♪ live from new york where business never sleeps, this is "squawk box. good morning, everybody. welcome to "squawk box" on cnbc. we are live from the nasdaq market site in times square. i'm becky quick along with joe kernen and mike santoli. look at the u.s. equity futures, you know that the markets were under some pressure yesterday, big pressure after the dow briefly entered correction territory yesterday, down 10% from its 52-week high at one stage. now down by 9.9% you can see this morning we are facing some continued pressure dow futures indicated down by close to 200 points. decline of 188 right now s&p futures down by 19

nasdaq off by 80 mike, what do you think is happening here we had the trade talk we were concerned about, facebook, social names under technology and the banks. >> a sense of nowhere to hide. all those things you mentioned affect different parts of the market the industrials get hit on the trade talk it pushed the market over the edge a bit the banks being weak is an interesting story. treasury yields coming down. yield curve flattening but also a bit of this stress and clogs in the short-term funding market it's not anything like those systemic issues that we had years ago. a lot of people are pointing to this as the fed raises short-term rates >> is it a temporary thing >> should be a somewhat temporary thing. the "wall street journal" has a take on it just the money market stuff. part of it is repatriation cash is coming out of very short money market type instruments and into treasuries. the u.s. treasuries issuing a lot of treasury bills. all of these technical

mechanical factors were weighing on the banks facebook and big tech seems like a place where you could hide >> jeff was like -- >> he was saying there's nothing to worry about >> facebook, social media. that's probably going to be contained. >> except those were some of the leaders on the market. but then tariffs, trade, powell, interest rates, sentiment. that's why i had my paper open, i was listening to what you were saying i was going to reference the lead editorial in the "wall street journal" explains the trade issue. you look at china, facebook is not allowed to operate in china. tesla gets a 25% tariff on cars they try to send over there, versus 2.5 here. predatory behavior everywhere in china to the point everybody in the world knows how bad they are, but how do you deal with

it this way or the "journal" says a rising and aggressive china poses considerable risk to the world order. you need to get allies in line and do it in a certain way there's a way where you end up hurting yourself rather than china. the enemy of my enemy, i have to fall back on that occasionally who is the guy in ohio he's from ohio sherwood what's his name? sherwood brown he's out there with elizabeth warren and the rest. he was saying how much he liked the whole idea, the whole notion of tariffs got to give the president credit finally we're doing something. i'm like i guess i have to be really against these things because of this guy. the enemy of my enemy. >> if it comes down to which country has the higher pain threshold to do without certain products, pay higher prices --

>> they're used to doing without things >> that's my point even yesterday when we had kevin brady on, he was like we'll make sure this doesn't affect consumers. well, it's hard to actually be tough -- >> brady was clear he was against it >> yes but measured in what he was saying, saying we agree that something has to be done you look and you have to have a chinese partner. >> other people say same as aluminum and steel aluminum and steel for everybody, within a week, you're exusecuse excused, you're excused. >> did you see u.s. steel and n nucor gave up all of their gains. the countries we import the most nooum a aluminum and steel from have been exempt. what does the beginning of a trade war look like? the chinese said we're willing

to fight to the end on a trade war they don't think they're initiating rhetoric flying back and forth we'll see. >> then this omniomnius bill >> 13% increase in domestic spending, 15% increase in military spending. >> what's the truth -- you're allowed to build a fence but no concrete >> there is some portion offensing that is put in there >> but no concrete >> no but additional border security put in. >> trump wanted the 700 billion plus for defense averting the budget crisis and averting a government shutdown

let's look at what happened overnight in asia. big concerns about the potential for a brewing trade war. that's what you probably see reflected here the nikkei off by 4.5% shanghai composite down by 3.23%, hang seng down by 2.5%. look at early trading in europe. not quite as dramatic. you see some major declines. germany, the dax is off by 2%. in france, the cac off by 2% in london, the ftse off by 1%. you see declines in italy and spain to the tune of 1.5%. treasury yields coming back down as investors fled stocks and headed for the safety of treasuries the ten-year yielding 2.814% right after we pushed above 2.9% >> yeah. so clearly that ier e eupper enf that range held. >> they skipped my big story

read because we have to get to eamon. >> what was your story read? >> going to talk about the ipo coming here. the dropbox. >> not "squawk box"? we're not going public >> dropbox that's not nearly as exciting. >> yeah, in that case we'll wait until after eamon. don't we all have a stake -- >> neither one will quite get to the $10 billion valuation. >> no. >> let's talk more about trade and tariff we have other breaking news out of washington, another shake up at the white house yesterday national security adviser h.r. mcmaster is out, being replaced by john bolton eamon javers has more on this story. >> the president never really clicked with h.r. mcmaster stylistically or on policy grounds. the white house spent much of the past week telling reporters that h.r. mcmaster was safe and not going anywhere, but last

night h.r. mcmaster was out. john bolton is in, former u.n. ambassador and fox news contributor. here was the statement last night. mcmaster served his country with distinction for more than 30 years. he has won many battles and his bravery and toughness are legendary. general mcmaster's leadership of the national security council staff has helped my administration accomplish great things to bolster america's national securitsecurity h.r. mcmaster then put out a statement. it indicates that mcmaster is retiring from the army a

altogether there was speculation that to move him out easily, he would give him a promotion to a fourth star that's clearly not happening here we'll have to figure out exactly why that plan didn't come to fruiti fruition who is john bolton, the man who will serve as president trump's third national security adviser? he's a former u.s. ambassador to the united nations he's a senior fellow at the american enterprise institute and a fox news contributor he's seen as hawkish on a number of issues including north korea. he wrote an op-ed recently suggesting that people who are arguing against a preemptive strike against north korea were wrong and that the united states had a legal basis to go in as a first strike against north korea because of the threat of their nuclear weapons. so that is seen as a hawkish turn in the national security adviser's post there's more news going on in washington let's turn it over to kayla

tausche. >> reporter: the new hawkish trade stance was even more apparent on thursday with the rollout of a third set of new tariffs just since this year this set against up to $60 billion in chinese high-tech imports is so far the most onerous. it was met nearly immediately with a counter punch from china, though a small one, which released a list of 128 american products it would tax on import. the products, wine, dried fruit, nuts, recycled steel and aluminum yesterday wilbur ross said there may be some firing shots over the bow but i believe at the end of the day this will end up in a negotiated settlement. it's unclear what the u.s. wants to negotiate a senior u.s. official tells reuters that washington has not provided beijing a list of remedies it wants which is a stark difference between this set of tariffs and tariffs on

steel and aluminum imports announced earlier this month for which the white house said the clear goal was to restore u.s. production to 80%. those tariffs go into effect today. last night president trump saying officially six countries in the european union are exempt from those tariffs for now the president, as many officials have noted, reserves the right to change his mind at any point. >> yes thank you, kayla we have time for some -- i can talk to both of you about -- i just looked something up i can't believe i found it there is actually an article yesterday about john bolton's mustache >> yes >> i was wondering, is this a porn stash like saccone's in pennsylvania or -- >> joe, the "new york times" actually wrote in their write-up of this that one of the reasons that the president was reluctant to appoint john bolton at first was because of the mustache. >> yes >> which they described as

walrus like. i don't have reporting to back that up. the president is known to keep his people out of central casting and likes a certain look >> not to disappoint, that's the "new york times. cnn is the article i saw check it out john bolton's mustache is more qualified to be national security adviser than he is. that came out -- who wrote that? >> david rothkoff. probably an opinion piece. >> i would say by the headline, probably most definitely >> cnn, how do you know? i don't assume that. that sounds like the news they report are you sure that's opinion? maybe not. we decided -- >> here's the -- >> the question about porn stash is relevant given the sunday night "60 minutes" piece >> the central issue with john bolton for donald trump is donald trump campaigned as a guy who said the republican party was wrong on iraq. the iraq invasion was a huge

waste of life an resources, he said we didn't get anything out of it john bolton was one of the biggest advocates of the invasion of iraq how you square those two things will be challenging going forward inside this white house if the president said bolton's singular accomplishment was one of the worst decisions the republican party has ever made how they move forward t will be fascinating to see will the president take bolton's advise on north korea. will bolton advise the president to do a preemptive strike on north korea. those are all fascinating and hugely significant questions >> the timing of this, too, is something the markets will pay close attention to the changing of the guard not only happens in very quick succession with cohn, tillerson, and now mcmaster who have been contrarian views to the president, but also comes at a time when you have deadlines with iran and north korea

approaching very rapidly the president has to decide by may 12th whether he is going to stay in the iran deal or not he said he will not recertify it again. that deadline is approaching quickly. then south korea has confirmed the president will meet with jong-un by may ambassador bolton is not coming into the job until april 9th there's crunch time for both of those situations where the white house will have to make tough decisions. >> bolton seemed stunned last night on fox news. he's a contributor there i believe he had been lined up to give that interview in any case he said he was surprised that this had happened so quickly he didn't have a chance to have it sink in he wouldn't offer his opinions on a number of subjects. there's been a big flap this week over whether or not the president should have congratulated vladimir putin the reporting from the "new york

times" and the "washington post" was that the president got briefing materials which said in writing do not congratulate vladimir putin and the president congratulated him any way. bolton was asked about that last night. said he didn't have an opinion on that he wanted to share in public >> i was wondering if they found the leaker i initially thought they thought it was mcmaster. >> i talked to people in the white house about that, did they think it was h.r. mcmaster who would have had access to the briefing materials and the conversation some people drew a dotted line to h.r. mcmaster, but there are some people who did not think it was him because they don't think it fit his style >> the "journal" points out if north korea was planning on a big bluff again like they have in the past, it won't work now with bolton which scares me because they are probably planning on that which means it will be a bad outcome with what might happen from the talks if they are really going to bluff then i was thinking you need to

polish up your resumes, larry was on tv, right bolton is on tv. >> that's right. >> we are hot in terms of the administration >> i think they have a bit of a stronger pedigree. eamon and i both have great college degrees -- >> don't sell yourself short >> i think their life before television was more robust than either of ours is. >> i think that's probably true. god, it's exciting what -- you know, he does have the team -- if you believe that he was uncomfortable with certain initial picks on his administration, he has certainly got people that may be more in line with him at this point. >> there's no question the president has been on a firing spree lately with the firing of the secretary of state last week h.r. mcmaster out today. just yesterday we had john dowd, the head of the president's personal legal team ousted as well we're bringing in new people on the legal team, on the national security team. all of the people he's bringing in interestingly enough are subjected to be more aggressive

in their sphere than the people who are going out. this prestages a new dimension to the trump presidency. >> it was quiet beforehand it's nice we'll have some activity now >> stay tuned. we have elton john on the show later. >> awesome >> no, i'm sorry it's john elton is who we have -- >> that's not as good. >> i thought did you see this? did you prepare for this >> yeah. >> i was hoping you would wear the glasses and everything >> right we have john elton scratch that we have john elton on, who is also great, i'm sure >> and michael bolton. >> michael bolton is not in -- he might be -- partner for the dropbox elton. john elton let's go thank you. let's get back to the markets. see if these guys have left.

jurien timmer is supposedly still here, director of global macro. there he is. charles devo is head of rates at aviva investors. it probably is not a coincidence that we raised rates on wednesday, and that happened on thursday, or is that a coincidence, charles >> i don't think it's a coincidence above and beyond the fact that we have a lot of moving parts you were just having a good update as to the political scene. that's upsetting people. valuations are playing a part. likewise the fed is raising rates. they have a hawkish tilt that's bound to have an impact

on sentiment >> it could be that simple i know it's tariffs. you can't overstate 3% for the markets. it's all related inflation is part of the reason that you're worried that rates might be raised more quickly than we thought. tariffs might play into the inflation. do you think we're going near-term, charles, above 3% on the ten-year yesterday there was a flight -- it's always the opposite effect happening. there's a flight to safety yesterday. rates went down. >> i think in the short-term that's unlikely. i think we'll stay in range because we've had all of these conflicting influences we do have a high growth profile for the u.s. we have some uptick in inflation coming but at the same time you have all these geopolitical issues

and cross-currents i think probably we stay range-bound for the next month or two then as we get into the second half we'll see a drift above 3%. >> jurien, how did you sleep last night after the 700 points? are you all right? are you questioning any of your forecasts at this point? >> no. the way i look at the market math is that you have earnings, interest rates, valuation. those are the three pieces of the puzzle and we all know that earnings are great. growing 10%, 20% for 2018, that drives valuations higher as well as stock prices. on the other hand we have a more hawkish fed. we have the trade issue, and those tend to be headwinds for valuation. not necessarily for the market as a whole you have this tug of war between one thing driving valuations up, and these other two things driving them down. that's why we're seeing more of a two-sided market, as opposed to the last two years until

january it was a one-way street because everything was lined up. i think this is the way it's going to be. other than lowering our expectations for not seeing a repeat of the last two years where the market was up over 50% against no volatility basically, i think this is how it will look it doesn't mean a bear market at all. it means price can only go up less than earnings that's a low hurdle because earnings were growing double digits >> when you're meeting at fidelity, president trump -- you have to take into account what he's likely to do at a given time, especially talking about tariffs protectionism and things like that. do you think that if he sees a real -- he's proud of what the stock market has done. if he sees that some of these moves are taking away from those gains, which are hard to come by, 40%, do you think he will moderate some of this?

do you think he goes full force with campaign promises >> you know, so the conversation about trade is one that he toll us was coming. we all knew it we were told we were kind of hoping it wasn't going to happen. so you had the tax side, which was wildly bullish for the stock market then the trade side was the evil doppelganger now we're here talking about that we've already seen, you know, some initial moves being taken back and so i think the market is probably holding out some hope that how it starts is not how it ends but the problem with trade wars historically is as they escalate, things can get out of hand we have to hope that doesn't happen it is a negative pe driver and we have the earnings to offset that. if we didn't have the earnings, it would be bearish. >> all right we have to run i'm noticing now that it's

national puppy day >> it is i knew this. >> i'm saying that without comment. not talking about overhead bins. let's leave it at -- everybody loves puppies. it's national puppy day. coming up, the facebook fallout. we'll hear from coo sheryl sandberg in a cnbc exclusive first, as we head to break, here's the international markets in correction currently. spain, germany, uk, japan, switzerland all down more than 10% from the 52-week highs stay tedun, you're watching "squawk box" on cnbc oh yeah. no. at cognizant, we're helping today's leading manufacturers make things that think and do automatically. imagine that, a world of new digital products and services

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designed to save you money. click, call, or visit an xfinity store today. welcome back futures now down, down but not out. >> not rebounding either >> no. if it was rebounding, ask mike santoli, he knows that would fail we will talk to katie stockton who might give us insight. we'll be down 10% again. >> it only took three points from the dow >> from yesterday.

>> we are talking about correction territory for the dow only not for the s&p or the nasdaq. >> the nasdaq was just at a high >> only about 5% or 6% off the highs of the nasdaq. >> when we do -- shoot something with our promo people, and they say go in, you can find it, is this dropbox >> i think so. >> i have used dropbox dropbox is coming public today, and i know what it is. >> breaking news >> dropbox -- >> a technology stock that joe has used >> next "squawk box. maybe not. lock box dropbox pricing its ipo at $21 a share, above the expected rate seems like a terrible day to go public the software company selling 36 million shares in its initial offering, valuing the company at 9$9.2 billion it will begin trading under dbx.

facebook chief operating officer sheryl sandberg apologizing for the cambridge analytica data scandal on an exclusive interview on cnbc. >> this was a huge breach of trust. people come to facebook every day and they depend upon us to protect their data i'm so sorry that we let so many people down. we spent the last few days trying to get to the bottom of what happened. cambridge analytica should have never had this data. they told us they deleted it it's our mistake we did not verify that. years ago we changed platforms so apps get less data, but that wasn't enough. >> joining us to talk about this is ed lee, recode's managing editor and a cnbc contributor, and porter bibb from media tech capital partners welcome to both of you sheryl sandberg speaking this week part of what she said is that she wishes they would have spoken sooner, she and mark

zuckerberg is this enough >> i think it was late in coming they should have gotten out in front of it sooner mark talking about we wanted to make sure we got the facts first. you didn't need the facts, you just need to say we're looking into it. >> and we've known about this for 2 1/2 years. >> that's the other thing that raises more questions. they're still taking incremental steps based on what they said in their statements and did in interviews they will rein in on how the data is collected, but not used. we're all facebook users here -- >> whoa. whoa >> even you, joe >> what do you mean i'm a facebook user. >> neither one of them >> neither one of you guys, okay >> just never got there. was waiting -- >> i had someone send me something that is on facebook, a

video. >> i have like a public page >> as an example, i'm not a heavy facebook user. i signed up in the era where you put in fake information. i didn't put in my real birth date what happened is that a lot of my friends on facebook or people i knew would wish me happy birthday on the day that was not my birthday. i was like now i have to go in and put in my real birthday. that's how they get you. >> i don't want to -- i don't know enough about this to be a big player here, i was talking to porter, i want your opinion on this if there's the slightest lessening of the amount of personal information that they're able to share with people to sell advertising, even if it's 10%, 20% some people said you will have na name, birthday -- >> not even birthday just sex and where you live. >> they're selling everything

now. if they're selling 10% less, doesn't that mean the business model is less effective? >> it's way overvalued, but try to delete your membership in facebook they have cleverly gone out and used facebook as the sign-on for hundreds of other websites, so that you don't have to put a password in. you just say i'm a facebook member and click you cannot opt out of those things what's going to happen to facebook is they have to be regulated. it won't come from washington. everything takes eons. it will come from european the germans and british will start regulating first and filter back to washington. this is the biggest media company in the world why should telecoms and media companies be regulated and facebook be free

mark zuckerberg says and sheryl says we're sorry trust us they could have one mechanism, opt in and of the out when you sign on to facebook. opt out. i don't want anything picked up. if they're regulated they go to jail if they break that rule >> right let me ask you, one thing i don't have an idea of. i still don't know what they do with my data, who they're selling it to, and they mentioned there were others than cambridge analytica. >> hundreds. >> was it three others, 300 others, or 3,000 >> that's the right question they don't know either they're doing an audit to make sure of that why do we know about this cambridge analytica thing in the first place? a bunch of reporters looked at how this data was checked, what it was used for. that tells us something. facebook doesn't know, it took some enterprising reporters to sort it out.

there is probably more they weren't aware of i think that's the thing and also mark zuckerberg saying he doesn't want to be in charge of a media sort of social network site he wants to be in charge of a software business. we want you the community to figure out how to manage it yourselves doesn't work like that. >> that's what's dawning on the market the market loves the idea that this was a magical machine for matching up advertisers and users. >> you have to realize when he says i'm building a community, it's not just a community. $40 billion of revenue from advertisers is being invested because they get inside your head and inside your activities. they know exactly what you're doing. it's the same template that the russians are trying to replicate when they come in and try to interfere with elections >> joe, you mentioned if they pull back on some of that data,

the details available, here's the thing, we're now in this data cold war situation. if facebook does this or if they cut out data, someone else will come along and create that system people are willing to give up a lot of their data. >> shame on us we sign all of this stuff. >> if you presented a lot of facebook users with here is how cambridge analytica used your data, joe, whoever it is, they would be like shocked at i didn't know you were going to use my data that way, even though i gave that up to you >> so it's buyer beware. >> yes >> really? it's still prone to litigation >> not just litigation, regulation >> i think it's time for mark zuckerberg to let the grown-ups run the country. >> he controls the companies through his shares even if sheryl sandberg is the

grown-up, there's not enough checks and balances in place against him structurally that's the issue >> thank you when we come back, fears of a trade war spooking investors complete coverage of a global market selloff is straight ahead. futures under pressure but well off the lows dow futures down by 124 points s&p off by 12. nasdaq down by 67. right now as we head to break, a few of the big u.s. companies being weighed down by tariff concerns boeing andcat erpillar down by more than 5% yesterday and u.s. steel plunging 11% as those steel tariffs got calf-oucalf-ourve outs around the globe. we all get together and support each other. that's the nature of humanity. ♪ i'll stand by you.

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all right. we've been talking about fears of a trade war scaring investors. futures right now indicated down -- that's better than before almost down 200 before on the dow. now down 119 the s&p indicated down 12. the nasdaq was almost down 200 yesterday. another 70 today the latest cnbc -- that's a lot of letters isn't it the latest cnbc/cfo/council survey asked chief fim officnan officers what they thought of trump's tariffs. in your humble opinion --

>> the message was interesting there was a shift in tone across the board with cfos that we surveyed the majority, almost 30% said u.s. trade policy is the biggest external risk to their business right now. only 1 of the 38 said their company supports blanket tariffs on steel and aluminum imports. some comments said it was a trade policy, a trade tariff war should be impacted aavoided. the majority of cfos said the impact of tariffs would be slightly negative on their business overall on the economy, in the past cfos thought stocks would go higher before lower, this time almost half said they think the dow will fall under 23,000 before crossing 27,000 for the first time on the fed, three quarters think it's on target for three rate hikes this year. on where investors can find growth, almost half still think

technology will be the sector that outperforms with tax reform behind the administration, 30% of cfos said their company will use the savings for share buybacks as for what's next, almost half think infrastructure spending should be the number one priority for the administration. for full survey results go to cfocouncil.cnbc.com. >> has trade ever been at the top of their concerns? >> it hasn't we've seen cyberattacks in the past as a big concern. that was key this issue is on the forefront of everyone's minds. china hitting back at trump's trade tariffs. beijing say it may target 128 u.s. products with an import value of $3 billion joining us is robert hollyman, he's president and ceo of crowell and mooring

international. there are two sides that seem to in the political environment we're in right now, this clash of clans there are some democrats who think this is great. most republicans don't i mentioned sherod brown earlier. you were in the obama administration where are you on this? can they work or do you dismiss all tariffs? >> we don't dismiss all tariffs. the problem exists and the administration quite correctly identified the massive challenge to the u.s. because of technology theft by china, by acquisition of u.s. technology crown jewels the question is what's the most effective way to try to solve the problem. it's unclear the impact of tariffs will actually solve the problem and cause china to change its behavior or will it, in fact, compound the problem by

creating dislocations, particularly in the american farm community and others likely to be targeted for retaliation by china >> i've read some criticism from people that are at least open to the idea of it, they say -- usually democrats, but they're like there's a way of doing this, but the trump administration looks like they're flying by the seat of their pants. they'll do this, see what happens, sort of rush head-long into it without thinking about the repercussions. is that the way you view it? is there a way of doing it if you specnt -- we had a lot of time, to years to figure something out. and do it perfectly in the best laid plans of mice and men, but we never did is it wrong to try it this way with $60 billion worth? >> 60 billion is a big number. what's unclear from this is is there an exit path by which the

u.s. can put this on the table as a way to try to change china's behavior, where they are a bad actor, or is this going to become the new default, the new permanent norm in the u.s./china relationship if that happens, if the latter happens, then we see a time where u.s. costs will rise supply chains will be interrupted. and if that fails to produce a change in behavior in china, the u.s. wins -- the u.s. loses two times over what i'm optimistic about is the u.s. will take some of this to the world trade organization one of the big news stories here is what the treasury department is likely to do, restricting chinese investment in the u.s. >> that's a nuanced opinion. so you didn't just dismiss it out of hand. you're kind of like a wait and see. not everyone is. stock market doesn't seem like

it's in wait and see mode. maybe the worst case scenario doesn't happen >> let's hope. >> thanks for coming on with us this morning >> thank you. coming up, steve wynn is cashing out, selling his entire stake in wynn resorts. that story is next plus continuing coverage of the global market selloff. here's a look at the s&p 500 sectors now in correction. stay tuned, you're watching "squawk box" on cnbc

right now it's time for the executive edge wynn resorts says founder and former ceo steve wynn sold his entire stake in the company, worth about $2.1 billion wynn resigned last month amid allegations of sexual misconduct wynn resorts also says that

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welcome back, everybody. nike shares rising this morning. the sports wear giant beating on both the top and bottom line with international markets making a sizeable impact check that out, the stock is up by 4.5% this morning and a down market and a rough day yesterday, too joining us is steeple's jim duffy, thank you for being here. >> thank you. >> good news on this, international markets, especially china, strong for nike that offset some of the weakness we saw in north america. what's your take on this >> it was a solid third quarter relative to expectations the focus of the market was on the outlook. there was two key watch points, the first being visibility to inflection in the north american marketplace. nike expects that to go flat in

the fiscal fourth quarter and return to growth in fiscal 19. the second watch point was the gross margins. nike's expecting inflection in the gross margins starting in the fiscal fourth quarter with more in fiscal 19. a key element of that is foreign currency which for a number of quarters has been a head wind to the gross margin that's expected to flip to a tailwind >> let's talk about north america. the company did say things were at an inflection point at the end of the fourth quarter. adidas has been battling nike. how do they think that is going to get to a good end what are they actually seeing happening in the channels? >> sure. adidas has come on strong in the north american marketplace one of the key things for nike is their product pipeline. they have a number of product initiatives which launched into the market in the recent quarter. those initiatives are going to scale into the back to school season you'll see some of those cascade

into the different segments into the sports wear and basketball segment. it's really all about product. >> jim, the stock is up 20 plus percent since october. it seems like the street is kind of getting behind be this sort of restructuring and new initiatives even before they're even bearing full fruit. where does that leave you in remaining up side, the drebt to consumer and also the comeback in north america >> you make a good point we are still constructive on the stock. i have a buy rating at an $80 target one thing i'll point out is i think the street was decidedly too bearish around adidas gains. niko had an investor day last october, presented to the street a number of these new product initiatives. you saw some appreciation for the potential contribution of the new product initiatives in advance of them hitting the market we think there is follow through on the stock one of the things we're particularly encouraged about is

nike's initiative to shift to a more direct to consumer strategy we think that gives them an opportunity to improve margins and capital over time. >> thank you for joining us today. >> you're very welcome. coming up, futures under pressure after yesterday's nearly 3% drop in the dow. your trading dayset up next. later, facebook and the fallout. we'll talk to the man who wrote "the accidental billionaires." ben mezrich knows the company. stay tuned you're watching "squawk box" on cnbc obvious. sometimes, they just drop in. cme group can help you navigate risks and capture opportunities. we enable you to reach global markets and drive forward with broader possibilities. cme group - how the world advances.

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hold on tight. >> i had a bad experience on this ride once before. >> what happened >> i threw up. >> global markets in selloff mode as fears of a trade war slams stocks saying sorry >> this was a huge breach of trust. >> facebook sharyl sanberg apologizing. ben mezrich. >> mcmaster is out and bolton is in the president's national security adviser steps down as the second hour of "squawk box" begins right now ♪ ♪ live from the beating heart of business, new york. this is "squawk box. good morning, everybody.

welcome back to "squawk box" here on cnbc we are live from the nasdaq market site in times square. i'm becky quick with long with joe kernen and in for andrew is mike santoli cnbc's markets commentator let's take a look at u.s. equities this hour because if you thought we were going to bounce back from yesterday's declines, well, i'm not going to say never. we were down 200 points earlier. the dow futures are down but only by 95 points. that is relative to what we saw earlier. check it out, the s&p futures down by 10 and the nasdaq off by 58 yesterday's declines of over 700 points was enough to push the dow into correction territory with these additional declines from this morning. s&p 500 and the nasdaq are not in that territory yet. the nasdaq is 6% off of its recent highs. congress has passed the $1.3 trillion spending bill that would keep the government funded until october. senate passed the bill early this morning after the house did so yesterday afternoon president trump is expected to sign it averting a government

shutdown drop box begins trading on the nasdaq today that comes from a stronger than expected pricing the ipo was priced at $21 a share. that was above the expected range of 18 to $20 that had been raised earlier in the week already drop box's ceo drew houston will join "squawk alley." that's coming up at 11:00 a.m. eastern time two economic reports are on today's calendar joe? >> the dow dropping more than 700 points yesterday on trade fear recently entering correction territory. dom chu, the march madness genius will join us right now. we'll talk about that at the end, dom you're not in first place. >> i wouldn't suspect i would be no, i'm not. let's talk about the market action

like you pointed out, a lot of these companies that we put front and center in terms of the trade discussion trade, if you will, have been a huge focus for investors. a lot of these companies are going to be battle grounds in the trade developments that are going to happen over the next 45 days or so as we talk about the companies that we want to focus on, they're the industrial ones with a lot of exposure to china according to data from fak set and smpi those that break out geographically specific country revenue exposure, these have some of the biggest exposure to china. an ago equipment maker like john deere. caterpillar stock is a 9% exposure to revenue in china boeing, another one of those battle grounds, 11% of their sales come from china. 3m is 13% and on the auto parts side borgwarner is 13% as we have this 15-day period for us to put together a list of

what we want to target and that 30-day waiting period or comment period after that, as those headlines come out and develop these are the stocks that may either go up or down big or small handy capping in real time some of those trade talks and their developments so those are the stocks to watch in terms of the overall scheme with china trade and industrials, guys. >> good. >> you've got it, dom. the first place is the star of the "nightly business report" and "power lunch", tyler mathisen. >> really? i didn't see that. >> he's got virginia. >> he is a cavalier. >> he's going nowhere but down. >> right >> down. but i just wanted to mention that. >> there are technical factors at play right now. i'm one of the i think ten people in that pool that has villanova so i'm still kind of in it. >> yeah, i'll say. >> he's rooting against me. >> bob huggins, baby go, west virginia. loyola i hope they win the whole thing. >> yeah, that would be a great

story. >> that would be a great, great story, and bring a lot of people back into the fold in terms of praying and everything else, right? you know what i mean i'm pretty sure there won't be a lot of atheists after the nun because she's doing it but she's also saying block out number 23. >> box him out. >> box him out >> here are the two things -- the two teams that i'm rooting for right now aside from villanova are, first of all, yes, like you said, what's going to happen with loyola and then also because west virginia for whatever reason, right, only because only in the last time i was on vacation in florida i actually had the chance to play golf, of all things, with the captain -- >> that's a rarity for you. >> he was the captain of the "u.s.s. west virginia". >> oh, wow. >> yes i played golf with the commanding officer of that particular vessel so maybe that was a sign. >> a sign. >> that was a really weird three bucks.

joe and i looked like we were signs. >> closer shots on us. i'm going to push away. >> java the hut. >> not flattering. get us out ofit. >> thanks for planning i knew i could get you going on that you're all markets all the time. i knew i couldn't resist. >> he couldn't resist slipping in golf. >> that whole tournament is dead to me. xavier -- >> that's because you're bad at it. >> i'm not bad at it i picked the teams from my heart. >> i did, too. i went with xavier the whole way. >> everyone's bad at it. that's why everyone loves to do it. >> it's like bowling, you know kind of for the most part. you can't -- you're just going to go out there and give it your best shot. >> look like a dummy thank you very much. joining us to talk about everything we've been seeing with the markets and whether you should be concerned today is jeremy zerin also jason trennert.

guys, what do you think? jason, let's start with you. is a friday you would be buying? >> i'd probably be more in the wait and see category. depends, of course, on your time horizons, i think a lot is made of the trade negotiations or the trade war. i think facebook is a big story. libor is a big story not enough people are paying attention to that story so it suggests there may be some tensions in the inner bank off of market. there's a bunch of things going on here. i'm not sure i would be, you know, kind be of running around with my hair on fire either. i think these are going to be things that are a process. >> how do you measure this >> if you look at the math, it's pretty bullish what we heard yesterday. we heard there's going to be a

r50 billi $50 billion tariff we think the economic impact is less than 1/10 of 1% even if this escalates, that's the risk it would have to escalate at a significant clip if you look at the steel and aluminum tariff negotiations as a template, things got watered down and scaled back if you look at the whole economic back drop, still very good profit momentum, very good economic momentum. i think we're in the bull market this is a buying opportunity as jason said, the market needs to chew through some issues in the near term whether it's the elevated and rising valuations we've seen for the tech sector, whether it's the interest rate environment, how much inflation is picking up. at the end of the day the profit cycle drives the market. we think profits are up mid teens this year. >> that's kind of the situation of this market the bull case is the stuff you're scared of isn't quite as scary as you thought as opposed to last year into joon r january

i'm expecting strong economic data in the u.s. later this year i'm not sure there was enough fear associated with the correction the market went up without much of a correction so you may need

to just bring more people's expectations in before you go higher but, you know, i'm very much -- >> is that a code way of saying you're looking for the markets to be flat for the remainder of the year >> that's probably the way it's going to work out. this is a mid-term election year it's another -- we've looked at this in the past it's another angle markets don't tend to do particularly well in those years until you're close to some sort of resolution of the mid term elections. in october, november they start to do better as jeremy pointed out, the basic fundamentals are very good. >> and the profit cycle. >> the profits are concerned interest rates yesterday went down so i don't know. i'm still bullish although i do think you're in a period now where the economy is going to outperform the financial markets. over the last -- in the obama years the financial markets gravely outperformed the

economy. the policy mix is that the real economy -- >> multiples are going down. >> right that's what people elected that's what people want and it makes our jobs tougher in a way but it's -- for a lot of my clients it's good because you get to pick stocks as opposed to just piling in >> where's the leadership going to come from because that's a point mike made earlier. if the financials are weak, technology is weak. >> if you look at an index basis, right, it's hard to see what the answer is if banks and tech aren't working. >> banks will be working over the next 36 months we'll see a rotation into value. growth has been a market leader over the last 12 to 15 months. when we're seeing some toppish behavior from the tech sector, which is the dominant sector in the growth index, i think you're seeing better dynamics if you look at the value versus 1,000 index, energy and

financials are 40% if we start to see technology start to lose a little bit of its lustster and we start to see economic growth hold up, usually value outperforms when economic momentum is strong and corporate profits are double digits. i think given the scope of the underperformance we've seen over the last year of the value you can get a meaningful rotation. >> jeremy, jason, good to see boldt of you thanks for coming in. twitter, very distracting going on in france coming up, the trump administration vowing to defend soy bean producers in the wake of tariffs imposed against china. the ceo of the american soy bean association will join us after the break to discuss later technical analyst katie stockton joins us to discuss market levels and what's next for investors that's a valuable inteiew rvif you're trying to figure out what to do here you're watching "squawk box" on cnbc

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tough talk coming from the chinese saying if this is a trade war, they are prepared to fight to the end >> reporter: absolutely. and, becky, i'm coming two from main export zone here in china this is essentially a town where the u.s. trade deficit was born because u.s. companies have been outsourcing to companies like this one for many, many years. this company makes men's shirts and a lot of other factories here manufacture toys and television sets that allow u.s. retailers to sell these goods to american consumers now speaking to a lot of business people here, but american executives as well as chinese exporters, and the trump announcement last night sent a shiver of fear down their spines they acknowledge that the focus seems to be high tech, made in china 2025 goods, however, they point out that the u.s. doesn't import a lot of these goods from china. so how is the president going to make up the difference when he says that he's going to be

taxing $60 billion worth of goods. so they're saying it could be a broader array of goods that are important for the u.s./china relationship and that's making them rethink their strategies to try to survive a possible trade war. they're telling me that they're looking -- once the announcements are made, they're going to be tweaking some of the products to fit the specs. they are also going to potentially split production so that they do some finishing in hong kong or taiwan or get rid of the production from here and move it to retaliation i spoke to people. thinking about that is they are going after american farmers the the trump political base as well as swing states.

dried fruits, nuts, wine, this is in california, a blue state, but if you actually break it down, it's a part like almond country which has gone for president trump. also,ette that nothing this is going to attack the midwest. this is a way to hit at corn farmers who don't export a lot to china but who want to and want to get into ethanol here. finally, the state media today was saying that soy beans should be targeted next speaking to an american executive in the agriculture industry, he said the chinese wouldn't want to do this and that it would hurt them, it would raise costs for everyone, and he said if soy beans are on the table you know we're in a trade war. >> yeah. i would talk about that right now, in fact, eunice the u.s. government vows to protect farmers from chinese trade acts for more, let's bring in ryan finley he's the ceo of american soy

bean he's the global importer of soy beans. they're not very good at growing soy beans, are they, ryan? they've got 700 million pigs. >> good morning. >> yeah. they need to eat soy bean meal or whatever, right >> they do. >> what are they going to do for the -- >> you have a really -- you have a big growing middle class in china, which is absolutely fascinating. they need to feed that middle class. they want animal protein you just hit on it they have a huge pork industry there and to feed that pork industry they do grow some soy beans but not nearly enough. so they need those from partners around the world and we are happy to supply that it's around a $14 billion market for u.s. soy beans exported to china. it is a massive market it's almost 1/3 -- if you're talking to farmers, one out of every three rows of our soy beans here in the united states are going to china it's a big deal. >> we're good at it. >> yeah.

>> are we dumping because we over supply or do we just through comparative advantage we're really good so we help them by selling it to them cheaply? they say we're cutting off our nose -- they're doing the same thing -- >> they can go to brazil. >> that's part of their rhetoric this is a great example of how markets have worked. united states producers, soy bean farmers do a phenomenal job at buying a great product. china wants that product, they need that product. they're purchasing from us and purchasing from our competitor in brazil and argentina. that's something we need to watch, we're paying attention to that that's a concern we have obviously we don't want to lose the chinese market we definitely don't want to lose it to a competitor >> makes me wonder whether this is an example when we say, really, we want to be in a trade war with us? we can win trade wars. i don't know, it seems like they need it more than we do.

should the soy bean industry -- farmers have already had their incomes go down in the last five years significantly. we know that china steals $600 billion annually of intellectual property should the farmers be asked to take one for the team, that we need to deal with that so you're the ones that -- the farmers are the ones that are going to have to sort of lose in the process >> well, if you're a farmer and err day you get up, lace up the boots and do what you can to feed the world and your income is half today what it was in 2013, and you've developed a market farmers have spent decades developing markets in china, in india, all over the world, in mexico and canada. we've spent a lot of time developing those markets so there's a system that's working right now. and if your income is half of what it was five years ago and somebody says, well, you may have to take one for the team here, i get that there's a

concern at the macro level, but to a farmer, that hurts. that hurts big time. >> when they say -- when the government says, you know what, we are going to protect you against this, do you believe them and how would they go about it >> i don't think farm -- i mean, this is a really difficult situation because farmers are saying we're -- we want to be capitalists. we want to focus on the marketplace and that's what we've done we've spent decades developing the market the market is working. we're supplying china. we're supplying mexico we're supplying our friends and allies around the world. this system is working we don't want to be talking about a mitigation program here in the united states we want to be talking about solutions to expand that trade that's the focus in agriculture. >> all right, mr. finley thanks we'll see how this all plays out. we don't want -- obviously this is not -- >> big deal. >> we hope that's not the end result i'm not sure how to address some

of the allegations. >> it would be part if we were part of the solution that's what we're ready to help. there's a lot of opportunity for us to grow our exports to china and to other countries and so, you know, we respect the decisions have been made, but let's sit down and work on a solution that's helpful to everybody. >> all right thank you. we appreciate it. >> thanks. coming up, ben mezrich, the author of "the accidental millionai millionaire. we'll discuss the fallout. stock down nearly 11% this week and if it's a half a trillion dollar company, that's pretty big. more on the turmoil straight ahead. time now for today's aflac trivia question. how many federal reserve bank presidents are there the answer when cnbc "squawk box" continues thanks, dad! break a leg! aflac?!

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accidental billionaire ben mezrich is here after the break. then we'll talk to katie stockton michaeo'nll haon of the brookings institution on the ouster of mcmaster as national security adviser "squawk box" will be right back.

♪ ♪ ♪ good morning, everybody. welcome back to "squawk box" here on cnbc we are live from the nasdaq market site in times square. here are the stories that are front and center this morning. former wynn resorts ceo steve wynn has sold his entire stake in the casino operator he sold 1/3 of his stock wednesday. he sold all the rest of it yesterday. he resigned in early february after allegations of sexual misconduct which he has denied stock is up by 2 1/3%. u.s. air line passenger traffic rose by 3.4% last year to a record high.

the transportation department says 965 million passengers flew in 2017. the carrier with the most passengers, southwest airlines with 157.7 million people. delta was second at 145.6 million. two days after the federal reserve raised interest rates, investors will have more fed commentary to try and digest today. atlanta fed president rafael boss stick, and rob cap lain and minneapolis fed president neech ca neil cash kari has speaking engagements. you'll see that the futures are under pressure if you've been watching, at one point we have the dow futures down by over 200 points. the dow futures are down by 95 points coming after that decline of more than 700 points yesterday. s&p futures off by 10.5 and the nasdaq is down by 52 if you take a look at europe, early trading shows some similar

patterns earlier the dax down by 2% now it's down by 1.6%. the cac is off by 1.5% ftse off by .6 energy prices are a little bit higher this morning. wti up by 25 cents to 64.56. if you take a look at treasuries, this has been part of the story as people were getting out of stocks yesterday, they were getting into treasuries. that put pressure on the yields which are at 2.83% after we heard from the fed earlier this week, you saw them move to 2.9% the dollar is down on some of these concerns about trade and tariffs. right now the euro is trading at 1.2332. despite its wild success in the past decade, facebook has faced some huge tests and challenges the latest data scandal might be the biggest. yesterday on cnbc facebook's

coo, sharyl sanberg, talked to julia boorstin about the data breach. >> this is a huge breach of trust. they come to facebook and they depend on us to protect our data and i am so sorry that we let so many people down we spent the last few days trying to get to the bottom of what happened. cambridge analytica should never have had this data they deleted it they told us but it is our mistake that we did not verify it. years ago we changed platforms so apps get much less data but that wasn'tenough. >> joining us now ben mezrich, he's the author of the definitive account on the founding of facebook "the accidental billionaires. which was the basis for the film "the social network. i look back on the film, ben, because i hope you're keeping up we didn't know the winklevy were going to be bitcoin billionaires we didn't know army hammer was going to be such a big star. we didn't know andrew garfield was going to become spider-man

and stop becoming spider-man how much of this could you have predicted knowing how it operated and they'd have all of our personal info, it would be worth half a trillion dollars in market cap regulators may put that in jeopar jeopardy have you been watching closely >> i have been watching it it's not a surprise to me. i mean, it's -- our relationship with facebook is kind of built on lies a little bit because we believe that we own our data, but the reality, now we all know, is that our data is out there for other people it's being packaged and that's what facebook value is built on. so we have to change our relationship a little bit. yeah, it's -- to me it wasn't a surprise, but it certainly is a bigger deal than i think facebook wants it to be. this is how facebook works. >> maybe it was too good to be true for facebook. it's like, all right, you let us

do this and you get to have all of our personal information to sell to people i mean, that was too good to be true anyway. >> i mean, you know, yeah, there's nothing free, you know and if you thought facebook was a free service, now you know that you get to use it but they also get to use what you put up there. and it's not as nefarious as that sounds all the time every now and then you get an ad directed at you because they know what you like that's not necessarily a bad thing but, you know, they're also using that data in lots of different ways we saw one instance where someone was using it to target political stuff at us and we don't like that as much. the reality is we're all adults. we're not little kids. we have to understand if you put something on facebook it can be packaged and used in a way that you don't necessarily know that that's how it's being used. >> so if you were a regulator, how would you use a soft touch here or would you? >> listen, as i said, we're all adults

there has to be a soft touch you love putting your stuff on facebook you like liking things and sharing things that's what you do on facebook and they should be allowed to capitalize on it to some extent. that's the deal we're making targeting ads at you, that's not a big deal. >> i know you're a chronicle of social network and a lot of other things i don't know you've spent a lot of time chronicling regulators. >> no. >> they don't come with a soft touch and they often come because the attention has come to a certain level, the media has focused on it. when they come in they don't come nicely very often. >> no. there's a lot of anger that's kind of misdirected in this case at mark, i think a lot of people want to hate on mark zuckerberg but, you know, the reality is we have to understand that this is what facebook is about. and once we understand that, if you use facebook you should be okay with having some things targeted at you. >> ben, you say that a lot of

the ire has landed on mark this era that we have here, these founder-run technology giants, it often -- they often kind of stick close to whatever their sort of founding mission was. whatever they told themselves their grand purpose in life was, their company's purpose in life was they stick to it, whether that's facebook connecting the world in a benign way or if it was microsoft, we say we're going to give the personal computer everything that a person might need including bundling, explore with it. it sometimes crosses over a line i wonder if they have to redefine what facebook is, submit to being a media company. how does it go from here >> yeah, great question. so, you know, mark's initial view of this was this was a revolution we're going to change the social world. we're going to make a world where people like mark zuckerberg can be social stars, everyone is sharing things and it makes the world a better place. that's what he truly believed when he started facebook then it becomes a business and now mark, you see him on tv,

trying to be a real boy. he's more of a -- that's not who he is really all of that stuff, it's become bigger than i think what he ever thought it would be. now they have to tread carefully as people realize it's a business and not just this revolution. >> i think they've figured out it was a business a while ago that's why they're so profitable. >> yeah, facebook figured it out and now everyone who is using facebook is starting to realize it. >> i mean, i just -- you know, you're a guy that writes endings. can you write one for me >> yes. >> it's not going to end like my space, is it i'm still on my space. >> we're all going to go back to my space. >> i love it >> no, i'm not on either but -- >> no, i think what's happening is i think people are shifting to instagram, which is also owned by facebook. people are starting to look at that as more peaceful and safe and the reality of that is going to come out soon, too, i think but, you know, i think people are just going to have to readjust their relationship with

social media and understand that we get a benefit from it, but they get a very big benefit from it, too. you know what, so when you go to disney world and put pictures of disney world, next week you're going to have a ton of ads about disney world that's how it works. we shouldn't be surprised by that i don't think facebook is going away i think it will adjust and people will say, okay, this is what facebook is then they'll continue to put their pictures up. >> on a separate issue, in the last month how many projects have you been pitched and what did you accept >> so i have a big secret project i will tell you about soon. >> give us a hint. >> i'm getting pitched an awful lot. the world of bitcoin is my world right now. i will be involved pretty heavily in some stuff. >> this is going to be good, ben. >> yeah. there's going to be -- i'm working on a very big movie and book project there's a lot of fun stuff. >> that plays up our alley so you're going to come back and

tell us about it. >> i will be there you will be the first to know. >> wahoo. >> my favorite people. >> i'm scared of bitcoin you can have someone rubbed out and do it anonymously. it's going to be on "dateline" and it's going to be some husband because it's always the husband. have you noticed that? >> yeah. >> it's two hours. two hours to realize it's the husband. >> yeah. and you realize it in the first 30 seconds. >> doesn't matter if he was not in town, but he always gets caught but with bitcoin, like the husband, he's scott free >> yeah. >> because you won't know it's him. >> it's all -- yeah, it's all great. good >> getting worried you're describing his book. >> yeah, i'm describing his book he did seem a little bit -- all right. come in and tell us. we'll see you around. >> great to see you. come to see you in new york. visit us on set. we miss you. when we come back, we'll talk technicals and the market's next move with technical analyst katie stockton she's going to tell us what the

levels are, the highs, the lows, what you should be thinking about. as we head to a break, check out the futures at this hour they are improving, believe it or not if you're just waking up, dow futures down by 87 points. when we started down by over 200. at least they were in the 6:00 a.m. hour. s&p down by 9 and nasdaq down by 48 the dow yesterday was down by over 700 points. it's a friday. good luck with that heading into a weekend. we'll be right back. yours. wow! record time. at cognizant, we're helping today's leading life sciences companies go beyond developing prescriptions to offering subscriptions with personalized, real-time advice for life-long, healthy living. honey? you almost done? nope. get ready, because we're helping leading companies see it- and see it through-with digital.

welcome back, everybody. market volatility is ramping up. the movement is coming from a few different sectors. joining us to talk about this is katie stockton she's the founder and managing director at fairlee strategies thank you for being here. >> good to be here. >> i don't know how to mix big level ideas with technicals. yesterday it was trade that spooked a lot of names, like a caterpillar and boeing then it was the financials under pressure because of some other technical factors and something happening in the money markets and lower yields it was also a lot of the social neatwork names how do you add all of that up? >> a lot of drivers. that's why we got that big gap down it's not often that you see the s&p 500 gap down in the way that

it did to me it's actually a positive we needed a bit more of a shakeout it seemed with the market to see this correction fasz mature. this to me is your retest process. the 200 day moving process is intact as support for the s&p 500. so for the first time we have an over sold condition this month and the last time we had that was at that february low so we're getting closer, i think. >> what's the 200 day moving average? what levels -- are there other levels we should be concerned about? >> sure. 25.84 for the s&p 500 cash index is the 200 day it almost would be too perfect to see it hold up there again, but you never know. >> 2% down >> just over 2% down it looks like we'll see a little down side follow through this morning. now when you look overseas and even here in the u.s., some of the more beleaguered areas of the market are already flashing counter trend buy signals, that would include staples, telecon,

the ftse 100 and it's very short term in nature but they enhance the over sold condition. >> we're still going point losses as the media. when we start doing point losses and doing percentage losses, it minimizes -- that's when i worry. we're still hyping 700 points like it's the end of the world which is 3%, that's a big move it's manageable in a correction. it doesn't cause you to say this is not -- and it rings out some of the near term bullishness and sentiment and complacency that people had that the correction was over so we still ring it out really quickly. >> it's almost the new normal to see the 3 or 4% as we had in february down days. >> when it becomes normal it's not going to work anymore. >> that could happen, indeed when you do see them at the pull backs so fast and furious as they have been -- >> those are good. >> -- it's more indicative of a bull market. the long-term momentum is there. >> you've always mentioned

corrections can be how deep they are, how long it takes how long do they normally take >> several weeks tends to be enough for the market to -- >> we're talking months already. >> it's been just under two months or so. >> is that long enough? >> when you look at the medium, it should be two weeks or so to get us back to where we need to be based on the indicators i need i think we're close to a tradeable low and i would start looking in the more beleaguered areas for the over sold buy opportunities. i think we're getting pretty close to that. >> when we got the first break off the high in january, it was really easy especially in retrospect to say, well, the market was so extended, sentiment was so bullish that it needed to be kind of, you know, knocked back on its heels. we had that process, but there's a sense now building up that it didn't -- you're suggesting you didn't have enough of a purge

and people psychologically didn't really get rearced? >> we did see that sentiment relieved in the first down draft into the february low and sentiment is now very conducive to a tradeable low in the market sometimes these corrective phases have three waves to them, sort of at that a, b, c wave this to me is probably that c wave of the corrective phase. >> could we ever see let's say that this tariff deal just explodes into a full blown trade war and like the market goes down much more than you thought and violates all your levels would you say, well, my technical analysis was fine but i was, you know, hit hard by the fundamenta fundamentals that really never happens. you don't care what the fundamentals never are. >> it's not that i don't care. >> they don't meet. >> they should manifest themselves in stock prices, right? i can be lazy about it and just look at the price. >> it seems like, you know, a

horrible terrorist attack or some -- north korea or something. >> predict that. >> it won't work but those are black swans. >> you know, when you see that kind of event, it's really the reaction that you have to gauge and whether it's driving a lot of breakdowns and whether those breakdowns hold for more than a day, for more than even a weak are those breakdowns significant and lasting or are they part of a shakeout that's what we have to evaluate. the charts will not predict a major terrorist event or something like that. certainly we can engage whether it will be a lasting change in trend. >> you can always find the fundamentalists, they can say technicals fall short here, then technicians can say fundamentals, it doesn't work. it's rear-view mirror. i guess it's like -- >> you could give the next four earnings reports in advance to somebody and you wouldn't necessarily be able to say what the stock is for. >> you have the fundamentals perfectly right. >> the market influences are so

important to understand, especially in this tape which is so top down oriented i would argue that fundamental analysis is a complementary discipline we're looking at historical prices to see where we might see momentum come in i think they work hand in hand. >> there's some commentary i've been seeing today just about how the market has changed its sentiment. any headline risk we used to shrug off. now any headline risk gets priced in. do you see that in the technicals >> that run up in january, right, set us up almost for this, for where the reactions are most over done, if you will, so that's where we're seeing these over done sort of scenarios to me in the areas that have gotten hit the hardest. facebook does look like a breakdown so that is one thing that, in fact, i would say the market's weathering pretty well. >> what about powell powell on wednesday and the ten year and -- >> it's all about the reactions. to me, the ten year treasury

yield looks somewhat neutral, somewhat consolidation phase within a broader, gradual up trend. it stairs stuff higher we're on the stair. >> can you tell whether soy beans are going to get hit by china? what's the chart going for soy beans? >> i haven't looked at that. >> did you know china was going to retaliate before they retaliated >> i wish i did. >> i'm looking at soy beans. >> what do you think, is the beans in the teens or not? >> pulled back hard. >> did it? >> look at that. >> in the last few weeks. >> see >> that's yesterday. >> it looks pretty over sold when you get the over sold -- >> there you go. >> that's your opportunity >> we should do a podcast of some sort with all of this stuff on how it all works. what do you think -- i think santoli would love to do that with you. >> let's do it >> get it done. >> my idea but -- >> cnbc pro talks. i call it a video podcast. >> okay. >> i do a few a month.

>> see always thinking. >> katie, thank you. >> thank you. coming up, h.r. mcmaster out as the president's national security -- ♪ when a man loves a woman >> all right being replaced by bolton, different bolton we do have this music for you. we have the reaction from brookings senior policy fellow, michael o'hanlon. >> you can't play bolton because it's percy sledge originally made this a hit. >> that was jim carry on some show, he said. ♪ when a man steals a hit song check out european markets bolton had the long hair remember that? anyway, not john bolton. ♪ when a man loves a woman ♪ spend his every last dime

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>> michael bolton all day long. >> then we have john elton coming up. a little yellow brick road micron technologies, they're the stocks to watch. lower in pre-market trading. the memory chip maker did beat estimates with the latest earnings strong demand and higher prices. the current quarter production will be impacted by, huh, did you know this, santoli, nitrogen supply disruption. if you don't have enough nitrogen, you're not making memory chips, i guess. kb home shares are moving higher reported better than expected earnings and predicted steady demand and tight inventories for the foreseeable future. when we come back. another shakeup at the white house. national security adviser hr mcmaster is out. we will have reaction right after the break. by the way, check out the futures this morning concerns about trade wars persisting, but the futures are improving. we're talking about the dow only down by less than 50 points now.

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buckle up. >> stocks around the globe drop as china hits back on trump tariffs. can facebook be friends with regulation >> it's not a question of if regulation, it's a question of what type. >> we'll talk to an attorney general reviewing the data leak coming up. plus, a unicorn comes to wall street. >> drop box set to make its public debut what to expect straight ahead as the final hour of "squawk box" begins right now ♪ ♪ live from the most power full city in the world, new york this is "squawk box. good consistent michael bolton to elton john

a guest coming up named john elton. totally confused "squawk box" back here on cnbc live from the nasdaq market site in times square. i'm joe kernen along with becky quick and mike santoli andrew is off. let's get a check on the markets right now. been some improvement from earlier lows in the session. now we're almost positive. >> wow. >> what just happened? that moved fast. >> down almost to katdy stockton, probably. >> go big. >> it could be. >> we were down to 80. katie could have been responsible for the last 80 points. >> the market ended right exactly in the zone. okay, it held earlier in the month. it's pretty close to -- we think it's a retest. maybe people trying to front run that. >> what if someone told you that technicals always win and that, you know, tear rir ofs notwithstanding, you know, all that -- >> but the technicals don't tell a clear story, right there are still over interpretations. >> they don't. whenever we attribute a big selloff, they raised rates on

wednesday. >> sure. >> and it's all related. >> that's the back drop. >> tariffs cause inflation, inflation causes higher rates. >> never is neat and tidy. >> if you look at the big stocks that sold off often the dow, boeing and caterpillar. >> facebook up for a long time. >> caterpillar shareholders were like, yeah, we're finally getting our time in the sun again. >> after january we talked about reversion of the mean. it had to come or else we were going to be up 800%. now up on the dow. s&p is trying to catch up. even the nasdaq, which is down 70, is now down just 22. in europe we'll see what's happening in socialism land. 1.5. they're getting less so. they're smelling the offee, waking up a little bit still all red this morning treasury yields, 280 or so not 290. not 3% on the ten year

mark grant was saying that the short end is flatter flatter and what that means. finally we'll check out the dollar versus the euro and the yen. we're looking -- that's not a lot of change in the last -- that hasn't been the reactions. >> no, but the yen's been strengthening. it's up -- the yen is down that's been something people watched as a measure of risk aversion. >> right big move there yesterday along with all of this. >> then china firing a warning shot at the united states over the trump tariffs. the chinese commerce ministry targeting $3 billion in u.s. goods. that's including fruit, pork, recycled aluminum and steel pipes. the ministry said the penalties are being imposed on the new tariffs on chinese steel and aluminum products. that doesn't include what president trump talked about yesterday. we will talk more about this in a few minutes with bill reinch. another big story we're

following is general h.r. mcmaster stepping down as security adviser john bolton is taking over joining us is brookings institution michael o'hanlon good to see you this morning. >> good morning, becky nice to be with you. >> let's talk about what this means in the white house, having bolton stepping into this position he's seen as someone who's incredibly hawkish what should we anticipate? >> i don't know what to anticipate, but you're right on that summary i see him as being more hard line as dick cheney who was always one of his mentors and political associates in earlier republican administrations john bolton is well known for being a stern critic of the united nations that's not unique to him as you know, he was nominated to be u.n. ambassador later in the bush administration but never approved for that job. he's been very hawkish on how to deal with iran and north korea his views are not unintelligent.

he's a very bright guy he plays his cards very carefully and pretty close to his chest. he's reserved in personality style, a bit laconic, a bit withdrawn. he knows what he wants he's a bureaucratic fighter. draw your own conclusions, becky. i don't know what this means i know there's going to be another advocate for hard line policies on things like iran and north korea. i don't know what decisions that will show from president trump. >> with north korea he's spoken about the idea of looking for regime change there. we're entering a delicate time for negotiations potentially with north korea what would it mean to have him involved with that i guess none of us really know. >> right i think the big question for me is -- well, there are two big questions. one, could we accept an interim deal that got us some of what we wanted but not everything, not complete denuclearization in the first instance i would be an advocate of that

as long as we don't have to pay too high of a price for it i'm not too sure about ambassador bolton, he would be a skeptic. i should say secretary bolton. he would be a skeptic. if we don't get complete denuclearization, we don't get a verifiable freeze, then what do we do? as you know,'s he been an advocate of threatening or conducting preemptive fights i don't think there are any good options. one could easily imagine a war in which many hundreds of thousands or even low millions die if there is all out war on the peninsula that results from an escalation. that's why i'm adamantly against these kinds of options bolton to be fair would say, yeah, but, if we let north korea build nuclear bombs and they sell them to who knows whom around the world, that's a pretty dangerous place to be that's the debate that could shach shape up. >> how are you viewing the changes? secretary of state will be a new

leader, too. how do you think that over all will impact our foreign relations? >> i think this one is a big change, going from mcmaster to bolton going from tillerson to pompeo, different views, different styles, but even though i thought tillerson had good judgment, he was not really building a strong foundation for his work at the state department he was in favor of cutting their budget by 30%. he wasn't making a lot of allies, wasn't building a strong team frankly, as much as i like him on a sort of personal level and respect his view of the world, i don't think he was being that successful in his job. trying pompeo with harder line views but a much better relationship with president trump, that probably makes sense. in this case, mcmaster was very, very steady. we owe him a big debt of gratitude. >> mike, thank you for your time steve liesman is here and has breaking news on the fed. >> i think we have to wait a few minutes. sorry about that, becky. >> is it out now >> is it out okay here we go rafael bostock saying he expects

further rate hikes over the next couple of years. and that policy -- fed policy should move towards neutral. the new atlanta fed president is a voter this year. interestingly though, he does come in on the low end of what neutral is 2.25 to 2.75 is neutral. there are some fed officials that are well above 3. he said the fed is near reaching its employment as inflation goes, at or near those goals they aren't substantially over heated inflation is trending towards the target there is up side risk for inflation for labor costs and inflation. fiscal policy sees a modest positive to gdp and he says significant or pervasive tariffs could represent down side risk he's weighing in on this whole tariff issue out there we're following what he has to say. he's a new guy and a voting member this year >> you think anything goes into this with market reaction on any of it? these guys are saying what they

think? >> i think they're saying what they think i was puzzled yesterday how much of it the down draft was all trade and there was a piece of fed in there i mean, i thought the fed was more hawkish in the report i did for you guys at 8:30 suggested the outlook -- >> you think it's coincidence that the day after they raise rates -- >> i have seen and i've done this a ridiculous number of times. the market is kind of cool with something right after it happens and the next day they wake up with something like a headache, especially when it's a more hawkish -- >> higher rates cost more money. even though on an absolute level -- >> that's a fascinating -- did you figure that out? good math. higher rates cost more money. >> if we ever look back on this and say, god, why didn't i see it coming, you might kick yourself by saying it's pretty simple. >> it's not, by the way, that powell was more hawkish, it's when you look at the average fed person that eight of them, 40% are above the median and that will be the way that you get to

these medians is a much more hawkish way than you do. those are things to consider i think trade is a negative. >> it's almost as if we watch and we're so used to things being in the markets we go, well, the markets always anticipate so when we know rates are going up and the markets don't do anything and then we say, well, they haven't done anything in anticipation of it so they're not going to do anything, then when something actually happens which shocks -- >> the market's a cross word puzzle, joe. you can see it. >> until you put the letters in, you can't get the word a lot of times until the market sees the actual policy, it doesn't react. you can't know exactly -- >> but the power of zero on your money for eight years, the power of that just to maybe mask what's really going on. >> it is interesting though the way they went scurrying to the shelter of the ten year, right >> plus the margins. >> that makes sense. a little bit contrary. >> that always happens.

>> by the way, you've pretty much priced out the third rate hike in the fed probabilities, you have one in june and maybe one november/december but the idea of a third rate hike from yesterday's trade seems off the table. >> all right, liesman. thanks. >> 8:30, durables. >> no way. that's today >> today is today. capital investment, the thing that you care most about >> not factoring that in. >> how did you not wake up in the morning and not factor that in immediately facebook facing questions about regulating its platform after the data leak. here's what coo sharyl sandberg told our julia boorstin. >> on regulation, it's not a question of if regulation, it's a question of what type. we're open to regulation we work with lawmakers all over the world. >> attorneys general from across the u.s. met in washington to talk about the cambridge analytica facebook fallout joining us pennsylvania attorney

general josh shapiro who's in washington following the ag meeting. i just wonder, had it been on your radar screen before this, attorney general shapiro >> well, good to be with you data breaches in general have been on my radar screen. how can we best protect people in my state, pennsylvania, and all across the united states that's why we looked into equifax and sued uber. all of these data breaches together really kind of follow the same pattern you have companies who are more focused on taking a dollar of profit and putting it in their own pockets as opposed to putting a dollar back into their company to protect your data, protect your information so while the facebook matter may not have been on our radar screen, data breaches in general have been a big focus of what we do. >> you have the data breach but it's also kind of a, you know, pulling back the curtain on how

facebook became a half a trillion company, too, and i think that's -- i mean, the data breach notwithstanding, suddenly we all realize, hey, wait a second, they know everything about us -- >> right. >> -- and they're profiting from this and all i get, you know, is to look at my friend's vacation pictures and they've got everything they've ever wanted and it's very valuable. >> right not only do they have everything they wanted, the reason why i called it a data breach is in these other cases equifax as an example, imagine a warehouse the hackers had to break into that warehouse and take what they wanted out of equifax's warehouse. well, with facebook they didn't have to break in >> no. >> facebook gave them the keys and said, come on in, take what you want and use it for profit use it for what you want and that's not something that we're going to stand up and tolerate we're going to hold facebook accountable. most importantly right now, we're going to get answers for the american people. let them know if their data was compromised and then try to make

sure it doesn't happen again in the future. >> josh, that's their business model. you're talking about changing the very business model of facebook that's what you intend to do >> well, their business model cannot be taking personal information from me, potentially violating their terms of service agreement with -- you know, with the users. >> let's back up if it doesn't violate the terms of service is it okay to do whatever they want with it >> i think it's too soon to tell no, i think there has to be a general understanding with people i think people have this understanding when they use facebook that it's certainly 23409 a private secure platform but that some third party can't come along, take their information and use it for some other purpose that they really didn't authorize >> who do you think we should as a public -- who should we hope is the eventual or ultimate regulator here i'm uncomfortable with attorney generals they're all running for governor some day you've seen what's happened with some guys that were attorney

general in new york. they've got one thing in mind, a future political office. they grandstand, they -- i don't know i'm not impugning you, but you've seen it we've got a guy now in new york and i've seen it in my home state of ohio as well. should it be attorney generals or attorneys general or should it be the ftc or some government agency or you don't care who it is >> i think what's clear, anybody who watches congress, anybody who watches what goes on here in the city behind me over the last decade, it's completely dysfunctional. it's completely partisan what state attorneys general do, what i try to do is be the people's lawyer. the one person everybody can rely on -- >> attorney generals aren't -- i've seen it happen here they're not only partisan, they're -- you know, it's ambition half the time >> i appreciate your cynicism and skepticism, but if you look at our record and look at the way we in pennsylvania have dug into these other data

breach cases and not only returned money for our consumers in our state but most importantly changed corporate behavior, that's what needs to be done here i do think that you're going to have a combination of state officials like attorneys general and federal regulators dig in on this the bottom line is it's got to be done right. facebook has to change its practice and the people deserve to know if their data was compromised in this process. >> yeah. >> that's amazing. >> yeah. the more the merry err, maybe. as long as someone gets in there to protect it, i guess we shouldn't complain we've got to deal with it. anyway, really appreciate your time today, attorney general thank you. >> it's good to be with you. thank you. >> all right some news that fast company is reporting. listen to this, target and kroger are discussing a potential merger according to fast company take a look at these two stocks. kroger up by almost 7% on this news, target up by 2%.

target has a market capitalization of $37.5 million. kroger has $20.5 billion obviously grocery store chains have come under severe pressure. tough margin business. target does a little bit of grocery sales of its own. >> yeah. quite a bit, actually. >> this is something that we've been talking about ever since whole foods was bought by amazon we've actually had people tell us they thought target was going to be a target of acquisition by amazon. >> potentially kroger since that shock has been preparing investors to spend more just to get the digital side of things up to where they want to. unclear if it would be, you know, some other thing short of a merger, you know >> right maybe helping each other out >> a lot of overlap with real estate. >> obviously a lot of overlap but if you're trying to figure

out how to get delivery, next day delivery to some of these things, maybe they could put their heads together. >> big merger and a big combined company in terms of market cap almost 1/10 of facebook if those two did become a $50 billion company. that just tells you, almost 1/10 of what, you know -- see, i still don't understand that. >> i'm just looking at the store base, 2700 stores for kroger target, i'm not sure how many stores they have still looking for that kroger is big, big geographic spread with 2700 stores. >> not fully national but definitely a pretty big portion. >> two midwest companies, minneapolis and cincinnati for the two bases. we'll take a look at this and continue too watch this. this is coming out on "fast money" -- fast company report, not "fast money," i'm thinking our own shows. fast company report. we're going to continue to watch this kroger shares right now up by

7.5% kroger up by 2.5%. when we come back, china firing a warning shot at the united states as trade war fears loom we will talk to former national foreign adtre council bill reinch that is next right here on "squawk box. jj, will you break it down for this gentleman? hey, ian. you know, at td ameritrade, we can walk you through your options trades step by step until you're comfortable. i could be up for that. that's taking options trading from wall st. to main st. hey guys, wanna play some pool? eh, i'm not really a pool guy. what's the hesitation? it's just complicated. step-by-step options trading support from td ameritrade

president trump slapping china with over $50 billion in tariffs on imports commerce secretary wilbur ross telling cnbc that he doesn't think the action will start a trade war. >> i think there will be some ultimate retaliation, but i don't think it's going to be the end of the earth think about the 60 billion figure that the president mentioned and that you quoted. this is a tiny fraction of our economy and atiny fraction of the chinese economy. so it's not as though we're blowing them up. joining us is bill reinch.

he's a cisc senior adviser bill, what's your take on this how big of a deal is this? is this what the beginning of a trade war looks like >> well, it could be the beginning. it depends, i think, on what both parties do. usually these things only go one round. we do something, in this case the chinese do something that's about the same back and we glare at each other and then there's a negotiation. if they over retaliate, you know, do an excessive thing or if president trump responds to their retaliation with another round, then, yes, you've got a trade war and a lot of people get hurt. >> i don't think i've ever lived through a true trade war i mean, what do you think would happen if we got into that >> well, you just start closing off your market to other people's products and it would be enormously disruptive we get a lot of stuff from china, but the thing to remember about it is a lot of it is stuff that originated here, parts and components are from here it's a global supply chain and it ends up being put together in china but it consists of parts

and intellectual property from here if you start breaking those chains up, you hurt an awful lot of americans, not just the direct consumers who are going to have to pay more for their products, but companies that can't get their products made in the same place and the same wa that they used to. so they have to go around and rearrange all of their supply chains and buy from other sources or assemble in different places it's enormously disruptive. >> let's hope we don't get to that, but is this an effective negotiation tactic >> we'll see it's a fair point when the president says past negotiation tactics didn't work. he's right, they didn't work this is a different approach, which is sort of, you know, hit them in the face and hope they come to the table. we'll see what happens my experience with the chinese is that it may bring them to the table, but i don't think they're going to be able to deliver what the president wants. >> what -- what would you suggest? what would your remedy be?

>> what works best with the chinese historically is if you gang up on them. if you get -- if you build a coalition, get everybody in the world, the europeans, the japanese, the koreans, the australians, the canadians all saying the same thing to china, and if you do it at a very high level, all the heads of state, heads of government, all the prime ministers, presidents all talking to xi jinping saying this is a real problem, you've got to fix it, that seems to have an effect because china does not like to be an outlier. >> when has that worked? >> it worked -- it worked in the obama administration on some tax issues where we marshalled the rest of the world, the europeans very effectively. >> yet we still feel like we're on the losing end particularly with intellectual property >> yes the diagnosis is right i think there's widespread agreement here and also in europe that what the chinese have been doing on forced

technology transfer, i.p. theft, discriminatory licensing requirements, that's all true. we ought to do something about it the argument is over what's the best medicine. >> bill, want to thank you for your time today. >> thank you. when we come back, some breaking economic news we will take you live to the cme trading pit. right now, take a look at the u.s. equity futures. it has been quite a morning. we were at one point looking at the dow down by 200 points for the futures. right now dow's in positive territory, up by 15 points s&p futures flat and nasdaq down by 15. i think we should do that meeting tomorrow. well wait. what did you think about her? it's definitely a new idea, but there's no business track record. well, have you seen her work? no. is it good? good? at cognizant, we're helping today's leading banks

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we are just a few seconds away from durable goods data we've been watching the futures this morning after the big decline for the markets today we came in to more red arrows dow futures down by over 200 pointsearlier this morning after closing down by over 700 points yesterday right now you can see things have turned around at least for now. we've still got an hour to go before the opening bell. right now the dow futures are up by about 28 points s&p futures positive as well nasdaq is down, but only by about 18 points. we've also been watching the ten year note. treasuries, yields yesterday under some pressure as more people got into treasuries and left stocks. this morning you can see the yield's picked up a little bit

2.854% back to the normal range we have seen again, a lot of things to be watching today fortunately we have rick santelli standing by he is standing by at the cme in chicago watching what's been happening with treasuries, with bonds, with the markets. all of these things. we're going to get more numbers to add to all of that analysis right now. rick, take it away >> all right durable goods, and i do caution, this is a preliminary feb number because the preliminary numbers have a lot of pieces missing, they can change. 3.1% that's basically what we were expecting on headline durable goods. if we look at the revision, there was just a subtle revision, if you recall, last month wasn't pretty. down 3.6 it now stands at down 3.5. now let's do the xs. this is always enlightening. take out transportation. up 1.2 this is also double the expectations and had a very subtle revision from minus 3 to

minus .2 last month. one of my favorites, capital goods orders, non-defense x aircraft yeah, it's a positive number we've had a couple of negatives the end of last year, beginning of this year this is up 1.8 day it's double down day 1/10 revision the wrong way last month from minus .3 to minus .4. budget passed last night never changes. our politicians have no self-control back to you. >> thanks, rick. steve liesman is here. got a kick out of that comment steve, what do you see >> this number is a terrible number you have the kind of volatility where you're down 3.5, up 3.1, that said, it's probably the most important number that we follow it sounds a little contradictory, but when you think about how the tax cut is going to have an effect on the economy, it's going to come through, this capital investment number that rick said is so

critical so these are early days now and one way we're going to start looking at this is new orders year over year i'm about to get you that number here it had been running quite strongly now some of that is going to be a rebound in mining and in the oil sector spurred by higher oil prices along with loosening up in the regulatory regime i'm going to press a number again and tell you what it is. year over year running pretty good, 7% you can see that down draft we had through 2012, 2016 we had a pop post the recession and then it was very lackluster during the obama years one of thefeatures that appear to be a part of the trump administration is a rebound in investment some of it oil and gas, but some of it perhaps spurred by a rebound of animal spirits. now -- >> and the tax law changes. >> and the tax law changes, right. >> the cap ex would rise. >> remains to see how people

would react. one thing says a change in the tax law is not going to make me break ground on a 20-year project. others will say at the margin there's a lot of stuff that might make sense that, a, you have the lower tax rate but you have the accelerated or elimination of any of the depreciation over time immediate depreciation that could have a powerful effect terrible number. i think this number is the only number i think we should get less data on look at it -- >> terrible from a statistical basis. >> really important from understanding the dynamic of the tax cut. the other thing i would add is listening to companies and what they're saying the cfo council report this morning, the cnbc fed survey what companies say they're doing with this extra tax cut will give us an idea of what's going to happen with the economy. >> to get more on this, joining us, roushir sharma

you make the point i've heard a lot that we're already in a trade war so this is not starting a trade war, right? could it turn into something that actually throws a wrench in the works of a pretty good situation the whole world finds itself in? could this be the beginning of pulling a thread on a sweater or something? >> yeah. as i say that, it's not the hundredth straw that breaks the camel's back, it's the 99 before we are in an era of deglobalization. this has been on since the global financial crisis. and what do i mean by this if you look at global trade as a share of gdp, global capital floors or even people floors, migrant floors, all those have been going down since the global financial crisis this era is very much in place and the steps that the trump people are taking now is very much a part of that. >> ruchir, hold that thought for

a moment we have breaking news here courtney ragan has a report. >> reporter: i've been making calls and a source close to the matter tells me that there is no truth to this idea that target and kroger are looking to merge. a source says that the two companies have been meeting but they've been meeting about the shift partnership. target bought shift for $500 million several months ago and shift continues to serve a number of other retailers, including kroger so, again, a source close to the matter says that there is no truth to the idea that target and kroger could be looking at a merger that meetings have taken place about the shift partnership. >> that would make sense, courtney i want to point out. let's look at the stock charts growing ger -- kroger shares

were up by 7%. we were mulling thinking how would that work and why? you would have anticipated that these two retailers would be looking for ways to get instant access or instant delivery to the home after the whole foods/amazon deal. the shipped part of that really would make sense but, again, both of these stocks were up sharply on that initial report we should watch those stocks very closely courtney, shipped again. describe for people what that is and how it works >> reporter: shipped, it works through an app it is membership based it's typically $99 a year. if you sign up to be a shipped member you can get delivery, same day delivery from a number of retailers so target said that they were buying this company so they're going to own it, but they're going to allow shipped to service the other retailers. target told us they weren't going to share that data,

meaning they weren't going to get that data from other retailers. they were going to allow shipped to more or less cooperate. >> courtney, thank you >> thanks. back to ruchir sorry. that's pretty amazing. by the time we reported on -- who knows, fast company. by the time we reported, the stocks had moved. >> that's why we reported at it. that's why we mentioned it because the stocks were already up and running >> yeah. gives you new meaning to breaking news. >> it's a twitchy market where in retail all of a sudden traders feel like, who knows anything could be plausible essentially. >> would someone at an institution like that hear about -- misinterpret that they're talking about this sort of thing that they're already doing and saying they must be talking about a merger >> the sources, i don't know

>> did say they started out as the talk of a partnership. >> ruchir, can you pick up your train of thought from where you left off >> we are already very much aware of deglobalization this is happening across the world. the countries have been taking much more measures which are harmful for increasing global trade. pretty much in sort of stark contrast to what was going on in the 1980s, 1990s, era of hyper globalization. i think the latest measures announced by the trump administration is very much part of the process it's not the beginning, it's not the end, it is the middle. i think we will keep seeing such measures here is the big risk which is if we're seeing such measures when the times are relatively good. if for some outside reason you end up having bad times, i think that's when you could end up seeing the full scale trade war. like we saw in the 1930s, you see the worst protection

impulses coming out. >> ruchir, sorry for the reportus interruptus coming up, the biggest tech ipo since snap is coming to the desk today. >> drop box is the oldest unicorn. we'll tell you what to expect, why expectations are so high and who is going to be making a lot of money today we'll be right back.

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still to come this morning, data storage company drop box will make its public debut today right here at the nasdaq we will talk to john elton right after the break. ♪

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. cloud storage company dropbox makes its ipo debut today right here at the nasdaq deidre bosa joins us now can you feel it? >> you can feel the excitement the folks are upstairs i think they're excited as well. today the big question has been in the leadup, do investors value dropbox more as a publicly traded company or a private startup. the early indications have been very good. the ipo priced at $21 a share. that is higher than the expected 18 to $20 range. that gives it an initial market cap at 8$8.2 billion that closes the gap from the $10 billion it achieved in the last funding round. that is good news for the people who backed the unicorn in the early days, drew houston has a

25.3% stake. and arah ferdowski has a 10% stake. now, guys, these numbers could change after the stock starts trading. what a week to debut with the markets down sharply while tech is getting hit hard in the selloff, more pure play selloffs are, indeed, fairing better they have well out performed the nasdaq last year the last time that drew houston was on our air, that was a year ago. he said dropbox would go public, quote, when the time was right for us and when the time was right for the markets. they achieved more than $1 billion in annual revenues last year they have been narrowing their losses we will be talking to drew houston shortly after they begin trading on "squawk alley." >> thank you, deidre. let's talk to john elton, partner at graykroft here with us john, if we didn't know what this was about privately, this

would look like a textbook perfect ipo. they know the growth opportunities. is there anything we can take away from the fact that the private market at one point did have higher hopes for this >> yeah. last time i was on i joked that ipos were the new down round i think we're seeing that now. but the reality is is it's a great, enduring company and i think, you know, we're seeing a down round but it's going to trade well i think it will be a company that goes on to accomplish great things >> and i guess i wonder, do we talk more about drop box -- well, first of all, there's a consumer brand not just an enterprise cloud company because it was one of these marquee unicorns or is really the opportunity relative to other public and private players really a big one for dropbox? >> i think the key is the collaboration tools. drew talked about it in his letter, but today it's an amazing product. people beat up on it because

it's in a commoditized space they missed the magic of the product. it's an incredible product it's viral it's something incredibly sticky you see that across the metrics of the company if they can continue to innovate and develop, which they've proved they can do in the past, it has a brilliant founder, two founders own 35% of the company, i think that bodes well for the future. >> my question is how do we know it's a collaboration company there's been a feud between bots and the leadup of dropbox. neither want to be compared to each other dropbox says they have a suite of collaboration tools like paper but we don't know that much about it. >> i think it is a collaboration tool we use it as a collaboration tool it powers all of our storage and we can search on it. search is a huge tool for us we share all of our documents internally on it and it's a huge collaboration tool

the missive about dropbox and box i think is misguided box is much more of an enterprise tool set. dropbox is more of a lowest common denominator enterprise tool with a consumer side. one of the great hacks that they have is you can toggle between your personal and business account, i'll be business, searching for something, i'll realize i'm on my personal account. >> is that risky >> not for me but -- because i lead a boring life i think it's just a great tool everyone loves it. business and consumer. >> you mentioned the kmod tieization charge. is there anything that ultimately down the road any of these bigger competitors couldn't do, whether it's -- i mean, anywhere from sales force to aws to any of the other ones out there or does dropbox become part of one of these bigger companies? >> i thought that when dropbox launched at tech crunch drew was presenting and i saw his product. i'm like, hey, there's a bunch of these products isn't there a

commodity storage? i missed the fact that it's an incredible product, and it's still that today i think that's the difficult thing that all of these people try and copy is that it's a -- yes, it's a thin veneer on top of commodity storage, but that's good for them. their gross margins have doubled over good for them their gross has doubled. that lowers their costs and it is a great product so people, you know, they raise prices and people don't churn. it is a great part of their business as long as they have an incredible product which is what they have. >> all right appreciate it. thank you very much. >> john elton, really? >> i was going spare you you that >> no, bring it. >> are you sick of it? >> no, you can't be sick of it i go through airport security and hear it 15 times >> and then they see you -- because you are not -- are you >> i showed up at the airport in germany one time and actually, i'm sorry, in russia one time, i

was wrestling there when i was a kid. and it was all these guys like ak- ak-47, military, like no joke. scared and the guy is flipping through my papers. i was born in berlin and he was asking me questions and he looks at me like elton john? and all the guys with ak-47s come out,take a picture with m in russia behind the wall in '91. >> he's on the farewell yellow brick road tour. >> anyway, thank you when we return, jim cramer is going to he avthese big glasses on live from the new york stock exchange mercedes-benz glc...

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learn how you can be prepared at pge.com/beprepared. together, we're building a better california. yesterday -- i hate social media, jim, but i do watch it. and someone was saying they were worried that this is another they have no idea what you are doing moment for you do you remember that was that yesterday >> i didn't know what i was doing? >> no, understand the fed didn't know what they were doing with -- you remember that, don't you? >> oh, yeah. that is not fair to the fed. the fed is doing --

>> was that a moment yesterday with tariffs where you said this is insane? >> well, that is -- >> where are you on tariffs? >> what i want to do is be smarter than the chinese we came out like we'll have some tariffs and we'll get to to tell you. the chinese are so ready for us, they immediately had -- they had the california plums, the texas peaches. they had the pistachios. if you're going to be in a trade war with these guys, you have to be better than they are. i mean, come on. these guys were so ready for us. they saw us coming it was like we went -- i mean mr. president, be ready. these guys are more clever than you think. they had the plan. you're not kinging s until you beat them. so i was really as shame that had they were so much more ready than we were >> if they do 60 and we do 3, i

don't know, that seems like a good twrad trade. >> i think they were more ready. they had their list. they were and yll set for us. >> worthy rivals, that is for sure >> we got to get better at our game come on, mr. resident. >> we're fat and happy we'll be right back. thanks energy is changing fast and we're changing with it. building a smarter grid, investing in new technologies, that's aep's road to the future. and the international brotherhood of electrical workers helped make that happen. the ibew's outstanding union professionals have the skills and training to get the job done right. that's good for our customers and for our bottom line.

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welcome back president trump just tweeting, i'm considering a veto of the omnibus spending bill based on the fact that the 800,000 plus daca recipients have been totally abandoned by the democrats, not even mentioned in the bill and the border wall which is desperately needed for our national defense is not fully funded futures were down about where they are right now they had turned negative now they are down 31 okay so down about 15 when this came out. >> this would put us in a position of shutting down the government today if this happens. >> a lot of times he -- >> just throws it out there. >> on twitter just to point out

the daca thing, he loves pointing out -- i mean, that resonates a little bit if there is a deal to be made, i thought the democrats really wanted that deal i don't know anyway, what time is it? >> makes for an interesting friday as we head into the weekend. we'll see where it gets us >> mike, great having you here this week. >> and we'll see you monday. make sure you join us on monday. "squawk on the street" is next good morning i'm scott wapner with jim cramer live from the new york stock exchange carl and david are off today let's look at futures. they have been all over the map today, down a couple hundred points for the dow early on. dow would still open lower by nearly 30 points there is the nasdaq down as well s&p with an implied open down about 2 1/2. over in europe, as the world really reacts to these