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

futures are lower and we'll get ism in an hour we begin with trade, china slapping new tariffs on u.s. good on this first trading day of the quarter >> walmart reportedly eyeing expanding partnership and a deal with insurer humana. trump's amazon parade bashing the ecommerce giant. first up, markets are set to open on the downside after their worst two months performance of 2016 china retaliated by slapping tariffs of 25% on more than 100 products including frozen fruits as you probably know dow and the s&p snapped some nine quarter win streak as far as first trading day of the month go

april's second best for the dow. only may has a stronger start for the month. >> one can only hope, right? i mean in the big tail is how big tech trades in today's market we had real doubt enter the marketplace when it comes to these story stocks anything where investors have to have a leap of faith people have been questioning names like tesla and amazon and netflix, they are down across the board sharply. it will be whether or not these names can gain any momentum and earning season will provide a catalyst for these companies or the conference calls will end up being more doubtful in terms of -- >> so at least the beginning although each of those are specific things and amazon is down we'll talk more about it because the president continues his hostile actions towards the issue. tesla has its own issues and net flick lumped into fang

>> these are chummy stories and before they were leap of faith stories. people believing of the narrative that elon musk is put out there and amazon can rose to the sky without any regulatory interaction and here we are, we are at this cross roads where all of these stocks are facing potential, regulatory actions or threats of their business models >> netflix met all of the expectations netflix seems to exceed whatever the subscribe metrics are going in >> tesla got its own story today. we continue to watch the yields. they had a lot of news on thursday night with recall on some of these model s's and

jeffery today taking to a whole, we are talking about q-1 data if we get some deliveries or production or cancellation or new order numbers. for the time being, tesla is back to 257. you have to wonder this company's ability to raise cash at a time when they'll absolutely need cash and you sort of raise on the debt side is going to be challenging given the amount of debt coming due the next 12 months of more than a billion dollars or so. imagine it being more delootiluo top of the decline that we have seen >> this is the pane thcompany tt lives on capital market. they have been able to fund what has been an enormous losses for years because people believe and if somehow that changes or facts on the ground changes and

changing people's believes that they won't be able to deliver, they'll have a difficult time. >> part of the jeffery's call is the notion they'll take what they're calling a drastic action on either guiding or funding >> you got to wonder what that is jeffery makes an interesting point that panasonic making it different to use it as collateral what are the options if they seem to be more limited at this point. we'll have much more on this as david mentioned with phil lebea at this point. this is confirmed by cnbc right now. these talks are preliminary and they could also focus on new partnership which is a possibility here of walmart and humana >> making some calls this morning speaking to people familiar with the situation. the partnership seems to be the

word that comes up more often. though again the wall street journal first to report this later on friday, the anthropologipossibilit is very early. i am not peicking it up they have a partnership a few of them in place that they started back on 2011 on a drug plan. much of this coming about hue a humana's desire to get close hit. that's where humana is focused, almost two-thirds of their earnings coming from medical add va advances walmart does have a lot of seniors who walkthru tho througe doors and doing a lot of different things to get closer there and try to bring down healthcare cost and not just employer base also but is the largest but overall.

whether or not this actually results in a deal, that seems to be less likely at least judging from the conversations i have been able to have on this so people are not sharing a great deal they do want to talk about the possibility of partnerships and pushing around seniors and hu n humana is focused on that as well we'll see if it evolves or how it will evolve and whether or not they'll get into true talk about a full accusation. >> i didn't realize how strong humana was in terms of healthcare what's the advantage that could give them over some of their rivals like target or albertson's. >> again, whether it is cvs/aetna. the vertical structure is taking

some shape without a doubt >> cvs/aetna is more to what's going on here. express script deals more of the pharmacy the express cigna, the potential tie up the key that you have to mention here will walmart ever consider to do something. these days there are so much uncertainty and we'll talk about amazon in a moment we got at&t and time warner being litigated right now down in d.c. and we got the president saying different things of amazon why they will be allowed and if you did want to follow that, you want to make sure cvs/aetna was approved by regulatorregulators >> and mma strategy, their

biggest deal was $11 million >> i was looking at a jet deal a few years ago. humana deal is $41 million that's a huge deal >> huge deal melissa it is a great point. you got analyst from bank of america talking about a deal being at least 20 or 25 times earnings that's what aetna was going to pay. that was implied by their deal. north of 300 bucks a share for humana and as to your point, we are talking about a deal that would be multiples of what walmart has ever paid. there is some issues there you got 50% ownership from the walton's family. do they want to go out to do something like that. it is no tt a typical move for walmart. a new series of tweets from the president blasting jeff

bezos. it is reported that the post office will lose money for each package delivering to amazon and that does not include the fake washington post which is used as a lobbyist and should register if the po increase its partial rate, amazon shipping costs would rise to $2.6 billion this post office scam must stop. amazon must pay real costs now now, a discussion of what's the difference of damage to the post office and low margin revenues which some argues amazon is really is. >> in terms of the damage of amazon, it has been dramatic $20 billion market cap and stocks have been down 2.3% whatever there had been a lot of fact checking article on thursday from the president's

tweet, the state's sales tax argument was false in itself it does not matter what we know is amazon is in cross hairs with the president and that's the certainty for this story stock we mentioned that before these are stocks are leap of faiths and knowing that trump eyeing amazon is enough for investors to sell it now >> when you are buying from a third party seller and not from amazon directly. >> the argument is that if they did collect sales tax and the price verses amazon is not competitive. so the third party's seller which are mom and pop sellers, they would be put in a disadvantage >> the campaign manager tweeted over the weekend don't forget to mention that amazon has ten times the data on

every american that facebook does, all that data then owned a political newspaper, amazon does not own washington post. jeff bezos does. >> there is a growing concern about the idea of being able to attack a particular company because you don't like them or you don't like their ceo because he may own a newspaper that takes issues with your policies. that's a terrible sort of way to go about trying to regulate things if there is a case to be made against amazon, it should be made many people would say the business community, the way they are always made, by the department of justice and in terms of the governing end trust laws that would allow them to bring such a case, otherwise, don't go down this road because it seems to be playing favorites one way or the other you have a lot of people and ceos wondering what are the

rules of the road. if i run a foul of the administration in some way or am i going to be penalized even though i am not doing anything wrong. >> that's why we are seeing the decline. zuckerberg strikes back at tim cook nasdaq is looking the lose 50 at the open much more "squawk on the street," live from post nine at the nyse when we come back of out performance. where a rising middle class powers a booming auto industry. a leap into the digital era draws youthful populations to mobile banking and e-commerce. trade and travel surge between emerging markets. everyday our 1,100 investment professionals around the world search out opportunities for alpha. partner with pgim, the global investment management businesses of prudential.

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china announcing some new trade tariffs on u.s. import in response to the white house's move futures is set for a lower movement this morning. we are joined by jacobson, good morning guys, good to see you both that leads you to your defense of over rate of the u.s., right? >> yeah, i think we had sort of a back to reality sort of first quarter volatility coming off and valuations are coming down a little bit 16 handlers than 19 handlers

i am happy about that. i think equities is pretty good right now. >> brian, do you agree is it earnings to the rescue >> well, i hope that's going to be earnings to the rescue. one of my big concerns earlier this year that a lot of analysts ratcheted up there 2018 could be a year of contradiction where you had fiscal tightening and monetary stimulus and tightening. we'll see quite a bit of that in the first part of this year. so let's kind of wait and see what earnings season looks like. i am skittish as we enter into the quarter here longer term, there are great opportunities and you look at 2019, analysts have not ratcheted up earnings up there maybe that's where the opportunities are. 2018, i would take this as a year to reallocate back towards

whatever your strategic allocations are. huddle on the cash and good opportunity to buy on the dips over weight and some of the riskier parts of the market, a good opportunity to pull that back in a little bit >> i think that's an interesting point that brian makes during the quarter, earnings have gone up by more than 5% there is really little room for error at a time when companies may be feeling skittish with this ramp and volatility towards the end of the quarter >> you have 20% earnings of expectations of the u.s. this year absolutely remarkable yes, i think you have seen the move and i think you have great visib vizti visibilities on those earnings though you need to be running a bit of a balance. the real opportunity right now is not in the financials it is in these utilities and consumer staples and thing that is are sensitive to this bond

yield. i think that's the sort of zu opportunity and if anything, people are quite a bit -- >> we think it is coming down quite a lot. >> what's going to drive that? >> i think a lot of this is sort of structural. growth peaks everywhere else and you see that for the ism a lot of head wings and demographics and prevent in seeing that spiking in bond yields, which people are positioning now. the biggest is financials. that is going to keep ongoing higher i think it is going to be frustrated the q-1 number is expected to come to sub 2. does ben have a point? >> i think he has a point. as far as my food grefriend at

wells fargo, they're talking about fourth quarter gdp number is looking pretty good as ben was saying about good earnings growth of 20% growth in decent visibility that hardly seems to be a case for lower yields or growth peeking in any sort we agree with our friends at the institute. it is a good average to the think of where it should be. if anything i think that we are going to see an acceleration of an economic growth i think we are pushing it to far to see growth is peeking when we have not begun to see businesses begin to lose the pursestrings as far as spending on capital and equipment.

>> you want to be sickle -- >> yes, basically i think it makes a lot of sense and near terms concerned of volatility. longer term, it makes more sense to be for -- seems to me that would be doubling down on a bet for lower yields if you have a balanced portfolio, 60% equities and 40% income if you are waiting, you are making a double bet on lower rates. >> nice to know we are still polite in some areas of the country. good to see you brian and ben, thank you for your time. >> the count down of spotify, taking another look of the

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♪ tesla shares is under. phil lebeau in chicago with the latest hey, phil. >> this is the weekend where tesla put out a statement on friday night defending the model x autopilot system for the crash that happened in san francisco about a week and a half ago. when you look at what happened in this incident and we look at the data, take control of the

steering wheel, that did not happen this was seen of the fatal crash in just outside of mountain view about a week and a half ago. after they put up that statement, that did not sit well with the ntsb, the ntsb issuing a statement over the weekend saying quote, "the ntsb is unhappy with the release of investigative information by tesla. i cannot stress enough how unusual it is for the ntsb put out a statement about a company that's in the heart of the investigation. usually you don't hear from them until the investigation is completed. we'll see if there will be some back and forth between the ntsb and tesla on this. investors are looking for data of the first quarter it comes in the first couple of days of the next quarter so we should be getting any days now what we are looking for is did tesla come close to or did it

meet its guidance of 2500 vehicles per week. that's 2500 model three by the end of march and did they have to change their target jeffery today is out with an upgrade to hold on the thomas hock stock but essentially saying look, one way or the other, this is good news or not great news but should be great news for investors, either they come up with a number or management is going to take this and become much more diligent about the guidance as well as whether or not there has to be a capital raise. >> phil, tight on time but we hope to chat with you later about other stuff going on with tesla. our phil lebeau opening bell just about three and a half minutes. [fbi agent] you're a brave man, mr. stevens.

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kudlow starts his job today as director of economic counsel in addition to some of the fang news we have been over this morning regarding amazon, tesla, and we'll talk about facebook in a minute there is the opening bell and the s&p at the bottom of your screen ripping the bell to highlight wrestle mania 34 it will streamline on sunday april 8th. global developers providing access to network training educational and employment opportunities for diverse individuals. the man ringing the bell with tom farley is a big show >> big is the appropriate word that's the angelina jollargest that i have seen >> seven feet tall and 370 pounds >> he's a tall guy and he looks like -- he looks small next to

you. >> he's a large man at the big show >> he's been in wwe for a long time in '99. wwe bringing it back to business started at one of the first out of the box of the streaming model in terms of creating their own streaming network and actually it has done quite well with it and sort of forge the new pap there for the company that some were doubting in terms of early on but gone fairly well >> we mentioned facebook a moment ago, mark zuckerberg is striking back at tim cook and the criticism of facebook model. this is what zuckerberg told >> i find that argument if you are not paying that somehow we cannot care about you, to be extremely glim and not at all align with the truth. you know 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 afford to pay. therefore as for a lot of media having an advertising model is the only rash model that could support, building a service to reach people that does not mean that we are not primarily focused onning people i think probably to the dissatisfaction of our sales team here, i make all of the decisions of what's going to matter of our community and improve our experiences and focus, much less and little on the advertising side of the business >> that's the cross fire between cook and zuckerberg getting more heated >> it is interested that tim cook criticized the business model directly so to say he would never be in a position, you don't know what kind of position you would be in if your business inputting

people information of themselves in order to be connecting with people facebook continues to decline on wednesday and thursday, the stock lost more than 3% in those two days alone and that's $24 billion in market cap. >> interesting, melissa, when i speak to people who are positive and there is quite a few of them they'll not lose people from the platform instagram is its own growth business in a significant way. back to the core facebook platform there seems to be belief that how many people will drop off and how many advertisers will. their cost will go through some extent because they are spending money on various fforts. the bull will come back to we don't think they're going the lose subscribers or advertisers and stock trade is at 17 times earnings >> i would not argue that they may not lose subscribers but the level of engagement maybe different from subscribers

sub vi subscribers may be less to share their data with facebook they may pair back the number of hour on the platform that in itself causing advertisers to rerate how much they want to pay for those ads even if subscribers hang on, we don't know to what degree subscribers will remain the same i think there are some question marks here there are certainly a lot of defenders defending facebook right now. >> and coming back to the multiples as you may expect they would given that it is cheap can based on its previous growth rate >> always in the social space, snap has a filing out that shows its cut of 7%. snap is down below 16. humana is going to lead the s&p for the moment getting a chance to catch up to the news regarding walmart which broke thursday night i believe late.

>> i am watching some of the casino operators a bright spot today. session mccal, it is the 20th consecutive monthly, we are seeise seeise seeise seeing wynn resorts higher it is showing in the higher margin mass market they are seeing some indications from operators that the mass marn market is coming back and vip is coming back. the barbells of the markets are holding these guys up. >> 20th monthly gain for mccow amazing. >> tyson is down it has to be related to china tariffs which includes frozen pork and some of the things that

we'll see tariffs is higher. uaa, data breach for my fitness pal, users are affected. we had under armour, and hackers starred stealing data back in may selling them on the dark web and boeing production is affected by the virus last week and not as damaging as some of these others >> it is interesting, the fitbit morgan stanley downgrade to an under weight part of the reason of the downgrade is the software opportunities and health coaching will take time to mature it will implies the collection of data and all these issues that's something to flag >> i know you hit humana but it is worth coming back to it again. it is up 7% since the first real reaction since we heard from the first story of the journal something analysts are coming

in it seems unlikely that walmart were moving ahead buying the entire company just to put it in some perspective. humana and aetna deal, 24 times forward year earnings, that was mid of 2015. if you want to apply that kind of multiples or low 20s multiples, you are ending up of a stock price of 340 or 350 just to put that in perspective and to melissa's point, we are talking about mid-40s billions for walmart, a company that typically did not pursue large transactions about 11 billion of a number of years back we are likely partnerships is what they are focused on they have an existing one, expanding and deepening those partnerships to try to reach particularly the senior population that is over representatives in terms of people walking through walmart's doors. on the activist fronts, a two

and a half billion dollars company. they're in the backup company of software there is laws that mandate and you have backup software and recovery software up there that's what they provide and they compete with the likes of ibm or dell or enc, the deadline was wednesday, they filed this morning seeking for four seats on an 11-person board. the ceo is one of the seats that's up. they say in a letter this morning, they earned a little over 10% of the company. a public software company, you are likely familiar of best practices and consistent with their growth rate and opportunity and they go onto say high growth company congest by lower growth margins they would put them in this category recognizing their

growth potentials and calibrate investment levels appropriately a commvault is not executing against the pyaradigm. for a company of this size, the play book for elliott. it has not resulted of new premiums on the stock price trade but something to keep an eye on >> so it is interesting they go after it it has not gone taken over and a lot of people thought they would be it was always mentioned. maybe that's part of the optimism forcing it to sell. >> obviously, it increase cash flows and incremental as well. >> only fools are worse, saying

our money losing post office is making money with amazon this will be changed also, our fully taxpayer retailers are closing stores all over the country, not a levelled plainfield amazon's 14 handles not far being from jeopardy. mall vacancies is at a 6-year high no surprise after the brookfield of ggp deal. >> those are out there the level mall operators, they're not seeing it. it is in sort of a different level. it bears repeating that we don't understand the president's methodology why he continues to say that the post office is losing money on amazon that's not the case but certainly many of us are opened

to understanding it in a full way. we have said many times amazon does pay sales tax and every state requires it. it is third party operators on the platform who complains about amazon competing with them if their products are selling well. something we dealt at our company of a number of years ago. it is not the case for amazon, you wonder whether bezos will feel some sort of need to address this more publicly given the president just relife-threatening >> wh -- relenting. >> basically telling him that he's wrong i don't know -- >> i don't know if that's a win. it will be interesting how mr. bezos will be advised on something like that. he has kept quiet and he'll continue to do that. maybe that's the best course he showed up at the white house a couple of times when they had various panels and commissions

>> and also there are reports today of the hq 2 search that was on they're spending 48 hours at these finalist cities, how many thousands of jobs does that bring and how much does that worth for the white house? >> and of course, everybody has noticed that three of the potential candidates are all in or near washington, d.c. so the percentage of chance you can argue that bezos establishing the second amazon head quarter of the nation's capital is fairly high >> we'll watch that. dow is down two-points adding 40 points to the index. let's get to bob pisani. >> happy monday. 3-2 declining. i want to highlight two groups healthcare, you may expect a little more action on the reports that walmart/humana is in discussion, but not really. some of the insurers are up,

anthem and cigna and that may make sense hospitals flat -- you may think there may be more competitions and you can see modest move what's going on. more important is technology and at the open semiconductor were again under pressure this is an emerging story as we get into the second quarter. some of the big names are all down today we are a week and a half away. tech and financial are dominating the discussions tech and financial are going to be the two biggest groups that are out there with the biggest earning growth we are only 8% from the historic highs and we are expecting really big earning numbers up 18% for the quarter and the whole year that's the best number we have seen in seven or eight years so a lot of pressure. the pressure is on technology and financial stocks for simple reasons. number one, they are the biggest sector and that's where the earnings growth comes from tech and financial are better

than 20% growth in their earnings everybody else is in the low teens. that means big pressure to make those numbers and semiconductors are way out there. they have tremendous move up so far this year. that's a contention here for some of the conductor groups most of them are off of their highs. micron are off nicely for the year they had their earnings couple of weeks ago 10 or 20% and nvidia on self-driving cars and research supply materials. everyone hits their highs a few weeks ago in semis and the trends have been down. they may have trouble hiitting all of those numbers people have february reporting quarters is about 20 of them the numbers are off the chart, terrific earnings are of 31% of that group of 20 or so companies. way above expectations

that's a very good early sign, the other sign out there is companies are expecting to report more on what they are doing with the tax cuts. we had about 150 reporting bank of america did something on this this morning. 30% of 150 are giving one time bonuses and 20% giving retire contributions and buy backs and dividends at 20% more cap spending at 40% that's a good sign at 40%. we are expecting a lot more commentary from these companies and other companies about how they'll be spending that tax money. that may provide another boost for earnings i will be back at 10:10 a little bit of preview of what we can expect of the spotify, right here back in about 20 minutes. melissa. >> thank you, bob pisani let's get to rick santelli right now in chicago >> hi melissa lee we are actually getting a little bit of steepening today up three on the 10-yr, you are looking at

the chart. if we open these following charts up to the beginning of february, you will get a bit of an honest market opinion 10-yr-year-old hovering since the early part of february there is so much focus on the credit markets in general and debt and issuence and how barely investment grade there is a lot of them out there, more than what we have seen in the recent past. we want to pay attention to hyg, it is trying to double bottom there at 85, slightly below. you want to pay close attention here this is at a time where yields have been moving down in the treasuries if you look at lqd, the investment grade, same scenario there. a little more nervousness on the investment grade side due to the pricing structure. if you are taking a risk, get

the biggest yield if you can dollar index, slightly elevated. the february 1st chart give you a true understanding of the marketplace. remember when we are sideways in 22 sessions and 10s. lo especially outside of the dollar yen. if you look at the euro, basically 124 seems to be a top but not moving quickly much below that level carl, back to you. >> rick, thank you very much more on humana talks, our kourtney reagan is watching that >> walmart/humana are in talks it is unclear whether the pair will merge p analy analysts are bull issue in general. there are 4800 pharmacies. they generate about 11% of annual sales from health and wellne wellness analysts projected an out right deal would be for walmart

particularly as it adds to incremental sales and drive traffic to stores. the thinking is 14 million subscribers would be incentivized to get prescriptions at walmart stores and more in-store clinics. plus as the largest private em employer, it could help lower healthcare costs for its own 1.5 million employees. and if healthcare is leaning towards physical locations, walmart could not miss out and aetna's deeper into healthcare so analysts all over calling for

a potential deal between walmart and humana transitiform tive. we'll continue to follow those stories. back to you. >> we know you well, courtney, thank you very much. dow is down 21 and amazon at 13.96, three weeks ago with 16 and 17 back in a minute my time is thin, but so is my lawn. it's been worn down to ugly thin grass! now there's new scotts thick 'r lawn, the revolutionary 3-in-1 solution for weak lawns. with a soil improver to strengthen roots! seed to fill in gaps! and fertilizer to feed! the result, up to a 50% thicker lawn after just one application.

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because when it comes to your finances, if you focus on today, tomorrow has a way of working itself out. take a look at what elon musk tweeted over the weekend. despite intense efforts to raise money including a sale of easter eggs, tesla has gone completely and totally bankrupt, so bankrupt you can't believe it. he did not stop there. went on to others. there are many chapters of bankruptcy and as critics pointed out, tesla as them all, including chapter 14.5, including the worst one. i think there was one more after this, in which he tweeted about his tears. >> bankwupt is what the sign

says there >> tesla-qila. >> you've got to wonder how effective these are. >> prior to this tweet storm, he tweeted that in a few hours, he would have a major announcement to make. and so a lot of tesla-watchers saw that tweet and thought, wow, what is this announcement going to be? and it ends up to be a massive april fool's joke, which shows perhaps that the company is a little bit tone deaf in terms of what is going on, and the context of this is that people are, in fact, questioning whether or not the company is going to have to do another capital raise. the stock as you see there, continues to sink. and yet he's making all these jokes about bankruptcy >> sub 250 takes you once again back to march of last year >> if we get to 248, that's a 52-week low. so -- >> has no fear i guess. he doesn't care, right so -- >> part of his charm as a celebrity ceo.

>> gm has a market cap far above te tesla's again. >> when we come back, we'll continue to monitor tesla down almost 7%, we'll watch amazon, the president tweeting about the company again this morning stock down below 1400. we're back in a moment you know what's awesome? gig-speed internet.

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u & a jim mcdonald hoping to support the dow. the top performing components, walmart the worst. but the story might be on the s&p where amazon and netflix are the two biggest laggards we're back in a minute

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good monday morning. welcome back to "squawk on the street." sara is off today. getting some breaking economic data the ism. let's get to rick santelli in chicago. rick >> wow, okay i love bringing out exceptionally strong numbers so for our march read on ism, we're looking at a number of 61.9 i have 20-year database in my hand, the highest level is 61.4. that's from may of '04 so you can see we've taken that out. strong number in that sequentially, that follows a

number that is -- let's see, i take that back 61.9 in new orders i apologize. i wish it was a 20-year high the actual number for the headline is 59.3 and that follows 60.8, which is the comp. going back to that aforementioned 2004 number, 61.4 so 61.9 actually for new orders, different scale there. that's down from 64.2. prices paid, pretty big jump 78.1, a move from 74 and finally, an older number on construction, our construction spending number up .1. a miss ofbit of a disappointmen. 57.3 is our lead down from 57.7 on ism national. carl, back to you. >> rick, thank you very much rick santelli, our road map this morning kicks off q2 a look at where we can put money to work in the new quarter plus, firing back. china slapping tariffs on the

u.s. we'll take you live to the white house for the latest. and spotify getting ready to go public in the first direct listing since google back in 2004 what you can expect from its first day of trade, straight ahead. stocks lower across the board this morning on this first trading day of the month and the corner china slapping some new tariffs on u.s. goods overnight, sparking renewed concerns. chief marketing strategist at cantor fitzgerald. welcome. >> thank you for having me. >> trade was the story and then fang was the story and both seem to be the story today. where do we stand on trade as we await some of the specifics? >> look, i think trade is important. i think it's a nontrivial risk to the performance of the markets. and frankly, to the global economy, as well i don't think we got anything out of china over the weekend that was a surprise to anybody they're obviously going to want to be measured in our response to tariff implementation and at the end of the day, there have been plenty of exceptions to the broad tariff originally articulated by the white house so for me, trade is really not the big worry here it's other things.

it is the increase in borrowing costs on the short end of the curve in particular that has me more concerned than trade. >> specifically libor. >> libor in particular is important but also the commercial paper market is very important to some large companies. and 90-day commercial paper is now above 2% and for the consumer, as well. even revolving credit is not the main driver of purchases by consumers. it is an important one and they're starting to feel that as well. >> so you didn't take any comfort in these explanations how they were related to the tax bill or foreign companies and their u.s. subsidiaries? mechanicals. >> i do they have the mechanicals have some validity to them. however, the fed is increasing interest rates, that's the number one driver. and second, we have a late-stage deficit problem right now. the t-bill issuance has spiked and will continue to accelerate as we look to fund the deficit the. so that's not something that's going to go away any time soon and whatever the cause, that has

real impact on borrowing costs for both consumers and companies. >> $1.2 trillion in consumer mortgages tied to the shorter end of the curve are you concerned this is going to eventually spill over to the consumer that's sort of where we haven't yet connected the dots fully in terms of this spike and the two-year yields we've seen >> yes, i am concerned about that now, these sorts of transmission mechanisms take time. >> right. >> and for me, i don't believe financial markets necessarily see that sort of thing coming right away i feel like any late-stage rally as i think we are in right now, it could be another six to nine months of head room we have to see asset prices continue to increase but eventually, tighter lending standards tend to chill asset price performance. >> certainly, you look at conference board percentage willing or looking to buy a house, right, looking to buy a car. and appliance, they're at multi-month lows you think that's going to continue that trend. >> i do. and it's interesting, though, because other gauges of consumer

sentiment, broader gauges of consumer sentiment, actually look fantastic we see a lot of numbers printing near highs when it comes to consumer sentiment and that usually is exactly what one would expect at about this time in the cycle >> how concerned are you about technology, big tech, and the trillions of -- billions, i should say, we have lost in market cap the last few days >> i think that's another gauge, frankly, of investor sentiment i think people are becoming more discerning about what -- >> market sentiment. >> i do think it is. and, of course, there were solid osyncretic things that had been happening in varies companies that have been read very negatively and have been taken from one company and applied to many others, which, generally speaking, means investors are getting a little bit more concerned about every little piece of bad news that comes out. >> so then where do you go what's the alternative right now? >> well, you know, i think equities still are the place to be cash is actually an asset now. you can actually get a yield on cash now but it's still not on a relative

basis, interesting relative to equities high yield has head up incredibly well. that to me is confounding because it's interest rate volatility that has led to the equity market volatility i think high yield is okay for now, but it's probably the other shoe to drop, so i'm a bit cautious. >> in terms of the rerating going on in the market as we speak and we were taking a look at s&p tech down by 1%, qs down by more than 1%. >> yes. >> where should tech trade relative to the broader market >> that's an excellent question. i think at this point in the cycle, i think at this point in the cycle, one can make an argument it should trade at a premium to the rest of the market, because gross steel feels pretty good. but if history is any guide, one needs to become more conservative, and that premium, that spread to the broader indices should compress over time so it's still a good place to be but you better not be the one caught at the end of the game of musical chairs here in tech.

>> finally, ism, prices paid at 78.1, a seven-year high. >> yes. >> so you think inflation will be a recurring theme, as we move into these -- >> it's interesting. in terms of inflation, i am actually not a big believer we're going to get accelerating inflation, because of many secular forces in play, including technology, disintermediation of the worker, globalization, which obviously imports deflation to some extent, especially in labor and in some commodities. so i'm not worried about inflation. but i think we will be getting just enough to give the fed head room to raise rates probably three times rather than four, because i think growth will slow until the end of the year. and so inflation will provide a catalyst for higher interest rates. but it won't be out of control >> all right pete, good to see you. >> thank you. >> interesting stuff david? >> thanks, carl. shares of tesla down again this morning, coming off what was the worst month ever for the company's shares under fire as federal investigators criticize the automaker for releasing

information regarding a fatal crash last month this is elon musk jokes about tesla going bankrupt over the weekend. for more, let's bring in ubs auto analyst, colin langen colin, i'm all for lefty, although i imagine some tesla shareholders are scratching their heads a bit. what's your reaction to the bankruptcy tweets, all be it on april fool's day from mr. musk >> yeah, i mean, i don't think that a company is in imminent danger of bankruptcy, although i don't think it's something i would be joking about. we look at it very likely by the third quarter if they can't get this model 3 ramped, they're going to have to raise capital i'm sure they'll be able to get equity participation but they'll be one of the first times they're raising capital without some good news to talk about if they can't get this vehicle ramped >> all right so give me a bit more on capital raising specifically what are their needs, at least in terms of your expectations, and how do you think they'll go about doing it, given they have

obviously tapped both the debt markets in the past and also done equity issuance, as you point out? >> definitely depend if they could ramp the model 3 there is a working benefit if they can get that ramped in q2 if they can't, they have to raise at least a billion dollars. that would be some form of equity so if i was a holder, i would be expecting some form of dilution. >> so colin, you had mentioned that management had said that it would need more than $3.4 billion in cap x in 2018, and that does not include any spending on a model y. in terms of the need to raise capital you foresee in the third quarter, is that inclusive of this $3.4 billion number, or is that on top of >> well, i mean, if they -- i mean, i think the way they would like to do it, they would ramp the model 3 and then announce a capital raise for the model y. if they can't get it ramped,

that puts them in a much more challenged position than historically they definitely in my opinion are going to need more capital than the billion i think the billion would keep them going as it bides them more time to ramp the model 3 >> the way tesla stock is trading, colin, it seems to indicate that there is an immediate near-term pressure on the stock in terms of, i don't know, even capital needs what's your take as to the severity of the decline we've seen recently? >> well, i mean, there's two major things going on. you obviously have the tesla autopilot crash that obviously raising concerns about, you know, that system. whether that maybe it's actually fully safe you know, i think in talking to a lot of experts, autopilot still is not a great name, because the driver really has to stay aware and maybe it needs some form of driver monitoring to make sure that the driver is aware so i think that raises concerns about liability, and that system and obviously, you know, we're worried about this model 3 production there is a lot of news coming out that's a concern

and on top of it, some of the initial reviews from customers are finding issues with this car and have to work this out. not only do you have to ramp this product but make sure the quality improves as you ramp it. so a lot of challenges ahead this is really a very important year this is the future of the company with the model 3 and it's not starting off very well >> separate from tesla or broader than tesla, there's this autopilot issue. there's the uber accident in phoenix. i wonder, i mean, what's happening to mobility right now? or at least the conversation about autonomous mobility overall? >> yeah, i think we've seen here -- we'll see how it plays out. i think we've seen maybe a little bit of a back step. i think we've had an awful lot of hype around autonomous technology and, you know, we might need to take a step back, do a little bit more diligent testing, maybe question the real-world testing. still doesn't take away from the fact that we've had pretty incredible progress on the autonomous technology. but maybe we need to do it in a little bit more thoughtful approach going forward, so --

don't see amajor setback, but do think maybe people are rethinking more caution as the testing occurs. >> and colin, finally, i mean, he may be joking right now about bankruptcy, but musk has proven to be, of course, extraordinary at developing enthusiasm around whatever may be coming next for tesla. where do you think he's going to sort of divert people's attention in front of what may be another equity offering >> i mean, it will definitely be the model y, which is supposed to be the mass market suv version of the model 3 that's obviously a vehicle that could have an awful lot of volume behind it, as well. and, you know, he's talked about sort of inventing the message th machine that makes the machine so the future factory would theoretically be an assembly factory. i would imagine that would -- in their view, be the story they like to tell if they have to raise cap -- when they have to likely raise capital in the

future as opposed to raising capital when they're in a cash bind if the model 3 doesn't take off. >> which is exactly the time you don't want it. colin, thanks for taking time this morning appreciate it. >> thanks for having me on. when we come back, president trump continuing his push against amazon's jeff bezos. plus retaliation china announcing it is imposing new tariffs on over 120 u.s. products we'll take you live to the white house for all of the daietls "squawk on the street" will be right back don't go away. [phone ringing]

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amazon, the worst-performing stock in the s&p 500 right now, be down by 3.75% the president attacking the company once again our eamon javers joins us from outside the white house with the very latest. >> that's right. the president a short while ago continuing to tweet about amazon here's what he posted just a little while ago about the company. he said only fools or worse are saying that our money-losing post office makes money with amazon they lose a fortune, and this will be changed. also, our fully taxpaying retailers are closing stores all over the country, not a level playing field. and i can tell you, i just ran into gary cohn, the outgoing national economic council director in the west wing a few moments ago and asked him about

the president's comments about amazon he didn't want to engage in that, but did say this week will be his last week here at the white house. he'll be leaving tuesday, wednesday or thursday, he said he said he'll be leaving this week, just not monday and not friday he also said that he's going to sit in on that meeting with larry kudlow here at the oval office at 2:00 p.m. this afternoon. so the president, larry kudlow and gary cohn all in the oval office together, presumably they will be talking about trade, and, of course, we had the announcement from china yesterday that they are retaliating with tariffs of their own in response to the u.s. steel and aluminum tariffs the president imposed a week ago. china rolling out those new tariffs on meat, food and other u.s. products in retaliation for the steel and aluminum at thtat representatives. i talked to a white house spokesman here who simply called it very unfortunate. he said the u.s. tariffs were legal and appropriate and any chinese retaliation is very unfortunate. he called that a continuing unfair trade practice by the chinese, guys. so a lot on the plate here of

the white house on the economy and trade today. >> eamon, we're going to watch that closely as larry kudlow takes the chair, and we'll see how the direction of policy debate continues with larry in control there. thanks, eamon javers. walmart in early talks with health care provider hue humana. hey, bertha. >> they have a long standing relationship, but sources are telling cnbc it's unlikely they'll pursue now an actual merger, but they are talking about a deeper partnership for walmart, it would help boost market share for the pharmacies and provide more services for its senior customer base for humana, it's a bulwark against the competition. united health is now the number one medicare advantage insurer by membership. it could also help humana expand its clinic presence. it has about 200 across the country and home health care services which would be a big

differentiator for both firms. >> 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 physical presence. but i think the key for walmart will be to access the home health element here, and humana's focusing on senior citizens >> and also being able to offer those services in the senior market is critical, because if the cvs/aetna deal is approved, that combined firm could offer compelling drug benefits humana shares are up on the news today. that's putting its market cap close to $40 billion, which would be a very sizeable deal for walmart if it were to decide to pursue an acquisition walmart declined to address the speculation, guys. >> bertha, just collecting some

of your reflections as when you first heard this news and put it in the context of some of the other deals we've actually seen happen what do you think this could mean >> well, it would certainly be transformative and there is this move to try to get primary care to try to get care for chronic conditions into that retail, less expensive setting. it would certainly be something that would challenge hospitals, which are already seeing their volumes drop they have to really continue to reevaluate their business model. it could be a challenge for some physician practices. on the other side, in areas where walmart is strong, some rural areas that are underserved, that could really be a boost for consumers the interest thing is, you know, humana also partners with a lot of folks they don't necessarily have to do an acquisition or be part of an acquisition they partner with oscar health, for example, on group health in kentucky and they're now partnering, in fact, on a research deal with

united health to try to use block chain to keep those doctor provider listings up to date if you tried to find a dobctor who is in network, you know how hard it is to find an up to date list. >> when something like this becomes public, it can put in jeopardy some other relationships, something humana does not want to do, particularly if -- it seems more likely than not, it doesn't go anywhere in terms of becoming a full-blown takeover. >> yeah. one of the things is they have already been in a position of being a takeover and people have speculated about that. but the thought had been that another insurer would want to take them over you know, humana is smaller, but vertically integrated, as well as i mentioned, they have some 200 clinics that they operate in 27 states, and they're sort of building up that franchise of it's called conceivo, i

believe. and brought up kendrick health care's health increasing an important part of care for seniors. and as the senior markets continue to grow with more and more boomers aging into medicare, that is going to be a very important business, as well >> bertha, good stuff. thank you so much. we know you'll watch it. our bertha coombs on walmart humana when we come back this morning, california making it legal to test self-driving cars despite some recent accidents. we'll look at the future of autonomous vehicles with the former administrator of ntsa d e p wn fl rct. back after this. let's begin. yes or no? do you want the same tools and seamless experience

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time for our etf spotlight dom chu looking at which index and sector-related funds are showing some of the most upside and downside momentum. >> a lot of ways traders look at quantifying the up or down moves. they use momentum-based indicators, measure different aspects of price movement. one is use of moving averages.

we're looking at the average price of these etfs over the last 50 days, otherwise known as the 50-day moving average. then looking at how prices typically trade around this average price using something known as a standard deviation, which is just a measure of where prices fall most of the time compared to where their average is over that defined period. the more standard deviations above or below an average, the rarer the price move is. so according to data from market analytics firm kensho, some trading the furthest below their recent average price are the more economically sensitive sectors. for example, the spdr, the financial etf, xlf, around 1.4 standard deviations measures below the average price. and among the major sector spdr etfs, the materials fund, xlb, around 1.5 measures below

its average. the only one of those major sector spdr s&p 500 etfs considered overbought is the utilities fund, xlu, which is around one-and-a-half standard deviations above its average traders will be taking note, if any of these funds start to go even further away from their average prices that's one way to look at whether or not there is momentum really going behind one of these moves, guys. back over to you >> all right,dom thank you. dom chu at hq. spotify getting ready to make its public debut here tomorrow at the new york stock exchange bob pisani joins us with what we can expect it is a direct list as opposed to an initial public offering in which capital is raised. that's not the case here and i know the price action and way it's regulated a bit different than what we're typically used to. >> much different, and the street is watching very carefully. this is basically a discount kind of listing, and they have tried this before with limited success in the real estate business we'll see if this works here

spotify will begin trading tomorrow, here at the nyc. citadel securities has the listing. we have highlighted how unusual this direct listing is no new shares are being floated. all the shares being sold would come from existing shareholders. there is no traditional road show, they they did hold an investor day there is no bank buying shares from the company and selling to the public as is typically done in an ipo. and there is no book, as we call it no one soliciting orders to buy and sell at the open finally, essentially no lockup about 90% of the shares will be available to trade, add it all up and it means initial trading is likely to be more volatile than usual how are they going to set the price? the opening price will be determined by orders from broker/dealers there is no bank under any obligation to stabilize the price as is typical with an ipo. in a secondary market, it's traded to 125. this year that's not very helpful in determining the price. nkm just initiated coverage with a price target of $200

though they stress that's a 12-month target. they have no idea how it's going to open. morgan stanley hired as an adviser and supposed to provide what they're calling a reference price that will be based on the trading in the gray market, as well as fundamentals, but nobody knows if this is going to matter or not second question, what will happen once the shares start trading. we don't know there either no new shares being issued well-known company, significant retail interests, the price should rise. but you could also argue that the large number of shares available to trade may suppress any price gains. again, we don't know finally, when is this going to open not early. don't hold your breath the price discovery process is taking a long time, likely how long again, i don't know, and no one else does. i'm betting we'll be eating lunch by the time it starts trading. deductible not definitely not 9:45 the street is watching carefully. small people getting into ibos have bitterly complained, as you know, david, for the 20 years i've been down here it's too expensive and it is.

typically 5 to 7% for a company to go public just like in real estate, people have complained for 25 years, it's too expensive, this has a 6% listing to sell your house and people who try to come in and discount broker that end of the business that is an essential way to do that, as well. the street is watching to see if this kind of formula provides any kind of way forward for other companies in the future. >> so what would have to happen to make it look like this doesn't work, that you do need underwriters come in? >> massive volatility, massive waves of selling at price swings an ipo significantly below your initial price. if you -- the problem is, we don't know what the expected initial price is supposed to be. it's unlikely it's going to be $48. it's unlikely it's going to be -- >> a lot of people talking about 25. >> close to 100, 125. >> bob, to your point, there's $178 million shares outstanding.

106 million can trade under rule 144. so there can be enormous supply coming on. but they do seem to have created demand, as well. >> remember something. you have 90% of the shares that are available to trade at the open if it opens at -- pick a number. $125 the average insider price is probably, i would bet somewhere around 20, $25 maybe. >> for some. >> series g, a long series of offerings here but that's a big difference. and when you see that, all of a sudden think about that 90% out there. if there is a huge premium for those existing shareholders out there, we don't know if they're going to turn around. >> and that's all that matters it almost doesn't matter about the volatility of the first day or huge price. this company does not have to raise money. it's allowing investors an exit. so as long as investors get an exit and they are made whole, probably at a lower price, all is well, right >> they're going to be very happy. but we don't know -- we've never

seen 90% of available shareholders can just sell the shares and i'm sitting there, i own this at $25, and it's $125 that's very tempting so we don't know if 80% are just going to sit there we just don't know. >> no, we don't. although it probably -- we do know it's going to take more than a day to figure out what a real price is for this stock, right? >> and that's why it's going to -- i believe, and nobody said contrary opinion to me, that it's going to take a while to open they're going to be very careful about opening this, and seeing where -- what they don't want under any circumstance is to see massive gyrations in pricing. >> we have a lot to talk about on spotify, the fundamentals which we'll be talking about a lot tomorrow bob, thanks. >> okay, pleasure. let's send it now to contessa brewer for a cnbc news update. >> hi, melissa here's your update right now russia released video of the country's new anti ballistic missile. it added the missile is in service and being used to protect moscow. a spring snowfall hit the northeast in new jersey and connecticut, up to 6 inches of

snow expected in some areas. what a mess this morning and, in fact, the new york yankees postponed their home opener until tomorrow afternoon. jury selection getting under way in the bill cosby sexual assault retrial. more than 180 potential jurors summoned cosby arrived at the courthouse during the snowstorm earlier this morning. did you see this shot? notre dame taking the inbound pass with three seconds to play tossing up a three-pointer, the swish through the net to win women's college basketball championship for the fighting irish. wow! the exact same thing in the semifinal win against the university of connecticut. that's our cnbc news update at this hour. back to you. >> tremendous shot contessa, thank you. when we come back, big tech's big losses. concerns over regulation, a crackdown on facebook and amazon getting the presidential twitter treatment, contributintog losses in tech stocks. much more "squawk on the street"

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i'm carl cantonia with melissa faber. we're an hour into trading q2 begins with a bit of a selloff. dow down almost 1% s&p down 33, which is a full percent, obviously fang not working watching some other consumer discretionary names also in the red. >> certainly another rough morning for tech stocks as facebook, amazon, netflix and alphabet make another move to the down side with the nasdaq as carl mentioned down by well over a percent now. joining us on the cnbc news line is morris mark, managing partner. morse, great to have you with us got to ask you, some of your top holdings as of the end of the year include stocks hit hardest. amazon, invidia, facebook and alphabet are you concerned?

have you been trimming your position >> let me answer the question backwards. we reduced some exposure where to control market risk, particularly where we're not impressed with how management has addressed certain issues we have not eliminated exposure by any means we think that the future for the economy is going to be guided primarily by disruptive technologies, and these companies are leaders, not only in developing these technologies, but in implementing them, and they're affecting the core of the american economy maybe that's why you're getting some sort of a reaction. but basically, they become the major media companies, whether some of them recognize it or not. i think some do. they have become the major distribution platforms and interestingly, they're not the biggest in the world that's the interesting thing to me i think probably in the area of search google is, but in the area, retail distribution, the major companies exist outside of

the united states. not in the united states >> well, that was -- i wanted to ask you a followup question to how you answered my initial question, morris, because it made it sound like you were displeased with what zuckerberg has said in response to what has happened since the cambridge analytica story broke. was it facebook specifically that you were mentioning when you said you were disappointed how management was responding to certain issues >> i guess the short answer to that is i don't want to say -- i don't want to single out one company. but i certainly be think in the case of facebook, i'm a little surprised that in 2015, they gave their data to somebody for a specific purpose, told that party not to use it for anything else, but had no means of auditing how that data was used and no means of shutting off that data or when it was determined it was not used in a manner to which they had given it to them that's -- you know, that's just -- that's business control.

that has nothing to do with the vehicle or anything. i'm just surprised now, i'm sure there's a lot of facts that i don't know and none of us know but i guess it's up to the companies to do a better job of explaining what happened and how they can control this in the future >> morris, if memory serves, last week when we were talking to you about facebook, specifically the stock price itself and where you might see an entrance in terms of being a buyer, i think you said right around 150 we're not too far from there now. do you still maintain that as sort of an area where you would be looking more closely? >> i will put it this way. at this price, i think an awful lot of the risk is reflected in the price of the stock okay that's the best way to put it. how we manage our funds, we believe in concentration but also diversification we see this environment as an opportunity to let's just say broaden our exposure in the area of disruptive technology, particularly the cloud particularly the leading companies that are either

providing cloud services or using the cloud to provide important services >> right well, one of those would be amazon and morris, in concluding here, i'm curious, how do you as an investor respond to or deal with something that really you've never had to deal with before, which is namely presidential tweets attacking a particular company over and over again? >> well, i think you have to pay a lot of attention to the most important person in the country and respect that but conversely, i believe there was criticism in the past towards pricing at boeing that the government is still buying boeing airplanes and it's been a very good investment secondly, i think it's reasonable to conclude that postal rates may go up i don't think that really violates the amazon thesis and as i said, amazon, by the way, is not the largest company of its type in the world

and if there was no amazon today in this country, there would be one. mobile technology exists, patterns of direct distribution exist. walmart has already made a lot of steps in this area that are quite large, and i would expect that to grow over time how fast it grows, that's a function of what walmart decides. you ought to ask them. but interestingly, walmart is a major investor in the second largest -- i would call it marketing platform in the world and that's jd.com. so if there was no amazon, there would still be an amazon, if you understand what i'm saying and that's how we're sort of addressing this. we expect some of the cost might go up. but i think it has to be viewed in the context of last year by our calculation, free cash flow from operations and amazon was $18 billion. okay >> okay. morris -- >> i'm sorry. >> great to speak with you morris mark, mark asset managements. >> thanks.

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hey! you still thinking about opening your own shop? every day. i think there are some ways to help keep you on track. and closer to home. edward jones grew to a trillion dollars in assets under care, by thinking about your goals as much as you do. welcome back time to get over to rick santelli at the c & e group for the santelli exchange. >> good morning. and thank you, david i like to welcome my special guest, first of the week, charles millard. thank you for joining us. >> good morning. >> you know, i look up at the board and see a ten-year note yield about 20 basis points down from its high yield close of the year at 295. that's shy of the elusive 3% but all we talk about these days are debt and deficits. what about pensions? what's the state of state pensions >> well, it's not good, rick it's not good. it's gotten worse in recent years. you know, about 15 years ago,

the funded status of most state pension plans was about 92%. they were reasonably healthy, on their way to a good result and now after the financial crisis, they're about 68% funded that is a huge gap that's going to have to be made up and crowds out other funding sources, as well in fact, if you look at the boston college projections, they say if things go well, by 2021, they'll be 72% funded. so there's a long, long way to go before they're the way they ought to be. >> you know, for the average american, how is this crowding out effect going to affect their lives and their ability to interact and get credit? >> it's huge and you're not going to see it as an explosion. what's going to happen is bit by bit by bit, there will be fewer cops and fewer teachers. for example, in california, a stanford study shows that the operating budget for municipalities in california over the last 15 or so years went up about 40%. that's a pretty big rise, but over more than a decade.

in that same period of time, their spending for pensions and retiree health care went up 400% los angeles county is going from 3% ten years ago to 10% ten years from now that's like a 10% tax cut or tax hike on everything else, or a 10% budget cut on everything else so i'll give you one last statistic. illinois, due to these kinds of costs, a year ago had $15 billion in unpaid bills. that's what's happening in the crowding out effect. >> okay. now let me get this straight of t the. so ultimately, there is going to be an intersection and this crash isn't going to be a good thing. how can these states get ahead of it? to me, one clear issue to solve this might be cutting back some of the future benefits but there's cases pending in front of the supreme court to make that possible yet undecided. your prognosis, charles. >> right so jerry brown, one of the most liberal governors in the united

states, has sided with pension reform in california there's something called the california rule, which basically says, if you show up when you're 25 years old, they can't cut any benefits, be even if you wouldn't earn them until you're 55 years old and the mid-level court said, sure, you're entitled to a reasonable pension but not one that is calculated in the mostaggressive, absolutely best, highest, most generous way possible to you so if that rule gets changed by the california supreme court, you might see other states beginning to make some changes and you have to look at the simple math. everybody has to give -- >> real quickly, charles, since i'm in illinois and you mentioned that $15 billion, there's also been some issues related to an appeal regarding what's called step up salary increases that could prohibit illinois from making adjustments. can you quickly give us the rundown on that before we run out of time? >> well, illinois's supreme court threw out two issues -- two opportunities for pension

reform in the last couple of years, because they say the constitution of the state allows absolutely no change so follow the california litigation, because if the california litigation goes the other way, that's an indication that other states will find their way to some elements of reform, as well. >> excellent charles, that's a great evaluation of the situation. of course, we'll bring you back with future updates. thank you for your time. david faber, back to you. >> okay, thanks, rick. important subject, of course. when we come back, the president having a busy morning. right now you can see he's at the white house egg roll also, though, taking on amazon a series of tweets that sort of continues from last week and amazon, as you see, down about 4% we'll be right back. we've been preparing for this day.

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welcome back to "squawk on the street." stocks are moving to their lows of the day so far. one of the driving forces behind the down day is the consumer discretionary sector home builder and home construction related stocks are among the big laggers. you have pulte and lennard and lowe's among the biggest decliners. that pushed the home construction etf below the 200-day moving average or longer

perm price trend line. the home builder stocks were the winners the last couple of years. certainly a trade to watch we'll send it back down to you guys, carl >> watching a lot of moving averages today, dom. thank you very much. it is now legal to test self driving cars without a human test driver behind the wheel in california despite the rent accident involving uber's self driving car in tempe, arizona. while no company applied for a permit yet, public safety is taking a backseat to financial interests. joan claybook is president amaritus thank you for joining us we have the ntsb looking into the uber crash where are we right now in autonomous and the way in which regulators are or are not keeping up >> i think regulators are not keeping up the public safety is definitely a risk. the u.s. department of transportation calls safety standards regulatory barriers.

they're having public meet thins this week to talk about less regulation and less safety protection for consumers there is a bill pending in congress that has passed the house and pending in the senate that would also cut back on safety standards, allow all sorts of exemptions and ignore the fact that we need to have requirements for cybersecurity which could result in terrible problems with these cars we need to have a vision test for the vehicle itself i think that's one of the problems that emerged in the tempe crash in arizona so that the vehicle is actually has to meet certain standards so that we know the vehicle can actually see just as when we go and get a driver's license, we have to pass a vision test there's no standards available for the electronics itself these are totally electronic vehicles so there are lots of missing links here and also the other issue is the

liability of the manufacturers if there is a problem. they say we'll assume the liability. recently in california where they adopted these new rules, general motors came in and said well, if the person doesn't keep their car up to date and repaired, then we have no liability. and luckily california -- yeah luckily, california -- >> you see a lot of daylight between the current standards and those that you think would safely allow this testing to take place >> absolutely. and luckily california would not let general motors get away with that but you're going to see in other states the companies are going to come in and ask for liability protection and they also are having to fight in the u.s. senate over this where senator bloomenthal says they want to say you don't have to go to arbitration and arbitration is a pro

industry arrangement and so the companies are not doing due diligence in my view and what they should do which is make sure the cars are safe. >> right is the testing happening though at enough scale to pose a -- obviously, one injury is too many but i mean this is happening in very small pockets, don't you think? >> well, yes but there is very small amount of testing going on. and one of the problems is that these manufacturers are all racing to be the first and they want to recoup their investments they put into this as opposed to -- and that means that we're going to have the consumers who are using the cars or on the road where these cars are being tested or used are going to be the guinea pigs. the companies want to sell the cars they don't want to just test them they want to sell the cars and let the public be damned it if there's a problem, well, that's just the price of technology dwoenlt think they're ready for

prime time there are different levels some are going to be semiautonomous and some are going to be totally. california allowed them to be totally autonomous i think it will be a long time before we see that on the highway. but in the meantime, we're going to see a mix of traditional cars and semiautonomous cars and that's very dangerous. >> we sort of throw around the term autonomy like it's one thing. it's going to have many different shades joan, we hope you'll come back soon and talk more about it. joan claybrook when we come back, battle of the tech ceos. mark zuckerberg slamming tim cook about facebook's data scandal. we'll talk to kara swisher about that with thdow wne do 1%, 233 don't go away. whoooo.

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