it's wednesday, april 4, 2018. "squawk box" begins right now. ♪ >> live from new york where business never sleeps, this is "squawk box. good morning welcome back to "squawk box" on cnbc i'm andrew ross sorkin joe kernen is back kelly evans is here. becky has the day off. as joe mentioned, big news, china announcing retaliatory tariffs this morning details released around 4:00 a.m. eastern time. more on this in a minute first look at the response in the markets. we are taking a tumble in the futures. u.s. equity futures dropping 300 points on the news let's see the dow, opening up closer to 460 points down. the s&p 500 off about 38 points.

the nasdaq looking to open down about 119 points let's show you what's happening overnight in asia. i wish we could show a chart so you could see the move hang seng off about 2% let's see how markets are reacting over 1% already in germany treasury yields, 10-year and 30-year. 10-year, 2.763 30-year, if you want to buy a fixed mortgage, it's available, starts with a 3 handle joe, let's get back to what's going on >> joining us is jack caffrey from jpmorgan morgan private bank steven rucitto from mizuho

security jack, we want to talk stocks at this point we were expecting volatility after january. and after not seeing much last year, but maybe not this much. what are the chances that the highs in january will be in for the year >> i don't think they wind up being the highs for the year but possibly the high for the first half we wind up grinding through. we have to make sense of how much things do slow and whether we see perhaps an impact on corporate psychology in terms of willingness to spend money and cut the checks we were anticipating earlier what we're working through now is more psychological. >> are the lows in for the year? >> i wish i could say that were true but based on futures, no. >> will it get to -- will we hit

a bear i don't know if it downs this time, we went up so quickly. >> i think that -- on any given day we have noise. noise around headlines noise around some event that upsets us, reaction to a tweet to actually get a 10%, 15%, 18% decline you need a credible story why the earnings outlook is at risk not a single sector having a challenge like energy in -- >> soybeans. >> i don't think soybeans will drive us >> but the question about this china trade war is not about soybeans, it's about autos, it's about jets it's about everything that's connected to the defense complex, if you will >> if you want to argue national security, intellectual property. two of the three largest economies in the world are exchanging words

>> it's still so small i get the big concern. but we're talking about a couple billion dollars around the edges of a trillion dollar economies, how serious of an issue is this? >> i don't think it's a serious issue in that regard unless the currencies start to collapse >> whose >> probably the u.s. dollar. >> dollar strengthened the last couple of days >> it's bounced off 90 on the dxy level, which is what bloomberg uses the whole concept is if the dollar keeps on moving down, you get greater inflation pressures. if you get greater inflation pressures, you'll have bigger moves on the front end and long end. that's the biggest worry for the equity markets the dollar is holding in everybody realizes these are proportional movements >> why would the dollar go down because of this? china's currency strengthening or people worries about -- what is the direct connection between a weak dollar and the concerns about a trade war? >> we are the reserve currency,

but we are also the largest net debtor in the world and we need to borrow an enormous amount of money. if they don't hold the currency you wind up in a situation where the dollar could move lower. >> yesterday the "journal" highlighted that foreign investors are buying the yield on the treasury keeps going down >> that could change that's the problem we do have somebody in the white house that is perceived to be unstable in a global footprint environment. >> where was -- you have been negotiate sieve on the u.s. economy every time you come on >> you say that all the time i went to 2.5% after they passed the tax cut. my number before that was 2.25 for the last five years it's been 2.25. where have they averaged 2.25 >> is it 2.50 with china

>> no, it's 2.50 based on what we'll get in terms of the tax cut. >> so the trade war is not going to -- >> at this point i'm not worried about a trade war. unless the dollar goes lower if that causes an interest rate problem, that causes a problem for the economy. what do we do in 2019? >> probably back to 2.25 >> the best we get is 2.25 >> that's about it >> i think that's negative >> it's negative against an equity market where people think it has to go up 30% a year i don't think it's bad >> you believe that pop laying growt -- population growth and productivity growth can't give us 30% >> no, i think the problem is the split in the employment and economy. we're spending so much on employment and healthcare, and that has to be adjusted around

>> we want to get to kayla tausche, she joins us from washington can you give us a rundown -- we're down so much this morning, but what is the timeline here? what did we announce what did china announce? how did this happen? >> what xhin thchina announced e revenge it would exact if u.s. went through with tariffs. it was first reported overnight on state tv and confirmed in a press conference with the dechity finandech i deputy finance minister. it would be what they call a proportionate response to what the u.s. listed. it's the third such retaliation that china would levee against the u.s. they have already sought retaliation on u.s. tariffs on solar panels, washing machines as well as steel and aluminum. this would be a third set of actions and it comes hours after

the u.s. trade representative published this detailed list of 1300 chinese imports it would target with a 25% tariff unless the u.s. and china reach an agreement between now and the end of may that's when the u.s. tariffs would take effect and china's tariffs would only take effect after the u.s.'s there's consumer products like dishwashers, golf carts. and the ustr elicited criticism from manufacturing, technology and business groups who said action was warranted but these specific moves will penalize consumers and small businesses president trump yesterday reaffirmed his desire to hold china accountable. >> they have a trade deficit of 5$500 billion a year.

it's not something we can live with so we'll be working with china we'll negotiate with china our relationship is good with china. we intend to keep it that way. we have to do something to seriously relieve that trade deficit. >> kelly, we first heard a couple weeks ago that the chinese and the u.s. sides were talking. we have not gotten an update on where things stand they have held bilateral talks in the past, and the u.s. says they have not been satisfied with anything that china brought to the table in the past so we're still waiting to see if these talks are different and if the u.s. goes forward with investment changes on china. treasury could wait a couple months to do that because it wants to study the effect that would have on the economy and it's watching the market reaction to all of this closely. >> golf carts. golf carts

they're made in shanghai on masters week they're dumping golf carts on us >> i could go on, joe. they're targeting syringes, dental fillings. this is a very, very specific and narrow list that's extremely long it's about 58 pages long those are just a few items contained in there >> am i just being an american and saying that the tariffs -- a lot of this stuff existed before we started, right? we start why do they have to retaliate if we're -- if we were the retaliators to start, how can they retaliate against our retaliation when they were the ones that were dumping and charging tariffs on us >> that's one of the schools of

thought here in the u.s., but if you're president xi in china, they have to be seen powerful. they have to be seen domestically as powerful in china. like i mentioned this is just the third set of retaliatory measures that china announced. with everything the u.s. has done to punish china rightly or wrongly, china has come back with actions of their own. it appears they're stepping up the fire power of the effect of each of these responses. they announced a couple weeks ago that they would be targeting imports of wine and cheese and fruit and rolled aluminum. that was seen as sort of a small ball measure that wouldn't have a huge impact on the u.s. economy if those tariffs would come to pass, but they have other cards up their sleeve. this appears to be one they've been saving. >> one more, kayla so you said nothing has actually

happened yet for this latest round. so the ustr put out its list yesterday. china has this third set from dishwashers to dental fillings none of this is happening pending bilateral talks which may be concluded at the end of may? >> correct the chinese list appears to be more tailored than the u.s the dental fillings, syringes, golf carts, those are products made in china that the u.s. would be putting tariffs on. the soybeans, once those are sent to tariff, those would get the new tariffs. we have six weeks before anything is expected to happen ustr is soliciting comments from companies, stakeholders affected by this. if you have views on this and you want to submit those, they have an open submission portal for that and they'll be holding a hearing on may 15th where people will talk publicly about this effect. then publishing a final list of

recommendations at the end of may after that process has run its course >> the list of recommendations will be less a function of open hearings and what the u.s. government hears back from its constituents as opposed to what it hears from china. this is a much larger almost public negotiation >> correct using this process is a way for the administration to buy time during these negotiations with china as well. so we'll see whether six weeks is enough time to change the dynamic between these two countries which administration officials as of two weeks ago were saying had failed economic dialogue going back to the george h.w. bush administration failed with china. we'll see what they can do this time around that's different >> i apologize, i know we said that was our last question we have one more, at least for me walk through the permutations that you could see in your mind

in which somehow this de-escalates meaning somehow both sides -- what would a happy place look like in this negotiation >> perhaps some agreement to settle this through official world trade organization channels both countries arguing that on the side, in addition to launching these trade measures perhaps some olive branch by china to open up the financial markets to buy more u.s. semiconductors these are things that china has been asked for to narrow the trade deficit with the country there's specific things that treasury asked china to do we'll see if china does those things, and if they do say they will do those things if that's enough for the president we've seen this play out before

where the commerce secretary signs off on something, and then when it's brought to the president he's not happy with it and he thinks it should be harsher. >> kayla, thank you very much. we'll check back in with you throughout the morning >> we're pretty much at the lows of the morning for the futures the implied open for the dow is 550 points lower let's talk about the market implications jack, we're trying to differentiate -- well, this hasn't happened yet. it's a couple billion dollars around the edges but the market is taking it poorl poorly >> sure. it's almost like playing techs hold 'em we got dealt our two cards, we're waiting for two new cars, response, counter response we're dealing with psychology. where do buyer s go? where do treasuries go

could we boycott certain things? this is markets are driven by market psychology and reality. largely companies are out of the market from buying back their stock. people are taken out of that market to avoid looking like you're manipulating earnings, and you're dealing with fears. the natural reaction to be more defensive or selling today and looking for a reason to be excited is human that's where you say where are values being created and being disciplined. >> the yield on the ten-year is 2.7 2.75%. you said the main way to watch this work through the markets is through the dollar and interest

rates. do you have concerns >> not only is the administration embarking on a trade war, which everybody is more paranoid about than i am, but also looking at technology stocks, the facebook issue, the amazon issue, the intolerance that the administration seems to have toward jeff bezos, and all these things work into the psychological aspects of it. buts this also work through the earnings aspect of it. if these earnings are questioned on the top of new regulations or new compliance organizations that have to be built in to the institutions, look at how they affected financial stocks, you see this is a costly event for these institutions >> do you think the regulatory environment in washington is a bigger deal than china's retaliation to our economy >> at this point the answer is

yes. you have a two-prong assault at the same time the economic data slow slowed, q1 about 2.25. it ended the year at 2.9 for the fourth quarter combining those factors together, you can see why the equity market has taken a nice pause and a healthy longer-term 2018 development for it to take a pause in here. >> futures again continue to drop down 600 points a moment ago the nasdaq would shed about 150, the s&p about 50 this after the chinese confirmed in a press conference the list of things, their list of third u.s. tariffs who is the tig-- >> i will cover for you.

>> thank you both. we will talk to wilbur ross at 7:30 a.m. eastern. that should be nteresting. someone has to blink i don't know how this ends >> maybe there's more cards in the texas hold 'em way >> every u.s. factory of golf carts could fit into one factory in china you would still have another -- you could fit ten more this is so big they make 60,000 a year. >> can i get you a golf cart >> i like to feel the terrain. >> i mean just to drive around the street >> that's what i want. >> i want to drive around the studio >> futures down 610 points we'll take a quick break and come back and keep you posted on that and give you new details on

the shooting at youtube's headquarters yesterday we'll have an update on what we learned about the shooter and we'll talk workplace security with a former hostage negotiator, jimcavanaugh it can bring all your apps to life and run them within your data center. it is... the ibm cloud private. the cloud that's built for all your apps. ai ready. secure to the core. the ibm cloud is the cloud for smarter business.

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they're big, but you look at them, it's 2.5%. you string a bunch together, you could be at 20%. you get lulled in 2018 -- or 2017, we did 60, 70 points up. >> it was a whole year before we moved two-thirds of a percent. >> monday it was 400, 500 down >> at the lows, 700. >> closed down 400 yesterday up 400 today down 600 if you wake up and you're surprised by triple digits, you have not been paying attention the move coming after china announced retaliatory tariffs on u.s. goods dental fillings. >> yeah. >> putting a tariff on fillings. they're clear now. >> i need some of those clear ones >> aren't they tooth-colored now? >> i only have one >> you have one filling in. >> i have one.

one cavity >> i could go off on that fact i could if i wanted. >> why >> because i have so many. because you're so good about taking care of your teeth. >> because i brush my teeth. i live in the great state of -- >> one filling >> i live in the great state of new york where there's a lot of fluoride in the water. >> the communists put that in. that's not true of new jersey. >> when i was a kid, it was a communist plot >> fluoride in the water >> yeah. >> helped enormously >> turning you into a communist. >> when you're a kid, you can now get your teeth sealed. >> one filling >> one i do floss i would like to floss twice a day, but i don't i use those stick things instead which are easier to use. >> the swords. >> those little things >> i went to a new guy, because we don't go out to engle cliffs

for you. he said your teeth are well trav -- traveled, i said what does that mean? he said a crown here, root canal here i still have all my originals, and one wisdom left, which he said was weird we have other things but you have -- honestly, one filling? >> one i'm not proud of it. >> oh, because you got one >> i always wanted to be -- >> perfect >> so unbelievable but predictable. >> this is a tragic and sad story we're following. new developments out of san bruno, california. a woman opening fire yesterday at youtube's headquarters wounding three people before taking her own life. adidi roy joins us from san bruno this morning >> reporter: things are much quieter here on the youtube campus than yesterday with those incredibly scary moments the crime tape is still up and

the area in front of the headquarters is still cordoned off. the police say the suspect is 39-year-old nasim aghdam authorities say she fired a .9 millimeter handgun in a lunch or patio area of the campus before turning the fwgun on herself three additional people were shot chaos erupted. some people were talking about hearing gunshots and hearing people running chopper cameras captured people evacuating the building with their hands up in the air. witnesses were terrified >> officers pulling ar-15s out of their trunks, bulletproof vests. i believe my co-worker saw a s.w.a.t. team, what appeared to be a s.w.a.t. team that -- it was just crazy to see in this kind of peaceful area of san

bruno. shortly after the incident, google's ceo tweeted out there are no words to describe the tragedy that occurred today. susan wojiciki and i are focused on supporting our employees and the youtube community through this difficult time together youtube will have grief counselors on hand for employees. as for the victims, we know the status of three of them. one man, 36 years old, he's in critical condition a 32-year-old woman is in serious condition. a 27-year-old woman is in fair condition. those conditions are likely to be updated later this morning. in the meantime, as far as motive, we do know from published reports and social media reports, that aghdam had her own youtube channel but expressed anger at the company >> before we let you go, can you

give us some lay of the land of what kind of security was at that headquarters? >> we are just hearing bits and pieces we hear there was security campuses here are known to be open even the office layouts are open not very many barriers look at the windows and glass there. we don't know specifically the security, but we can imagine there were a number of security guards here. we just don't know how much security there was in that patio area >> thank you very much for that report we'll come back to you throughout the day i want to bring in jim cavanaugh retired special agent for the bureau of tobacco, alcohol and firearms we wanted to talk about workplace security i wanted to understand your thoughts about this incident, but also the changing dynamic of workplace security, active

shooter drills now taking place within workplaces. people used to have fire drills, now there's active shooter drills how should the workplace need to or should change >> there's a lot of moving parts in this shooting we have to look at how the shooter acted and information out there. there's reports in the media in california now, abc news report that i read that the shooter's father had called the police, reported her daughter missing in the last few days, and said she was ang fwry at youtube. i watched her youtube videos this morning that she posted she was extremely angry at youtube for the demonetization of her site. she spouts out this stuff. she's clearly angry at youtube this is a person, andrew, she did not work there yesterday we were talking about

workplace violence as if this was an employee or people saying this is domestic what this looks like is a person not employed at youtube and does not have a relationship with anyone at youtube an does not have access to youtube they're an external threat to youtube. so that's the first thing everybody has to realize if these facts hold true, she's an external threat she has no access. and there's warning signs. her father reports her missing and she's mad at youtube that information, was it given to youtube we don't know. if it was, they could have or should have acted. maybe they never received it the issue is when you get information like that, it's always going to be subtle. if it had come in, would you have done something? it's going to be subtle. somebody is missing and they're mad at your company. what are your procedures this was an open courtyard the witnesses i watched yesterday when we were discussing this on msnbc was

right there at the drive-in at carl carl's jr., hearing the shots. victims running over to the restaurant this was an outside external attack on youtube. >> i want to make one commentful we're ta -- comment because we're talking about this as an outside person, but this is almost an online community that has now moved offline or to reality, to the real world in many ways this individual thought that they were part of youtube or part of this community, this platform, this culture, and then were pushed off of this platform and culture, almost like a fired employee might feel or somebody part of a group that was then, you know, given the hand and said you're not supposed to be here so it's very interesting we now talk about these online worlds there's all sorts of people who

think they're part of a community, who think they almost work at a company -- i don't want to say she thought she worked at youtube. but there's a different dynamic at play now, no? >> it's a great point. in our new digital world people feel a tight connection to all the digital companies, part of a larger community you know, there's always been corporations going back, customers are tighter with their corporate companies they deal with, corporations they deal with, customers are treated better, romanced, helped there are always people more in touch with the company when i say external, i mean not an employee with access to the building from a security standpoint they couldn't walk in >> for the corporate leaders this morning who have campuses, not buildings where there's one way in and one way out what kind of security do they now need to think about? do they need to think differently?

should the security people be armed? >> first, the main job as a leader, decisionmaking you have to make a decision. what areas of your campus or building will be secure? you have to decide that. you can't willy-nilly say we didn't know that you have to make a decision, this is secure, not secure if a person can walk into your facility carrying a rifle, for example, if you walk in carrying a rifle, walk across the parking lot and nobody stops them, you don't have security. >> do you want the security armed? >> sure. security needs to be armed >> jim, we have to go. thank you. >> thanks, andrew. coming up, china strikes back announcing new tariffs on 106 products futures are plummeting, a live report from beijing next and later lbwiur ross live at

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welcome back you're watching "squawk box" live from the nasdaq market site in times square. good morning if you are just waking up, we're following the market response to china's announcement of new tariffs on u.s. goods. equity futures are down 560 on the dow. the nasdaq down 134 points

and the s&p indicated down about 46 look at the auto stocks, which would be affected if all these things come to fruition by the end of may there's some movement there. and then we'll check soybeans. soybeans is one of the things that we have talked about sense all this started we talked to farmers, everyone else soybeans down 4% on the news down to 995.25 >> more about the breaking tariff news this morning that sunk futures eunice yoon joins us from beijing. i guess in the press conference in the last couple hours china announced these retaliatory moves. >> that's right. the finance ministry and the commerce ministry were holding a joint press conference earlier today to announce this $50 billion package of tariffs that is going to affect a wide range of goods i specifically was talking with

the vice finance minister about some items on that list. you mentioned soy. i asked why did you choose soy at the end of the day china needs soy to make it into meal so they can feed their pigs. pigs and pork here are seen as a strategic asset. because it's so politically sensitive because chinese people love to eat pork he said they chose soy because it's important to the economy. this is what the vice finance minister had to say. >> we value our relations with u.s. farmers, but we're concerned about u.s. government subsidy, the damage. so we have to take action. china is the largest consumer country for soy. >> i pressed him a bit more about soy because the u.s. is such a big supplier. he said that china is a huge market they need a lot of soybeans, but they could get them from other

countries. also on the list were aircraft i said boeing is such an important company here you buy a lot of aircraft from boeing he said that's true but look at the u.s.'s list of tariffs chinese aircraft are on that list that's why they put u.s. aircraft on their list >> we promote economic relations with china we know how hard they work to promote economics. we take equal action to do somethin something. >> again, he repeated to me many times that the chinese will not be pressured into making decisions on what they see as important practices. i asked specifically about

intellectual property practices that the trump administration is targeting. he dismissed it saying china constantly is trying to improve intellectual property, because it want s to be an innovative society but he said china will not be pressured into doing something that he does not think is good for the country. >> eunice yoon, thank you. glad you got that interview. it is amazing to hear them come out and say we targeted this because we know it's important to the u.s. economy, apparently they're willing to take the collateral damage. thank you very much. we'll see you in a bit >> can't believe this, is it jobs friday? >> already there >> really it was just -- we had that big number, right >> yeah. then the wage -- you have to watch the wage >> that was good we want it to be up. >> you did -- >> for the markets, it was good.

this is what i was talking about. the squawk planner, what's happening for the rest of the week today in the united states, an early read on friday's jobs number at 8:15 a.m. eastern. we'll get the adp private payroll report among the fed speakers, whale hear from jim bullard and cleveland fed president lore tt mester john williams got the job? >> john williams got the job >> any "star wars" music >> indiana jones close encounters any jaws >> i'm sure there's lots of john williams spotify lists >> that went well. >> we will talk about that >> a sea of tranquillity in a turbulent tech area. >> we didn't know what would happen >> you take off two days, it's like -- you know, you have one cavity in your entire -- >> off two days and a trade war

erupts >> don't -- let's see. let's see. >> we have not even talked about mr. bezos. >> unbelievable. >> when we come back, we will talk about china retaliating against the u.s. and the president retaliating against mr. bezos.

welcome back it's time for the executive edge the president is taking on amazon via twitter they lost more than $60 billion in market cap since last wednesday when axios reported the president is obsessed with the company. will the fight blow over or should investors be more worried? joining us is a sr. tech reporter from buzzfeed good morning to you. >> good morning. >> amazon started selling off before the president went after it it was part of this whole -- the market peaked in late january. how much of this is directly because of concerns -- yesterday we spoke to the lawyer who tried to lay out the case for coming after them on antitrust ground the president thinks they should be paying the post office more money. what is the threat to amazon

>> the president tweets yesterday, he hammers amazon again, and the stock goes up i done think wall street is taking these threats seriously >> there's been days when things have been down big, are you saying that's not the real story? >> i don't think the government will take action based on what the president is tweeting. i believe the market is getting scared because we're in a profound moment of distrust in big tech they're seeing the backlash against facebook and amazon and watching trump seeing these resentments under the surface and picking up on them >> the amazon post office story. so we totally understand what's going on there was a citi group analyst

who said losing money on every package >> not losing money. >> but underpriced >> you do lose money at the post office they lost $60 billion. >> we have the guest here. i want you to fact check the whole story. "a," are they underpricing it? my understanding is if they are underpricing it, it's not just for amazon but everybody and their brother, any company doing any of that bulk packaging just so we understand what's happening. >> the post office as far as i'm aware is not allowed to lose money on packages it ships there's been a discussion of the taxpayers lose money they don't make money from taxes, they make money from the sale of their postage. they're losing money because they have to pay out retirement benefits, not because they're giving amazon a deal >> that's part of running a

business to afford your pension obligations, you have to raise prices which they are unable to do >> if one good thing comes out of this, the president puts pressure on the post office about the rates its charging amazon we know amazon and the post office will renegotiate rates in october. this is a negotiation coming up. i wonder if this is a move by the president to try to give the federal government a leg up in those negotiations but i think that we could all benefit from seeing the prices that they pay be brought out into the sunlight as opposed to being hammered out behind closed doors. i feel like we have a right to know what's going on there >> alex, thanks for your time. >> thank you coming up,the saudi crown prince has been on a coast to coast tour of the u.s. michelle caruso-cabrera following that story for us. what's coming up >> the trip ends this week the goal was to change saudi arabia's image did it work? we discuss coming up on "squawk box.

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welcome back to "squawk box. cnbc.com reporting snap is in advanced talks to open an office in saudi arabia. this comes after a three week coast to coast odyssey of the

crown principles mcc is here. snap remarkably popular in saudi. it has been one of the places where they've had a lot of growth. >> very young population so many people under 32 so it matches up with their core constituency it was a jam packed three weeks for 33-year-old crown prince mohamed bin salman head of the economic development team and the country's development minister it was a full-court press to change the country's image was that accomplished? when it comes to the economy, did he do enough to convince corporate america saudi arabia is open for business. >> first stop, washington, d.c., for a meeting with president trump followed by stops at harvard and m.i.t. with big plans for development. next stop new york city. signing a $200 billion solar energy agreement with softbanc

plus a day long event with american ceos where they announced more than $20 billion worth of memorandums of understanding with companies like google and raytheon and held a panel on the changing role of women. >> are you going to learn to drive? >> yes, of course. i'd love to have the choice. >> then off to the west coast for meetings with boeing, richard branson, jeff bezos, satya nadella and bill gates among others dinner with the royalty of the west coast media executives rupert mourdock, bob iger and oprah, too. this as saudi arabia opens up to foreign entertainment going from zero to big bucks. american companies seem happy to sell goods in saudi arabia but the trip will truly be a success if they're willing to invest in the country and give the capital it needs to grow when it comes to all those deals that we mentioned or memorandums of understanding that were announced, there weren't a lot of details given to the press.

it's hard to know how meaningful they are the bottom line, the crown prince is trying to change the image when it comes to the general public and the investing public one of the key questions remains did he put to rest concerns of rule of law after he put hundreds of royals in jail at the ritz carlton and getting them to give up $100 billion of their wealth we'll see in the coming years. >> what's your take on this? i've had a number of conversations with some of the people actually that we've shown in some of these pictures with him. they're all taking the meeting because ultimately they have their hat -- they have their cup saying, please, we want your money to come to us. it's very rare where you hear them say we're really thinking about how you may open your market and we come to you. >> there's a lot of skepticism about whether or not they're truly going to change enough to attract foreign direct investment i would agree with you so far it's not symbiotic. pass please. i'm here to fix the elevator. nothing's wrong with the elevator.

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market selloff china striking back against u.s. tariffs and markets are responding dow futures down sharply on the news >> how will washington react we're going to hear from commerce secretary wilbur ross. >> a developing story in california more about the shooter at youtube. the second hour of "squawk box" begins right now live from the beating heart of business, new york. this is "squawk box." good morning welcome back to "squawk box" right here on cnbc we're live at the nasdaq market

square in times square we have a market selloff to tell you about this morning lots to tell you about what's going on what seems to be the beginning of a trade war it's part of a larger brand negotiation. dow down emotions running high. 543 dow set to open off. s&p 500 opening off 45 points. nasdaq down 130 points >> after beijing responded sharply to the u.s.'s threatened tariffs. slap 50 billi$50 billion on tard then a few hours after we did that china announcing $50 billion worth of retaliatory tariffs against the u.s. including soy, car, and chemicals. phil lebeau is in chicago with the auto sector angle and more but we begin with eunice eun in

beijing with the details on the tariffs. good morning again, eunice >> good morning, guys. well, china said it was going to strike back with equal force and scale and boy did it this is 25% tariffs on $50 billion worth of goods 106 items on the list. a lot of them in the agricultural industry. soy beans as you had mentioned, corn flour, cotton, beef orange juice nonfrozen as well as some frozen items. whisky, tobacco. a lot of these are going to be hitting american farmers, and i actually asked the vice finance minister about that and he said that they -- the chinese love american farmers and want to continue their good relationship with american farmers but they felt they just disagree with the way the u.s. government has been behaving now the vice finance minister

also had outlined a couple of other items on the list. aircraft for one phil lebeau's going to be talking a little bit more about those items. also automobiles and chemicals. all of this, again, these -- this large group of tariffs are open for commentary. there's going to be a period where the government is going to be taking on discussions and thought from companies here as well as citizens and they also said that they're not going to be moving on their tariffs until the u.s. government moves on theirs and the vice finance minister had also pointed out that china definitely does not want a trade war but that it also will not step down. over now to phil >> reporter: eunice, you talked about autos and airplanes. those are the two areas where we're noticing a move this morning in terms of those stocks why would autos be hit particularly hard?

take a look at what they're looking at in terms of the proposed tariffs 25% additional tariffs on vehicles built in the u.s. and shipped to china there's already a 25% tariff on those vehicles that would mean a total tariff of 50% on u.s. built vehicles shipped to china, primarily electric cars and suvs the u.s. last year exported just over 267,000 vehicles to china suvs built in the southern u.s., we're talking about bmws built in south carolina, mercedes suvs that are built in alabama. those are among the most popular over in china. when you look at the auto trade, it's clear that china benefit -- or we benefit more in terms of vehicles that are built here and sold there than what we import from china no comparison at all almost $10 billion worth of vehicles are built in the u.s. and then shipped over to china as opposed to $1.45 billion

built in china that's the reason why you take a look at shares of general motors, all of the automakers, why are they under pressure this morning? this has the potential to blow up and become a huge trade war gm's already built a huge number of vehicles that are sold in china. this has the ability to further hamper those relations take a look at shares of tesla this is one that will get a fair amount of attention from traders just because of what tesla is as the stock that moves so much remember, tesla is trying to do more in china. sold about 14,000 vehicles there in total finally, let's talk about boeing because the proposed tariff would be 25% on older, heavier aircrafts. we're talking about 737s as well as the 777 we've reached out to boeing and we have reached out to other companies as well.

boeing says it is assessing the potential impact of these tariffs. guys, back to you. >> phil, thank you very much nearly 5% drop for boeing helps explain why the dow is down. we're joint by jim paulson and lindsay hicks is at stifel let's start with you jim, these are proposed measures by both countries. why is the market so concerned

here it's not so bad if it escalates worldwide where everyone has to put up protection, then you really threaten the recovery globally and in the united states this is just another step that makes it look like this thing has legs where does it stop this creates pressure to look and evaluate whether they need to put up protections. the market is concerned about this thing escalating right now, kelly. in the background of the market we're very close to breaking the february lows and so there's a lot of technicals at work here, too, of challenging that low perhaps today and seeing if it holds. >> jim, that said, we've also heard plenty of people say, look, we're going to have this period of turbulence until we get to corporate earnings. that's going to assuage

everybody everything is okay >> if it escalates out of control, there certainly is. if this is just negotiating techniques between china and the united states and it doesn't escalate into global trade war, then i don't think there's a lot of down side for the economy or for earnings certainly if it escalates out of control it's a huge deal. >> lindsay, what about you we're looking at the macro the amount of u.s. goods is $50 billion for the tariffs, 25% of that that's not much in a multi-trillion dollar economy. what are the macro implications as you see them? >> absolutely. as jim mentioned, the immediate impact could be very minimal, but i think the concern right now is that this is the early stages of what could be a very ugly trade war with one of our key trading partners and given

still the fragility of the u.s. economy, if we're talking about the free flow of capital, labor, goods, services this could easily undermine the 2ish% growth we're seeing. the impact could be minimal. the expectation could be to undermine the recovery as we see it right now. >> lindsay, it's very easy to quantify the tariffs and to sort of jump to the worst case conclusion here. is there any way to quantify the harm that's been done from the u.s. economy from intellectual property or the benefit that could come if they have to kind of cave because of these negotiations on tariffs that pre-existed in lowering them >> it's very difficult to put a number to that this is one of the motivations behind the trump administration's push, to renegotiate a lot of these trade deals which has been in place in decades and rely on very antiquated language. we need to put in place

protection for intellectual property or protection for counterfeit goods. this is the motivation it's very hard to put a dollar number to the impact that we've seen now we know this is happening and of course anecdotally we can feel that from companies it's going to be hard to argue that the net benefit is for the economy to offset a lot of that pressure that we've seen as a loss of protection. >> here's the question that i have try to first map out a best case scenario and a worst case scenario when you think about what's going to happen over the next six weeks, to the extent that you are invested in the market one way or another, what do you do about all of this i'll go to jim. >> is that to me >> i'll start with jim and go back to lindsay. >> oh, sorry >> well, you know, andrew, i think this is just one more challenge facing the stock market i think it actually has bigger

challenges that it's dealing with in terms of valuations that are high and contracting financial liquidity, rising yields, rising inflation we may be talking about completely different issue friday morning if we get a hot wage number right now, for example. so this is the issue of the day. i think the odds that this becomes a huge issue are still fairly low and there's a likelihood that inflation goes over 3% and pushes inflation up. those are the bigger challenges that face us this year i would certainly remain conservatively positioned looking to move away from the united states, looking to have a little cash, looking to add a few commodities to the equity portfolio, things of that nature i still think we're probably goings to head lower yet before we find a sustainable level we

can rally off again. i'm not sure that's going to be irrespective of what happens of this trade issue >> lindsay >> well, i think the market's reaction is really reflecting the fact that we still are in very modest territory when we look at fundamentals as kelly pointed out, we were talking about a strong economy this minimal impact from what we've heard from potential tariffs wouldn't necessarily rile the market as much as we've seen i think the market is waking up and participants are waking up and this international chaos is just another layer of concern for investors at this point. looking out to friday's employment report, if we do see some disappointing data, i think this will just kpountd the volatility and potential downside to the market at this point. >> jim, how do we get out of this how do we get out of this in a way that's positive, to the

concerns that keyed off a lot of this about china's behavior towards the u.s. >> yeah, you know, i really think at this point, you know, china's approaching this from a negotiating standpoint, too, kind of tit-for-tat with the way trump's doing this they didn't implement any tariffs this morning they put it on the table and said, look, if trump doesn't want to change anything, we're going to implement them. if he wants to come to the table and talk, we'll talk so i still think this looks more like negotiating posturing than a nuclear option at this point and probably before we get to the may deadlines we'll see a more reasonable approach on both sides is my view i think the odds of this escalating to a major trade war that takes down the global recovery or majorly affects earnings are still low, kelly. i think there's more important issues for investors to focus on than the trade war. >> we can't both be the tap.

>> you're going back to that >> paulsen -- >> they said it's tad for htit. >> let's see if chicken and egg might be better. jim, the ten year is weird it's not cooperating with any of your sort of worries and forecasts, but it could be -- you know, europe is still so low, you might as well buy ours. i don't know, it's weird i don't think it's necessarily a reflection of inflation expectations you're right it could go up quickly here we are below 280. a week it could be at 3, i guess. it is not cooperating with your overall scenario >> joe, i'm almost the opposite of that. i'm really kind of impressed by the fact we've had a 10% plus correction in the stock market and the bond yield's off maybe ten basis points from where it was after it went up from like 240 to 285 or 230.

i'm more impressed it hasn't pulled back more. >> you mean money going into bonds? >> yeah. there's been no panic. we've had a 10% decline. no rush to the dollar, no rush to safe haven bonds. there hasn't been a big movement because of stocks. that's part of the reason we have to go lower, to scare people more before this thing finds a bottom. >> complacency was pretty sick, that is true we asked them what they were worried about and they said nothing. >> was davos the chop stick? >> yeah. >> nowhere except down coming up, they nail it every year coming up, thanks, lindsey, and jim paulsen. the tech community responding to the tragic shooting at youtube's campus in san brunos, california then commerce secretary wilbur

ross we're going to speak to the man himself. >> something going on today? >> i really do want to hear him say we need to do this >> pass the tin can at this point. >> exactly we're going to join him or he will join us to discuss the new tariffs and fears of a trade war. stay tuned you're watching "squawk box" on cnbc welcome to holiday inn! thank you! ♪ ♪ wait, i have something for you!

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welcome back to "squawk box. we're learning more about the shooter from youtube aditi roy joins us. >> reporter: hi, kelly things are in sharp contrast police are revealing new details about the suspect. she is 39-year-old nasim aghdam. she last resided in san diego or in southern california we're also learning new details about a possible motive. we know she had her own youtube channel and her own website. on that website she expresses a great deal of anger towards the company saying she believes youtube was assimilating against her videos she shot and injured three people on the campus before turning the .9 millimeter gun on

herself. police swarmed the area and chaos erupted. >> you hear about ten in a row, all single fires and next thing i know, couple minutes later i'm hearing sirens go towards youtube over there i take my car and i parked it to see what was happening and next thing you know, got s.w.a.t. teams coming in. yeah, everybody is being escorted out >> cameras captured video of employees one by one coming out of the building being escorted out with their hands up in the air. it was such a scary site youtube has 1100 employees on campus as far as the victims, we know one is in critical condition, one is in serious condition, one is in fair condition we do expect an update on the conditions later this morning. in the meantime, we have google which owned youtube has grief counselors on hand >> let's bring in our next guest.

scott stewart. tactical announcement. dealing with the workplace and violence from this yesterday you can't pardon everything. you can't. i don't know what the answer is. >> well, i think the answer is really two part. there's obviously the reactive answer, the reactive section of it i think we saw a pretty good job of that, you know, at youtube. the employees knew what to do so apparently they had had some training or at least understood the concepts of the run, hide, fight, or avoid, deny, defend. obviously the police were there very quickly really the most important segment is trying to get their reaction prevention is far better if you can stop the attacks happening, it's quite compelling in most cases there are indications, you know, of a

problem if you have a disgruntled customer somebody within the company. in many cases you'll have somebody with the authorities or the police have also heard about this potential threat. so this really places the emphasis on the importance of protective intelligence in corporate security to identify these threats and hopefully interdict them before they can come to fruition. >> in hindsight it always seems like there were signs obviously. i don't know how we anticipate that in schools, workplace, similar, i mean, would you say in the parkland incident, i mean, there was a total breakdown of responding to the warning signs there. in this case -- >> no, absolutely. and, you know, we know there's almost always leakage, what they call leakage you know, basically the attacker displaying their intent to someone and whether that's on social media, whether that's to a person or to a family member,

that almost always happens in all of these cases it's unusual for it not to in this case it appears that the father was concerned about her attitude and informed the police of her danger. it's a case of us needing to be able to communicate better and be able to identify and assess these better. >> scott, that's one part of it. another part we talked about it in the last hour is just the idea of the online world moving offline. the online world moving to some kind of new level of reality the reason i mentioned that is here is an individual who seemed to think that they were part of a community. they didn't work at youtube per se but given the level of involvement in terms of the things they were creating, they turned into a real life problem.

how we should think about that in the future given the rise of social networks and how connected people feel or don't feel >> yeah. it really does -- it kind of brings up the idea or the concept that when we're talking about this prevention and protective intelligence, it's not really just a problem for corporate security basically everyone in the organization needs to be involved and report potential problems whether that's an internal problem, whether it's a domestic situation, angry employee, or whether it's an angry customer, they need to be able to communicate that effectively and get that to the right people so these folks can be assessed for potential threats. >> scott, thank you very much. i don't want to see you again any time soon, but it is good to have you on this morning >> thanks, guys. >> coming up, commerce secretary wilbur ross is our special guest. his reaction to china's

announcement to the new tariffs as the trade war looms and the president just tweeting, we are not in a trade war with china. that war was lost many years ago by the foolish or incompetent people who represented the u.s now we have a trade deficit of $500 billion a year with intellectual property theft of another $300 billion we cannot let this continue. we will ask wilbur ross, the mmceecta autcoer srerybo other things the futures down 508 they're off the worst levels of the session. we'll be right back. ♪ this is a story about mail and packages. and it's also a story about people. people who rely on us every day to deliver their dreams they're handing us more than mail they're handing us their business and while we make more e-commerce deliveries

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when we return, we have reaction to china's announcement to new tariffs the tariffs on u.s. products including soy, cars. wilbur ross joins us next. as we head to break, here's the latest with futures down 600 points dow looking lower by more than 500. "squawk box" will be right back.

good morning from foggy new york welcome back to "squawk box" here on cnbc we are live at the nasdaq market site in times square among the stories front and center this morning, the main one is the plunging stock market futures.

take a look at what's happening across the major averages. dow set to open lower by 500 points. >> 400. >> down 480. that's an improvement. we'll see what happens after our interview with mr. secretary coming up in a couple of secretaries here that reverses yesterday's gains and then some. this all happened after china announced new tariffs on u.s. products they had a press conference a couple of hours ago. we'll have more on the trade battle in a moment yesterday the u.s. put out its list of products that will be putting tariffs on china all of this as kayla tausche was reporting depending on how talks go over the next six weeks or so still, a lot of concern in the markets. amid all of this, mortgage applications dropped by 3% last week new figures out from the mortgage banker's association and that's despite a drop in interest rates refinancing activity also fell the average 30 year mortgage rate unchanged at about 4.7%. we'll be getting the latest snapshot of private sector employment at 8:15 a.m. eastern.

the adp report expected to show the private sector at 200,000 new jobs last month. that would follow an addition of 230,000 that adp reported in february. the world's biggest ad from wpp saying it has appointed an independent counsel to probe an allegation of personal misconduct against sir martell sorrell. a spokesman says the amounts involved aren't material to wpp, meaning that whatever the allegation is, it's not material to their own earnings for the company itself, however, in a statement sorrell denies any wrongdoing but says that he recognizes the company has to investigate the situation. sorrell has been at the helm of wpp since 1986 helping to transform a little known maker of wire shopping carts called wire plastics into what is a global advertising giant martin's somebody who's been on this program many times over the

years. >> able to continue to be one of the highest paid ceos in the u.k. and to withstand that because there's a lot of -- >> the worst climate over there. >> he would be doing okay over here even. >> yeah. >> he's made 50 a couple of times. >> down last year. he was up in the 50s came down to 20 last year. pulling the reins back just a little bit >> so i don't know what -- >> we don't know enough about -- >> well, i'd like to -- if you are making 50, i'd like to know how much this -- you say it wasn't material to the company but it could be material to him. tough to be material to him, too, when you're making 50, wouldn't it? andrew you wouldn't be messing around with 10, 15 grand? >> i'm not sure. i think we need to understand a lot more about the allegations nobody really knows what's been alleged. >> let's wait. i hate waiting. >> patience is the virtue.

>> yeah. >> we say it was wire, paper and plastic. >> half cocked. >> we have reaction to china's announcement of new tariffs. we have commerce secretary wilbur ross. look forward to speaking to him. as we head to break, u.s. equity futures, dow is looking lower at 450 right now. we'll be right back.

welcome back to "squawk box. big morning for the markets. dow looking to shed 462 points at the open. we are down more than 600 at the lows this morning. >> almost exactly 2% 2%, right? right around 2%. >> there's been a lot of 2% lately >> there have been, up and down. >> china is promising counter measures after the trump administration proposed slapping 25% tariffs on some 1300 industrial technology, transport and medical products joining us first on cnbc commerce secretary wilbur ross mr. secretary, it's great to have you on this morning to talk about some of these issues we've had people on, wilbur,

that say still a skirmish. if we call it a war, that's not really appropriate yet it hasn't gotten to that point these are skirmishes will it eventually end up being a full scale, if you will, war >> let's put it into perspective, joe this 50 billion that they're talking about amounts to about 3/10 of a percent of our gdp. so it's hardly a life threatening activity it's relatively proportionate to the tariffs that we put on based on the intellectual property, but i think the more important thing is the tone of the president's tweet earlier this morning. as you know, he's said in the tweet, and i agree, when you're 500 billion down, this isn't a war you can lose if it gets to be a war we have had a big problem with trade deficit for a long, long

time several presidents got us into this big deficit this is the president who's going to get us out of it. he's determined to go forward and this response should not have really surprised anyone their response to the 232 tariffs was quite proportionate. >> buy that time the negotiations

favorable outcomes for the united states. what does that look like what would we need to come to some type of agreement or negotiated settlement? >> well, think about it. even shooting wars end with negotiations somebody signs a treaty with someone else and has whatever terms it has so it wouldn't be surprising at all if the net outcome is some sort of negotiation whether it happens by may or some other time, that's another whole question i think it's very difficult to put a specific time denomination on negotiations that are as complex as these remember, we have some 1200 products their list, which i haven't seen yet in english, i think has 30

products that's 2500 products to talk about. but in terms of the content of them, i don't think there was really anything surprising if you look at their own commentaries, if you look at what they had said so this should not be a great shock to anyone. i don't think anybody expected that china would do nothing in response to our initiative >> so the president has what i would call -- you know, i haven't been in the room, but i would call it a good relationship with president xi and president trump's also in the past said i don't blame the chinese for this, i blame the people that were negotiating on our side for getting taken advantage of so here are these two gentlemen that talk on the phone and have a certain rapport. i mean, is it possible that maybe president xi and president

trump could talk as negotiators? i don't know, the chinese seem very intent on being very successful globally, and i don't know whether a personal relationship could really change that i'm just wondering whose feet are really in concrete here, you know >> well, i think it is certainly true that president trump and president xi do have a good personal relationship. they have a rapport. they're both very strong leaders. that doesn't mean that this is going to be armageddon one of the good things about people having a relationship with each other when there is a conflict coming up is that at least there's a dialogue at least there's a mutual respect and those are usually the foundation for ultimately making a deal. >> wilbur, i want bed to ask you. steven roach wrote a book. called "unbalanced, the co-dependency of america and china. he has a chapter called bad

dream. he lays out what a trade war would look like and the implications of a trade war. he specifically suggests that china's deficit if a trade war were to take place would get distributed to all the other countries that make up our trade deficit and they're all higher cost producers of china. and the ultimate conclusion he comes to is that it becomes a tax on american families, it becomes a tax on american families that the administration has said they're trying to protect. what do you make of that argument >> well, i think it's a very over blown argument to begin with and, second, if you look at the way other countries have behaved in the face of the 232s, many of them are starting to put in their own safeguards against china on steel and aluminum. so, sure, some of them are also putting some tariffs on us very small popotatoes.

the amounts to our economy are trivial. they're not going to blow anything up, and i think what is starting to happen is the world is recognizing that china's behavior is a little bit out of control and i think you're going to start to ciacosee a coalescig against china. you saw it in steel and aluminum you saw that the president was able to have a deal done with south korea on the steel and aluminum tariffs that helped not only that situation but also our automotive the president is a lifelong deal maker. this isn't the first deal he's gone into. it isn't the first controversy he's gone into, and i doubt that it will be the last one. >> mr. secretary, can you explain, i admit to being slightly confused about how the u.s. started by going after china on steel and on aluminum saying it was dumping and it's

hurting u.s. manufacturers i know there's a separate concern many people have about china stealing our intellectual property from a lot of technology companies why are we seeing tariffs back and forth on everything from golf carts to pork to dental implants to soy beans to cash registers and dish washers how did all of these items get caught up? why are we seeing so many different tariffs leaf have i lk and forth? >> sure. that's a very good question and i'm happy to answerit. the reason for the u.s. list is very simple. we did a survey of what products we're not terribly dependent on china for. these are all products where china is not our major source. china is a minor source of our imports in each one of those products, therefore, the ease with which we could substitute other products for the chinese

imports is quite great in the list that we put forward. >> mr. secretary, let me ask you -- >> that was the theory of it. >> -- on that front, does that mean those are just a tool in order to achieve your goal on aluminum and steel and intellectual property? >> well, aluminum and steel is about today's immediate problem. those are industries of today. intellectual property is about our future our country will announce its 10 millionth patent sometime in about the next two months. no country has ever achieved anything like 10 million patents. we must protect our intellectual property because that's our future and there's a fundamental difference between the two moves we made and the two responses of the chinese. our moves were based on facts. they were based on bad behaviors. they were set up in an effort to

modify those behaviors the chinese reaction is simply saying, well, you hit me for x billion, i will hit you for y billion. it's a tit-for-tat there's no intellectual underpinning for it. there is for ours. >> hey, wilbur, china's called the trade war a lose-lose situation. walk us through what a win-win situation would look like, both for us and to the extent it could turn into a win-win for them what does a best case scenario look like? >> well, i think it's a pretty clear one. we have no objection to chinese trading internationally. we have no objection to importing from them, but we do have objection to violation of the rules. the wto rules do not permit subsidies, they do not permit dumping, they do not permit those things the rules do not really address very well intellectual property

but it's pretty fundamental that you cannot steal someone's intellectual property. that's what they've been doing they have to stop doing it if they got off those two bad behaviors we're very happy to compete against them and we're happy to see in which products we're the best, in which products they're the best, have a real level playing field it's not a level playing field now and this president is determined to make it a level playing field. >> so, wilbur, i just wonder whether the end result could be where, you know, where china says, okay, you got us i mean, we want to make america great here they want to make china great. i understand how that works. do they know that they are being dishonest with intellectual property do they know that this is unacceptable, bad behavior and they're doing it because it's the ends to -- or the means justify the ends

and could there come a day where they said, okay, all right, you got us it just seems like they're very comfortable stealing the intellectual property because that's going to help them eventually win in their view i can't imagine -- do you really think they're going to finally >> waking up this morning seeing this news.

boeing, its stock looking like it's going to open down 6% caterpillar down 4%. advanced micro devices down 5% do those numbers make sense to you given what is on the table >> the office of government ethics would freak out if i started making actual market forecasts. that's something i used to do when i was in private life but i don't think it's appropriate now. what i do think is appropriate is proportionality what we're talking about on both sides is a fraction of 1% of the economies. should something that will potentially adversely affect some portion of 1%, should that result in a major change in stock market values? i leave that for your own viewers to answer. i think it's being out of proportion and what does surprise me, as i said, in the beginning, this has been coming

for quite a while. anyone who thought that the chinese would do nothing when we put on the measures that we did just wasn't paying attention that would have been extremely embarrassing to them it would have been unnecessary they are very good at arithmetic they know we are talking about fractions of 1% of the respective economies so this is not world war 3. >> wilbur, do you and the president discuss amazon >> i'm not involved in the ftc or activities of that sort i have quite enough to do with the mandates that they're giving me. >> you're confident and i know, you know, you've seen the tweets and the administration's gone to great pains to say there's no actual executive action coming down the road with him does the president ask you what is it possible for his administration to do to deal

with some of the things that he thinks are inequitable in amazon's business practices? >> well, if you read the tweets, what he's been talking about is the relationship between amazon and the u.s. post office he's been talking about what amazon's activities have been to small retailers around the country. his tweets have been, as far as i can recall, quite specific none of them relate directly to the department of commerce. >> but i guess the question on the amazon front is how much of this is about amazon itself, how much is it about jeff be zozos his ownership of the washington post whether executives who own the company should own a newspaper, too, given what now appears to be a conflict that's emerged >> well, the president has been very outspoken, his views on amazon, his views on the washington post and his views on

jeff bezos i think he's your best source for follow-up questions. >> it was -- wilbur, it was interesting that nafta was actually brought into the conversation about the caravan, whatever you want to call it, coming up from mexico, wilbur. i mean, there's a lot of negotiation -- negotiating and tweets, things like that, is -- could -- could mexico's action given what happens with these hondurans, could they affect negotiations for something the size of a nafta deal >> well, i was at the wonderful lunch yesterday with the presidents of estonia, latvia and lithuania with the president and it was at the press session just before that lunch that he talked quite actively about the caravan, and he indicated he had

asked the mexican president to disband the caravan because u.s. has very weak laws about illegal immigrants as he said in the conference, it can take two years before they get scheduled to go to court and then they never show up in the court anyway so he asked the mexican president to use his forces, his legal forces and if necessary his military to disband the caravan, and as far as i can tell, the caravan has pretty well disbanded while it's an unfortunate incident and a very provocative one, it doesn't seem to me that at the end of the day there's going to be a caravan. >> mr. secretary, just to circle back to the trade issue for one second as investors are trying to figure out whether they're -- how this will be resolved, you mentioned that the goal here by imposing these is to get china to stop the behavior are you specifically talking about steel and aluminum there

are you talking about intellectual property or is it all of the above >> it's all of the above as i described, steel and aluminum deal with current industrial activity. intellectual property is the key to our future. we have to solidify both our immediate present and our future because we need both and we need them to comply with the rules to get both. >> hey, wilbur, has the administration changed its view about how it looks at the market on a daily basis the reason i ask is obviously when there was a rally taking place it was -- it was looked at and used by the president and the administration as a signal of success steve mnuchin used to talk about it as a mark to market and said we're a mark to market administration obviously we're in a different place now than we were then. >> i think the president's real marks are how is the economy doing, and the economy is doing very, very well.

a lot of the same naysayerswho are wringing their hands about trade situation are the same ones who said we couldn't grow more than 1.5 or 2%. they were wrong. they're the same ones who said the president would never get major tax reform and tax cuts. they were wrong. now they're wringing their hands about trade. they're going to be wrong again. >> mr. secretary, thank you for all of your time this morning. >> thank you. >> appreciate it. coming up, former deputy trade reprentiestave, former dallas fed president richard fisch fisher on all of these things. we'll be right back. alerts -- wouldn't you like one from the market

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open an account today. market selloff futures plunge triple digits after china hits back with new tariffs on u.s. products full market coverage straight ahead. are we one step closer to a trade war? >> when you're 500 billion down, this isn't a war you can lose if it gets to be a war. >> much more from our news making interview with commerce secretary wilbur ross coming up. >> plus, breaking news the adp employment report is just minutes away. we'll bring you the numbers and what they could tell us about friday's jobs report 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 and welcome back to "squawk box" here on cnbc live from the nasdaq market site in times square i'm joe kernen along with andrew ross sorkin and kelly evans. becky is off today and our top story, the markets and trade tensions markets down about 2% as china announces tariffs, retaliatory tariffs on u.s. goods including soybeans, cars and whisky. this is in direct response to the tariffs announced by the trump administration more on that in a minute first, here are the futures. we were almost down 600 at one point on the dow we're down 480 new hampshire boeing a big part of the loss in the dow. down about 6%. the nasdaq is indicated down

about 110. s&p off its worst levels now down 37. in europe you might expect a little bit of angst. there you see it not quite as significant as over here 1.3% in germany. almost 1% in france. overnight in asia, a lot of the trading was before the retalleyation but you can see that the hang seng took it on the chin a little although the nikkei was higher. the dollar has been weak -- or has been stronger the last couple of sessions today you can see the index is off a little bit nothing substantial. then the ten year confounding everyone again 2.75 2.75 on the ten year. >> we've heard from president trump about the issues that -- of which we're speaking. president trump tweeting we are not in a trade war with china. that war was lost many years ago by the foolish or incompetent people who represented the u.s

now we have a trade deficit. now we have a trade deficit of $500 billion a year with intellectual property theft of another 300 billion. we cannot let this continue. >> we spoke to commerce secretary wilbur ross just in the last couple of minutes here's what he said about the tariffs and the market selloff. >> this response should not have really surprised anyone. their response to the 232 tariffs was quite proportionate to the 232 amount. the response here is also quite proportionate to the 50 billion that we announced last night so i'm, frankly, a little surprised that wall street was so surprised by it this has been telegraphed for days and weeks. >> let's get to eunice yoon in beijing. once again, eunice, good morning. >> reporter: good morning, joe

well, the finance ministry as well as the commerce ministry held a joint briefing about this very topic the vice finance minister told me that they've decided to move so swiftly because they don't want to have a trade war but they also wanted to make sure people knew that beijing would not succumb to pressure. now going through some of these details, this is what you need to know. this is going to be tariffs on $50 billion worth of goods this is a 25% tariff, but it was explained to me by the finance ministry that the 25% tariff is additional to anything on the list that already has an existing tariff. also, the implementation is going to depend on when the u.s. decides to impose its own tariffs and on the list there are 106 items. a lot of agricultural products, soy beans, corn, beef, orange juice as well as other big ticket items like automobiles, auto parts and aircraft. the vice finance minister told

me that they decided to choose aircraft because chinese aircraft are on the u.s. tariff list and when i asked him if the u.s. tariffs would make china feel that they should change their intellectual property practices, this is what he had to say >> china is a more open, more reform driven and intellectual property protection certainly is a top priority for us. that's our interest. rather than forced >> this is the point that he was making several times that china would not be pressured.

>> despite tech. willing to do it >> there are some fault lines. >> is there any part of this you can imagine the chinese have any room to give >> i asked the vice finance minister that question as well because i was wondering what's going to be the next step and he -- when he talked about the forced technology transfers and when he talked about the idea that china has been subsidizing industries, i thought it was encouraging and he also said that what he's hoping is that

the u.s. is going to come back to the table and be more constructive in their discussions because so far he said over the past two months the chinese feel that the u.s. administration hasn't really been -- really been helpful and open in the overall discussions. >> okay, eunice. thanks we'll continue along here. keep your earpiece in. joining us now former dallas fed president and former deputy u.s. trade rep richard fisher he's a barclay senior adviser and more importantly a cnbc contributor. >> yes. >> good to see you so you weren't one of the foolish or incompetent -- >> you're looking at him. >> you're both no, he's not talking about your negotiations with trade in the past, but have we been taken advantage of at some point in the past, do you think >> i remember very clearly with president clinton standing on my side after we -- i negotiated the korean auto agreement, the

first one, by the way, we sold 321 cars to korea before we negotiated that. they had an 80% tariff the last question in that press conference was you're in the middle of the negotiations of the wto. i remember distinctly saying, we sell them $12 billion in goods, they sell us over 70 this is not -- this cannot continue i think the secretary's right in the sense that it has continued but, remember, china's now using the wto. we're circumventing the wto with section 301 and section 232. we're not the first one to do this we use section 232 against japan in the case of steel against japan in 1998. there are press urs. we had an $8 trillion economy. now it's three times larger almost they're selling us 70 we're selling 12

the spread continues something has to be done to reduce that spread what is worrisome is the way this is articulated. obviously we didn't have social media back then in 1998 so i think the war of words is really the issue here it's not a trade war, and i hope the secretary and bob lighthizer and the president himself can in the background negotiate this that reaches a settlement that is constructive for both sides. >> you've got to admit trump can be a good cop/bad cop at the same time. >> yeah. >> it's weird. on tweets he's the bad cop but then he talks to xi or whomever on the phone and suddenly it's oh, yeah -- >> you know the old saying, skits chizophrenia beats dining alone. >> does it work? certain sectors of people who are following what's going on, they don't think it's unhinged whereas, other people see a method to the madness. i never know where you're going to come down on this. >> i presume there is a method to the madness

is this something you would embark on? >> this is a very complicated thing, joe you remember the top official in china, he just came to the united states. he offered some thing. we rejected them the trump administration went back, sent a letter, which has still not been responded to. he's the one trying to lead reform in china and bring them into a more fully market based economy. i would be asking myself, is this helping him or is this hurting him? there's a lot of opposition amongst the old communist officials to oppose any modernization to take on the united states. there's a lot of complications here >> i want to break in for a moment a little bit of breaking news. mark zuckerberg will now officially testify before congress it's going to happen a week before today on april 11th this is according to a release from the house energy and commerce committee this is the first time mark zuckerberg, i believe, has ever testified in front of congress i don't believe i've seen him in washington so publicly before.

>> i don't think he'll be talking about china. >> this is a very different story than what's taking place this morning with this potential trade war. fascinating development. he did say quite publicly that he was prepared to go to washington. >> if he was the right official. >> he has clearly accepted the invitation. >> i think he had to. >> i don't think he has a choice. >> yeah. >> go ahead. >> yeah, we've -- 8:11 we have to get a break in, we'll get the adp report you're going to stick around i want to talk to you about whether -- wilbur ross made an interesting point. they don't admit they steal intellectual property. >> they do. >> if they stop, they don't have to lose face. >> we know there are two -- >> ask zuckerberg about that >> that's true we have two army divisions that spend their time trying to invade everything from harvard university to trying to get into the defense department, trying to get into private companies, trying to get into the federal reserve. that's what they do. that's a fact.

and this has to be put to an end. i don't know how it will be put to an end without triggering a much broader conflict but he's right. >> you are -- you've got the common sense of a techs texan, you know what i mean >> i agree with you. >> you ran as a democrat come on in. >> we're in texas, my friend, we're different. >> you are taking a lot -- stick with us. we've got to get the adp report. coming up when we return, the march adp employment report just minutes away. yes, steve liesman has got those 'sig os right after the break. he rhtver there. stay tuned, you're watching "squawk box" right here on cnbc. is the monolithic view of emerging markets obsolete? at pgim, we see alpa in the trends, driving specific sectors 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.

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you know what's not awesome? gig-speed internet. now yard time is our time. 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. 241,000 adp reporting that it's a measure of u.s. jobs in the private sector rising by 241,000. and by the way, that's quite a bit once again above the estimate for adp today also above the nonfarm payroll 178,000. over the last several months adp has done a good job of pointing

you not to the exact number but a higher than expected bls number on friday there's the february report. 246,000. goods, 65. that is a strong number. services 176 you'll see more details also strong when we look at where the jobs were by company size. i think that is next you'll see the big number in that 500 to -- 50 to 499 employees. the medium sized companies up 127. it's the next screen that's most interesting to me because what you see when you look at by sector, it's very balanced 40,000 trade transport construction having a very good month. 31,000 i think this was a month with a lot of nor easters i'm kind of interested if that was they built anyway or some of that construction comes from reconstruction manufacturing though strong. 29,000 and, again, it's the balance across the five sectors that we look at. let's bring in mark zandi. kelly was supposed to do that.

>> no, by all means. you're rolling. >> mark, good morning. let's talk about -- >> good morning. >> -- how long can we do this for? everybody thought we were running out of workers and yet wages have been relatively modest the unemployment rate hasn't changed. where are these people coming from >> well, some are coming from out of the labor force labor force participation has picked up, but we can't sustain this, you know, forever. i mean, the labor force will grow about 100 k per month, recruiting jobs at over 200k per month. unemployment will continue to decline. by this time next year we'll be well into the threes wage growth is picking up. you look at the plethora of wage data, it's very consistent with the tightening in the labor market everything is on track at this pace of job growth we're going to run out of workers. >> mark, let's talk about what this means for the bls number. as i said earlier, nobody gets the number exactly right if we did, well, none of us would be working here, we'd be doing something else on an

island in the bahamas. >> i would be. >> it has pointed the way towards stronger growth. what are you seeing in your numbers that gives us a push towards higher numbers in the bls than wall street's seeing? >> well, i think wall street, you know, we got a huge number last month, right? >> right >> we had over 300k. generally there was some mean reversion. weather as you pointed out was bad in the northeast we had a couple of nor easters people are building that in. it's possible that the bls comes in shy of adp because, you know, the way the adp -- there is some conceptual differences one of the conceptual differences makes it difficult to pick up these weather events. it is possible it comes in on the soft side. fundamentally we're creating a lot of jobs. well over 200k there's a record number of open job positions. the number of under employed is there. all of this suggests this economy is heading to an over

heating situation. >> mark, i want to turn it back to the trade question here wilbur ross talked about the trade deficit being bad for growth i crunched some numbers yesterday. every time gdp in this country goes up, the tradedeficit rises. imports go up. can you have strong growth and a smaller trade deficit? is that the right -- >> yeah, the under secretary is just wrong you have bigger trade deficits when the economy is strong because we're buying everything. we're buying everything we produce and everything everyone else produces so you get big trade deficits when the economy is strong. in fact, here's the irony of this because of these deficit finance tax cuts and huge increases in government spending, we're going to have a bigger trade deficit a year from now, two years from now no matter what trump does with regard to trade tariffs this trade deficit will be larger this is just wrong headed. >> mark, thanks for joining us this morning >> you want to take us to break? >> i'd be happy to take us to

break. andrew, joe, and kelly will be back and i won't be so there's a reason to come back, folks

get back to our special guest, richard fisher. do you think we're running out of workers do you think that's happening? do you think we're in an over

heating economy and this is negative too much good stuff? >> it's what we at the fed wanted so much >> he's not real happy things are going this well. >> they should we should all be happy if you look at those numbers what's interesting is the previous numbers were revised up. >> right >> so i think it depends, joe, whether we cut off immigration or not because that's the safety valve. if you go through whether it's the nfib data, small businesses, conference, anybody else, they're saying the same thing. we are lacking skilled workers >> is it only baby boomers and old people 25 to 54 there's a large contingent in that labor -- the people that aren't fully employed. >> even old folks like me are in the work force but i do think the real turn will come as to whether or not we bring in the kind of skilled workers that we need that we can't fill ourselves. the nice thing is we are fully employed, getting more fully

employed >> from a policy perspective do you think that that's the safety valve you talk about is in jeopardy >> we have to see what they do on immigration. >> joe, what are they going to do on immigration? >> you mean illegal immigration? >> no, skilled labor immigration is what we need to -- >> totally off the subject but it's used in a blanket statement by many. >> right >> was it the wrong time to cut taxes on corporations because the economy was already -- >> we were hoping -- my ten years at the fed we were hoping to get some fiscal response, some reduction in regulations. >> it finally happened but we're told it's at the wrong time. >> talk to him, don't talk to me. >> my guess is it gives the federal reserve cover from a risk management standpoint to continue to increase rates gradually because at some point the cycle turns. >> there's no inflation still. even the wage number which if the market is -- the labor market is as tight as you're saying it is -- >> this has nothing to do with

the 2% intermediate term inflation. >> this is trying to get as many nuts in the tree and some day the cycle will turn. >> the question is always about the timing and when the cycle turns. if you believe you are closer to the end of the cycle rather than the beginning, you have to try to figure out how to do this in a measured way -- >> right. >> -- the question is, yes, you could say philosophically, theoretically that you want tax reform and all of these things to happen, the question is when do they happen how do they happen how immediate do they happen and do they effectively hasten the end of the cycle or the beginning, right >> even lie owe brainard said we have a tailwind now. what you do with fiscal policy on this -- you're pushing out the cycle. just remember, the record is ten years of expansion march of '91 to march of 2001. we're in our ninth year. if you're relying on policy, we

have regulations pro business, pro finance. this extends the cycle it's good for the fed. now you can put some nuts in the tree you can also keep reducing the balance sheet so if you have to use that tool -- >> you don't know if expansions die of old age. >> what's that >> rates are -- >> donald trump is saying the business cycle still occurs. >> 2.7 on the ten year >> who knows, but i think it's very important that the fed take advantage of this in a nice way without disrupting everything. store those nuts in a tree be a good squirrel use them when the winter comes, the winter will come, it's not going to come as soon. i think this package is a good extender and provides a tailwind i was big on it. good for cap ex. >> coming up, trade tit-for-tat. we'll have full coverage we'll cover it, china's tariff announcement, the impact on the markets, the trump agenda. check out the futures now down

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good morning welcome back to "squawk box" here on cnbc we're live at the nasdaq market site i'm andrew ross sorkin kelly evans in for becky the market selloff, take a look at futures right now they are dropping after china announces tariffs on more than 100 u.s. products. this in direct response and the latest tariffs announced by president trump. take a look at the board right there. dow off by 530 points. s&p 500 looking to open down 30 points nasdaq looking to open down 120 points flip it around to what's happening in europe as well and what's happening overnight in asia you're looking at a red board there as well with the dax, the italian ftse and spain off over 1% ftse 100 holding nargely better, but looking also at the hang seng and shanghai composite off

as well. we'll show you the ten year while we're at it. what you can see there going on. we're now at 2.752 richard fisher is here you've said it a couple of times during the breaks. you don't think that the market is moving necessarily as a function of the tariffs. we keep saying -- we keep making the correlation. you think something else is happening. >> no, i think the market was priced to perfection, it was not sustainable at these levels. i think the interest rates have come up in the two to five-year area in particular, back to nine-year highs. it settled down in the 2.70s that's a big jump where it was post brexit at 1.366 it is a trip wire, but i don't think it's the cause if i can differentiate it that way. it gives you an excuse to reposition yourself, to worry o outloud. we had no vol for so long.

we're finally getting volatility that's a healthy thick in my view. >> couldn't you make the argument that the vol is artificially created meaning the vol is being created by tweets, trade wars, it's not a function of a naturally flowing economy? >> we had no vol whatsoever. you need to have some volatility in order for capital to be properly apportioned this is a one-way street we helped engineer it. now that game is over. we're back to more normal conditions these are big numbers as joe pointed out earlier on the broadcast. percentagewise they're not overwhelming we've had 31 corrections in the post war period including now of 10%. we've had 9 of 20% or greater starting 1957, 1962 or better. >> only 9? >> only 9, 20% or more this is the way markets work they go up and come down i don't think there's anything unusual here we don't know how many young

traders i meet with on behalf of barclays and other -- >> big 2016, 2017. >> they think this is normal this is an adjustment and i think this is healthy for the markets, healthy for the economy unless it gets out of control. >> it will be back below 24,000 today. we were back above 24,000. >> remember, the low was march 9th, the interday low of s&p 500 before our programs kicked into the market what i called the devil's numbers, 666. >> right >> look where it is now. >> let me make the point, i know you're going to think it was a partisan point for a whole year when those of us who said we felt like it was being artificially inflated, it didn't make sense, or that it was being over valued there was a whole community of people to my left who said, no, no, no -- >> to your political left? >> political right but maybe stage left. >> we're at 24,000. >> we were at 18,000.

>> yes >> so that's 33% higher than where you got nervous. >> go ahead. what were you going to say >> it was 33% higher than where you were wringing your hands. >> it's down 1,000 points or 1500 points. >> now you say, well, actually, maybe we were over maybe it wasn't -- >> after january we said there was going to be a reversion to the mean and regression to the mean and that's all he's saying. it was priced for perfection look, when we get back to 18,000 you can start feeling good about all your prognostications. until then you're still out of the market when it's up 40%. >> i'm sitting here as is this brilliant woman between the two men. >> what would you do if we really did go down back to like under 20,000 >> i think we'd have a real problem. >> why >> we're at 24,000 now we were at 18,000. >> i understand. >> everyone thought we were going down everyone thought trump was going to kill the markets, andrew, kill them. anything above -- >> and now any time he does

anything wrong they say, oh, no, it was actually just priced for perfection he's not killing the markets it was priced for perfection >> for you, anything above 15,000 is a big surprise. >> oh, please. >> it was. >> kayla tausche is waiting. >> krugman, mark cuban i can go down the list of people. >> kayla -- >> steve ratner. >> nice to see you save me. >> reporter: successful out for you this morning, andrew good morning, guys as you're talking about the market reaction to the china potential tariffs that it would leafy, let's talk about what those actually are overnight china confirming that it would place a retaliatory 25% tariff on about 106 goods that it currently imports from the u.s., things like soy beans, automobiles, cotton and chemicals. that would be more onerous than some of the previous retaliatory measures that china has put in place. this is the third wave directly and proportionately in response to what the u.s. did a few weeks

ago when it announced $50 billion of imports would be targeted with its own 25% tariff and just last night the office of the u.s. trade representative published a detailed breakdown of the 1300 plus products that it would place tariffs on, things that companies use, small businesses use like cash registers, syringes, copy machines things that consumers use like dish washers, flat screen tvs and golf carts the two sides have six weeks until anything comes to pass these tariffs aren't going to be put in place overnight the ustr will be holding a hearing in the middle of may and then receiving comments on may 22nd and anything that it does would happen after that and china has said that its tariffs would only be in response to anything that the u.s. does. the commerce secretary this morning on "squawk box" said that the $50 billion figure for the u.s. economy is hardly a life threatening one and he said he's still leaving the door open for this to get settled in

negotiations behind closed doors before any of these tariffs get put into effect. >> even shooting wars end with negotiations somebody signs a treaty with someone else and it has whatever terms it has so it wouldn't be surprising at all if the net outcome of all of this is some sort of a negotiation. whether that happens by may or it happens at some other time, that's another whole question. >> reporter: well, it would need to happen by may, at least if the administration is going to stick to this time line that it's put in place. it is worth noting as we've said earlier this morning that previous negotiations with china even though some of the principles that were discussed were agreed to by the treasury secretary and the commerce secretary were ultimately rejected by the president who wants to take a very harsh stance with regard to china. a white house official saying the president is not phased by the market reaction and that it

is pastime for the u.s. to be tough on a trade war going on for a long time even before this administration guys. >> kayla, thank you for that report we're going to get to chicago right now where phil lebeau is standing by trying to understand the implications of those proposed tariffs on cars and aircraft phil >> reporter: andrew, the reason you're seeing the auto stocks in particular under pressure this morning, anywhere from 4 to 6%, is because this proposed 25% tariff from china is an additional 25% let me explain what we're talking about. there is currently a 25% tariff on vehicles built in the u.s. and shipped to china what they're proposing now is an additional 25%, which is the total tariff of 50% on all vehicles built in the u.s., electric vehicles and suvs are most exposed to those proposed tariffs that china is talking about. and when you look at the vehicles that are built here and sent there, yeah, a lot of people talk about teslas because they do not manufacture those in china, but you have to think

about mercedes in alabama, bmw in south carolina, the jeeps that are built at various plants around the united states about 267,000 vehicles were exported from the u.s. to china last year and here's the trade difference in terms of vehicles built here, sold there, $9.87 billion worth last year. what did we get from china in terms of vehicles and there are some, not many, 1.45 billion built there, sold here i mentioned tesla. take a look at shares of tesla they sold just under 15,000 tesla suvs, model s, model x in china last year considering na they sold, what, about 95,000. 90,000 vehicles last year overall or 101,000 i think it was overall. it's an important part of their business not a huge chunk but an important part of it so that's the reason that you're seeing these auto stocks under pressure this morning.

>> phil, thank you very much tesla as you said down more than 9 pores percent. let's get over to jim iurio. this is rippling across markets this morning interestingly enough, stocks are down interest rates are churning in place here what are you watching? >> well, because interest rates we believe are supposed to be going up in this economic environment but they can't because they're still the go to of the safe haven. if you would have told me 12 hours ago that the market cared about tariffs and proposed tariffs, i would have said you're crazy there's much more to worry about. this morning soy beans are down 6% that makes me think, yes, now tariffs are thrown into the mix of why this weakness has been over the last six months i believe this is all about transitions. we built up over ten years' time we papered over a lot of problems economically. now those problems are becoming visible with higher rates. the libor is much, much more

important than tariffs. >> what problems are you talking about? or do you mean because the fed is exiting >> yeah, i mean because the fed is exiting zombie companies, the average has been 5% of the u.s. companies or zombie companies, companies that can't cover debt service with current earnings. >> yeah. >> that blew up to 10% now we're seeing that becoming more and more difficult for those companies. this is all about transition we wanted transition from ultra ultra low rates to just kind of low rates but it's never going to be elegant. there's clumsiness along the way. that's what we're seeing in the last two months in my opinion. >> we've got about twenty-three five on the dow with the -- that was the second low that was lower than the first low that we saw so we tested it once we're going to get close today and then on the s&p we're almost -- we're going to be right on that support level as well do we go through there do we make new lows? which is more important, the s&p

or the dow >> the s&p is only what i look at i think it's a much broader picture. we are going to revisit those lows it's like if you're on vacation in rome. the coliseum isn't in your itinerary. if you say to yourself you say i might as well go see it since i'm right here the market feels that way. i think it's going to test that level. it takes it out. what's important to me is where we close the end of the week after we see another round of employment data which is probably going to be good. >> jim, thank you. thank richard fisher we had a view on autos. >> i'm not surprised they're selling off. they're all trying to resolve the nafta negotiations >> right. >> this is a doubling down for autos, i would imagine their lobbyists hard at work. >> you're on the board of at&t do you have a handy cap on how the anti-trust trial is going so far? >> at&t is the greatest american company. >> very poll particular answer. >> along with pepsico and others. >> your time and your perspective.

thanks >> great to see you. coo call in session, we'll enlbthhewethy geer wn come back after this

welcome back to "squawk. it's no secret that corporations today dealing with tremendous change, but aside from the big visible technological changes, a new report from deligoit. a new shift that businesses are making what are now called social enterprises joining us is kathy engelbert, thank you. >> good morning, andrew. >> when you say social enterprise are we talking about steps that companies like blackrock are taking when it comes to issues like, joe, close your ears, climate change, guns? is that what we're talking about here >> i think it is totally multi-dimensional. we have 62% millennial work force. social enterprise is so important to them from well-being to some of the things you just talked about across the life cycle of our employees. >> how much of this is being driven by the millennial employee base, meaning companies want too do this because they think this is what they think their employees want and how

they want to attract new people versus what the consumer wants >> i think it's both there's this relentless focus on what the consumer wants. that's why digital and transformation is so important, but i think people are stepping back and they're looking at human capital and looking at the human capital balance sheet as importantly as their financial balance sheets. >> there's stuff that, for example, i can understand -- okay let's say a company is going to say, we provide day care are we talking about perks that kind of help the lifestyle or are you talking about having a social agenda? >> i think it's purpose driven agenda so we all know millennials, the digital natives, gen z, gen zs d, digital native. they're investing in them as they do their r&d or innovation. >> the reason why i divided it between the employee base and the consumer base is the employee base issue to me is

clear if you're trying to hire millennials and they have this mission purpose driven life that they want to pursue. the consumer side's harder because as joe and i have debated constantly, there is a very broad spectrum of people out there that have lots of different ideas about the way companies should behave and who they want to buy from because of that behavior. >> that's true if you're a millennial even if 70% are on the left, there are 30% who feel -- it feels like it's pushing companies to choose sides. >> in the end -- >> it's making the tribalism that we wake up to in this country every morning, it's making it worse. >> in the end, companies are focused on sustained economic growth looking at policies, tax reform, regulatory reform, infrastructure, they're looking at that, again, for what is the next generation technology. >> do you think they should weigh in on pro choice versus pro life would you do that? >> i think you have to look at

your talent platform and determine what the interesting things are around your talent. i think if you have a voice on every issue i think you lose your voice you have to pick your spots. whether it's sexual harassment, me too movement, whether it's other things you want to pick your spot. >> it's a longer conversation. >> much longer. >> appreciate you being here. >> can you find the report on the website? >> yes, our human capital trend report some interesting things about the robot apocalypse yes, you can find that. >> appreciate you being here. >> let's get a check on the futures now. big story of the morning seen declines of more than 500 points, even more than 600 points throughout the premarket trade. getting close to the market open dow looking lower by 497 and another big corporate story that concerns a familiar face. julia, hey, she's here what do you have coming up >> i'm here. sir martin sorrell, the ceo of wpp group is under investigation

enisd empire and the entire ad empire is under pressure we'll discuss coming up after the break. you know what they say about the early bird... he gets the best deal on the perfect hotel by using

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. welcome back, let's get a check on the market this morning. 500 last look. even show s&p matters. the key level is about 235 on the dow if it retest lows. i think of 25.20 on the s&p. we are indicated to get in those areas today on the open. not quite on the s&p but the dow is right about there, 23.5 >> all right, the head of the biggest advertising firm in the world is finding himself on the hot seat jul julia boorstin is here on

details on martin sorrell. he's being investigated by wpp he's the leader of the industry. he's the ceo of the world's largest ads. he's been praised on managing over ads personal misconduct and there is al allegations of p allegations -- he rejects those allegations. i think it is interesting to point out at what point is this coming into wpp's history. wpp is under a lot of pressure it just reported of its worst quarter since this the worst is that outlook. they don't expect growth in 2018 and there are a couple of reasons for that sorrell --

>> that's not a good look. >> the chart is down and he's facing criticism for his big pay package. there is a lot of questions of what's next for the company and there is no official accesser. >> no official successor who's in line? >> there is a couple of names that's been thrown out the ceo of cantor. and there is an officer of wpp, there is speculations of who could replace him. no names have been put out there. he's been running this company for a long time. so i think it will be interesting to see what happens and even if there is no sort of findings in this investigation, it is a tough time >> body language from the company meaning this investigation, sounded like semiinvestigation going on semi-privately did you get a sense that this

was a big deal or somebody was trying to trump up >> i think it is hard to tell if it is a big deal these days. there is been so many revelations of misconducts across the spectrum. there is always questions of ceos, even it is wrong doing even if it is not a massive deal, does it show bad judgment. >> clearly it relates to financial, is there something to this, too? >> there is also reports of financial propriety >> are we in a #metoo situation? >> i don't know the details. >> and you are talking about financial propriety or use of company funds. >> i hope we'll find out

>> they say it will resolve quickly. >> all right, we'll get to "squawk on the street. we'll be right back. es etfs ared the way investors think. with objectives like building capital for the future, managing portfolio risk and liquidity and generating income. that's real etf innovation. flexshares. built by investors, for investors. before investing consider the fund's investment objectives, risks, charges and expenses. go to flexshares.com for a prospectus containing this information. read it carefully.

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let's look one more time and relish it. down 482 now on the dow. we'll be below 24,000 in the open we'll see if we'll hold in the 23.5 s&p indicated at 37. nasdaq indicated down of 102 make sure you join us tomorrow got to get to "squawk on the street" now, it is coming right now. ♪ good wednesday morning, welcome to "squawk on the street," i am carl quintanilla with david faber cramer is off today. got a sell-off on our hands. tariffs on 106 u.s. products as investors ask once again whether they believe a trade war is inevitable bonds relative stability