business never sleeps this is "squawk box. good morning, everybody. welcome to "squawk box" here on cnbc we are live from the nasdaq market site in times square. i'm becky quick along with andrew ross sorkin joe is out today but sitting in for him we have "shark tank's" kevin o'leary >> great to be here. and joining us, guy adami, cnbc fast money trader guy, welcome >> in from the snowstorm >> i know. april 2nd, first trading day of the month. and, yeah, a snowstorm, right here in new york city. check things out with u.s. equity futures this hour and you might have expected some green arrows given the month we had last month dow futures down 9 points s&p off by 5 points. nasdaq down by about 40 points right now. as we start this new month, the

dour dow is barely out of correction territory. s&p down 1.2%. the dow was up 2.4% last week. nasdaq up by 1%. you can see overnight in asia, the nikkei down by .30 and shanghai, a little weakness there, too, down by less than 0.2% in europe, most of the major markets are closed for easter monday no easter monday here. things are open and trading. treasury yields over the last week, you can see, ten-year still yields at 2.784% we'll keep an eye on that. >> china striking back on tariffs. they increased their tariffs on 128 products the products include wine, frozen pork and fruits and nuts. an editorial in new york global times even though u.s. and china

have not said they're in a trade war, sparks have started to fly. we'll get a live report from beijing at 7:00 a.m. eastern time >> you could say some of this is a little tempered. not massive yet. but they are targeting areas, rural area, a lot of them supported by -- >> but this -- people think that is a a trade war is like missiles going at each other in an economic way. this is little skirmishes. >> it's nothingness. >> this is a nothing burger? >> i heard about this going into back practice. relating again to cash flows i called to europe to see if the bonds have blown out, that's the first place you see trouble. nothing. everybody anticipated this the market isn't even off this morning and it's very thin trading. if you saw dynamic that showed you volatility as a result of this, you should care. nobody cares

>> the volatility started in the beginning of february. late january, beginning of february, before anybody could spell tariff including me, i don't know if it's two "f"s or two "r"s tariffs ticker noise, back on nothing burger, by the way, if your band is lousy, has it been negative cash flow >> just all it the roi >> i think the fed is in play here the fact that you saw wage growth a ma onth and a half ago that spooked the market. >> is there any way to change your mind about the tariff situation? >> but the market, it's a difference in administration trying to change big things. like automotive tariffs. we saw that work >> obviously, some saying you need a different tactic. >> i'd be more concerned about the fed moving rates more than anything

it feels to me we're going to have a terrific earnings season. this idea that we're going three more, the economy isn't that on fire wage inflation really isn't here yet. things are way better than people think >> it's a goldilocks >> yeah, i'm bullish >> guy >> there's one word out there, live war is a big deal we're talking about what we haven't seen in eight or nine years. live war is -- i am not an economist, steve liesman might know >> is it about repatriation? >> i'm not sure. you want to talk about potential canaries in the coal mine, the biggest one, deutsche bank, last week it had a 52-week low. the fact that it is over there in europe, we don't talk about it but we have to talk about it you're getting ramblings right

now. live war should be a concern >> why is it -- >> if you're getting enhanced libor, it's because there's a demand in the economy. >> $3 trillion debt paid to libor. >> i agree but also has to do with enhanced profitivity. >> i hear you. i try not to be dogmatic, and i think we are all you can tend to make things looking bullish, if you're bullish or bearish i would take it other side, but that's what makes markets. >> in the meantime, another story. yes. another data breach to tell you about, this time, stores owned by hudson bay, saks fifth avenue, and stores off fifth, may be compromised

i say may. it has taken steps to contain the breach it says but hasn't released details about the dates or location involved one cyber security firm said it has evidence that millions of cards may be compromised we're going to have to keep our eyes on that >> another data leak over the weekend. under armor saying 150 million people who use the my fitness app, that has been breached. this is personal information information. >> i'm a loser >> you're a loser? >> yeah. i got to count calories. it's always a struggle you got to be honest with it you can't lie to it. >> the database is better on my fitness. >> i was going to say to you about data breaches. you know, every day they're reported >> yeah. >> but you never understand exactly what's inside. what's the intensity of one versus the other on the other hand, i've never

heard, hi, i got wiped out. i don't own a home anymore, my children lost money in their accounts that's why there's no cause and effect you get the breach, we don't know what happens? >> we never know what happens. >> what do you think that really matters? who cares what you weigh >> all of my yogurt consumption? >> yeah, that's what i mean. >> i think it's that easy. i think the embedded cost in all of this is in the credit card fees and the financial system. so -- like a -- >> i actually think it's hidden profit the reason i own mastercard and visa they're charging more for the perceptionthis is real cost margins get enhanced >> by the way, i don't think it's the network who is the beneficiary. i think effectively, the issuer is the one who gets killed >> very self-insuring.

that's basically what's happening. >> the reason why nobody cares if you're chase or bank of america, you're paying for this. >> one thing i will say, be careful if you're using your debit card this is another reason to use your credit card instead of your debit card >> that's a good point or put a limit on your card. i like a limit on a card >> i look my debit card and divorced from my savings account. >> by the way, the small thin -- take a chase, for example, i had a charity thatness whatted to use their system to collect credit cards, they were so poor in service, that stripe wiped them out chase is weak in a lot of service area >> you know who could be cleaning up, the cyber security names. symantec should be doing better, firewall, and the cadillac in space should be doing better that surprises me that these stocks aren't up to the races

commensurate to what we've been talking about in the last five minutes they should be we're going to discuss all of this and much more this morning, in the meantime, president trump is set to meet with his new economic adviser larry kudlow this afternoon. aim mon jave eamon javers joins us >> the new national economic council director who has not been necessarily a fan of the president's tariffs comes into office now at the time in which the president is talking about tariffs. and as you guys were just discussing a little trade skirmish brewing between the united states andchina the president tweeting yesterday about mexico here's what the president said yesterday. mexico is doing very little if not nothing of stopping people flowing into mexico through their southern border and into the u.s. they laugh at our dumb immigration laws they must stop the big drug and people flows or i will stop

their cash cow that thanafta. need wall. those negotiations with canada ongoing. and the chinese announcing retaliatory tariffs on the united states. here's what we know about those tariffs. meat, food, and other products they're in retaliation for the president's steel and aluminum tariffs. and they're going to hit 128 u.s. products. the question is now, does the united states take further action on china or is that where this ends and the dust settles a lot of questions here. fascinating to be a fly on the wall for that oval office meeting at 2:00 with larry kudlow with all of this trade war brewing. >> can we talk amazon? and all of machinations on twitter this weekend >> yeah, the amazon thing is fascinating, right because the president has long been skeptical of amazon, particularly skeptical of jeff

bezos who owns "the washington post" personally but amazon does not own the. the president sees "the washington post" as a political tool that jeff bezos can use and the president is using twitter as a political tool against amazon sort of in retaliation the question is, is there anything real there, i think i don't know what you guys made of it. >> what do you think the answer to that is >> boy, i'll tell you, the president likes to vent, right there's a lot of venting that goes along with this presidency. sometimes, there's no substance behind it, sometimes, there is and i don't have a good read on whether or not they're going to take any particular action about amazon working that through the bureaucracy would be tricky. they have to come up with a way to hit amazon that doesn't look like amazon is being signaled out. and in washington, particularly with what's going on with

facebook right now, i think there's a lot of sentiment in washington across party lines. >> first, he went after the post office issue in terms of the packages he's gone after the taxes issue. and he's now gone after what he calls the lobbying issue which he believes "the washington post" is the equivalent of being a lobbyist and saying they should register. >> right that won't wash. >> but take that off the table for now. in terms of the post office issue, i would imagine -- >> he's wrong on both counts? >> no, he's wrong, i think, on all counts but in the post office issue, could he get to the bottom of that is that something that we could actually learn whether it's profitable or not? >> sure. >> the post office says they're not losing money, but we don't know >> yeah, look. the postal service can provide you data on that, that data i think should be public, right? i haven't looked into that myself >> there's not a detailed accounting on amazon specific. >> well, i mean in theory, now

government bureaucracies do things that are not always theoretically smart. but in theory, the post office wouldn't be doing those deals with amazon if they weren't making money on each one, what's the point otherwise? >> let me pose a question a different way. i'd love all of you to sound off on this. do you think at this point bezos regrets having purchased "the washington post" think about the trouble this gets him in for nothing. he has to be on the editorial staff. he does not control their left wing bias against the president. he clearly doesn't but look at what a pain in the you know what this is for him just to have a newspaper >> on the other hand, he's taken a paper that was in trouble financially and has helped turn it around. >> but the reason, he's getting this focus is because of the bob snow from the president of the "washington post." why is that good for shares of amazon >> the family warned him

specifically, don graham warned bezos, as he was recruiting bezos to take over the newspaper that this will be a lightning rod at some point. and you're going to have some financial pain here as a result of this. it's like -- >> it's a football team, not a newspaper. >> the value of independent journalism was worth protecting and pay something cost for that. >> i'm going to take the gamble that he's happy about it >> oh, i don't think so. >> "the washington post" is doing incredible journalism right now. they're hitting on all cylinders. >> if he spends more than 10% of this day on "the washington post," that's not worth it for shareholders >> why not let me ask you a question, when you say it's not worth it for shareholders what pain have shareholders suffered to date from bezos personally opening "the washington post"? remember, amazon doesn't own it. >> many of the allegations are not factual. so, does amazon pay tax? yes, they do does it have notifying do with

the post office profits? that's ridiculous to tie the two together yet, here they are, tying it together, i'm basically saying the president doesn't like what "the washington post" ask saying about it >> that's exactly right. i haven't looked at it recently -- >> thursday, the shares took a hit after those tweets >> that's not good i don't like my shares taking a hit because somebody owns a newspaper. i don't like it. >> but the market is the ultimate arbiter they're going to report amazon april 20th or thereabouts, i don't have the date in front of me, i will tell you they will report a ridiculous quarter because they can last quarter, margins were 2.5%. they could tweak again the ultimate judge would be the quarter -- you just said tell at the top of the show, earnings are great across the board >> we're getting pe impression if you were running for office you wouldn't be sitting in that chair anymore.

why? because there's too much risk for the network to be with a politician >> return you running for like prime minister at canada >> he knows what he's talking about. >> that's why i speak with experience listen, i wanted to try to run for prime minister i lost in quebec because i don't speak french. >> hold on hold on. i have one last question you own lots of businesses. >> yes >> lots of different businesses. i imagine that certain investments you have might have the potential for a conflict with other investments that you have right? it's possible. it's possible. >> yes, but not in the same -- >> i'm not asking -- >> like a lightning rod. >> jeff is out there, he's got "the washington post." he also is trying to put -- you know, in space he's doing all of these other things the question is, do you think, as a public company ceo, right, that you should only be attached to one business? because that --

>> you should be myopically focused. they get on you. i bet you if you're sitting around the board at amazon, if i was on that board, i'd say, jeff, let's not buy that newspaper. let's stay out of that whole fray let's get you focused myopically on building the amazon business which you took billions of shareholders' wealth to create i'm not saying he's not a great ceo. i just said i bet he regrets having purchased that. >> let's get him on. >> i would take the other side of that. >> by the way, eamon looks great. did you see that beard >> you're rocking it >> i was on vacation i didn't have time to shave off the beard. >> leave it. >> are we talking like a ben affleck back --

>> i'm not telling people make a lot of bad mistakes on spring break. this is the least of what you're seeing here. and jobs in america. joining to us talk strategy on that former labor secretary understand president obama and senior fellow, chris lou also american enterprise director michael strain. good morning to both of you. did you just say that you felt the market was just -- that the economy was not as good as people thought >> no i think it's better than people thought i use the gauge of my small and mid-cap companies running in these states i see the quarterly data, we are on fire. from cupcakes to tech to weddings to all of that stuff i do on "shark tank," dozens of companies just humming that's better data than what i

see from the markets >> chris and michael, do you agree with mr. wonderful >> yeah. yeah i think the economy is strong. and i think we're going to see another good jobs numbers this friday i don't think it's going to be this 313,000 we saw last month but i think it will be a very positive number. i'll continue to be looking at wage growth, which we saw a tick-up in january it didn't quite materialize last month. and obviously, retail sales would be interesting given what consumer spending has been yes, the economy is strong right now. >> michael >> yeah, i agree with all of it. i think a big mystery is what happens with wages will look more like january and february i also think the question will be will the labor force anticipation rate continue to increase we know the economy has grown above official we know for sure there's a massive amount of stimulus coming down the pike in both tax cuts and spending. the question is how long can we

sustain above potential growth how long can we continue to add more than 200,000 jobs every month. so, we actually see wage growth pick up. and when we see some of these folks out of the labor market come back in and we've seen signs of both, you know, a little bit over the last two months and we'll see if we see it again. >> michael, what's your growth rate at the end of the year, this year, gdp >> i think something, you know, reasonably close to 3. 2.7, 2.8, something like that. >> but not over? >> i'd be surprised if it were over >> chris, i have a question. what is a yield, outside of 50 basis points, probably the tightest we've seen some quite some time. is the fed going to hike us -- i happen to think it's happening -- are they going to hike us into this recession that nobody seems to want to talk about? >> look, i'm looking at wages growth i realize what is sometimes good

for workers is not good for the markets as we saw with the january numbers. but i'm looking at the 2.6% wage growth that we had last month. again, that's a good number. it's not a great number, if you look at where americans have been over the last 10 or 20 years. so, i'd like to see that number continue to go up. and i still think there's room to grow before the fed starts hiking interest rates more you're right, we have way too much people on the sidelines right now, labor force has been trending within 62%, 63% over the last couple of years i'd really like to see that go higher before interest rates go up >> mr. wonderful, have you actually increased the wages of your people? >> i have, actually. i have because we have -- >> what happened >> what happened for a lot of our companies, some actually moved from california to florida before the tax change occurred because they were trying to get out of the owner's cost to do

business in california now for the profitable ones we have to be competing for programmers, logistics people, accounting people, and we have increased wages because we have to not because we're really nice people we have to so, that tells me the economy is doing very well. i don't think the 2.6 number is going to scare the fed into an additional wage hike it tells me globalization is still working. >> you're talking programmers, i want to know how far down the chain. >> no, i'm talk accounting, logistics people, salespeople. all of that. i have all of those. i look at data every quarter and say what has changed and all of those costs are creeping up. social media directors you used to be able to hire out of college for $40,000. that cost is $70,000 now because people are competing for those jobs. >> i read a story last week where it's finally back to take this job and shove it. >> i have a young woman working

for me in social media she's very proud of her tattoos. she's got all kinds of stuff hanging out of her hooks and all of that. i think it's terrific. i love that counterculture stuff. she's working with guys with suits on, she's so good at what she does that corporations are competing for her. i have to pay her more i'm cool with that i just want great work >> we are going to thank michael and chris. retail needs health care walmart reportedly potentially looking to either buy humana or either team up with them amazon has been stepping up its operations in the health sector as well. we're going to talk about possible deals, next people don't invest in stocks and bonds.

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huma humana michael baker from raymond james. michael, you hear the talk about preliminary talks wh s what do think is really behind it? >> yeah. i think what's behind it, if you've seen the recent reactions to transformational deals it's largely been negative. the only stock that's up kind of predeal is aetna and you have obviously cvs cigna stock is under a lot of pressure i think that's why you want to float a trial balloon. and as we have spoken to our retail analysts, health care remains complex. >> health carol remains complex. this is your way of saying this is very early on and not something that is about to get completed? maybe there's another talks about this about partnering up or something else, too >> yeah. i didn't realize until i had spoken with our retail analysts just how many hurdles there might be on the walmart side

you know, my sense of it is there are a number of things that they kind of have to work through. but the bottom line reason for doing a deal like this is the rise in consumers in health care given the fact that the cost has gone up through the high-deductible plans. >> you think overall it makes sense? what are some of these barriers that you're talking about? >> well, in terms of the barriers, you have the walton ownership that has to be dealt with you have the current debt level. you have this is an area that has played a role for walmart in health care but obviously will get a lot more focused when you pay 50 some billion on it. so, i think those are some of the, you know, elements to it. but i think there's some opportunity with this deal i think the longer term question in health care is how much of it will be a touch business, which in my opinion will always be and that means you need a fiscal presence versus how much can be done

through telemedicine or online i think the key for walmart will be to access the home health element here and humana's focused in on senior citizens. >> you do think this does make strategic sense because of what you just mentioned, the touch factor and then the focus on senior citizens those are people who shop at walmart, that's your point >> yeah, so, my point is, obviously, i have a lot of health care needs. and if you can meet them at the home, you can even broaden the definition of historically which has been thought of as health care and do more wealthness. in other words, food see how they're living those elements, so you can broaden what's beendelivered, or in essence, capture that customer in a much broader dynamic and fashion. >> michael, the journal wrote an article talking about the hospital concerned about this deal i'm not asking you to play stock market in this, but are they accurate in that assessment? >> yeah, i think what's

interesting to watch here, there's been a lot of talk about amazon but we already see health care changing. one of the leaders, quite frankly, united health, united has come out for cost alternatives for consumers and those are urgent care centers and surgical care centers. obviously the volume going through hospitals has been pulled away? >> michael can this be done without walmart having to own humana, the benefits being locked to one company as opposed to two that are part of a joint venture which really if you read a lot of reports and sources i talked to, hints around the edges, that's at least how this started? >> yeah. i mean, i think that's kind of the bigger question. i think when you're kind of on the cusp of transormation control is a better -- 100% control say better way to go about it because you can effect change much quicker. but clearly, it takes a vision

>> why wouldn't it be the stor efficiency you get control of this thing, you digitize it, and you focus on streamlining it, the potential of digital m aal medil centers have been out there for years if the potential to do that here? isn't that what the story is all about? >> well, i think it's story obviously, the difference with walmart, they have a physical presence so, there's a segment of the population that's going to need that higher level of touch so, digital will come telemedicine is around obviously, walmart plays on that side as well but i think it's unique element that this particular deal will bring is that. and the other thing that consumers that will play are, you know, tools, ways to assess cost and quality and that's not very present right now in today's world, yet

something folks will demand, as the cost shift continues from employee to employee so, there is the opportunity to take this platform and broaden it >> michael, when you look around broadly, in the health care arena, we hear all of this talk about disruption, all of these different forces that are trying to, if not bring down health care costs, at least arrest their continual rise is there anybody in the industry that you think is in a good position or is this a game of musical chairs where eventually, you're going have fewer and fewer seats, fewer and fewer dollars and the only answer is consolati consolaticonsol consolidati consolidation? >> yeah, the one leading it is united health. all of the focus is on amazon. there's a couple of different elements that they're bringing to bear as i indicated there are health insurers getting involved on the broader side so that shows you there

will be a touch elements although what's needs are cost alternatives to what we see today, those are the urgent care centers and surgical and one aspect which doesn't get talked about allot is how to manage data. so how you get that data pool, what can be done with it and leverage it as well. >> as long as you don't do what facebook is doing, right >> no, i hear you. obviously, there's ethical elements to it but the beauty of health care is you don't know the costs up front or the quality and that's kind of surprising given that most other services you're able to shop before you buy. >> michael, thank you for your time today >> thank you, becky. okay, coming up, when we return, believe it or not, earnings season right around the corner again it's time to get your portfolio again, we're going to talk to the head of the stock next take a look at the s&p's winners

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♪ welcome back you're watching "squawk box" live from the nasdaq market site in times square. good morning those are some cases joe's not here, though, we have other cases today. taking a look at u.s. equity

futures on this monday it's a snowy one, if you can believe that, it's also a semi green and red one. dow up 3 points, nasdaq up about 33 points. s&p 500 up about 4 points. and analysts might be alarmed at rising interest rates but the recent outfit said the new rates are nothing to fear. joining us co-founder and ceo of earning scout. nick, you've been running through the numbers. and you think this is really a story that has been underreported, the strong earnings growth we've seen so far, correct >> yes, absolutely the growth right now, this late in the cycle is pretty phenomenal so, as you said, the early report is, we're looking at companies that are reporting the federal quarterly end. cosco, fedex, nike, walgreens. reportedly 33% growth and top line 9% growth the earnings season, great

barometer for overall earnings season is going to shape up once it starts to peak. >> the tax act we should look at as qe4 >> it talks about near term recession, you don't get a recession with having this type of stimulus being added to company's balance sheets the tax savings in the hundreds of billions of dollars to companies. we're likingen to qe4, if you like, to this type of stimulus one of the other fallacies that companies are using the tax for buybacks we're not seeing that. buying back shares, yeah, but paying bonuses, paying down debt and we tracked 40% of companies in the s&p that said that going to raise capital expenditures this year on top of what they're going to do and attributing to the tax cuts

that's why we see a 12% revenue gains and that's really good for business we really think the street is underestimating how beneficial that is going to be. >> let's bring that back around the table. kevin, you told us this morning, that's what you're seeing in your small businesses as well. does that answer translate into that >> no i think it's fair. guy brought up people focusing on the trade war the political issues the unusual nature of this administration in terms of how they react to markets. we're seeing peak impression cash flows are phenomenal. partly because the tax reform is kicking in but i don't think that real benefit comes to q4/q1 next year. they don't know how to implement it because they haven't received the tax code yet so at the end of the day there's a lot of upside ahead but the market could go flat for

months because of all of the other concerns there's very high pe stocks maintaining indiceindices, like fang stocks, people questioning more they should trade a tesla or netflix and i get all of that but leave all of that out and look at the core mid-american company and what's happening there they are doing exceptionally well in a way i've never seen, despite the cycle. so i'm extremely bullish about the russia 2,000, for example. and the markets are flat again they didn't even care about the china pork war whatever you want to call it >> and you if do that at 5:00, melissa looks at me and shoots dangers. if nick is here, i've got a question i agree, why is the back end of the curve so stubbornly slow why aren't we seeing a commensurate move on the back

end like the front jeend? >> one of the fears we were worried about the ten-year rising above 3%. we actually want to see interest rates rise gradually because it means a better economy i believe what you're seeing on the ten-year yoields come down, this is as good as it gets on the earnings front first quarter earning about 15%. we're going to peak in the third quarter, 25% to 30% earnings growth for the s&p 500 this late in the cycle to see that type of growth is phenomenal >> nick, i want to thank you for your time today. >> thank you for having me coming up, when come back, we're going to talk about new tariffs on the united states david ignatius

>> and joining us fred davis at 8:30 eastern time. and much later, facebook privacy prices with franklin foeer from "the atlantic. stay tedun you're watching "squawk box" on cnbc a trillion dollars in assets under care by focusing our mind on whatever's on yours.

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welcome back to "squawk box" this morning time for "the executive edge." the island nation of bahrain has now discovered its largest oil field since the company began oil operations a century ago saying the new field was said to dwarf off the west coast of the island steven spielberg's latest adventure coming out on top of the weekend box office "ready player one" took in more than $41 million in its debut that film is based on a 2011 novel about a high-stakes contest in a digital universe in the future in second place this weekend, tyler perry's "acrimony. brought in $17 million a woman who seeks revenge after

she finds out her husband has been often favor and marvel's "black panther" holding on to the third stop bringing in $650 million just needs 1.3 million to pass "jurassic world. when we come back, former new orleans saint marques colston is going to join us. and a quick check of what's happening in the european markets right now. when this bell rings... ...it starts a chain reaction... ...that's heard throughout the connected business world. at&t network security helps protect business, from the largest financial markets to the smallest transactions,

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welcome back to "squawk b " box. feels just like the super bowl end bed but football is back already. nfl draft just a few weeks away, but while that event is always the beginning of many successful careers, our next guest is going to tell us about the growing list of opportunities for players once they've run their last route joining us right now is super bowl winning former wide receiver with the new orleans saints, marques colston. the founder of dynasty sports group. good morning to you. >> good morning, guys. >> thanks for joining us you're working on an interesting project, which is to effectively help athletes after their career find out their way back into business i wanted to understand your own

route in terms of what you did when you left the game >> sure. so i was actually fortunate enough to have some advisers early in my career that kind of showed me how to transition out of football. they were former players themselves and transition into the financialservices world. so that kind of laid the blueprint for me to really start working on life after as i was still playing. so about my fourth or fifth year i really started to look at opportunities off the field, and, you know, as i'm -- as i'm retired now, i've been retired for two years, it's been an opportunity to really build a platform to help players that are actually active as well as retired transition into the investment world through this program. >> marques, i assume the second you joined the league you had people coming at you every day one way or the other trying to get you to invest in some business, whether it was family or friends orphans coming up to

you throughout is that how this works >> yeah. i mean, it's -- it's kind of a double edged sword especially in the social media area. you have direct access to fans and really anyone in the world for as good as it is to build a brand and connect with people individually, it makes it difficult because like you said, you do get opportunities thrust in your face at all times from all angles. >> so i want to ask you about social media and football players. just an observation you can help me with here i look at a typical nfl team, maybe one or two guys have a big following on social, maybe three. look at an nba team, six, seven, eight, nine. does it have to to with the fact that you're wearing a helmet and they never get to know you this is a big problem if you're an individual player how do you deal with it? >> that's definitely part of it. if you look at the nba, it's truly one of the most global games of our big four sports

here in the states but i think as a football player it's -- it's obviously the easiest angle and the easiest platform to build your following is in your sport there's an opportunity to build your following around what you're passionate off the field as well and i think that following is -- will follow you after you're done with the sport as well. >> marques, real quick it's guy should the league do a better job of financial literacy? is roger goodell dropping the ball on this >> no, i think the league and the players association does a good job of providing resources. really, i saw an opportunity to provide an additional resource nothing competitive what we're doing. they do a really good job of, you know, financial literacy and providing opportunities for guys and -- in our league to understand what's going on in our world and the one gap that i did see was in the private

investing space. i just wanted to help develop this program as something complementary to what's already offered by the nfl and the players association. >> marques, cliche question. what was the biggest financial mistake you made while you were a player >> it's interesting. the biggest financial mistake but it was the best learning experience i had it was a professional indoor football team in my hometown i ran it, owned it, operated it for three years and lost a good amount of money but, you know, through that experience i was able to learn a ton of different skill sets so financial loss, education gain. >> okay. we'll take that to the bank. marques, great to see you. thank you for joining us this morning. >> i appreciate you having us. >> guy, thank you for being here. >> thanks for having me. it takes two of us to fill joe's seat that goes to show the genius of joe. i know he's watching.

>> you've done it quickly. tesla, somebody upgrading it to hold figuring that after all that's happened there's a good chance that management -- >> the tesla bulls will remain tesla bulls regardless the concern now is a credit concern. are they going to have cash flow issues if you're trading it in my world, it's got to close above 280. that was the high in 2014, 2015. that's what we need to cloe above. >> thank you very much, guy. always good to see you. >> when we come back, we're going to talk strategy the first trading day of april you'll see some modest declines. dow is down by 7 points, s&p by 4 and nasdaq by 37 >> spotify's early days, fred davis, he helped them secure worldwide labels we'll be rightac bk.

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new quarter, new plan. what investors need to know on the first trading day of april. firing back. china's slapping a new round of tariffs on the u.s we are live in beijing with the details. plus, retail meets health care walmart reportedly receiving a bit for humana details just minutes away as the second hour of "squawk box" continues right now. live from the beating heart of business, new york. this is "squawk box. good morning are they playing "doctor, doctor" for the whole walmart?

doctor doctor will be a walmart now. welcome to "squawk box" right here on cnbc andrew ross sorkin along with becky quick. in studio, mr. wonderful making the snowy, cold day more wonderful. kevin o'leary, co-host of "shark tank." what was a three day weekend, happy easter, passover, everything else. dow down 20 points, s&p 500 looking to open 6 points off several cyber attacks in the news hudson bay's the parent of lord and tailor and saks says credit card data was compromised in a security breech. under armour, my fitness pal app, including me, had their data compromised in that case they got your password and your user names if you use it on every other site like most people do, you've

got a problem. the ceo of atlanta working on its systems hit by hacking ten days ago institute of supply management's march manufacturing index. the government will be issuing february construction spending figures and then we should tell you a little hollywood news. steven spielberg's movie "ready player one" topping the box office took in $41 million in north american ticket sales. marvell's "black panther" continues to perform well. crossed the $650 million mark moving into the number five slot on the all-time list and then if that's not enough for you waking up, china hitting the united states with import tariffs on more than 100 products today our very own eunice yoon is live in beijing what's the damage at this point? >> reporter: so far it's looking like it's going to be pretty bad.

china is making good on its pledge to retaliate against president trump's tariffs on steel and aluminum now this was announced by the chinese finance ministry over the weekend who said that the previously announced tariffs about a week ago were going to be implemented as of today now these tariffs are going to target american meat as well as fruit, nuts, wine and steel and aluminum products. they're also going to affect about $3 billion of goods. the commerce ministry said it was met to balance the loss from u.s. action. they suggested this wasn't meant to escalate the situation but at the same time this is what the commerce ministry said we hope that the yunited states will withdraw the measures that violate the rules of the wto so that the trade of related products between china and the united states will return to the normal track the tariffs impacted pork stocks in greater china, especially wh group. this is the company that owns

u.s. smithfield foods, which has operations in virginia and north carolina that stock dropped to 8% those other companies are local producers that sell in china well, smithfield is seen as suffering because its products have become more and more popular among the chinese. j.d..com distributes for smithfield here. they said u.s. pork, fruits such as sunkist oranges and cherries and wine are some of the best sellers they sell in china the commerce ministry said that despite the concerns that consumers might have here, that the public does support these tariffs. and that's because like the united states, china opened up a period of commentary for citizens as well as companies to weigh in with their thoughts and the government says that the public here supports the

decision, praised the government for protecting china's national interests and also supports even tougher action if it's so necessary. >> eunice, thank you very much again, our eunice yoon kevin, you made the point earlier, the market's not reacting to this at all. >> no. highly anticipated this is a negotiating tactic by the administration that's very eclectic and unusual in many ways people are getting used to it. investors are asking themselves in what way would this affect earnings of large cap and domestic it's a rounding error. it's a trillion dollar economic global trade everybody assumes we're in the beginning stages of a wilbur ross, kudlow, whatever you want to call it sausage is being made, it's ugly, but the outcome is going to be one where there's a better balance between automotive tariffs. it is an absolute nothing burger. >> larry kudlow's first day on the job in the white house is

today. >> i gave him well wishes saying, larry, it's all on you now, baby. you're the guy. >> you're the voice of free trade. >> of reason >> in the meantime, "the wall street journal" reporting that walmart is in early talks to buy humana >> good morning, andrew. it's the latest in this consolidation nation that is health care. walmart and humana already have a co-branded medicare drug plan. they're talking about a potential merger but more likely a deeper partnership for walmart it would be a way to boost its pharmacies and provide more health services to its customers base which tends to be older seniors. for humana it could help boost its offerings in a shifting landscape where cigna is buying pharmacy benefits from express scripts while cvs's $69 billion acquisition of aetna aims to bring together medical and pharmacy benefits and combine

that with primary care in a pharmacy setting and the chain's in store clinics with a merger walmart and humana will have a lot of catching up to do to catch up with cvs and aetna. most of walmart's 4700 stores do have pharmacies. the retailer only has 19 clinics of its own in three states humana has 227 states. that pales with cvs's 1100 clinics across the country they have 10,000 stores as well. while they have about the same membership, cvs' pharmacy benefits dwarf the pbm the market cap tops $37 billion. not to mention the learning curve for walmart when it comes to the complex health care regulation, which is only getting more complex. >> the idea that there could be a partnership instead of an outright purchase. could it work the same way you could get a lot of benefits? >> you could get the benefits cheaper because walmart's health

and wellness revenues, 11% of its total net revenues once you buy humana you're going to skew a lot more towards health and wellness. at that price it might be tough but it would be a good combination to try to really bring those kind of in store, you know, hands-on touch services for seniors and particularly in underserved rural areas where walmart has a strong hold. >> i get the control story you want to control the business i understand that. is there lost business is there lost business that humana would lose as a function of being part of walmart >> perhaps perhaps. but, you know, on top of it they might also be able to leverage their relationship when it comes to the employer plan side of walmart. >> right. >> everyone's talking about amazon potentially entering health care. amazon is entering it right now as an employer with this ven tutu that it's trying to start up

walmart is the largest employer in the u.s. with 1.5 million workers here in this country alone. if they form some sort of exclusive partnership, that could help leverage humana's group and commercial side which right now is only about 1/4 of its revenues. >> who does the walmart employees right now? >> not sure, but they get services from a number of different -- walmart is self-insured so they connect -- they do a lot of contracting on their own with hospitals, for example, for centers of excellence rather than going through their insurers for that. >> if you don't control it, you can't get the whacking stick out, you can't get the synergies. that's why the partnerships never work you have to control it, cut, bring in technology to be more efficient. control is the only answer that's it. you have a million plus employees. imagine the whacking stick you can go through that. there must be 10% fat in there for sure that would be interesting. that's interesting. >> you would need to scale up a lot in terms of the pharmacy benefits. >> yeah. yeah

>> right now humana's is very small. while you're trying to execute on that there are a lot of execution risks because this hasn't really been tried before. to do it at that large of a scale is going to take time. >> anything that large is fat, fat, fat and there's a huge opportunity >> not a lot of fat at walmart though. >> that's my point if you take that philosophy and apply it to big fat and sassy million plus base, that's a lawnmower in there you have a chain saw running through the policies chopping them up. >> such an image. >> once again, we've got potentially let's say three big deals that are very transformative, although they're vertical integration deals, regulators are going to look at what this is going to mean for the entire landscape i would imagine that doctors are concerned about this because if you have more primary care in store that's going to mean less business for doctors not to mention hospitals which are already under pressure. >> my image in vertical probably

depends what happens in at&t and time warner. different industry. >> different industries but one analyst i was talking to was saying within that merger you've got a real specific issue with regard to cnn because there really isn't anything that's exactly -- >> but how the court rules on vertical mergers could impact not just only -- >> at&t is going to win that one. don't worry. >> they have the law on their side we'll see what happens >> it wouldn't be the america we know if they lost. >> lots of news for the markets to digest. plus, guess what, it's jobs week on friday we'll get the jobs number joining us is brett ryan he is dooueutsch bank's senior management and michelle williams let's talk about all of the volatility we've seen. this is new to investors maybe into the new if you've been around a long time. it's new if you've been watching

the last several years what does it mean? >> volatility is back. we've gotten complacent that we've had no volatility in the markets. everyone woke up i think ultimately it's a great reminder for investors to remember the long game, right? keep the eyes on the prize ultimately we feel markets can go higher. >> that's what you're watching >> yes. >> that's been the message we've heard again and again. >> except for the modification, if you don't like vol don't own high pe stocks i think the fangs are 10% of the s&p. >> it's crazy. >> 14 on their way to 10. >> that's true >> going into the back end of the year maybe you de-fang and you say give me cash flow, give me return of dividends, give me stability through a 16, 18 pe. >> plus you like small caps, too. >> i love the tax effect on small cap. >> michelle, how do you feel about some of those names? >> i think you're for getting about foreign markets, right you have international trading

at 5, emerging trading at 12 t 13 i think the buy's over seas. >> that's a good point if you like pe at a lower price, you're right the numbers out of china last week were phenomenal like that place is humming >> you look at the european economic numbers though and they have not been what people had been anticipating. josh, you look at the u.s. and the u.s. compared to some other places what's the economy here versus economic numbers other places outside of china. >> to kevin's point in china, china is picking up the manufacturing. part of that being they're trying to ship as many goods to the u.s. ahead of tariffs. you see a spike in imports recently there's a spike in q4. china shipped the most aluminum on record by far in january. that's throwing off our growth numbers a bit because that counts against growth. in terms of europe, yeah, growth has been good. it has been good, but what's

happening and this is globally as well, you've reached kind of the peak in pmis, in the manufacturing pmis for a lot of these. manufacturing ism is likely going to peak this month they don't stay at the post recession highs for more than a quarter or two so these things, they should moderate at this point and that's fine as long as they stay firmly within growth territory of 55, 56 manufacturing ism is just fine for the economy overall. it's just that maybe there's been a lot built in at this point. >> josh, michelle, want to thank you both for joining us this morning. good to see you. coming up when we return, the saudi crown prince is headed to silicon valley to meet with tech executives. we'll speak to david ignatius after the break. later, helped spotify obtain the rights his thoughts on the streaming business and spotify's ipo stay tuned, you're watching

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welcome back, everyone saudi arabia's crown prince continuing his cross-country tour of the united states. mbs is now on the west coast he's meeting with technology executives and hollywood a-listers there as he sells the kingdom's economic vision. joining us to talk about this and much more is david ig nation shus he is foreign affairs columnist at the washington post his late zest "trump and kim jong-un have a lot in common is that a good thing?" >> let's talk about mbs. watching what he's been doing, coming to the united states, trying to put a new face on what's happening with the kingdom, you've been there to saudi arabia what do you think about the changes that are actually taking place there? >> was zblus riyadh in late february talking at length with

mbs. we spent nearly three hours talking, and he seems to me to be gaining confidence in his ability to make fundamental changes in the saudi economy and the political system he has really consolidated power in a way that saudi arabia traditionally is slow moving, consensual royal family hasn't seen in modern times he is the executive. he's the decider he has people in saudi arabia scared of him after jailing more than 200 people at the ritz carlton famously last november in the u.s. he's on a road show to try to convince as much of the american business and political elite that he can that the reforms are real and that they offer investment in business possibilities saudi arabia is moving forward very quickly to try to provide

more entertainment saudi arabia traditionally was a place where there was nothing to do, just kind of sat around, people -- not much entertainment. that's changing. mbs wants to bring in some of the biggest american companies to help with that. he made a $400 million investment several weeks ago in wme agency and business as a way to try to bring in expertise to try to create the venues, the infrastructure for a new kind of entertainment industry in the kingdom. talking with one of the saudi ministe ministers. talking about different markets for women's athletic apparel, ancillary services building athletic womenswear all of these things that come

from social change, entertainment. >> i hear a very schizophrenic view from investors and the financial community. on one end, you hear it in the tech companies as well, this he have the cup out, they want the money. if they can get the money out of saudi they're very happy to take it, ala wme and others however, on the other side, the idea of investing in saudi, bringing money to the country, there's still a remarkable amount of skepticism given what took place last fall when we talk about the arrests of all of those who ended up in the ritz and what that means and the transparency around that and then on top of that is this cloud called aramco and the idea that it will go off only in saudi and it will only happen in saudi because of the lack of transparency around that company and the fact that it won't be able to go public in a place like london or a place like the

united states because it can't abide by the rules >> it doesn't -- those are the right questions. is saudi arabia really ready for the level of transparency, rule of law that investors will expect in the united states, in the u.k., ready for the implications of a listing on exchanges in those countries talking to saudi legal authorities on this trip, i have to be honest, i did not hear the kind of modern, decisive explanation that led to 200 billionaires or near billionaires being hauled in for questioni questioning. i got a very fragmentary account of how that happened those are the things that overhang this. the only point i want to make is that i've been visiting saudi arabia since 1981 and you do see signs of real change when you

talk to saudi young people you hear what i haven't heard in all of that time from visiting whether it can be monetized, turned into real opportunities for investment in the business world is a complicated question. in terms of the basic dynamic, it is different and people should listen to the pitch that mbs is making and ask themselves is this a real opportunity be at this for me now to make money in investing. >> david, we're out of time. i'd love to have you come back so we can talk about north korea, kim jong-un and president trump, what's about to happen there. >> with pleasure. >> great thank you very much. david ignatius when we come back, spotify is one of the most highly anticipated public offerings this year. we're going to be speaking to the man who helped give the company its music rights very early on lawyer and deal maker fred davis is our guest

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♪ ♪ good morning, everybody. welcome back to "squawk box" here on cnbc we are live from the nasdaq market site in times square. among the stories that are front and center today, tesla shares are under pressure once again this morning several pieces of news involving tesla. the company is voluntarily recalling 123,000 model s sedans over a potential power steering issue. tesla does say that the issue has affected a very small number of cars. separately the ntsb is criticizing tesla for publicly releasing information for a fatal crash involving a model x before it was done investigating this incident, this is the regulatory agency was done investigating that, you can see the shares are down by 4.5%.

take a look at the stock over the last week or two it has been massive pressure coming on this upgrade from jeffries upgrading it from a hold if you hear anything from the company it will boost sentiment. that stock down by $12 right now. shopping mall vacancies reaching a six-year high during the first quarter. that's according to data from rice the vacancy rate is 4.8% and then the banks raising oil price forecasts for the sixth consecutive month in march that's according to a wall street journal survey. they say that west texas crude should average $59 with brent crude averaging $69. wti already up at 65 and brentd is almost at $70. spotify about to go public

on the new york stock exchange julia boorstin joins us with more right now julia? >> good morning, andrew. when it comes to the number of subscribers, spotify is the clear leader, but there could be some competition concerns for the company as it gets ready to trade tomorrow spotify has 71 million paying subscribers globally that's nearly double the next in line which is apple music. and then pandora comes in last with 5.5 million subscribers apple music is growing fast. it added its last 2 million subscribers in about a month and is on the verge of taking over the number one spot in the u.s. according to "the wall street journal. while apple music is losing key visionary jimmy ivine, it's growing. and even though pandora is down, the stock is down 60% over the past year, it's not out just yet. the company just acquired an

audio ad technology platform prompting one analyst to upgrade the stock. now apple may have the deepest pockets in the race, spotify did score another big win against its rivals over the weekend ahead of the ipo taylor swiftintroduced her latest video spotify said it will have 95 million paying subscribers back to you. >> thank you for that. great to see you. separately, life as a public company will bring new challenges for spotify they're challenges that one early adviser believes they can deal with. david rain helped spotify secure its first worldwide music rights did you think we were going get to this moment in the early days >> yes, i did. i've always been a believer of music streaming was a matter of when not if.

>> you heard julia's report. you think of the model and where apple is can spotify outperform >> spotify doesn't have to out perform. at the early days of the music streaming revolution competition is good. all boats are going to rise. >> what about the danger that you have other businesses competing with spotify that are effectively powered by another business model so you have amazon getting into music. a, they don't really care about profits historically and, b, they capture so much other revenue from other places. apple, same story. >> i think it's a good question. this is where the labels come into play. they protect the value, try to make it competitive so their artists can be compensated. >> let me ask you about the label. let's say i have a hot band that's breaking.

is there any scenario where i give the rights to one platform or another why would i ever do that i want my artist ubiquitous in the market there's no real advantage. pandora doesn't have an advantage over spotify over apple. >> apple tried that and i think they quickly realized that it's not a successful model. >> is the real model this, music is a total commodity just total music outside on the street, artists that break and go away the user interface of spotify -- i said i had enough of this crap to spotify, i'm he not going back that's what happened, right? >> part of what happened spotify had a better product they were in streaming many years before apple did apple had itups downloads.

>> apple can get it back now, right? >> apple can always get it back. what spotify did is 20 million songs doesn't help you know which one to play. >> spotify had to diversify into other media meaning is the trojan horse here the fact that they're in music and they have all of us on the phone, could they turn into video service as well >> could they, yes do they have to, no. >> do they want to what do you know >> i don't know. there's a reason that days before the ipo they're launching the taylor swift vertical video. i think theywant to get into other forms of media. >> i did see something that concerned me on the google home device i just bought one for my condo in miami and i was setting it up and it only gave me the option of picking one service to default to i couldn't blend my apple ownership with my spotify. when you say, hey, google, play

steely dan which i do at 4:00. >> default. >> except why can't it get me all of the instances i have to listen to the one that spot ify wants. >> you want a radio. >> more curated unbiased view of the world. i like to complain a lot so i immediately said, i'm not happy with this. >> fred said that's one of the big advantages it does curate. >> if you get the apple home pod they only play apple music. >> and i can't choose spotify. >> amazon echo you can. >> the future of voice, how is that going to change the business meaning you have spotify, apple music. is it going to be one service? >> i think the music streaming revolution is still in the early

days advice does help simplify the access to music. >> how do you make money on this is it simply through subscription if you have enough subscribers who come in it's a mass -- >> not that complicated. it's a quantity business not that complicated. >> could you ever see spotify being taken over there's an article about live nation, ticket master. they have their own antitrust issues i don't know if they could be the one to buy a spotify i thought apple could take out spotify or netflix or something like that. >> i do believe we're going to -- there's only so many checks a family's going to write for content. at some point it needs to be consolidated. >> is that with another content group or with a live nation, ticket master? >> i think both are options. both are possibilities. >> what did you think of the -- you're a live nations -- you're interested in that whole topic. >> i read that article first thing when it came out yesterday. >> do you think there's an antitrust problem? >> i think we need to make live

music more competitive i think ticketing, music needs to become more competitive. >> if true most of the money comes from live performance and not the streaming is err advise >> correct. >> we're back to the shakespe e shakespearean day where you go from town to town. streaming is a very difficult business if you're an artist. >> right now we're at 100 billion, 120 million if you're at 3, 4, 500 million those numbers might change. >> if i'm a major star and my economics are better, can i -- >> ala taylor swift. >> we haven't gotten to that area. >> everybody gets the same nickel >> right now, yes. possibility can tell that you will never change. >> agents need to start doing their jobs. >> yes, maybe. maybe. there is room for improvement. >> tough buy. >> if you're a major star you want more. >> the consumer wins in everyone of these. >> that's a good point. >> nobody else makes any money. >> i should ask you before

letting you off the hook, do you have an early stake hopefully in spotify? >> we're now investors in sound cloud. >> that's right. >> that's our business. >> you did not take any equity early on >> i've done very well with spotify for ten years. >> good luck. >> thank you very much >> appreciate it. when we come back, stocks on the move this morning plus much more from "shark tank's" kevin o'leary on the state of business dow futures now down by 75 points s&p futures off by close to 12 and the nasdaq off by 62 "squawk box" will be right back. - i love my grandma. - anncr: as you grow older, your brain naturally begins to change which may cause trouble with recall.

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welcome back to "squawk box," everybody. we've been watching the futures. they've come under a little bit of increasing pressure you can now see the dow futures down 67 points they were down by 75 a moment ago. s&p off by 10 and nasdaq off by 58 this comes after an up week for the markets last week. definitely a down month. at this point a down start to the year for the s&p 500 and the dow. >> meantime, want to take a look at some stocks to watch. the fda has rejected an

application by alkermes for approval of its experimental depression drug. regulators say it had not shown enough proof of effectiveness. >> alkermes. >> adp has updated to outperform at rpc capital improving growth story for the payroll processing company they made an identical upgrade for olive garden parent restaurant darden restaurants. you can always bet on pasta. snap chat parent cut its global workforce by 7% last month. snap will take a $10 million charge against earnings for the quarter that ended march 31st. we heard about some of those layoffs. egg producer cal-maine earned

12%. when we come back, retail meets health care. walmart reportedly looking to buy humana amazon has been stepping up its operations in the health sector. we'll talk about possible deals in just a bit. later former under secretary of defense paul wolves did have --z will be up you know what's awesome? gig-speed internet.

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welcome back, everybody. let's talk business conditions and market conditions with kevin o'leary who is in as a guest host for us today. kevin, we've been talking about business conditions and about what you've seen this is one of those times where people are looking at a down market over the course of a year to date so far and maybe thinking, wait a second, markets do more than just go straight up what would you tell people who look at that and maybe get a little freaked out >> i always say you're not an investor until you've lived through three cycles of some kind every correction has a personality. here are some generalizations. ten years is a generation for investors. this particular generation i would say that over 40% of the people who are investors today have never lived in a down market 2008, 2009 straight up to where we are now, basically the last 20% of that period, no volatility, which is extraordinary. that was an extraordinary period we probably won't see again in

your life. that's going to cause some jittery nerves about how capital gets allocated a lot of people going to cash which has no value whatsoever to try to mitigate their risk they see no value in fixed income that's number one. we are late in the cycle we're in the eighth inning here and traditionally when you're in the eighth inning you're getting ready to prepare yourself for slowing growth and recession it has been that way my whole investment life but not this time this time when i see the cash earnings of domestic companies and i'll include the s&p in there, too, it's extraordinary we're going to have an absolutely unbelievable earnings season in the next few weeks like you've never seen double digit growth and free cash i like free cash i don't believe in earnings, i believe in cash flow, real cash. we're going to see extraordinary lifts in real cash it's going to continue for at least another four quarters. >> does that mean we may be going into extra innings potentially? if we're in the eighth inning.

>> this is unchartered territory. this is the part where you as an investor have to start making some decisions do you increase your allocation to equities at a time when your history tells you to pull back because you -- >> never supposed to be different? >> yeah, that's truex september when you're at this late in the cycle and all of a sudden you get this remarkable tax reform package which nobody -- nobody believed would get done and here it is, i argue we haven't even seen the benefit of it yet so i'm really intrigued and it's forcing me to do one change. the own change i'm making is i'm proving through the s&p 500 and i'm taking any insanely high pe stock out of the mix i don't care anymore -- i don't want to, you know, focus on a netflix or a tesla or anything like that. this late in the cycle i don't think people are going to want to take that kind of risk because you can see in the case of a tesla, let's pick one, oh,

golly, it really is a car company. maybe it should trade at a multiple of other car companies. >> right. >> that was suspended belief for three years now. now it faces the fact that it has to raise a few more billion dollars, will it be equity, will it be debt maybe what comes back in favor, this is the bet i'm taking is if you're trading at a 16, 17 pe you generate free cash you return capital to mean a dividend i'm going to start dating you aggressively that's the kind of girl i want to marry in this market. >> bring her home to mom. >> i'm going back to mom, good old cash flow. i'm going to ride through this i'm increasing a huge amount of my portfolio to small and midcap companies because when i talk to them they say, how good is it? they say, we don't even want to talk about how good it is. we don't even know how good it can get yet. we haven't even got the i.r.s. tax code we don't know. >> tons of optimism. tons of optimism. >> but they are nervous to be

giddy about it for good reason they can't believe the gift. don't bite the hand that feeds you as one ceo said to me. >> let's go back to the baseball analo analogy. today is the opening day at yankees stadium and what could be the snow that falls >> the only thing that kills great bull markets is the fed over reaching on rate hikes. historically they have done that over and over and over again so when, you know, you get liesman out here talking about four rate hikes in a row, i can't agree with him on that i don't see that happening not enough wage inflation. 2.6% you need to be 3.5 to 4% interest rate. that's probably the one metric they look at. >> the fed chief has made some commentary in his first outing to congress talked about the potential for an over heating economy. >> yeah, but that's just giving himself a little room. that's jawboning the fed today has -- does a lot more advertising than it used

to >> in terms of where it's going. >> all of that stuff so, you know, today you have to reallocate capital the one extremely interesting place that nobody goes to anymore, we never even talked about it, fixed income market. it's still a very expensive place to put money to work and that means equity is still the default. >> using more companies, you think the big companies aren't going to have the same earnings power or don't get it? >> no. the one difference is we never really focus on this most large companies have armies of lawyers and accountants that have already figured out tax they did their own tax reform. they moved all their operations overseas they threw up their hands -- i don't want to speak ill of the dead but never got the joke. all that capital is moving over seas. >> so none of them were paying 35% anyway. >> they were paying maybe 24, 25% tax on aggregate in the s&p. now 21, that's not that big of a difference the real accelerator is in the

core of america, the midcap company in california that was paying 32% tax now paying 21 we haven't really focused on that because we don't cover a lot of these small guys. you have a billion in sales, who cares? but that's where the action is going to be. i think we're going to see a renaissance in the russell 2000. >> there have been a few big cap companies that pay 35% because they're stuck in the united states. >> if i was sitting on their board i would have said, you did a very poor job in allocating resources. >> some of them are u.s. companies that don't have a lot of options. >> the drug guys had a problem. >> right >> and the government stopped them from moving. >> you think of a berkshire hathaway with a lot of utilities that are paying really -- >> it's interesting that warren buffet never returned capital to his shareholders but always made sure that the companies he bought returned capital to him >> yeah. >> so you basically are entrusting him, he's done a great job, to reallocate your portion of the profits.

>> that's what he said it's like a savings account. he takes his shareholders money. >> he's been a good stewart of it what's going to change is people who put money to work in the markets will go back to the old metric 70% came from dividends. we're going back to that way of thinking, that's my bet. but the volatility we're going to see moving forward. the one thing that came out of the market, all of the frenzy about the tweets from the president and all of that stuff, that's all noise right now. >> your basic message to retail investors are this is not an over valued market and don't freak out. >> unless you have a value for crazy pes. it's amazing you can suspend belief when a great promoter tells you don't worry about the pe until you have to worry about the pe by the way, i just bought his vehicle. great example where you can love the product and never buy the stock. i'd argue the same thing for

spotify. >> you wouldn't touch it >> no. i love the service what's the dividend yield on that what's the return to capital on spotify again? imagine, you're taking money out of your account and you're putting money into something that will never return you money in the future. bad. don't do that. >> we're going to talk a lot more about tesla in a little bit. elon musk playing a prank, a practical joke on april fool's we'll talk about that. also raising some questions as well. coming up, former defense under secretary paul wolfeowicz coming up. tesla's new auto pilot product. phil lebeau will join us to discuss. here are the futures at this hour it's snowing outside and it's snowing in the markets, too. dow off 66 points, nasdaq off 60 points s&p 500 off 10 points. back in a moment

ready for q2 stocks face a new test as china slaps new tariffs on u.s. goods. new this morning, facebook ceo mark zuckerberg responds to

this >> mark zuckerberg, what would you do >> what would i do i wouldn't be in this situation. >> we have the details coming up. plus, elon musk tells the twitterverse tesla's bankrupt. except it was an april fool's joke we're going to tell you why investors may not be laughing as the final hour of "squawk box" begins right now live from the most powerful city in the world, new york. this is "squawk box. >> good morning. welcome to "squawk box" right here on cnbc the nasdaq market site in times square andrew ross sorkin and becky quick. sitting in for him is mr. wonderful, kevin o'leary meantime, want to get a check on the markets. the futures are in the red m

dow off about 60 points. s&p 500 off close to 10 points also show you what's going on in the bond market right now. treasury yields, we flip that board around 30 year right now 2.986. in our headlines this morning, mark zuckerberg responding to apple ceo tim cook's claim that the apple iphone is better off because it sells products to the users and getting into the privacy concerns. >> here's what he said with ezra klein. >> i find that argument that if you're not paying, that somehow we can't care about you to be extremely glib, right? and not at all aligned with the truth. the reality here is that if you want to build a service that helps connect everyone in the world, then there are a lot of

people who can't afford to pay and, therefore, as with a lot of media, having an advertising supported model is the only rational model that can support building the service to reach people. >> a bit of a smackdown. guys, what do you think of that argument we knew that this might be the case after tim cook kind of weighed in. >> i was surprised of cook's comments, actually i didn't understand the benefit of taking that swipe in the first place. >> apple has spent the past year and a half taking the position that it is -- it does a lot more around your privacy than these other -- i mean, that's almost now built into the brand, right? >> the idea that none of your personal data in some way influences how services are provided to you on apple is a falsehood. >> but the idea that they have third parties coming in and data mining, maybe that's the differentiation they wanted to

make when fang stocks were under pressure. >> there would have been a better way to say that without smacking down a competitor i like to see competition, it was highly entertaining. facebook on the other hand, this is my theory about this company, is in three months, four months this thing will be behind it and it still is the only platform i can find, and i look at the digital span that i will make in the next six months across all of these small companies i talk to all the time, there's no other place that is better to deploy capitol. >> even if the regulators come >> let the regulators come if they regulate it the same way you regulate television, it makes facebook more competitive because nobody can afford the compliance costs anymore that would be a bad outcome. let's make compliance so onerous, so cost -- >> do you see a day where they make the screen so available to you where you can get to control your own preferences and what you share that the kind of information that is leading you to be able to use this

effectively for targeting becomes less effective >> unless you believe that this whole generation of users, we talked about this on the show, that maybe there's a generation that actually doesn't care. >> so there was a plethora of posts and information all over the internet showing you how to access all of your historic data on facebook. guess how many people went and did that >> how many? >> practically zero. nobody wants to spend time doing that. >> no, but the message was not lost on me i didn't look that up but the message was not lost on me. >> you talk about this concern, you are hyper sensitive and you are unique in a vertical of 0.1% this is my personal opinion. the average millennial couldn't give a bean about this. >> that's what andrew thinks, too. >> doesn't care at all. >> i don't think they give a beef about it in the context of you selling them product i think they do in terms of you selling them political advertising or other kinds of

things. >> if it was bad for advertisers that support, zuckerberg said why it's important they support, because not everybody can afford to buy a service, they'll simply stop advertising on facebook i always say this about these situations where we see squawking politicians. the worst thing in the world is, hi, i'm from the government, i'm here to help you let the market fix it. let the market do its thing and it will work perfectly i find it so hypocritical. i said it a number of times. every one of these talking head politicians is using facebook in a geo lock basis to raise money in their state, every single one of them. again, a personal opinion. how hypocrite call is that >> what about my idea that facebook says we're not doing political advertising. >> why it's an important process. you have to use it >> because if they said they were out of politics, i think it might actually help them get out of the regulatory sort of context. >> i don't think shareholders

wants them to go out of politics. >> not the shareholders. the politicians. >> this, too, will pass. >> okay. >> all the squawking heads will be gone onto the next issue. the news cycle is the shortest thing i've ever seen now the shortest thing i've ever seen i keep going back to the poor dog that got wiped out. >> i agree with you on that. >> it was 12 hours we need to talk about the dog. we have to talk about it it's gone. nobody cares. >> this subject is not gone, at least not this morning. >> not until the hearings are over. >> in the next half hour with the atlantic's frank foer. >> in other news this morning, let's talk about global news china is striking back in response to u.s. tariffs it has increased the number of tariffs on 128 u.s. products by up to 25%. those products include wine, frozen pork and certain fruits and nuts an editorial in china's "global times" says even though the united states and china haven't

said they're in a trade war, the sparks are starting to fly joining us is paul wolfeowicz. he's a visiting scholar. ambassador, thank you for being with us today. >> good to be with you. >> is this the beginning of what a trade war looks like >> i think the tariffs are not the real issue the real issue is about china's theft of intellectual property which they've been doing on the internet that needs to stop. >> how do we stop that this has been an issue many u.s. presidents have faced and one that we have been incredibly unsuccessful with handling how do we do it? >> i'm not sure how. it is very difficult but i think one thing can be done is to use some of the tools that we have in the cyber world to go after that kind of activity and shut it down.

>> what kind of tools are you talking about? >> the kind of things that the national security agency has. >> ah, the secret things that are not publicized of trying to fix it behind the scenes >> that's what i mean, yes the other thing is for american companies to be much more careful about making deals in china and realizing that the chinese are there to squeeze them for their intellectual property on the front end and the promises that they'll make money later. >> that's interesting. we have had a lot of ceos come on they're asking for help. you kind of knew this when you were coming in, signing up with a local chinese partner. there's been case after case including a ceo who joint us last week. basically any money you didn't get up front you were not going to get, forget about it. whatever money they gave you in the beginning, that was it but if we talk about free trade, how is this a situation of free trade where you know you're not

going to be able to have the same sort of access that we have granted to china >> i think free trade means everybody has to play by the same rules and china has not been playing by the same rules i think it's right to take them on in some form. i think they may be getting the message. they depend on our markets even more than we depend on theirs, much more. >> i want to suggest a solution to the i.t. war. let's say without naming any company you're in the u.s.teleco space. you make equipment you feel that your i.p. has been compromised. you can prove it in a court of law when you look at the firmware and the device. why not have the right at that point to have the product be listed -- this isn't a tariff issue, it just can't be sold legally in the united states anymore? that would disincentivize anybody that's ripping off i.p. to come and try to sell it back

into a larger market and go to european markets, right down to the sku number, this is stolen i.p. it can't be sold in europe and the united states. why wouldn't that work >> i'm not sure that wouldn't work if we could speed up the way in which this thing is adjudicated it might work. i suspect now it would take an army of lawyers and a long, long time by the time you finished the process, the market -- the product itself would be on so he let. might work if you could do it quickly. >> ambassador, if you think the kids are getting the message, how do you think it plays out? >> hopefully it plays out with a change in behavior on their part they know what they're doing, we know what they're doing. we should be able to tell when it stops or slows down you know, what people worry

about with a trade war is you end up basically freezing trade and both sides pay a big price when that happens. i think we'll stop before then. >> the market seems to agree with you based on what we're seeing this morning. ambassador, thank you for your time we appreciate it. >> nice to be with you. coming up when we return, it has been a rough weekend for tesla. the ntsb slamming the car maker. an april fool's joke that tesla investors may not have found too ruowof a ndn what to expect when we return. from farm, to pot, to jar, to table. and serve with confidence that it's safe. this is a diamond you can follow from mine to finger, and trust it never fell into the wrong hands. ♪ ♪ this is a shipment transferred two hundred times, transparently tracked from port to port.

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you know what's not awesome? gig-speed internet. save up to 15% when you book early when only certain people can get it. let's fix that. let's give this guy gig-

really? and these kids, and these guys, him, ah. oh hello. that lady, these houses! yes, yes and yes. and don't forget about them. uh huh, sure. still yes! xfinity delivers gig speed to more homes than anyone. now you can get it, too. welcome to the party. welcome back to "squawk box," everybody. tesla making a lot of headlines this week end be lots of stuff for us todig through. fortunately for us, we are joined by two special guests this morning tim higgins, he covers the auto sector of the wall street journal and our very own phil lebeau let's start out with some of the full headlines we heard. the ntsb is unhappy when it revealed some of the information about the fatal crash. tesla said the driver who was killed did not have his hands on

the wheel for six seconds before that crash phil, let's start with you what does this mean? how big of a problem is it >> reporter: not sure how big of a deal it is the ntsb is saying, knock it often. i don't want to hear anymore from you both in terms of the auto industry and the airline industry and historically what the ntsb does is, hey, we're checking this out. there will be a preliminary report at this point you usually hear nothing else. the fact that tesla came out and said trying to come up with a position there were warnings that were issued to the driver his hands were off the wheel for x number of seconds prior to the accident and then the ntsb comes out and says, you've cooperated in the past. that's what we expect. give us the data say no more.

we're not happy with you essentially trying to put your position out there already it is highly unusual. >> phil, did they not give the data or just go public with the data prior >> it's unclear if they have given all of the data that the ntsb is looking for right now. the issue for them is releasing it publicly because, look, there's more than just these six seconds. there's a lot of factors that the ntsb looks into when they're doing these investigations. >> was it the publication of the information straight up or the fact that they, don't want to say shaded it, but by describing that there were at least five seconds where the driver had a chance to do something and didn't >> my guess is more from dealing with the ntsb in the past and talking with them, it's the way that it was couched, the way that it was shaded in other words, look, don't try

to position this before an investigation has even released a preliminary report. >> tim, let's look at it from tesla's point of view. the stocks are down. what does this mean? would you agree with what they've done or not? >> well, in the last year the two things that have been driving tesla's shares to historic records has been the idea that they can bring out the model 3 and also the idea that they're going to have the self-driving cars in the future. so any questions about the abilities of auto pilot in the present are a big threat to tesla. they're saying auto pilot is safe and it helps the driver and helps people on the roadways. >> here's a question, mr. wonderful, real quick. you just bought a tesla. >> yeah. >> so you see this news. are you going to not go in your

tesla? are you not going to use auto pilot? are you going to do anything differently? >> the death in florida and now this one are tragic. i am of the basic belief, i think there's millions of us that share this view, if i have to choose to drive in a world with the majority of the cars being run with ai versus human drivers, i'll go with technology every time i think i'm safer. these are tragedies. i think we're going to find out how they happened, but i believe a lot of deaths occur when people falla sleep at their wheel. >> true. but would you -- i agree with everything you just said but would you engage in the auto pilot in your tesla at this point? >> i bought it for the auto pilot. in fact, i was unhappy to find out i had to put my hands on the wheel every 90 seconds i said to my son, how do we hack this >> it's improperly marketed. >> it's not self-driving. >> you're driving it for -- a main driver is to drive the car

so you don't have to drive the car. the name auto pilot suggests that it can do it in an auto pilot wait and it can't. >> i bought the car because i hate driving for two hours on a dead straight highway. i have a situation like that on my way to my lake house. i was wishing i could say, okay, car, take me to the lake house now, which is what i want before i'm dead that's what i want. >> right >> i think i'm going to get it. >> it's not here yet. >> i want it the other reason i bought the car, my son says it's cool he said, i don't care if you buy the stock, get me the car. that's what happened. >> separately, we should tell you the other big news over the weekend was an april fool's joke but some investors may not have found it so funny. elon musk tweeting just yesterday, tesla goes bankrupt despite intense efforts to raise money including a last-ditch mass sale of easter eggs we are sad to report that tesla has gone completely and totally bankrupt, so bankrupt we can't believe it

there are many chapters of bankruptcy and as critics so rightly pointed out tesla has them all including chapter 14 and a half, the worst one. they also have an image of mr. musk -- >> i have a problem with that. if i'm on the board, i have a problem with that tweet. that is responsible. you're in the market to raise equity or debt you put that up there. >> as i was reading this, i was thinking to myself for all of the algorithmic trading. there are people who listen to our show >> that's a problem. >> the twitter sphere. tesla, bankrupt, here we are phil, what's the inside take on this >> i'm sure investor relations is not happy with it, but elon does what elon does. we've known that from the beginning when it comes to how he manages tesla and also when he makes comments in public or

when he uses social media. as mr. wonderful points out. >> i >>, it's not a smart thing to do somebody might say, hey, elon, that probably wasn't the smartest okay, it's done. it's over. >> tim >> well, the market might say something here there is a school of thought here that it's his bravado that he's trying to get out ahead of whatever the sales results for the quarter are going to be. we're going to be looking to see how many model 3s they were able to make in the last three months the goal is to reach a rate of 2500 a week. that might be a stretch goal.

in here. at the end of last, there are the fact that they have it you expect them to hit that rate most people think they were closer to 1500 and get the other do they change their q 2 target. do they come back with some new guidance jeffries was out with a note today, yes, they upgraded their position to hold on the stock but they said the high probability -- there is a high probability that management and the board will take more drastic action on guidance and funding to restore credibility

you can't really trust the guidance that they give. they have given guidance repeatedly and then fallen short or changed it. so at some point as an investor if you were truly buying into that they can ramp up production, excaccelerate it, a some point you have to say, okay, i've got some confidence that they're going to follow through. so far there's been none of that. >> phil, they've never hit their estimates. nobody cares >> correct. >> you're saying this time they care >> i'm not sure if the investor will care. increasingly when moody's came out and they downgraded the credit rating, people are saying there's a credit issue and a cash flow issue. i think that's what people care about. you're right about the guidance. the bulls are the bulls. they're going into this stock regardless of whether or not the guidance is accurate. >> we're going to leave the conversation there phil, thank you. tim, thank you appreciate it. coming up in the next half

hour big technology backlash. we will talk to the atlantic's frank foer about the latest piece. it's called "it's time to regulate the internet. mark zuckerberg might believe the world is better off without privacy. he's wrong that's coming up at 8:30 eastern time to feed the world. and energy to fuel its growth. real estate such as e-commerce warehouses. and private debt to finance transportation and infrastructure. building blocks of strategies to pursue consistent returns over time from over one hundred fifty billion dollars in real assets. partner with pgim. the global investment management businesses of prudential.

all right, folks when we come back, to regulate

or not to regulate that is the question we'll ask the atlantic's frank nebo febk'furetu xt

a good snowy monday morning to you welcome to "squawk box" right here on cnbc at times square in for joe, kevin o'leary is here we'll check on the markets this morning. did show you a little bit of red right there. dow off about 75 points. nasdaq looking to open down as well off by 56 points. the s&p 500 looking to open off about 10 points. a couple of things going on this hour two economic reports on today's calendar both at 10:00 eastern time the institute for supply management releasing its march manufacturing. gambling revenue in macau rose

by 20% revenues still off the all-time highs seen back in 2014. also another data breach in the news this one affecting retailer lord and taylor and saks. the parent hudson bay said they compromised payment cards used at stores in north america it did not say how many cards might be affected, however. one big mover this morning, drug maker alkermes. you'll see that it has been down sharply. a drop of 20%. that's a decline of over 11 1/2 dollars. meg tirrell joins us with more on why. >> it has to do with the experimental depression drug the fda declining to accept an application on that drug there's not enough evidence to see whether the drug works and it wants to see additional clinical trials. that's off a market cap of $9

billion for alkermes the company saying it strongly disagrees with the fda's conclusions and it plans to appeal the fda decision. it will request a meeting with the fda to determine appropriate next steps the decision from the fda comes after three late stage phase 3 clinical trials that it ran. the company did decide to apply for approval there are other shares moving on this this morning though in addition to alkermes. intracellular therapies is one we'll draw your attention to that stock down 9% in the premarket trade. it has a schizophrenia drug. people may be feeling negative about their prospects as well. there's the stock movers for you, becky back to you. in the meantime, mark zuckerberg responding to apple ceo tim cook about the claim that the iphone maker is better off because it sells products to its users, it doesn't sell users to advertisers sparked a bit of a reaction. in fact, here's what the facebook chief said in an

interview with voks's ezra klein. >> i don't think at all that that means we don't care about people to the contrary it's important that we don't all get stockholm syndrome and let the companies that work hard to charge you more convince that they care more about you because that sounds ridiculous to me. >> joining us right now for more on this is frank foer. he is national correspond decen with the atlantic. frank, thank you for being here this morning >> pleasure. >> if people were wondering where you came down on this, your most recent column is headlined it's time to regulate the internet mark zuckerberg might believe the world is better without privacy. he is wrong. give us your take on what's happening. >> the cambridge analytica scandal has revealed all sorts of things that have been simmering anxieties but it revealed them in such stark fashion that it's created not

just a massive consumer backlash but it's created all sorts of pressures to regulatefacebook because the company has been revealed to be incredibly insensitive with our data, with our privacy and that they've used that breach of trust to manipulate us in a fairly widespread fashion so the question has always been could these companies be counted on to behalf in a responsible sort of way with the incredibly treasured things that they've been handed. and the cambridge analytica scandal shows that, in fact, no, they can't be. the question is, if they can't regulate themselves, then the government's going to have to step in and regulate them. >> frank, i agree with you on a lot of these ideas, but i've been doing some soul searching trying to figure out a couple of things. >> yes. >> first of all, i'm old and i care about privacy in a way that younger people may not >> right. >> second of all, i'm a member of traditional media, used to be a reporter at "the wall street journal" and now here.

i keep reading these ideas that we in traditional media have taken this all too much to heart and that there's a little bit of sour grapes in this. what do you think of those two arguments? >> first of all, when you look at the rest of our economy you look at the way we handle aviation, pharmaceuticals, financial markets, we set some basic rules for how companie should behave and when it comes to this part of the internet, there's simply no rules that exist. and so it doesn't seem like it's -- you have to be grampa standing on the lawn with your pitch fork telling people to get off to be able to say, look, the internet should have some basic rules of the road. >> so the internet's done quite well without any regulation for a very long time what do you say to people like me that argue that productivity of many of our companies and their ability to get customers and start new businesses and create jobs to great extent is because the bar to entry is

lower because i can use the internet you want to impose regulations to fix something that isn't broken isn't that the push back on your position >> well, look, we don't want to -- we don't want to turn into the soviet union here and we're not talking about that we're talking about protecting something that's incredibly precious, which is our privacy and our personal data. and if there has to be a little bit of a sacrifice for efficiency for a few companies, then i think that's actually a pretty small price to pay in terms of a tradeoff. i don't think that that would have -- it would really depress productivity in any sort of meaningful sort of way besides, the fact is that these companies are going to have to start accepting regulation you see zuckerberg, you see tim cook, they're all coming to the fact that they're going to have to start accepting some form of governmental regulation in order to regain the trust of their consumers. >> frank, i've been socializing this idea for the last week on the show that maybe what facebook needs to do is just

decide we're not accepting political advertising. >> yeah. >> it's one thing to use data to sell me a better pair of sneakers. >> right. >> or something, but it's very different if they're trying to influence the way i think about society or politics or other things does that make sense to you? >> it makes sense to me as a strategy -- >> this way you're not on either side of the political spectrum you say, i'm out of this business. >> if you step back, it seems like that's facebook's strategy at large which is that they've stepped into this role of media gatekeeper and media has become highly dependent on facebook that's put facebook in a very uncomfortable sort of position where facebook has propagated fake news, propaganda, it's been manipulated by all sorts of bad actors so facebook has made noises about how it's going to reshape its policy so that rather than playing this role of media gatekeeper it's just going to go back to what its core

original function was which is to share photos about your vacation to make your friend feel bad about how handsome your family is. they're moving in that direction because it makes sense for them to move into that direction. they shouldn't want to accept all the responsibility that they've had to de facto accept and so stepping back from the brink in that sort of way, taking themselves out of the politics business which might be lucrative for them in the short term is bad for them over the long term. >> so, frank, we're in times square here. if i went and grabbed 100 people off the street, 18 to 34 years old and put them in the studio and asked them, do they actually care about this issue, what percentage doesn't give a damn do you think out of 100 people >> well, first of all, i think there is a backlash that is emerging and i don't have the data to support it when it comes to that specific demographic, but if you look at the trust that facebook has among the public, it's been descending for some sort of period of time.

if you look at the political backlash that's emerged, i've actually been surprised at how fierce it's been because i -- you know rk i've been criticizing these guys for a long time but i didn't anticipate that the public would ca catch up to my criticism with this speed that it has i think the public anger against facebook is real a lot of it is partisan to be sure and that people blame facebook for the election of donald trump and it's become a scapegoat in that regard, but on another level, i don't think it actually really matters because, you know, consumers get manipulated in all sorts of ways by unscrupulous businesses and we protect them. when it comes to the foods that they ingest, when it comes to wearing seat belts and speed limits and so, you know, even if the public wasn't crying out for that, i think it's a good thing for the public to have that kind of protection when it comes to something as sacrosanct as privacy and personal data. >> well, i don't agree with you

at all on this i really don't my assumption is if you got those 100 people in here, maybe 20% would know the story by the way, in my view, "the new york times" and the washington post are not the public. we learned that in a hard way in the last election. america doesn't care about this issue. that's what i think. >> you look at the opinion polls they tell a different story. >> maybe. >> you look at the stock price it tells a different story. >> let's wait six months and see how much facebook has changed. >> frank, real quick you think that if you actually got a screen, you think that if every facebook user got a screen that said i'm opting into this, i'm not opting into this, that they would turn everything off? >> i think if the default options were set towards privacy versus having an opt-in system, they would accept whatever the default option is. >> you mean if -- they would accept whatever -- this is a situation where people are just lazy, they're not going to look -- >> the terms of service agreements that you have to enter into are take it or leave

it, filled with all sorts of jargon. >> sure. >> when it comes to setting the privacy on facebook it's taken 20 different screens in order to set a privacy setting where you're actually protecting yourself so if you set the default options on facebook to be actually protective of privacy, i don't think that -- i think consumers would be very, very happy. >> so the market isn't going to fix it, we need the government to do it for us? >> government may be coming whether you want it or not >> my point was the market would have fixed this problem if you just let it do its work and we don't need the regulator here. >> your privacy would be gone. >> it may be gone already, that's my point. >> frank, thank you for your time today. >> all right thank you. >> when we return, we're going to have a debate over health care is the health care sector telling cnbc/walmart talking with hanuma. we'll tell you when we come back right after this that'll crack this case wide open!

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walmart reportedly talking to health insurer humana bert that coombs is with us to break down some of the details of what's actually happening behind the scenes. >> "the wall street journal" says there might be an acquisition. it's not a surprise walmart and humana would be talking. they have co-branded programs. whether it leads to a merger is unclear. for walmart, a deeper partnership would boost its

pharmacies walmart's customer base is older and humana could add more clinic experience and home care services that are important. for humana it's a bullwart against the competition. united health is the number one medicare advantage cigna buying express scripts in an effort to have more integrated benefits. the cvs/aetna deal could have a tougher landscape in health care they can offer primary health care in 9500 pharmacies. the pressure to cut overhead and to coordinate medical health care is driving this into vertical integration into the industry with three megadeals at once the key for regulators is whether these deals taken together will result in more competition and lower costs for consumers. the last time around we saw when they were taken together it really raised a lot of alarm

bells. >> okay. be bertha, stick around are there antitrust issues around any of this joining us is craig garth wade he's at northwestern university. good morning to you. >> good morning. >> do you think there's an antitrust problem here >> not what we've seen in the past couple of years fundment mamentally we have to remember this is not if you competitors getting together, two people who were customers and suppliers together thinking how they want to reorganize the provision of health care services that has far different implications than two firms getting together with the hope of charging higher prices. >> go ahead. >> my question was given what you know about the industry, assume this merger goes together, is the opportunity be at this here, as you say, it's vertical, to dramatically change the cost structure because that's what really this

is all about if you change the outcome in terms of health care costs, walmart combo, does that do it is that in two years, three years, do i look at a 10 perfection percent enhancement in reduction in costs? >> that would be the hope of a merger like this it's not exactly clear what would happen with walma walmart/humana what you can imagine is it's about building out a set of retail health clinics at walmart stores that patients would go to you provide services that make them healthier so they don't end up at an in patient hospital the savings would be enjoyed by the merged retail provider and health insurer we don't have the incentive for many firms if walmart makes them healthier, they benefit but how does walmart get its piece of profits. what this is about is about aligning the profit incentive so firms will make more money if they're healthier and then we're going to see if they can do it.

>> you're talking about this coordinated care, but if we have both the cvs/aetna deal going through and potentially a walmart/humana deal going through, this would really shift the landscape in terms of where care is done for potentially a lot of people and what would that mean for hospitals? what would that mean for doctors? >> i think the people who should be most worried about this reorganization of the vertical chain are the large in patient hospitals, right the people -- the sort of community hospitals that exist where we get lots of very expensive care today you note across all of the vertical merger, united health care group and cvs/aetna and potentially walmart/humana, all of those are about combining providers and insurers no one is combining with the hospital the goal is to keep them out of the hospital that's good news potentially for insurers, good news for the

retail provider, good news for patients not good news for the hospitals which are large fixed cost enterprises that need the volume to be profitable. >> do you expect the hospitals are going rushing to the government saying, we can't have these deals? >> i think it's a tough case to make, right? there's not anti-competitive nature here. the statement is that the merged entity will make people healthier, that's competition. that's what we should expect we want people to generate new business models in health care that make people healthier is and have lower costs this is the first step down what that chain will look like. we should imagine if we get to what we call value-based services, we need new organizations to compete in that environment. that's what these will hopefully provide us. >> craig, i asked bertha this earlier. is there business that humanmana

ultimately lose? are there clients and customers of humana that would say i can't be in business with you anymore because you're now part of walmart? >> that's unclear. we've heard talk about that. we've heard talk about that with the anthem which is a health insure that anonounced they would use cvs, would pull away anthem decided to stick with that deal. it is goeing to be a case by cae basis. but, it is possible at the margin they could lose some business and they'll have to weigh the benefit from the merger is greater than the business >> last week at our healthy return conference, he wanted to look at some of the deals when it comes to pbms these big companies make big

deals with pharmacy makers that deter generics for example being able to get the markets. do you worry of the scrutiny post of these deals. what's the challenge to make sure these guys don't use their big market heft to keep the savings for themselves and not necessarily lower costs for the system >> the integration of the insurer and the pdm leek we sike with aetna and cigna, pbm is capturing some of the rebates that they negotiate and the discounts on those drug prices i think the thing we have to look at going forward of these mergers is there a competitive health insurance market such as any savings are generated.

we'll be healthier and we won't spend as much. we want those savings to flow back to customers though you need to have a competitive market that forces aetna and cigna. i think there will be a lot of scrutiny when that happens >> craig, i want to thank you. >> when we come back, we are counting down to the opening bell check out the futures, you can see things are under pressure. the dow futures are indicated down by 65 points s&p by 8 points and nasdaq by 50 points "squawk box" will be right back. so i go national, where i can choose any available upgrade

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all right, welcome back to "squawk box" everybody our special guest, kevin o'leary of "shark tank." you would do anything for the show what did you do recently >> well, i thought i would i will tease it a little bit.

we have a great promotion coming between discovery channel and "shark tank. we have season 10 coming up, this involves the shark getting in the water with sharks >> so you are in a cage? >> i did it in an uncaged control environment, the giant tech - >> not a digital shark but a real shark >> four sharks in atlanta. >> the aquarium from atlanta, we have done a show there, it is an amazing aquarium >> i agreed to do it until i got there and put on the wet suit and looked at these things and went what the beep am i doing? >> i would have a heart attack and die. >> i was nervous >> i have seen the shark thing where you are covered in a box >> the theory here is they are well fed so they are not going

to chow down >> the thing that scares me was their size they are so big and you're inches away from them and their size are the size of a human's eyes >> my respect for you grows. >> season 10 of "shark tank" will be really good. >> kevin we'll see you back here tomorrow >> right now it is "squawk on the street." good monday morning, i am carl quintanilla with david faber and melissa lee here cramer is off today. welcome to the start of q 2. a big week upon us most of the european markets were closed on easter monday