceos. don't go away. think again.

this is the new new york. we are building new airports all across the state. new roads and bridges. new mass transit. new business friendly environment. new lower taxes. and new university partnerships to grow the businesses of tomorrow today.

learn more at esd.ny.gov danielle romanetti will never sell joan tyn. the owner of fibre space in alexandria, virginia, doesn't want to process web orders. she wants to connect with customers at her store. using social media she entices people to come in and buy. for more watch "your business" sunday morning on msnbc. present? american express open cards can help you take on a new job, or fill a big order or expand your office and take on whatever comes next. find out how american express cards and services

can help prepare you for growth at open.com. find out how american express cards and services is it because so many go after it the same way? chasing after short term returns. instead if getting caught up with the crowd, the investment managers at pgim take a long term view, teaming specialized active investing with risk-management rigor, to seek out global opportunities. we manage over a trillion dollars this way, attracting many of the world's leading investors. partner with pgim. the global investment management businesses of prudential good tuesday morning. welcome back to "squawk on the

street." i'm carl quintanilla with michelle caruso-cabrera along with david faber. sarah is off today. the vix highest since november. ten-year yield comes back to 2.32. >> road map starts with ceos making their way to the white house. the president getting ready to host a strategic and policy discussion on infrastructure spending, tax reform and a lot more. we'll go live to washington. united airlines backs its employees after that incident with a passenger that went viral. we have the latest. speaking of airlines, azul airlinesed thirst largest airline going public at the new york stock exchange. >> azul just opened for trade this morning, the airlines founder david neeleman will join us in a few moments to talk about the state of the industry along with the way united has responded to this pr debacle.

the stock is the biggest loser on the s&p, down about 4% this morning. it's going to lop off about 800 million in market cap. >> nice move for azul, not bad opening trade there you see. >> he knows all about -- >> you have azul on. >> i'm wearing azul, not by design. david neeleman knows about big dramas involving airlines. his planes stuck on the runway in 2007 for eight hours, we had new legislation as a result of it. so he can probably give some insight into what they should be doing right now. maybe he was in talk with them because they have a stake in azul, united. in the meantime the white house economic advisory group led by steve schwartzman is back in d.c. coming up this hour the president will host a strategic and policy ceo discussion. the attendees include the heads of go, m, ibm, pepsi, walmart and more. kayla tausche is outside the

white house with more. >> reporter: good morning. at official name of the group the white house put together in december is the strategic and policy forum. it met last february. this is the second meeting for the group and the attendees you listed some, ceos of ibm, blackrock, pepsi and kevin warrish formerly of the federal reserve. members not attending jamie dion, elon musk and wob bob eiger of disney. today they'll discuss, for instance walmart and pepsi meeting with wilbur ross and gm in the discussion on the environment. then they'll come together with the president and as a group have a discussion a little bit later on this morning. the president as you know by now has convened more than a dozen of these groups of industry leaders since taking office earlier this year, but this particular group of multinational heavy hitters has been discussing tax reform, trade, they want certainty on trade, and infrastructure, and

today they'll likely be looking for more granular detail on the big picture agenda items. steven schwartzman spoke this morning and said infrastructure would be complicated but that it is very important to this group. listen. >> reporter: there's been questions whether or not the president's infrastructure package could pass through congress. >> i think it's complicated, and it's a legislative type of tactical decision. all i know is that it's a very important priority and will be handled whether the' simultaneously or whether it will be handled inity own order. >> reporter: at the end of the first meeting of the group in february schwarzman told cnbc the ball was in the white house's court. it was up to the administration to put the people in the staffing roles to put these conversations into effect. we'll talk to schwarzman in the 11:00 hour and ask him whether they've done that.

>> thank you very much, kayla. today's ceo agenda comes as new reports suggest the white house is going back to the drawing board on the president's tax reform plans counter to the trump's early bullish outlook. take a listen. >> we'll be coming up with a tax bill very soon, a health care bill even sooner and it's really working out. we're going to be announcing something i would say over the next two or three weeks that will be phenomenal in terms of tax. we're doing a massive tax plan, coming along really well. it will be submitted in the not too distant future. >> joining us at post nine cnbc's senior contributor larry kudlow. sir lawrence, good to have you.. >> thank you, appreciate it. >> are these meetings going to start bearing real futuruit youn eat on paper? >> i'm not sure. honestly not sure. i'm a huge fan of steve

schwarzman, huge fan. i have not talked to mr. schwarzman, he's going to push for a corporate tax cut, asap. it would be the single best economic stimulant number one. it is a wage earner's tax, number two, and number three, you could link that plan, repatriation to infrastructure, you could. it's there, a little tricky, i agree, but you could do that. one of the things that's bothering me here, the whole world is talking about steve bannon and jared kushner and so forth. i think, what i gather from the white house sources, those guys are fine. they worked it out. what was this game we used to play when we were kids. >> rock, paper scissors. >> rock, paper scissors, did a round of that and they decided they're okay and they're friends. you have big policy issues here and here's one of the things that troubles me. process sometimes leads to policy. the treasury department is in charge of tax policy, all right?

they got a lot of staff to do it. okay? now, national economic council is in charge of coordinating different points of view, inside the white house. we have treasury, the council of economic advisers, now going to be run by my great pal kevin hasset who is terrific. you'll have different views and an option paper. i don't think we should be reaching out for new ideas. to wit, all right, to wit, mr. kohn starts talking about carbon tax and denies it and the white house denies it. all that does is confuse congress and everybody else. >> glass-steagall. >> that is another one. this is not the time for glass-steagall, that's coming down the road but you're right. mr. cohn and mnuchin were talking about value-added taxes. v.a.t. taxes. it's not on the board, it

confuses people and finally, i've never spokele to mr. cohn, it's not personal, i read on a bloomberg tv interview he's now saying individual tax cuts should come before corporate tax cuts. nobody in washington even believes that, first of all. that is not true. second of all not good policy and he's confusing it. why are we confusing the issue? >> larry, this morning i reported a number of people in the corporate community that i speak to are starting to talk about a lack of certainty when it comes to these policy pronouncements, because everybody seems to be moving in different directions. >> all over the place. all over the place. >> we heard the president there on the 3rd, on the 9th and the 16th of february talking about something coming very soon. it's now the middle of april, just about. what are your expectations here in terms of what they're capable of? you seem to be outlining a process that is not working cohesiv

cohesively. >> the president put it very well, it was in the paper this morning "the journal." let's prioritize. you can't do everything all the time all at once. you have to lay out some priorities. a, b, c, that's all you're going to get in the first year. they got gorsuch, that was a very good priority. this tax thing is all over the place. trade is moving, i think, in a better direction, far less harsh and protectionist. but i want to come back to this. they, we, they created a very good tax plan in the campaign, if i do say so myself. >> because you helped create it, yes. >> that says to me lord knows steve moore, steve miller, very smart guy who is the supply side, hang on a second, let me thaek in point. you're not going to get, this is my view, you're not going to get it on the tax reform that includes everything. go for what you can get.

lake at jason furman's op-ed. >> he was on this show. >> he was discussing it with me and i loved it, he's coming on my radio show this saturday by the way. so just figure out repatriation, lower marginal corporate tax rates for large and small business. >> i hear you saying something more distinct. >> just get that done. that's what you have to do. >> nobody is in charge or the wrong person is in charge or too many cooks are making this soup and you can have a great plan but if you've got all the different people, are you saying gory cohn shouldn't talk about it? >> i think too many voices can be a bad thing. too many press, media voices. you say stuff and what happens is the white house comes back and slaps you down. remember that episode with the carbon tax? no, no, no, we're not looking at that. you're not looking at that, then why did you say it? >> he this all need to be on message. needs to be a cohesive plan and

you defeat and you also you start to hurt confidence when you have different messages going out. >> yes. okay, that's fair enough. who is on first, who is on second. i agree with that. the treasury department should have the play but they're the process guys who run it. you got your cea and nec, you'll have your steve miller over in the policy council. yes, but the job of the nec it seems to me is to put together the options on paper, so the president can make a clear and final decision. i may be wrong but i don't see them doing that. i find this troublesome. >> sounds like mnuchin not consolidating enough power. >> he's new to the game, they're all new to the game. mistakes are made. i get this. we did this in the reagan years. nothing is perfect. i'm just saying let's get this down here. i don't want to hear other

options that are on nobody's list, carbon taxes and v. a.t. taxes. you have a house bill close to a trump bill. the trump bill itself is the starting point, if they get it out there. they have to deal with the senate. the senate has some different ideas, okay? i'm not saying bad, but orrin hatch has different ideas. they have to consolidate a trump position, and got to go in and negotiate. let me make another point. this blows the heck out of me. i've written it up on cnbc.com, blah, blah, blah. you want to pay for this stuff? all right? growth. growth pays for this. now, a little research -- >> don't worry about deficit neutral? >> right. >> okay. >> but don't not always worry. >> don't not always worery what does that mean? >> because it's going to take care of itself, david. look, here is the deal. the congressional budget office,

which has no statutory authority, in other words if you go into reconciliation, follow me on this, you do not have to use the low ball cbo static. there is no law, there is no rule. the senate parliamentarian said we will accept dynamic scoring. all right, so now here, look. cbo says 1.8% growth for the next ten years. in other words, lower tax rates have no impact. nonsense. if i take that up to 3, 3, which is below our historic average, you know how much money i make? >> a lot. >> $4.5 trillion. that is the mother of all pay-fors. pay for taxes, pay for health care. use it. the main guy here is senator mike enzi, chairman of the senate budget committee. all he has to do is stick dynamic estimates into the reconciliation package, and you're done. now, i want the white house to

raise that point publicly so this can get done, and let's, you know what? let's drain the swamp. you know who is part of the swamp? you know who is a card carrying wamp member? >> freedom caucus. >> cbo, joint tax committee, bad revenue estimate. i want to clean the swamp by using dynamic scoring, which will pay for every bloody thing under the sun and will help wage earners the biggest ben tish areas. listen to me. >> you don't need the mike next time. >> exactly. >> i get excited because i want this to happen. >> you're right, larry. >> it's for the good of the country. >> larry kudlow, thank you so much. after the meeting with ceos head of the white house economic advisory group blackstone chairman and ceo stephen schw z schwarzman will join us. we look forward to that. earnings season is going to kick off this week, with goldman

sac's chief economist david kostin will talk with us. tax reform, and a lot more. we'll take you to washington as soon as that begins. "squawk on the street" is back after this.

concerns over geopolitical market risks keeping the markets on edge as earnings season kicks off this week. david kostin goldman's chief equity strategist and joins us here at post nine. >> nice to see you.. >> thanks for joining us. you've made a great call so far, you argued that march would have been, would be the point of maximum optimism. >> right. >> a lot of people argue it feels that way. do you think you're right? were you right? >> i believe. we hit peak around 2,300 for the year in the first quarter and that was where we were march the 1st and most likely will be fading towards 2,300 level for the s&p 500 at the end of the year. basically in that sort of range right now and if we think about the structural way to think about the market, there's two parts of it. an earnings part and value indication part and at points in time, one or the other is more important. and the driver has been for the last five years has been pe

expansion. the market multiple has gone from ten times to 19 times. valuation expansion is behind us and now we need to see some earnings growth and that is really from a portfolio strategy from a fund manager point of view where do you find that. there are pockets where we can see some earnings growth. that is what is going to take the market higher or lower and basically we're looking at very, very modest level of earnings growth which we offset by a lower multiple as interest rates and inflation continue to move higher. >> as they continue to move higher that's interesting you say that. the bond market today the yield curve is the flattest it has been since the election. it seems there's less and less confidence about something coming out of washington that will raise interest rates at the long end of the curve. >> my characterization early march would be a point of maximum opt minimum reflects that view and the idea that

anything was possible and still is possible in terms of washington developments. it was the latitude of health care, tax reform at the beginning of march and now as the years and weeks go by, the days go by the degrees of freedom start to narrow and fewer things and maybe the tax reform ma l take place. >> what i don't understand, how do you believe we're at maximum optimism and then expect the yields to rise? you expect interest rates to rise? >> so the inflation data would suggest that there has been some increase in whether it's wage inflation, oil prices up 50%, first quarter this year versus first quarter of last year. you have other input costs for companies which will be pressuring margins. that's the inflation component of it. >> not necessarily growth component. >> and forecast goldman sachs ten-year bond yields rise 3% by the end of the year and if we think about the optimism essentially what fund managers are doing and often still do is

look at the impact of tax reform and say how much accretion will that add to earnings, and then think about the valuation of those higher level profits. i want to talk about maximum optimism, the recognition that that is not likely to happen this year, is when basically investors have to walk back those higher level of profits. you basically have an increase in profits probably around 5% which is modest growth and you have basically offset that by a lower multiple, why the market will end around 2,300. >> people wonder you've had sub 5% unemployment for 11 months. the stock record highs, all this chatter about reflation, some wage growth, and yet you can't keep the ten-year above 2.6 and you think it's going to 3? >> there is a rise in inflation indicated and the expectation is that the fed will be tightening along the way, so later this year as well there will be a draw-down on the balance sheet.

think about where there will be some growth in earnings, where is that compass leading you, towards financials which ought to do better in an environment of higher interest rates. . quarter earnings will kick off on thursday, we're looking around 15% year over year growth in financials, second will be technology around 13% growth. that's your leading work horses of higher earnings growth and the rest of the market will probably be something closer to 5%, once you take away energy. >> how are you processing, we mentioned north korea, syria, vix today above 15, gold's closing in on 1270. how are you incorporating that? >> the vix has been extraordina extraordinaryily low. you saw the rise ahead of the brexit vote, rise ahead of the election. it was basically two weeks before, one of the big red letter days we have on the calendar is the 28th of april, when the u.s. government will need to have a continuing resolution to continue funding and given the acrimony in

washington, d.c., that raises a risk about whether that will pass and the last time you had this was 2013, the federal government shut down for 16 days. so that is some of the risk. you made some reference to other geopolitical issues. they're certainly out there. it would call into question the idea of a market trading at 19 times forward earnings which is we talked about before at the high, high, high end of historical valuations. >> do i understand that it sounds like you think the greater risk is the issue of what's going on in washington, whether or not we get a shutdown. >> the end of the day the story of earnings for most companies is a domestic story, two-thirds of all revenues are domestic. the question of what's happening in washington i think say leading focus for investors, clearly the geopolitical issues around the world are always present but difficult to invest on that as a backdrop. we focus on financials and technology, as areas for better growth and that's how we set up a portfolio now. >> we'll see what earnings bring

in this week. good to check in with you. look at shares of azul airlines going public moments ago here at the new york stock exchange, higher by 8% on its debut. stay with me, mr. parker. when a critical patient is far from the hospital, the hospital must come to the patient. stay with me, mr. parker.

the at&t network is helping first responders connect with medical teams in near real time... stay with me, mr. parker. ...saving time when it matters most. stay with me, mrs. parker. that's the power of and.

hey dad, come meet the new guy. the new guy? what new guy? i hired some help. he really knows his wine. this is the new guy? hello, my name is watson. you know wine, huh? i know that you should check vineyard block 12. block 12? my analysis of satellite imagery shows it would benefit from decreased irrigation. i was wondering about that. easy boy. nice doggy. what do you think? not bad.

the third largest airline by passengers azul opening for trading here at the nyse moments ago. joining us now is the founder and ceo of azul, david neeleman, you may remember him of course as the founder and former ceo of jetblue. it's been a while. nice to have you. >> it's been a while. thank you for having me. >> you had trouble getting this off the ground so to speak but managed to this time. why this time and not the others? >> brazil's pretty volatile economy but during the time as things were going on in brazil, we were just building our business, building our business, adding more and more cities, building a stronger route network so company is much stronger today than back then. whenever you take private equity money the guys like to see, so you make a commitment to do it.

the market conditions aren't right you pull back and in the meantime whethbuild a stronger business. >> i didn't know david neeleman was running an airline in brazil. why would do you that, political crisis after political crisis and an economy that cratered. what's the answer? >> the answer is that the challenges in brazil are big, but the opportunity is much bigger. we are an airline today that does 26% of all the domestic air revenue in brazil from zero to 26 in eight years. it's incredible. to be able to do that and during that time, traffic in brazil has doubled. we've taken about half of that new traffic. now we really think there's going forward that the market should be much bigger than it is today and we're well positioned to get a big chunk of that as we go forward. it's a big opportunity. >> who did you take that share from? >> we created it. we created demand.

so obviously there were two incumbent carriers and they had 95% of the business, it was gold and tam at the time. the market got bigger. they didn't shrimnk. they flew a lot more people too. when i went down there in 2008 i said there's only 46 million people traveling by air and at the time in the u.s. 750 million and the country is the size of continental united states and 50 cities didn't have air service at all. part of our strategy was to add, we have service to 96 brazilian cities today. our closest competitor has 52 and one has 44, and we have 96. being able to go into the cities people have to drive four hours, take a three-day boat ride to catch a plane, so it's just developing new markets. >> reporter: the routes profitable? >> oh, yes, sure, they do really well. we've built this huge network, now in brazil -- we want to add another 30 to 50 cities over the next five years. now you can go from any city in

brazil that we fly to, to another one in one or two stops. incredible. >> to david's question earlier not only has the brazilian economy been tanking but we learned how deeply corrupt it is. one guy in a scandal offered to give back $100 million overnight. that's one guy. it's vast. what's it like doing business in that kind of environment, and is all of this actually going to work out to some good? is this a less corrupt place after all these investigations? >> well i think the old saying never waste a good crisis, and i really feel that's the case. our former board member is now the finance minister and he's doing a great job. there's reforms that need to be passed, they passed a cap on spending in brazil and working on the retirement age and also working on labor reform, and so i really think we have a president that is not running for re-election. the congress is working, so i think as we went right-hand aon the road show and talked to

investors the sentiment about brazil is on the return, and it has vast potential and they have to get things -- >> what are you landing on in the cities hoping to open up? infrastructure certainly comes into play here, are they just landing strips? do you have to pay off local officials to get stuff built? >> no, no. during the military regime in brazil, they did a lot of infrastructure building, so every one of the cities have airports. they maybe the terminal was nonexistent or small. we have a team with a checklist, we meet with the mayor and say look, we need security checkpoints and need this and help them open the cities. it's just with all of our expertise we've been able to do it and the people in the cities couldn't be more thrilled. >> compare starting an airline in the u.s. where it's d.o.t., faa, port authority and dealing with the agencies down there. >> well the agencies are good really. we have a knock, they took the f.a.r.s in the u.s., the regulations, and translated them into portuguese and we have

pretty much the same thing. we come in there and set a standard and we have a great relationship with the recognizetory folks. so it's really worked well. they were thrilled to have us. if you bring an airline in liberates the communities and lets them fly, we're really a hero in all these cities where we fly and with the government as well. >> you're coming public on a day, day two of the firestorm about united airlines and the guy being dragged off the plane. you've been in a fire storm before. >> i have. >> when jetblue was stranded on the runway for eight hours jfk. >> nine years ago. >> 2007, yes. when you look at this video that everybody is still talking about, what do you think? >> it's unfortunate. it's really unfortunate, and i think, i have a lot of respect for united, they're our partners, they own part of our company, i have a lot of respect for their leadership. they have to look at this and they're going to be better for it. they'll learn and i'm sure that they'll make some policies going forward to make sure this never happens again. >> have you talked to oscar

munoz about this? >> i haven't talked to him but talked to some folks and given them my advice but they're good people. >> you were a good communicator during your time, jetblue came along it was sort of a different proposition. they don't seem to have been communicate so long well since this occurred. >> it's always hard. you just want to make sure you say the right thing and you've got your pr people talking to you, but as the day plays out i'm sure they'll make the right decisions. this is a learning experience for them and you know, at the same time delta canceled 3,000 flights and people are stranded in atlanta. so it's amazing. blood brings a lot of attention and that was very unfortunate. >> you raise an interesting point. on the one hand is this a lesson for flight ops or pricing models, booking policies, some larger thing to affect load factors and revenue going forward. >> i think it's giving the control of the gate agent to bid a higher price to get people to voluntarily get off an airplane. as simple as that. everyone has their controls they

say you can do this much. if they just give unlimited, if you have a situation where you have people on an airplane, and you have to pull someone off, just give them, you know, there is a price you that people would have stormed off the airplane. it's just you know, this thing between kind of the propeller head finance guys that want to control things and you have the marketing guys, but in this day of social media, everybody has a camera you got to give people more power. >> do you remember the impact on traffic for jetblue? how long did it take for patterns to get back to normal? >> first of all our stock is up today. >> your stock is up. >> i went on, i went, i did 25 live things like this. >> i remember. >> we created a customer bill of rights, and we made commitments to our customers within two weeks. our sentiment was actually higher than it was before so it's how you react to the crises

that makes a difference. i'm sure they'll figure it out and this won't happen again with united. >> jetblue used to fly the brazilian embriere. sume you're using them with aduel? >> yes, we launched with that airplane. >> david congrats on a well-received ipo this morning. >> thank you. >> david neeleman from anneal. contessa brewer with an update. secretary of state rex tillerson arrived in russia after wrapping up a g7 foreign ministers meeting in italy. he says russia was complicit or incompetent regarding syria's chemical attack and insisted the distinction doesn't matter much to the dead. fighting continues between iraqi forces and isis militants in western ma sul with iraq 'artillery and coalition aircraft targeting militants. lot of civilians were seen trying to leave the area amid gunfire and explosions.

traffic problems for thousands of commuters in atlanta. tractor trailer truck carrying diesel fuel overturned on i-285 early this morning. about 7,500 gallons of diesel spilled. it shut down traffic in both directions. atlanta just can't catch a break. and more bad news for struggling restaurants here, consumers are opting to save their money rather than dine out. that's according to a recent survey by consulting firm alex partners. those polled say they plan to eat out less, in fact by as much as 13% over the next year. that's our cnbc news update for this hour. carl back to you. >> thank you very much. janet yellen speaking at an event at the university of michigan last night outlining one of the possible challenges ahead for the fed. >> if the economy ends up overheating and inflation threatens to rise well above our target, we don't want to be in a position where we have to raise

rates rapidly, which can conceivably cause another recession so we want to be ahead of the curve and not behind it. >> we'll get reaction from former federal reserve board governor mark olson in a moment. [pony neighing] what? hey gary. oh. what's with the dog-sized horse? i'm crazy stressed trying to figure out this complex trade so i brought in my comfort pony, warren, to help me deal. isn't that right warren? well, you could get support from thinkorswim's in-app chat. it lets you chat and share your screen directly with a live person right from the app,

so you don't need a comfort pony. oh, so what about my motivational meerkat? in-app chat on thinkorswim. only at td ameritrade.

let's get to rick santelli at chicago and get the santelli exchange. >> hi carl. welcome mark olson, former fed governor. thanks for taking the time today, sir. >> thank you, rick, always enjoy being with you. >> let's start out since we ran a sound bite from janet yellen last night university of michigan, did you hear anything in her comments or read her text and some light bulb went on of something we may have missed or new information, sir? >> i think if we could have picked it up, i think there had to be a certain element of relief. she described the fed coming back to its traditional role of not being the provider of

stimulus to the economy, but monitoring essentially the viability of the economy, and i think that's a much better role, and what she decided in your clip there they'll get ahead of in terms of raising rates and adjusting money supplies which is what the fed should be at this time. >> the big news of late, you and bob heller have been all over this. reduce the balance sheet. i think we're kind of there. now if you talked to pram mare dealers, 5 out of 15 think it happens at the end of '17, the balance by 2018 or in 2018. your thoughts on how it will play out and when it may play out. >> if i'm reading the balance sheet correctly and i think i am, there are $200 billion of short term treasuries less than a year maturity.

plenty of firepower to start it immediately. what chair yellen said earlier they'll raise rates first and start at the passive tightening or on what i would call the stealth tightening. the market reacts to adjustments and the fed funds target but exactly the same effect on the money supply if you allow for the runoff but what we don't know is how the markets will respond. i expect to see it sooner rather than later to get a sense of how the market will respond. >> all right, very interesting. now let's contrast that, with the notion we have two tightenings for 2017 built in additional tightenings supposedly three for 2108, total of five which brings us to if that occurred a range of 2% to 2.25%. is that likely, considering balance sheet coming of age with respect to reduction. are we going to get both or one

at the expense of the other, in your opinion? >> it is entirely dependent on the growth of the economy. right now we're seeing right about a 2% growth. i think that the tightening will be relatively slow and again doesn't matter from a money supplier perspective, whether you do it allowing the runoff or adjusting the target rate. i think the market reaction sooner than later some sort of a reduction in the balance sheet, which absolutely has to happen in order to get the sense of how the market will respond to it, and see if it responds the same way that it responds to adjusting the target rate. >> all right, real quickly, we only have about half a minute left. there was an op-ed today titled "obama's debt interest bomb." it talked about things we all know that the interest payments on servicing our debt are going up, and the more we see rates go up, whether it's fed driven or market driven, a combination of the more expensive it's going to get. can you just weigh in on the

debt issues and the fact that maybe the last president didn't really pay his fiscal consequences to are that debt expansion. >> remember there isn't much need to do a mark to market. so on a balance sheet of a financial institution or balance sheet of a company, they need to make an adjustment. but the only effect that the interest rates will have on any incremental borrowing the fed does. there's no question the obama administration got the break of the very low interest rates but i don't think they'll see a significant adjustment in the next few years unless there's a significant increase in the borrowing. and i think that's what policymakers are trying to avoid is a significant deficit in the economy. in the budget. >> thank you, mark. yes, that's a great point. basically what you're saying is maybe it's going to turn out to be a good thing that we didn't float more of the debt that we issued over the last eight to ten years. thank you, mark olson, as

always. back to carl quintanilla. >> we go to break and look at shares of whole foods down 2%, as jana partners takes a nearly 9% stake suggesting it should put itself up for sale. keeping an eye on washington the president meeting with the ceos. dow is down 100 and ten-year back to 2.31. the road can change in an instant. but with lightning fast shifts and dynamic track-tuned suspension, what the road demands, the gs delivers. experience high performance through high technology, in the lexus gs 350 and gs turbo.

experience amazing.

retail stocks struggled this year. few specific snamz could present new opportunities. tradingnation.cnbc.com. more "squawk on the street" coming right up.

president trump getting ready to host a meeting with the who's who of ceos headed by steve schwarzman anded hit of general motors, pepsi, ibm and walmart. some may walk out the door and talk to the microphones you see at the bottom of the screen.

attorney general jeff sessions touring the u.s./mexico border today speaking to military personnel and law enforcement. deidra bossa is with us from the u.s./mexico border nogales, arizona. >> reporter: sessions putting the focus on the administration's proposed wall. behind me is the existing wall but only exists along parts of the border and doesn't look like this in many places. five miles down the road it is simply a fence with some barbed wire. president trump wants to extend and fortify it, create what he calls a great, great wall. what you don't see here though is the role of technology that is already playing in securing the borders and that experts say the role it will have to play in any future plan of the systems two already working elbit systems develop high tech

surveillance using video cameras drones and other technology to monitor activity. the ceo says this isn't anything new. >> dhs has been a long time user of technologies to help and identify border incursions. thermal imaging technology has been recognized as a very powerful tool in that mission in that it operates day or night and operates over long ranges, so you can detect and identify people or human activity at several miles and range. >> reporter: now, former secretary of homeland security janet napolitano once said show me a 50-foot wall and i'll show you a 51-foot ladder. experts say technology can make up where a physical barrier cannot but the administration made clear that technology alone will not meet its requirements for that great wall and that could disqualify some tech companies that have submitted

proposals to the cbp. the biggest question as jeff sessions will tour this exact part of the wall shortly may not be whether how much is going to be virtual or physical, but who's going to be paying for it. guys, back over to you. >> thanks very much. donald trump walking over to that meeting with all of those ceos. this the second meeting of this strategic policy council. it's a very different time. >> some of the things -- we saw it during those very meetings. the president had talked about their plan coming for tax reform. we have yet to see it. heard a lot of things that don't point in one clear direction. we have the house blueprint. we mention tax reform so often because it's the single most important business issue. as you might imagine, if you have the opportunity to

repatriate billions of dollars or you have an opportunity to buy a company tax rate of which is going to come down drauical y dramatically, so many different areas. >> over and over again the ceos come on and say we are consistently at a disadvantage in the united states and the arbitrage the rest of the world plays, we have to be more competitive. >> many would embrace tax reform. at this point it's hard to imagine we're going to actually see it. maybe some cuts. maybe some repatriation. actual reform encompassing broadly speaking, we'll see. it's a big -- >> border adjustment tax hangs out there as this big unknown. >> let's get over to jon fortt and see what's going on on "squawk alley." >> some facts you want to hear. and qualcomm strikes back

countersuing apple and what qualcomm says is the real issue here and blackstone's ceo is going to join news the aftermath of this ceo meeting with the president. all of that and more coming up on "squawk alley." they're experts in things you haven't heard of - researchers of technologies that one day, you will. some call them the best of the best. some call them veterans. we call them our team. we cut the price of trades to give investors even more value. and at $4.95, you can trade with a clear advantage. fidelity, where smarter investors will always be.

welcome back. i'm julia boorstin. snap chase after instagram announced features to make it a direct competitor to snapchat. the number of people that use direct messaging on instagram has grown from 300 million people in november to 375 million people now. this morning instagram announcing its combining disappearing photos and messages within one thread putting focus on those that instagram unveiled in november. now, facebook shares are down about 1% today. michelle, over to you. >> thanks very much for that update. coming up, president trump hosting a strategic and policy ceo discussion. we're going to speak with the head of the white house economic advisory group, blackstone chairman and ceo steven schwartzman coming up. look at the dow.

dow industrials off triple digits at these points. that's only two-thirds of a percent. you can see s&p tech sector one of the leading decliners of the intercession l inter-session lows. much more ahead. stay with us. with e*trade's powerful trading tools, right at your fingertips, you have access to in-depth analysis, level 2 data, and a team of experienced traders ready to help you if you need it. ♪ ♪ it's like having the power of a trading floor, wherever you are. it's your trade. ♪ ♪ e*trade. ♪ ♪ start trading today at etrade.com

welcome back to "squawk on the street." semiconductors weighing on the tech sector over all. down 2%. qualcomm lagging. technology will be a big sector to watch here in the coming hours because we are floating right near support levels traders have been watching for quite some time. take an eye on technology. speaking of tech, that does it for "squawk on the street." let's send it downtown for the start of "squawk alley." >> thank you. good morning. it's 10:00 a.m. at united headquarters. 11:00 a.m. on wall street and "squawk alley" is live.