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.

♪ >> good tuesday morning. welcome to "squawk alley." obviously busy morning as the president meets with top executives in washington this morning including the heads of gm, ibm, blackstone ceo steve schwartzman on the agenda trade, infrastructure, budget and education. our kayla tausche is on the ground with all of the latest. >> reporter: good morning. just a few moments ago we saw the president leaving the west wing going over to the eisenhower executive office building to meet with those some 20 ceos of some of the largest multinational companies based here in the u.s. we are getting some headlines based on the comments that he has made on an introductory basis to this group saying the administration is going to have pleasant surprises on nafta and

notified the senate that he negotiated. the nafta headline is one we want to discuss further. this group has been convened to discuss tax reform, to discuss trade, to discuss infrastructure, education, and this whole host of issues that cabinet level secretaries have been in small groups with all of these ceos discussing at a more granular level throughout the morning. we'll see exactly what the president says and how the ceos in attendance at today's meeting react. the president, it's worth noting, has convened about 13 of these meetings since taking office at the end of january. they range from the retail sector, airlines, pharmaceutical executive, trucking companies. we have yet to see any real policy results from them. of course, health care was the lowest hanging fruit for the administration. we still don't know when we'll get that. administration has yet to notify congress that it wants to start the 90-day clock to renegotiate nafta and of course tax reform

was previously said to be a goal that would be completed by the august recess. now the administration is backing away from that. it is declining to commit to that time frame, so where these executives can get some certainty on some of these topics is going to be very important. we will see exactly what they say when they come out. we are expected to hear those comments from the president on video. we'll bring them to you when we have them. we'll also talk to steve schwartzman who chairs this group a little bit later on. >> kayla, even as you're talking. headlines are out. president says his administration is doing a revamp of dodd/frank and may eliminate it entirely. that's one headline out of reuters so far. >> i was watching the banking index while kayla was talking and while it was crossing while she was speaking. i think there is a time that would have lifted the banking index. not really coming off the lows very much. maybe as yale takayla was talki about, health care didn't happen and so maybe it doesn't happen.

>> 10-year is 10-10.29. guys, good to have you back. let's talk about this tug of war between the promises the white house is trying to make and this bond rally which doesn't quite believe it. >> i think michelle just nailed that point. took it away from me. that's what i was going to say. exactly right. when you start to kind of pull the rug out of the kinds of expectations that have been so important in driving markets particularly equity markets ever since trump got elected, the dynamics really change a lot. i really take your point there about dodd/frank. if you go forth as trump has done saying i'm going to do tax, i'm going to go health care and dodd/frank, if that lacks credibility, dynamics play out

differently. i think that's what we're starting to see. i thought markets got way too far over their skis on what trump could actually do legislatively. >> there are deminishdiminishins to these meetings? pepsi doesn't always make the decision. united is in the news. gm had issues in the past. at what point is this no longer a great headline for the trump administration? >> right. at first it was kind of novel because trump was showing he's going to be more pro-business than obama. obama had a ceo council. they didn't meet very often. trump here right away meeting with top ceos over and over again. it set a different tone. at some point the sales job needs to end and there need to

be deliverables. i think what's happened here -- during the obama administration we talked about certainty. businesses worried about lack of certainty. as we move further into this first term, there's less and less certainty. in february he promised those ceos that in two or three weeks there would be a tremendous, fabulous tax plan. now that tax plan is less clear now than it was six weeks ago. >> i wonder how these guys get anything done? how many times has mary barra been to the white house? sh she has a company to run. a lot of names that show up over and over again. >> elon musk didn't show up today. >> he has a rocket to launch. >> he was supposed to. >> he's busy doing rocket science. how does this work out, jared bernstein? what do you think? >> i think that at the end of the day there's going to be a tax cut, okay, and i didn't say that about health care because i know republicans when it comes to health care they are all over the map. they really don't have any kind of a bench on that. they all agree that they want to

cut taxes. it turns out that it's a heavier lift as jimmy suggested. i think what they're going to end up with is one of these budget gimmickry kinds of approaches where sun sets after ten years much like what george w. bush did. that kind of fits within a set of budget rules. it's not tax reform. it's tax cuts. i still think we're going to see that. it's going to come later. it's probably going to be smaller than markets predicted. >> go ahead. >> just to turn a bit of a left turn here, gold is up 20 bucks. vix highest since november. we don't normally turn to you on major indices and tools, but south korea, etf down six straight days. to what degree is geopolitics throwing a wrench in what we thought was a conversation about domestic policy? >> listen, foreign relations is always going to interfere. presidents would like the agenda

what they want it to be and maybe trump would like to focus on taxes. you pick bat whls yotles when y president of the united states. the world is always throwing something at you. >> i have a great antidote for that. when i was working for the obama administration in early months, i asked the president about this. i said of all of the things that have come at you, what surprised you the most? you know what he said? pirates. this was, like, an 1820s problem and turned out this was the pirates. i'm not dismissing the magnitude of that problem but jimmy is right. you don't know what's coming at you. i think one of the problems wth administration has had, marvelous at campaigning but maybe they never expected to get to where they are so they've done no coalition building, policy work is very thin and having tremendous problem

getting over any legislative goal posts. >> appreciate your insight today. we'll get more information on these meetings at the white house in not too long. jared and jim, thanks again. united airlines responding to a social media firestorm after that passenger was dragged off one of the company's planes late sunday. as you know, it was all caught on video. phil lebeau joins us with more on the company's continued response. >> i think they are grappling with how to effectively deal with this. we've had three responses from the company. one sunday night. one in the middle of the day yesterday which showed more compassion to what happened and one last night, a letter to employees. we'll talk about that in just a little bit. here's the latest in terms of what happened with this incident. the department of transportation is investigating what happened here. not only how united handled this but also when you look at the aviation security police who were gentlemen involved with removing this passenger. one officer was placed on leave

by the chicago aviation department. in terms of the employee letter that was sent out last night, he admits that he regrets how this went down. however, he also defended that they followed the proper procedures. he wrote while i deeply regret this situation arose, i also emphatically stand behind all of you, you being the employees, and i want to commend you for continuing to go above and beyond to ensure we fly right. we've had this question about how many times people get denied boardings or voluntarily leave a flight. 86 million people flew with united last year. a little over that. 3,700 approximately, 3,765 were denied boarding. bumped. they didn't want to leave. they were told you got to leave. what are the odds here? less than 1 in 1 million. 65,000 said i'll take 1,000 bucks to take a different flight. >> david was on last hour,

founder of jetblue. he said they should have offered more money. give more power to folks working the gate. i got the impression yesterday that there were regulations that prohibited that. any clarity there? >> there's not regulations that prohibit it. there's a limit where the airline can say, look, nobody is leaving. we can't go much higher and d.o.t. says it's four times the price of your fare. >> or 1,350. >> that's what you're looking at. if an airline comes on and says we'll give you $10,000 to get off, d.o.t. won't stop an airline from doing that. there's a price. i've been on these flights. i've seen when people have to leave. at some point, younger people say, all right, i'll take that money. >> a couple things about this strike me. one, some people are outraged that four employees were getting on the flight and that's why people got bumped. my understanding is these were people who needed to staff a flight that was going to fly out

of louisville. if they didn't get there, there's another plane that was going to be a lot of people -- >> you're losing that revenue. you have to weigh it. you have to make that choice. that's what they do. >> as much as we fly and we feel like we can relate, we don't understand how the airline business works. >> you're correct. >> right now to me it doesn't look like it works that well though is the issue, right? i mean, it's just a mess. the situation was a mess. >> with social media, all it takes is one incident like this and it goes viral. >> they may have had the right but it isn't necessarily right. thanks, phil. >> understand what you're saying. >> don't miss our interview with management expert bill george coming up at the bottom of the hour. his take on the united fiasco and the ceo's response. >> when we come back, google responds to reports that it systematically underpays its female employees and legal battle between two tech heavy weights heats up. qualcomm firing back at apple

and schwartzman live after his meeting with the president at the white house when "squawk alley" returns after this.

google using data to rip the claim that it pays female employees less than male counterparts. a blog post written that google is taken aback by this assertion which came without supporting data or methodology. we suggest an amount for every employee's compensation. the analyst that calculate amounts do not have access to employees gender data. let's bring in shelly palmer and john brod. john, start with you. does this put this to rest because this is a strong response from google. >> very strong response. i think it really puts the onus on the d.o.l. to share their

methodology. they made sweeping damaging claims that google has done a terrific job defending. >> google says they use this same methodology for race. i never heard of a company going through these lengths. employees can appeal if they still think it's unfair. >> in practice, data doesn't lie. people do. so the length they're going through are extraordinary. the methodology is pretty spectacular. the question is, are they asking the right questions at the department of labor? my suspicion is they're not. google is just coming back saying this is our practice. this is how we've been doing it. this industry is desperate for diversity. google is really one of the -- if not the leading company from a data perspective and tech perspective so in practice, we would expect them to be held to a higher standard. they certainly have demonstrated that they are acting at a higher standard. let the department of labor come back and tell us otherwise.

>> i'm far less tech savvy than jon fortt. it seems to me that i want to understand this methodology that they did that everyone proves they're right. massive spreadsheet. input everyone's data. adjust for men, woman, rank, and spit out numbers at the end and what does it tell us? >> they look at level role, blind to gender and race and did an analysis in late 2016 across 52 different job titles that said we have closed the gender gap. they even tweeted a week ago today how proud they were to do that. >> this is not on our agenda for the moment. we're going to hear from the president in a few seconds as he meets with ceos at the white house. to what degree do you expect tech to be part of that conversation whether that fits in infrastructure frame work or somewhere else? >> i personally hope that the president is paying a lot of attention to what's happening in the tech sector right now, and

i'm really, really anxious to see how this comes out. they talk about building physical walls. let's have a tech solution to that and have an invisible technology wall. show me different ways to invest in tech. show me tech infrastructure and privacy protection and show me sources and users of data. there are so many things about the world. show me cybersecurity. so many things about the world. let us hope. >> let's take a listen to the president. >> i want to thank steve schwarzman for putting together this very incredible group of world-class business leaders. that's what you are. also joining us are secretary betsy devos, secretary wilbur ross, secretary elaine choi, scott pruitt and my budget director. that's the easiest job of anybody in the government.

at the top of our agenda is the creation of great high paying jobs for american workers. we've made a lot of progress. you see what's going on. you see the numbers. we created over 600,000 jobs already in a very short period of time. it's going to really start catching on now because some of the things that we've done are catching on. we've already created more than almost 600,000 jobs. and yesterday toyota just announced that it will invest more than 1.3 billion, probably 1.9 billion, into its georgetown, kentucky, plant. an investment that would not have been made if we didn't win the election. we have a lot of work to do. the last two decades our nation has lost a third of its manufacturing jobs and our business tax is one of the highest in the world. it is of developed countries the single highest tax anywhere in the world. for too long we punished

production in america and we rewarded companies for leaving our country and we're going to reverse that. we will reward companies and give them incentives to leave. nafta is a disaster. it's been a disaster from the day it was devised and we'll have some very pleasant surprises for you on nafta. that i can tell you. my administration has already taken historic action to unleash job creation. we've signed dozens of bills and executive actions to reduce federal overreach and expand domestic production. on the environment, we're going to be careful on the environment. it's very important to me and the administration. we've allowed a lot of companies to go back to work that were being restricted. jobs were being restricted. we unleashed a lot of companies especially right now in the energy sector. you see what's going on there. it was impossible for people to do what they had to do. now they can do it. it's all done. we're also working to modernize

our economy and harness the full potential of women in the workforce, which is crucial to our economic success. economic confidence is sweeping the nation. you saw the new survey that came out. it's at 93, which is the highest its ever been. 93% of manufacturers are optimistic about the future. it was a 27% increase over two months ago when it was also high because of the administration and much higher than its ever been. 93%. highest its ever been. this is just the beginning. we're going to reduce taxes. we'll eliminate wasteful regulations, which we've already done probably 25%. you can look at dodd/frank for bankers in the room they'll be happy because we're really doing a major streamlining and perhaps elimination and replacing it with something else. that will be the minimum. we're doing major elimination of

the horrendous dodd/frank regulations. keeping some obviously but getting rid of many. we're going to put millions of people back to work. banks will be able to lend again. people come to me all the time. small businesses are unable to borrow from banks. never had a problem five, six, seven, ten years ago. had great bankers and great relationships and now they can't borrow. we're going to let the banks loan them money and they can build their businesses. so with your help and insights, we will use the private sector innovation to drive job creation and reform government. a lot of reform. we have a computer system in this country that is 40 years old. when you hear we're hacked and we're easy targets, one of the things we're doing, in fact, we're working with a very, very wonderful woman from ibm and

others. and others. many others. like when i said to lockheed i like the f-35 fighter jet but i also like the boeing f-18. i love your computers. we also are looking at others. we're going to have a massive program to modernize our equipment. ideally get brand new equipment. the cost of maintaining computers is a number that's so high it's not a believable number. from 39 billion to 89 billion a year. is that even possible? that's for keeping our computers updated and running. i think we can buy a whole new system for less money than that, wouldn't you say? i hope so. we'll give you 10 billion right now. so i want to thank everybody. most of you really are the top. i want to thank my friend jash

we wi jack welsh for being with us. we did deals together. trump international a big success. great success. terrific. so i just want to thank you. you've been a special guy for a long time. we'll get down to business. maybe before the meeting leaves -- media leaves, we can go around the room. thank you, steve for putting the group together. >> wrapping up his remarks there. you can see big crowd of ceos there. schwarzman to his left on the camera elaine choi department of transportation head. a big player when it comes to infrastructure, et cetera. we have kayla tausche standing by. we have seen, kayla, his remarks about dodd/frank about perhaps trying to eliminate the whole thing. banking index came off the lows a little bit but still not the

rally you might have anticipated as we see steve schwarzman talking right now. let's listen in. >> regulatory reform and infrastructure, all of these things are really important. we're focused, people in the administration are also focused on working together. hopefully we'll have good outcomes. >> we will. chris? >> boston consulting group. >> ibm.welsh. >> we may have jack welsh on later. kayla, go ahead. you were so rudely sbur lly int. >> reporter: that's quite all right. the administration has lofty priorities. unclear what the time frame will be for executing on many of those. this is familiar territory for the president.

he's hosted a dozen of these meetings and has chosen to begin meetings like that with the german chancellor and canada's prime minister with meetings of business leaders. this is a relatively safe audience for him despite the fact that steve bannon, chief strategist, and steven miller are proponents of economic nationalism. trump does feel like he's speaking the same language as the executives in the room. he talks as he often does about the confidence that has been infused in the economy since his election and since he's taken office he cited a number of 600,000 jobs that had been created. unclear which data he's referring to there. he has chosen and white house has chosen not to specifically address the march jobs report that was disappointing that came out last friday. he did cite the confidence of manufacturers, of ceos like those in the room and specifically name checked the ceo of ibm saying she's done great things with the administration. she was at that meeting with the german chancellor and executives from german multinational companies to discuss

apprenticeships. you mentioned earlier many of these executives have been on this campus many times in just the last few months. it's unclear what they hope to get out of it whether they just want a seat at the table or tangible results or something they're pushing. we'll talk to steve schwarzman in just a couple minutes to get his take on the meeting. >> they don't dare not show up. what are you going to do when the president calls? >> reporter: there are a lot of people who have said, look, i would love to participate, but i simply don't have the band width. bill gates was given an opportunity to participate and he said i don't have the time to be at the white house every month. jamie dimon who previously scheduled business to africa and elon musk is not here. and of course uber quit the forum because of the outrage

from his customer base in the bay area over this. >> i stand corrected. some do not show up. thank you, kayla. appreciate it. let's get to bill george standing by. former ceo. what do you think when you see this videotape roll by with ceos who have been there repeatedly? >> these are the best of the best. the president is obviously very comfortable with this group. i'm glad he's listening to them and bringing the right cabinet officers to bear and they can sit down and have honest discussions about how to build the country and how to build jobs and create high paying jobs. this is a move in the right direction. his comments on regulations were moderated over what he said. we don't want to throw out dodd/frank. we want to take out onus provisions and get country growing. only going to be done with a global approach. every single person in that room is a globalist. you talk to mary barra. she sells more cars in japan than in the u.s. every single person wants a global outlook and not steve

bannon economic nationalism and they're willing to produce in this country but economics have to work for them. i think he's going the right way if he will listen to them. i talked to a number of people been in these meetings with trump and the feedback is quite positive. he actually does listen. they're all afraid of a tweet but he does listen. >> that sounds good but we're on the pace of something like a ceo meeting per week. at some point does this become sort of a shadow cabinet? on the one hand, you know, far be it for me to criticize people for meeting with ceos. i do it all the time. there are a lot of different constituencies in the country and a lot of people who are critical of the sorts of decisions that companies make. we've seen it time and time again in the past week. >> i think there's lots of reasons to be critical of decisions ceos make. this is the top people. i wish he had jamie dimon in his cabinet. steve mnuchin is a good guy. he has tillerson. he needs to be educated on how

these big business executives think and how they build global businesses to make american companies dominant in their respective industries around the world. that's the key to creating jobs. of course you have jobs overseas. you create more jobs back here. we have to -- i love to hear the comments about mary barra and apprenticeship program. we need to update our workforce. we don't need to replace coal miner jobs of the past but jobs of the future that are high tech, artificial intelligence, robotics, 3-d printing, automation. that's where we need to focus our workforce and update our workforce to fill those jobs. >> pivot to united at this point. if you were the ceo, what would you do right now? >> well, i tell you, i would stop digging a hole. he keeps digging the hole deeper. let's first recognize they

pulled four people off the plane that were boarded that were replaced by four employees. i mean, why would you do that? and things gone viral in china. 270 million hits of this video. >> these four employees had to go staff another plane. if they didn't get to louisville, there were going to be more people that wouldn't get to their destination there. that's an argument. >> great. great. you have tens of thousands of employees. find another way to get them there. charter a plane. do something. >> that plane out of louisville will be three hours later if they have to drive because these passengers won't take a different flight. come on. >> everybody understands there are tradeoffs. >> offer them $5,000. $3,000. this thing is going to cost a fortune in pr. i wouldn't fly united unless i absolutely have to. it's going to cost them. customer relationships matter.

>> people who live near chicago and newark say they don't have very many choices because of those big united hubs if they want to get anywhere. >> well, oscar has to get his act together and he has to stop digging. first thing you do in a crisis is apologize. say i'm sorry this happened. we'll make amends and offer compensation. do whatever you can to that chinese doctor who was trying to take care of his patients the next day and not treat him that way. >> stlaes a lot we donthere's a >> you have to do something. you can't sit there. >> we have to delineate between the operation of airlines and move crew around to thousands of cities but your point is more about the response, right, and telling consumers something that is going to reassure them that you're on the case. >> carl, they have a bigger problem. they are grossly overbooking.

cutback on overbooking so you don't find yourself in a situation. move crews around. get your operation nailed down like richard anderson did at delta and did a fantastic job. don't have these fiascos. when you find yourself in one, apologize. say we're sorry. make financial amends and other things you can do to help these passengers. if you don't, it's going to rebound terrible. i hate to think of united going to the chinese market. they won't be very popular there. >> great to have you. we're showing united ceo letter to employees standing behind employees but at the same time tried to thread that needle so to speak. bill, thank you so much. >> watching markets this morning, dow is down 103. pretty steady with these losses. keeping our eye on the 10-year hanging on.

the man suspected of ramming a stolen truck into a crowd in stockholm killing four people wounding 15 last week has admitted his guilt. his lawyer spoke outside the stockholm court. >> he's pleading guilty. the court has decided that i'm not allowed to tell anyone about what happened inside court today or in the questions with the police so the only thing i'm going to say is that he's

pleading guilty. >> commissioners in palm beach county are so tierds red of spe money on trump's visit to his mar-a-lago resort they are suggesting a tax be added. armed with new evidence the u.s. preventive task force says men between the ages of 55 and 69 should decide with their doctors whether to take psa tests to screen to prostate cancer. the group previously recommended against that. that's the cnbc news update for this hour. let's get back to "squawk alley" now. >> counting down to the close across the uk and europe. >> we have closed lower for the day. disappointing data on the economic front in europe. eurozone production coming in lower than expected. that's a rare setback for europe which has been producing strong results on the growth front.

uk inflationary pressures suggest that bank of england may discuss scope of monetary policy. french politics back in the spotlight with just 12 days to go until the first round of the presidential election and polls show a tight four-way race. many people discussed is a leftist candidate who wants to renegotiate france's role in the eu. the bond market is responding. cost to buy french debt rising resulting in this widening spread for germany. keep an eye on that. geopolitics still a big talker second day of the g7 meeting in italy. no resolution on the conflict in syria. russian stocks has been a big talker rebounding after three consecutive days of losses coming ahead of u.s. secretary tillerson's meetings in moscow. the objective to find a resolution in syria and push

russia to change its stance on supporting assad. want to point out russia shares up 0.4 of a percent. back to you. >> thank you. when we come back, blackstone group ceo stephen schwarzman live from the white house in that meeting with the president and a number of other top ceos at the white house today. first, rick santelli, what are you watching today? >> heck, i'm looking at a 231 yield in 10s. today could be the day we create a new low closing yield for 2017. currently it's from last week at 2.32. we'll discuss some of those cool comments mark olson made earlier in the day on "the santelli exchange." i hit my head on a pole. tune in after the break, i'll see if i'm still around. 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. whole foods is under pressure. we'll have new details on what could happen next. plus, the united fallout. shares are sharply lower today as the pr nightmare for the airline continues and our calls of the day. there are many. trades on seagate, western digital, toll brothers, yelp, disney. maybe even another one. carl, we'll see you in a bit. >> thank you very much. let's get to the cme group and check in with rick santelli and hope he's okay. >> i see everything in a new light now. i'll tell you what, it's so fascinating to listen to mark olson, former fed governor, and title then and title of this

piece. reducing the fed balance sheet. kind of what it means. we all think we know what it means. many of my compadres on the floor say, listen, just talk and you can see the way the market respo responded, it's okay with it. we don't know for sure. mark olson brought up great points. first of all on the issue of maturity. the fed has a couple hundred billion of securities that are maturing in less than a year. what he said was, boy, plenty of firepower. what does he mean by that? if you don't reinvest proceeds and things are dropping off because their life is no longer than a year, boy, you could make some big reductions quick. that is an interesting aspect to this. the other interesting aspect that i thought he mentioned really goes to the comments of some of my floor traders and that is monitoring the markets reacting to balance sheet reduction at the time it begins. whether it's this year or some primary dealers think next year.

what does that mean? that means think utility function. think back to your college courses. we have raising rates and balance sheet issues. there's the perfect balance of doing both and monitoring reaction, tweaking one maybe at the expense of the other. i'm sure this is going to occur. it gave mark a lot of confidence that the fed is going to get back to more basics monitoring money supplying and markets versus extending the policy where we don't know how the return trip is going to pan out and then finally, this is the most interesting point. listen, we're all worried about the debt. last administration for better or worse whether it was needed or we got our bang out of it or not, used a lot of debt and unfortunately not in a priming the economic pump process because that didn't work. ended up being the actual fuel for many years. so it put us in a bit of a dire straight. we all know that 20 trillion is

a big number on the national debt. mark's point was that for the most part even though we do a little floating debt issuance by the treasury, most of it is fixed. that's a good thing. think your mortgage. think if you have a 3% mortgage and rates are 3%, what happens when they go to 5%? you smile because your payment is fixed. it's only on new date as rates move up that we need to think about that even though obviously we have a lot of servicing because we have a lot of debt, it's probably a bit of an issue but not nearly as much as some may make it out to be. now we'll go back to jon fortt. >> all right. thank you, rick santelli. still to come, blackstone ceo stephen schwarzman on today's meeting with the president when "squawk alley" comes right back. dials down 105. you always pay

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stocks are lower this morning. kevin joins us this morning, washington crossing senior portfolio manager. it's good to talk to you again. >> good to be here, carl. >> on the list of potential worries people have mentioned today, there's always the prospect of how earnings come in. somebody mentioned the budget cr this morning. you have north korea. you have putin on the table. what's really at work? >> sure. i think the knee jerk is really more of the geopolitics. i think looking at the gold market sort of tells you the tale of the tape for today. your earnings question is also very relevant because the market

has rallied sharply from november. a lot of that has to do with what's been called the reflation trade. analysts are looking for 10% type increase in earnings for the quarter and for the year. so i think for the year. so i think there's now some question as to what actually is delivered and where we go from here. given elevated multiples and full expectations for earnings. >> how much of that is about banks with the ten-year trying to hang on to a 23 handle? >> the bond market has been telling a different story. curve has been flattening. if you look at credit spreads, those have started to widen out a little bit, not significantly, so i think the banks are going to have like the rest of the market, to show some good num r numbers. particularly as they've been a real proxy for sentiment, especially since the election. >> i was talking to a trader on the floor saying we could use a little volatility. of course, we don't wish for geo

political instability, but how much of that do you think the market can handle given how quiet it's been over the past couple of weeks? >> i would agree with that. ipg markets have been complacent for a while. if you look at where the vix is, it's been relatively low. spreads have gotten tight. so ultimately, the returns from where you are need to reflect properly risk and one of the challenges we had coming into the year was that when we looked at many markets, the expectations priced into the market would suggest a lower expected return comeing from here. so, we think that markets are going to have to go through a period of sorting out and more volatility might actually serve the purpose of put meat on the bone for an investor to come into these markets. we're just not there at this point. >> i wonder what sectors are particularly vulnerable, we get an upgrade of western dig today and at the same time, semis break their 50-day for the first time since december. what does that tell us?

>> well, a lot of this has to do with investment spending. the tax cut, the expectation for repatriation, all of those things help to gin up expectations for investment spending, which would play directly into technology, so i think you're seeing that reflected in weakness there. again, this is all going to play out over the next few months, but that would explain some of the weakness perhaps in technology. >> speaking of technology, there's been a bit of maturing along a number of lines in the sector reflected in some of the lawsuits that we've seen. qualcomm now countersuing apple and of course, we've got an iphone that we expect at the epd of the year. what sorts of either events or earnings signals are you looking for in tech? >> well, those are really company by company sort of developments. as far as the overall events, it's really going to have to be for a group. i think you're going to need to

see real convincing signs that the economy's picking up and that investment spending, which has really lagged, really starting to pick up u and show strength here. so, the bigger beyond technology, the big story for the market and the economy will be whether or not this feel good market actually translated into more expectations for business spending and investment. i think that will be critical to the second half story. >> one last thing on macro. q1s have been soft seasonally for a few, we've been down this road before, where it looked like q1 was weak and it turned out to be b a lot of seasonal factors in play. you think that's likely or not? >> yeah, that's sort of the voodoo of the gdp statistics. but our forward looking indic e indicators we follow, there's a good story to be told is that most of those indicators seem relatively good. so, as we move into the second quarter, we would expect to see a little bit of a pick up in growth as we move from the first

quarter, which might be a little weak, to the second, which we would expect to be stronger. >> we're going to start getting micro this week. that's for sure, as these banks start to come in with numbers. kevin, always good to take your temperature. thanks again. >> thank you. >> when we return, it is apple versus qualcomm. chapter two. details on that in a moment.

just three months after being sued by apple, qua qualco kournt suing. two of the world's most bable technology companies. i talked to qualcomm a bit about this. part of this is qualcomm saying apple, if you don't like the general terms you're under now, you've had the opportunity to negotiate a direct license, the way it's been working for qualcomm's technologies. it's actually fox con and other contractors who have the license. apple's been paying through them, then apple stopped in essence giving those contract manufacturers the payment they needed to pass along, so they're not paying. qualcomm's also saying that when it came to the modem in the last version of the iphone, qualcomm says our performed better than

intel's and apple sort of capped performance then claimed they performed the same and said, qualco qualcomm, if you go out and tout your modem is better, we're going to bring the full force of apple markets on you. that's just qualcomm's side of the story. but this is a lot more ca complicated. >> what's up with apple and its suppliers? you've got the qualcomm issue here, an analyst suggesting that could lose its status. we know it happened with imagination and a graphics chips a couple of weeks ago. >> normally, if you're a component supplier, you like to have a diversify number, but as we know in the smart phone world, there's apple, samsung and if you want premium, there's not lot else. so it's the rare market that really is dominated by a couple of big players. especially if you're talking about quality components that go into premium phones so some of these guys are locked into apple. samsung makes a lot of

components themselves. the chips, they've pushed qualcomm to the side. samsung is a provird of displays. especially the led displays. >> as if the industry leverage wasn't enough. apple remains the best dell component of the year. above boeing. of course replacing goldman sachs maybe as the best since the election as well. >> lot of money to spend on lawyers if they choose to do so. but so does qualcomm. they've got more practice at this whole ip legal wrangling even than apple does. >> we'll keep our eye on the market. dow's down 93, off the lows, but the ten-year hit the lowest since about november 29th, when it was 229. gold as we mentioned, $20 gain. to 12.73. vix highest since last november. so, whether it's earning conc n concerns as we said with kevin or geo politics, investors trying to bake in some protection from risk.

>> but at the same time, risky is to be is to stocks at least . go proup better than 4%. twillo up 3.5%. also, ceo on the ft. knox podcast this week. to headquarters and the half. welcome to the halftime report. i'm scott wapner. top trade this hour, whole foods fight. partners taking a near t% stake in the company. the stock's falling today after poll popping 10% on the news. new details on how this could play out. with us today, joe, stephanie, the brothers najera yan. let's begin with the pressure on whole foods. at noon today, i can report from sour