there's a lot of time in the day to trade. >> you don't need to change your settings. >> i don't >> no. >> oh, no. i'll get up as early as i do today. >> yeah. >> i'll be here tomorrow >> yeah. >> it's easier than changing it. >> right good. >> thank you we'll see you tomorrow andrew, leave yours set at 5:45. we'll see you. make sure you join us tomorrow "squawk on the street" is next ♪ good monday morning. bulls will try to reset here after friday's losses. futures are up as we buckle up for an eventful week bank earnings on friday. zuckerberg on the hill tomorrow. larry kudlow with us in the next hour europe is fairly choppy. gold just about unchanged. we begin with futures posting

solid gains ahead of the open. investors seemingly shaking off last week's plunge as the trade war rhetoric softens will the volatility continue president trump is taking to twitter to say he's optimistic china will make the right moves. but china reportedly considering currency deevaluation as one of the tools in this fight over trade. facebook suspending another data analytics firm a day before zuckerberg goes to capitol hill. volatility is alive and well on the street. the threat of a trade war still front and center china's foreign ministry saying the u.s. is to blame for trade friction and its impossible for negotiations to take place under current conditions the president is tweeting this

morning. well, a lot of discussion over the weekend. larry summers in the ft today talking about some of the reasons why we have what we have today. >> yeah, look. things calm when we don't see the big sunday night announcement from china. i think that the only thing we saw from china this weekend they're banning exports to north korea, which is positive wasn't watched at all or talked about but this is something that president trump had focussed on i think he would have said we have a potential win here with china cooperating with us. so i think that the futures jump more on this than anything else. a recognition that perhaps things are moving a more our way in china than we thought germany and france coming here perhaps to be able to say, you know, we stand a little more united on china. so i know that the president is combative as ever, but these -- the doves seem to be a little bit to make it so there's

something positive. >> you think merkel's visit will be constructive? >> yes. >> the japan news last week seemingly taking some sides with us at least on the wto. >> i think that -- i don't know how separate we'll want to be. i think peter that vnavarro, i closely. he didn't come off as someone that said this is just full bore war. it was the opposite. so, i mean, the people were presented this weekend were a little bit relenting the tweet is something factual but americans need to know. >> what can we expect in terms of the market's continued response to the potential back and forth. i mean, it's difficult to sit here and say there won't be another tweet or there won't be another response from the chinese and there won't be another tweet. i mean, at what point do we mute it >> there's a fundamental shift going on in the market now i counted 15 groups that are domestic that are doing well

we're about to see we're about to have earnings the shift is out there's a piece today about doing better i'm not doing that i think the tech are not where the money is going ever since tech reached 26%, it's been going down for various reasons. not just because of china. but this market has switched, and people are not aware of it it's fundamental just look at the retail. look at the fact that retail the stocks, even though the ones that are supposed to be connected with china, they go up almost every day there's a switch going on. >> on friday, when you said that's the new portfolio, when you were looking at hershey and smuker you think that sticks? smuker didn't have a good number the stock is up. they doubled down on pet food. the stock has been doing okay. it's interesting because downgraded tyson last week tyson exports about 30% of the pork product we don't know how much is china. tyson is a beneficiary that soy

came down 50 cents last week what people are looking at and not being talked about there are winners. 15 different domestic sectors that had lots of money coming in the last few weeks 15. >> do you buy this out of the journal today? "cracks in the global growth story. three months of negative retail sales. ism softening. jobs rolling average is coming down. >> matthew boss is talking about actually retail sales in the country were surprisingly strong despite the weather. i think that's important it's hard to gauge europe. i have to think the biggest thing that happened in europe is they have to keep pumping up growth it matters the cracks in the world trade, you can dismiss three months i don't know six months out to be concerned i'm not seeing it. >> all right they mentioned copper down 7 they say german industrial output down -- >> it's a little bit weaker than i like. >> they got auto numbers last

week. >> did you see the auto parts stocks magna? it flew last week. and that's a good example. with autos doing better in this country, that is a huge driver it's why ksu stock, which should have been worried about nafta. ksu broke out last week. >> soon we'll be talking about earnings every morning >> i like that. >> that may be a positive? >> i think so. look at the way sonic reported a horrible number. okay domestic. >> sonic >> it's true. >> how about the stock >> they got horrible advertising. >>well, the stock has been great. the stock has been great since then these are the things i'm talking about. there's money flowing into things but we don't talk about the sectors because they've been losers i'm looking at hershey and thinking "holy cow" i can craft a thesis

general mills may market the end of money coming out of consumer product. >> that would be good news to many of the stocks >> yeah. >> take a listen. >> oh, craft hines try to put together a thesis for that weekend. >> couldn't do it? >> not yet. >> i'm working on it. >> you are okay >> it's coming your way. we'll talk about this and more in the next hour with white house chief economic advisor larry kudlow just past 10:00 a.m. eastern time a ton of news out of phasebook today. the company suspending another data analytics firm after cnbc discovered it was using tactics like cambridge analytica separately today starting today the 87 million users who might have had their data shared will be notified. users will get a detailed message on their news feeds and zuckerberg is heading to the hill he'll meet with lawmakers today ahead of testimony tomorrow and wednesday. house energy exercise on

wednesday. journal has a piece out about what he needs to do. one of the things they say is keep your cool. >> the sweat problem it's a whole new angle that he was a water works when he was asked questions by the "wall street journal." water works doesn't play well in congress then people say it's too late to apologies. it's never too late to apologize. we know that that's like a 2,000-year-old theory never goes out of time. >> always worth it. >> i apologize i'm sorry speech was still the benchmark when he was running city which was the worst violator of everything at the time i'm sorry. i apologize. i'm sorry. he says sorry and apologized over and over. you wear them down they don't know what to go and the hearings are boring. let's go back to the regularly scheduled programming. >> you know over the weekend jeffreys coming out they analyzed facebook's traffic over

the course of march. recent headlines data policies have not meaningfully engaged. a lot of analysts come back to. >> but not the media. >> it trades in about 18 times the 19 eps numbers that are out there. >> you have to believe the 18. >> you have to believe the 19. >> right. >> it's too high. >> but there's just endless pieces from wall street saying don't worry about it you pick up the paper, of course, it's everything. but then i spoke to people this weekend that i thought it was where we were going. what was in the cambridge analytica thing about? what did they get? >> they're not paying attention? >> no. and you look at the facebook profile. i said they found out i like cats. >> steve wozniak, one of apple's cofounder said he's quitting told "usa today" i'm quitting because of the data breach of course, he's got apple bias,

perhaps. they're trying to use privacy as a wedge. >> tim cook versus zuckerberg. >> that's a real war of words. and today is the six year anniversary of instagram purchase for $1 billion. >> i think systems is a lot cooler they should start having systems more in the face because instagram has been unscathed here. >> a billion dollars that's worth a little bit more than that now. >> oh, my gosh. >> it may be a little bit worth than google paid. >> that's why the stocks are where they are do you ever hear anyone say, you know, mark is a great guy. you got any money? >> i don't know enough people who know mark to comment on him. >>well, the charm event how is it working so far? >> no. >> i would love him to sit at the end of the desk there. maybe they'll let them on with a

t-shirt. he's zuckerberg. >> we should go to marshall's. when i workeds at go at goldmanv me $500. >> i'm confident he'll wear a tie tomorrow. >> think so? >> i do. >> yeah. >> with a t-shirt but it'll be a tie. >> lawyers you have to have lawyers >> we're looking for feinberg, for ted wells listen saying we're turning the books over like the brady investigation of deflategate which has been more serious than the facebook investigation. deflategate/facebook what was that cambridge analytica? what was that cambridge analytica? >> it was time it give them time. nobody tossed away with a cell phone yet with necessary information. >> i like the doggist. >> have you seen it?

>> no. i like the doggist a great site russia doggist. in other words stay away. >> okay. i will when we come back, david has new details on cbs' bid for viacom we'll talk trade, tariffs, markets, and more with larry kudlow in about an hour's time. take a look at the premarket as we try to offset some of friday's sell-offs we're back in a moment roundup for lawns has arrived to put unwelcome lawn weeds to rest. so draw the line. roundup for lawns is formulated to kill lawn weeds to the root without harming a single blade of grass. roundup, trusted for over forty years. pthey don't invest inn stalternativesds. or municipal strategies. what people really invest in is what they hope to get out of life. but helping them get there means you can't approach investing from just one point of view.

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as we start the week, take a look at the s&p year to date down about 2.5%. over the past year, s&p up about 10.5 keep that in mind. >> a lot of people are talking about trump versus other presidents now where he falls in the first year, and i think that one of the things he's gotten away from is the idea of letting the stock market be the gauge. i think that was year one. year two is to get this trade deficit down with china. i don't know i think that people are accepting of the fact that maybe he's not stock market is not his highest call. >> yeah. we may not see that many tweets about it i want to get to cbs viacom.

we got more back and forth the back came from viacom on thursday night in the form of a counter off to the .55 ratio that was offer offered by cbs' special committee. let's step back for a moment it's urging of controlling shareholder of both companies national amusement is run by sherry redstone it's a by disast -- bizarre situation. cbs is being told make a bid i want the two companies together and then we'll figure it out back to what the bid was it was .55 coming back .68. others reported it this morning. it came back on thursday night my people familiar with the situation it indicates they have yet to respond to that offer of counter offer of .68 well above the .55 perhaps more importantly not

even perhaps, more importantly, viacom also saying this is what the management team must be. leslie and bob i'll get back to that in a moment a bit more to share. viacom offers about 40% of the overall combined company importantly, they point out, well, 49% of the company would be coming from viacom. 49% of the cash flow would be coming from viacom but the market wants to put a lower multiple on that they feel it's less reliable cbs did a lot of due diligence didn't believe the projections they were hearing from viacom. by the way, also seems to be a big gap in terms of their view cost synergies people close to viacom believe there's as much as a billion dollars in cost signer gis not just revenue cost synergies they can deliver here cbs people close to them say it's way off

that's what they told me way off. they don't see it anywhere near a billion dollars, as you might imagine. of course, that comes back to what they believe is a fair ratio in terms of what they should be paying, again, an the urging of their controlling shareholder to acquire viacom. much of this is going to come back what i reported a week ago, which is this almost -- almost attractable situation in which you have a controlling shareholder who wants bob backish as number two and the current ceo very successful ceo leslie moons have of cbs wants joe as number two. what you'll hear from the viacom campus listen, why would we accept that the other side will say, hey, special committee at cbs, we believe if you want to deliver on any of these synergies, even

though we don't see them as high as you do. leslie moonves needs the team he needs in place viacom come back and say, you know, 2022 the nfl deal goes away there's a clip there regardless, they have to try to get the two companies together what i continue to hear, jim, is the following. if bob is not appointed coo and president under a deal that is hammered out, and they got a lot of math to get through here. but this if that doesn't happen, leslie or sharon will start replacing board members. and dick parsons takes his role today where it's announced as a new board member that's a slot across the barrel there from sheri redstone in terms of what she can do if you're a cbs shareholder you might be saying, really? i got to over pay? we have to overpay for the company. do i have any role or say here

>> why don't i sell cbs or something here for me? >> why >> well, no. why own it i don't know to me the new angle about leslie moonves at 68 and got a replacement. i don't know >>well, listen, it's been a week now from saying this is the crucial issue. it remains the crucial issue they've got to figure out a way around it. either one backs off or i believe shari redstone will replace board members that agree with her deal and do the deal she wants and mr. moonves would no longer be. >> it's a very strange deal, isn't it, jim. you've got a control shareholder forcing, to a certain extent, forcing this certainly the cbs special committee would say. >> they say everything is cordial. a lot more being played up in

the media as opposed to, at least what advisors are saying are cordial negotiations >> is that why cbs is down 10% this year? that's not so hot. know what i mean >> you think they belong together better together or apart >> i like to know the value of them apart so maybe you can buy cbs right now i think there's a discount that's good reporting. explains a lot. >> yeah. when we come back, cramer's mad dash 'rba ia meart.t the premke wee ckn mont at ally, we offer low-cost trades and high-yield savings. but if that's not enough, we offer innovative investing tools to prepare you for the future. looks like you hooked it. and if that's not enough, we'll help your kid prepare for the future.

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>> today is monday it would be the first of the week. >> geez. i thought it was like appearances by mr. ned on the news 7-1. >> i know. >> okay. 7-1. let's get to avexis. >> 88% premium they had a drug that had phenomenal success with 15 patients for a horrible disease, david. sma, which is another term for it is -- there was a drug which they got from ionis that had huge sales it had 3 million in the fourth quarter alone. it's a direct competitor they feel avexis is superior i thought it was going to go to 5. i said that because i got a

citron report it was $5 in 24 months no >>well, it was short this. >> killer. >> let's give them credit. they loved it the whole way and this drug -- >> they have clinical stage products for the spinal muscular a trophy but they work in different ways. >> the biogin drug it's going down because of cbs try to figure it out there's a lot of stuff, david that, is happening and people don't understand why stocks are going down. we find out and say maybe now is the time but people figured out it's well ahead. >> yeah. >> there's good stocks. a rht. >> one of the bigger deals of the morning, for sure. the opening bell a few minutes away stay with us on "squawk on the street."

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await the start of earnings season with the banks on friday. people trying to put friday's sell-off into some perspective, because some of these averages had no green in them by the close. yet, there was light volume. we haven't gone back to the february 9 lows to watch it out. >> there is an interesting statistic about the vix that i talked about i typically don't talk about the vix in this show the vix was going down when the market was going down. thank you to mark sebastian who does a lot of work on this on thursday and friday. that only happens when the market is about to have a bounce because the vix should have been going up and i think it's really important to know that it looked like -- i'm not saying friday's trading was phoney but i agree with you that there was something wrong with the way it fell and then we -- boom sunday night we don't get anything. i kind of like how we're set up. i like how we're set up.

>> it will be interesting to watch as we start the session today. and we get a look at the s&p at the bottom of your screen. it's the independent petroleum association of america so is boeing still a name to watch on trade >> oh, jees. >> if not, what is >> i thought that was substantial. >> 47. >> caterpillar you have 14% earnings at risk. that's all you have. c.a.t has 100% of the earnings i think there's some faux worries about cat. that's the one that we're going to think about now cummins less than 10%. everyone is freaking out about cummins. the different companies that have a lot of exposure to china, i went over them, it's funny, we

don't have as much exposure as we thought because we've done so poorly selling in china. >> right. >> i'm not kidding we've done so poorly unless you make it there. >> right but there was something -- and i tweeted it on friday a campaign online to start to boycott u.s.-related goods they're made in china but they're sold in china. starbucks. >> yes i said that. >> that would be much more damaging. >> young china, starbucks, apple -- >> automobiles, as well. >>well, tesla. i mean, tesla needs that there was that great piece about how he likes the model 3 that's in the cross hairs. gm likes the cross hairs because they make them there gm i like the upgrade but one of the things missing the upgrade is how strong the sales are. by the way, i think i prefer the analysis i did of morgan stanley. he's the best there is

but it was just hard to find companies other than the ones you just mentioned apple, starbucks, kfc, those are the ones they can hit. suddenly we would be saying when they have the most exposure. not skyworks skyworks continues to be mentioned incorrectly >>well, they end up on the top end of the list of companies with percentage exposure to china. >> right. >> and, of course, the ones that are most -- amazon is not really in china facebook is not in china google is not in china but that's the group that has been hit the hardest and i think that's been hit the hardest. amazon because of, obviously, how much they make off the post office. >> yeah. >> yeah. they're taking them to the cleaners. >> yeah. they took them to the cleaners. >> yes. >> right. >> they panted the post office not.

>> another not another that suffered is nxp every time i get into this i get more questions. >> that's for real. >> i don't want to because my reporting has not turned up a lot. last week i mentioned that nxn would likely want to extend the merger agreement, which as of now is extended beyond the 25th of april the expectations has been that we'll hear one way or the other by the 17th. or call come would have to refile but they refiled once it would be unprecedented to refile a second time 12750. if yo got approval tomorrow it would close quickly. and the upside is very strong. many say, jim, the downside they don't see is particularly significant except that you would have a lot of selling shareholders initially. >> yeah. you have the big jump. >> right. >> now, by the way, on the $4

break fee it would have to paid regardless the question to whether or when they'll get the approval, i got nothing >>well, earnings per share basis the stock would be here. >> it would be here. >> yeah. it would be here. >> if they don't, maybe it gets washed out just because. you get a lot of sellers who own this thing those with the agreement some of them you believe it would come back >> i do. just because it's nearfield communications which a lot of people like. more linked to auto. it's good analog in terms of auto and analog device is good analog those stocks are down too much because of the worries about china. there's just a lot of negativity about china i think is misplaced by what the president is doing am i coming after the president's stance i'm saying stop selling everything stop selling everything because of china it's just incorrect.

>> one thing not being sold today is because of china is hilton the stock is up. they're handling it well. >> numbers are good. >> in connection with the offering and the numbers are good they raised their third quarter guidance and adjusted expectations 445 million. previously they had been at 410 to 430 >> marriott stock is on a tear it's interesting because marriott paid for starwood starwood has huge business in china. stocks not being hurt. the inconsistency of what is being hurt because of china is baffling to me it's baffling. but the nxpi you're right to bring it up. there's a feel that maybe they won't get bids for let's say

west prudential. because maybe the chinese would veto that. maybe it would take over premium on a lot of stocks >> if they were to rule against qualcomm's acquisition, that would send a terrible signal there are so many technology deals that need chinese approval so you basically say we can never get another technology deal done until things change. many people hope, certainly, it does not occur because it would be a real negative by the way, that would be reciprocated here. not that any chinese companies are trying to buy anything. >> what happened with what we've heard so far in the at&t trial i mean, it's aplenty. >> yeah. aplenty. >> yeah. >> broad come and qualcomm >> yep. >> they got a lot of witnesses to go in the at&t trial. >> yeah. >> all i can tell you is a lot of consolidation theories drove a lot of these tech stocks

look, again, i don't think tech is a great sector to own here. because nxpi, because what you will get how much is self-owned. you have depth internet of things and internet of things would get bought but now it's frozen and the chinese, david, maybe this is the real tell. if this nxpi deal goes through, maybe it's a pot maybe it's the chinese sending a signal. >> it would be a positive. it would be a positive for qualcomm, as well. on viacom which is down .68 is what they want. we'll see if they get it i want to point out, they did accelerate their earnings announcement it had been early may but now it's april 25th. you don't accelerate your earnings announcement unless you have something good to say, right? >> what do they got? >> one would think the earnings will be pretty good from viacom. again, they move it so it will be ahead of cbs' earnings

announcement which i think is may 3rd. >> what would be the driver that would be better? >> just delivering to cable networks and maybe more. maybe ad sales. >> do they cut some people >> they cut some people. >> paramount is not a turn out until next year. >> paramount studios. >> national airline quality ratings are coming out to phillip lebeau. >> on the one-year anniversary of a passenger being dragged off a united airlines flight that lead to a lot of people in the industry saying what is going on here is service slipping that much? we have the national airline quality rating it is at a record high for 2017. fewer complaints, bumpings following that incident dropped dramatically mishandled bags dropped. the on time rate dropped which airlines did the best? alaska for a second year in a row finished number one. narrowly edging out delta.

jetblue was three. the three that lagged. expressjet, frontier, and spirit it dropped to number 12, at least having problems with the dot complaints in the last year. as you take a look at the airline index, don't forget that the airline earnings start in earnest this week on thursday. we will be in atlanta talking with the ceo of delta airlines as it reports first quarter earnings back to you, carl. >> 5-1 advancing in the declining stocks take a look at the sectors these are growth sectors it looks like january. consumer discretionary strong. remember amazon and netflix are in the consumer discretionary group. and it tends to drag the group up you need to be aware of that

financial industrials doing well y utilities are lagging. it looks like jan here they're calling it the yo-yo market friday was a day of tremendous distress for the market. i heard people use a word i haven't heard in a long time "uninvestable. we don't understand how to deal with the market on a daily basis. if this keeps up, people will pull away. it happened late recently in a number of specific sectors the hope on the china thing is negotiations will start sooner rather than later. let's get it over with a lot of people who are looking hopefully toward nafta agreements to pave the way say, look, here is an example of deals that will be made. stop worrying so much. there's a summit of the americas april 13th and 14th in lima. it's looking like they're not going to announce an agreement but at least indicate how far negotiations has been going. anything would be helpful to the markets at this point. i want to point out, there's been some damage here.

the s&p remember when we started february 27th was the steel tariffs. that was a recent high we hit there. and march 13th we heard of tariffs. it went down 7%. so there's some damage out there, particularly in the momentum name if you look at semiconductors, that was in the middle of march. down about 13% materials, industrials, banks, all close to 10% so bigger drops in the market for some important sectors job overall. faang suffered the most. this isn't surprising. facebook 20% netflix and amazon down double digits and apple down about 8.2%. there have been some pockets of strength out there i think jim mentioned at the top of the show retail has been doing better retail had a very good week overall. chico and jp penny and urban

outfitters they have been underperformers i think it's an modest amount of rotation we're seeing. nothing like the rotation we saw last year when we saw a weakness in technology stocks taking up slack in other sectors like energy there's no real rotation going on i think that's the problem on days like the market pulls back like friday certain sectors pick up. but for the most part it's cancelled bids it's not people saying sell everything now it's buyers expressing no interest in getting in the market when you have normal bounces selling pressure and no buying interests, the market droops it's not very concealing to people out there it's not selling pressure. it's lack of buying interest not very consoling but a distinct way that the market behaves when people don't know what is going on and they use words like "uninvestable" why buy in the market 152 on the plus side. >> thank you let's get to the bond, as well and rick santelli at the cme

group in chicago good morning, rick >> reporter: good morning, carl. interest rates it's all about where they're trading the context of a broader range, which in the case of treasuries, it could clearly see on the one week chart that we're trying to drift up toward it and we moved into it briefly this morning with a 280 trade. but it's back down look at february 1st and you can see what i'm talking about lots of sideways activity. the same time frame for the european ten year looks noticeably different more to the downside, but it really does continue to hold right around 50 basis points keep in mind, many of the big bond constitutional traders continue to point to the relative value trade and how associated and tied in, of course, all these long-term interest rates are if we switch gears toward foreign exchange, we all know that big exporters, whether china, japan, even some extent the european union, everybody is monitoring these export

economies due to the trade issues that are now front and center look at one week of the dollar you want boy, the dollar is grabbing a bid here if we go a year to date chart on that, you can definitely see there's kind of this double bottom action right around 627 or so. if you zoom out to 2015, you can clearly see what i mean. it has been more of a you on story. along with the dollar. granted, both those are having a lot of dynamics and moving parts and distortions on where flight to safety is in a currency market where the japanese have kept the biggest stump on the scale in just about every conceivable way. we continue to monitor how the trade issues may confront some of the central bank policy issues back to you. >> thank you very much we'll talk to you in a bit when we come back, larry

kudlow will join us. we'll talk trade, some tariffs, the jobs number, the market, and a lot more dow is up 144 to start the week. don't go away! whoooo.

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coming up at the top of the hour, larry kudlow is going to be with us he's now in a position to support the president's china tariff proposals, but that's not always a position he's always held take a listen to the exchange between larry and president then donald trump from back in 2011 on larry's cnbc show "the kudlow report." >> you want to put up a curtain wall in the building where does it come from? china. so many products come from china. a lot of it has to do -- >> that's not a bad thing, is it >> it's bad -- >> look, i mean, you are going to grow the pie if both sides are trading freely and fairly. >> it's not freely what we should do is a simple solution you put a 25% tax on chinese

products coming into this country. you'll never even have to tax, larry. they'll come and negotiate so quickly, your head will spin. >> if you didn't, would you go to the wall? that's a 25% price hike for consumers who buy chinese goods. >> the consistency of both men's positions pretty striking. >> yeah. >> over seven years. >> yeah. i mean, the language is exactly the same. >> yeah. >> on both sides. >> that's probably the same conversation going on now. >> certainly no one thinks it's pro growth it's more about china getting the chinese to play fair the question of whether -- and, look, the president said there could be some pain. >> right but politically it's tough to sustain that pain when they're particularly targeting districts in upcoming congressional races and soybean states that went strongly for trump then again, you know, larry felt

if there was an industry that is hurt, you bail out the industry. you don't interfere with free trade. i think the president and larry are going to talk about this maybe there's a carve out for china. >> a carve out? carveout >> larry's free trading hadto be suspended if he took this position >> we'll ask larry about that in a few minutes. mark zuckerberg announcing a new step in preventing interference and misinformation in an election we're establishing an independent election research commission that will solicit research on the effects of social media on elections in a democracy. how to address these,s as well as to hold us accountable for making sure we protect the integrity of these elections on facebook looking at some of the funding sources on this one includes the charles koch foundation.

we'll see to what degree it is bipartisan >> i've been looking forward to somebody independent i would have preferred an independent internal prosecutor, but this is something that you want if you're going in front of congress you want to say, we've convened people of all different -- the whole political spectrum this is a great thing to say when they get to congress. fabulous time >> going to foundations. not going to lawyers here. and independent commissions. >> still another step to be taken which is someone who cannot be influenced, but this is -- i think the koch brother thing is very interesting. congress might like that. >> we'll get stock trading with jim in a minute. the dow is up 171.

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you know what's not awesome? gig-speed internet. 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. time for jim and stop trading. >> a piece put out by jpmorgan about general electric i read it several times and thought i saw a positive i was thinking maybe he's going to change.

i think others read it the same way. so he came out today basically saying, listen, there's no confusion here i hate the stock they're not going to make the numbers. forget it. the earnings will be a shortfall. this clears up what looked like a momentary wavering in his hatred of the stock. not the company because i think he thinks they're all very nice. >> although the stock has hung around this $13 level for a long time despite continued criticism like the ones you're mentioning. >> $11 price target. a lot of people were thinking he goes positive. >> see what the quarter looks like >> down 25 for the year, no other name is near that on the dow. p&g down 15. >> clear victory if i were him like citron should have maybe declared victory on that >> was there ever a time when he was anywhere near victory in that i don't think so >> david, you can declare victory all you want >> that's all the rage

>> i'll have to remember that. >> it does work. and facts don't get in the way at all anymore >> you have always let the facts get in the way of the story. people feel you don't do the kind of reporting that fits into this day and age >> i am an anachronism >> that story must have taken as long as it did for me to watch the masters, which is on cbs >> oh, it was. >> what's on "mad" tonight >> a lot of individuals are in these partnerships and they've been annihilated and michael mears runs the most conservative one >> you'll stick around >> i'm going to stick around >> hope you do we await larry kudlow. we'll check in with larry. white house economic adviser dow is up almost 200

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street." i'm carl quintanilla jim cramer and david with us s&p up 23 or so. nasdaq doing fairly well as well our road map begins with some trade. larry kudlow will join us with the latest >> volatility continues in the markets. how investors are gauging a potential trade war with the dow coming off its worst week in two weeks. more on the fallout for facebook what's next for the social network and the stock ahead of zuckerberg's testimony the stocks rebounding despite some ongoing tensions regarding trade with china charles joins us today aerial investments vice chairman and jill kerry, bank of america equity and kwan specialist we'll talk to larry in a moment. set the stage for trade this week bank earnings not far behind that on friday what takes center stage this

week >> i think finally it's going to be earnings which i think are going to be a lot better than people believe at the end of the year, managers set expectations their bonuses are based on how they do in setting budgets and so managements have no incentive to overshoot their forecast the beginning of the year we think the estimates that are out there are too low. the effects of the tax rates and a strong economy are going to be better than people think and we're going to have up side surprises. >> jill, estimates too low we're looking for 17.1 normally come down from the start of the quarter in this case, we've gone up. from 11,300. is the bar too high? >> you've seen upward estimate revisions. we're expecting you can see estimates beat by about a percentage point so 18% year over year growth even the early reporters that have reported so far have been reporting positive surprises at

near record levels besides that, we're looking at guidance early in the quarter. all of these pointing to a beat so far >> on the other hand, charles, the sentiment shifts daily, intradaily when it comes to trade. ten of the lasttrading session the dow has gone up or down more than triple digits you feel comfortable to tell people to buy in on this market on earnings when we don't have anything resolved on the trade front? >> it makes us much more comfortable when people are nervous about something. frankly, we were a little bit concerned late last year when everyone was so positive so it is nice that people are focused on issues right now like trade. i don't want to undersell that a trade war would be a disaster, but i think cooler heads are going to prevail we'll get something reasonable put in place and fortunately everybody seems to be nervous right now, which is good for the market >> i'm working on a new thesis we ought to start thinking about how much of our businesses are affected by china. we've been able to do so poorly

in china really, they're only a handful of companies direct earnings per share. we go back to tariff a lowest tailers we think are hurting are able to source away from china what about a bifurcated market where there are a lot of companies doing well if you buy them on every tweet that is tough, you do well >> right i think with the s&p 500, you know, we only have about 5% sales exposure to china. but obviously, if import costs are rise, this will be an issue for a lot of the retailers in some of these areas that could be exposed there and we're watching for a higher -- signs of higher -- signs of margin pressure this quarter. analysts are still penciling in margin expansion if we see wage pressures, any impact if higher import costs and trade tensions escalate in the quarters coming out, that can be an area of pressure for the s&p 500 where a third of sales are coming from overseas it's a globally integrated benchmark. >> charles, b of a has a note

out today. they argue we've gone from a buy the dip dynamic to a sell the rip dynamic. they say these other q2 themes moving from cyclicals to liquid defenses are all perfectly valid. is that true or do you continue to chase large cap, multinational tech and industrials? >> yeah, i really want to emphasize this point which i've said before. you have to be very careful this year talking about the market. the individual stocks are going to act very differently. it's been fine to own the market, the s&p 500, the last couple of years because stocks have taken the market higher we're going to see big dispersion in performance. a lot of names like the fang stocks overpriced but a lot trading at ten times earnings. kkr and board warner great companies selling at ten times earnings big dispersion in what's going to happen from here. >> but to what degree does it matter to you how much of their revenue comes from overseas? >> it matters. if we have a trade war with

china, and in particularly because of the dollar and how that affects earnings. the s&p has a lot more earnings coming from exports than do small caps ariel investments is mostly small and mid caps we care a lot less about exports and the dollar that's why we think small caps right now are very well priced relative to the s&p. >> jill, where does technology fit in with this thesis on china, overseas earnings and, of course, on what we're expecting, which is a better earnings season information technology and the s&p 500 is the worst performing sector in the past with down 8%. are you wary >> the sector has gotten a lot cheaper. that's part of the good news now is we're only about 17 times forward earnings on tech versus several months ago when we were over 20 times. fundamentals have still been positive obviously, there's a near term risk with the sentiment overhang to tech and with the global trade tensions we're seeing.

tech is the most globally exposed sector it's also a sector if we're seeing rising interest rates, tech is the cleanest balance sheet in the s&p 500 and has more cash than debt. you're starting to see leverage increasingly penalized guidance trends are good tech seeing a lot of positive surprises from the early reporters so far and buybacks if we see repatepatriation we've seen it in the last couple of weeks and that will continue throughout the second quarter. >> we'll find out if that blackout window really had any effect on us without us knowing. charles, jill, thanks so much. motor week coming up appreciate it. so do you think that -- does that ratify your thought about moving to a more domestic focused portfolio? >> yes, look, the rising cost is definitely an issue. what's really interesting to me is before we just decide that's the be all and end all, where the rising costs have mostly been, restaurant s and retail,

best stocks right now, restaurants -- so really struggling now there is a new theory being propounded that there's been so many bankruptcies that the remaining companies in retail have done very, very well. the most powerful stock i follow right now is abercrombie & fitch. american eagle they are very hurt by that they are the two strongest stocks tremendous labor costs everyone can shift away from china. pbh told me, we need to source in china multiple sources all over the globe but i'm not getting that negative thesis on margin pressure other than some commodity supplies and then if you take soy down 50 cents as it did on wednesday, even there i can make a case you can buy tyson foods which is dependent on chicken feed costs more than it is on pork sale to china. >> on the import point, jim, so far, clothing and sneakers which is manufactured in asia has been spared in the list of back and

forth tariffs. i wonder if this escalates to a point and they toldous power lunch on friday, there's a -- >> what is nike doing at 52-week high nike, 13% of their business is china. but it's been a huge growth for them how do you explain it? >> international growth. >> yeah. >> not just china. western europe, double digits. >> but what happens if the reputation of american firms, for instance, in china gets soiled >> won't they have to do something in the -- the prc has to come out and say we think that there's another pair of shoes better than nike haven't seen that happen yet >> only one dow name has done better than nike and it is -- >> boeing. >> the two worst stocks to own if there's a trade war >> also had a masters win this weekend, i'm told. larry kudlow joining us next on the growing trade war rhetoric between the united states and china. always market moving lately. sticwi uk ths. "squawk on the street.

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you know what's not awesome? gig-speed internet. 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. president trump taking to twitter once again this morning to talk trade with china the president saying when a car is sent to the u.s. from china there's a tariff to be paid of 2.5% when a car is sent to china there's a tariff of 25%. does that sound like fair or free trade no, it sounds like stupid trade going on for years joining us from the white house, our former colleague, white house national economic council larry kudlow good to have you back.

good morning >> thank you, carl appreciate it very much. isn't what he tweeted right? honestly i'm a free trader. you're probably a free trader. president trump is a free trader but look at the differentials. it can't last. it's not right >> right i want to read to you a bit from a note out today they say it's the president -- it's a discussion of whether or not there's a trump put. they say it's his words that have been the catalyst for market sell-offs recently. they've stopped any recent one-day, two-day strong bounces dead in their tracks do you think the president knows that, understands that would you any more discretion in the future >> i don't think i agree with it for starters i mean, this may be a difficult situation. let me just back up for one second miller tabak, with all due respect. i'm a free trader. i didn't like the original 232 i don't like blanket tariffs

you all know that. but i've also talked for years about how china is getting away with stuff they shouldn't get away with. this president has some backbone others didn't. he's raising the issue in full public view. setting up a process that will include the -- may include tariffs. hopefully mostly negotiations but you can't rule any of that stuff out. i don't think this is damaging the market at all. i think all this talk is just dead wrong, okay i just want to start with that somebody has got to do it. somebody has got to say to china, you are no longer a third world country. you are a first world country. and you've got to act like one there are laws on the books. technology transfers -- let me say forced technology transfers have to stop and stealing intelectual property has to stop technology is our bread and butter, is it not? and they can't just take away our advances and innovations i don't find that bad. for economic growth, it's terrific so i don't know about this

day-to-day commentary. i reallydon't. >> larry, jim. how you been >> hey, jimmy cramer, how are you? >> so great to talk to you larry, i'm listening to you and thinking, you know, we could have been saying that germany is aggrieved. they're going here we know they can't be happy with the way he was treated in china. could thereby a coalition of the willing being built by you and president trump that says it's china that's a bad guy and is hurting everybody. >> the president is amenable to that he's not out soliciting support, yet, but he's amenable we've had japan come out, europe, france, germany, canada. it is -- i call it a trade coalition of the willing that's my view i don't think the president has quite put it that way. but here's the point you're getting to the whole world knows -- the whole world knows that china cannot continue to behave illegal and unfairly, as they

have we've got to get along with china in the long run, absolutely the president pinged out that he's going to be friendly with president xi no matter what happens. okay get that but on the trading sphere, certain things have to stop and the whole world knows we are right. and that's why, by the way, jimmy, i'm an optimist about the outcome. china will listen to reason and i think ours is the reasonable view >> my one problem is when you and i worked together for many years, the glue that held us together is pro growth no way tariffs are pro growth. how do we rationalize something that you taught me, which is if you put tariffs in the way, then world growth slows world growth slows means lower profits. the average working person does poorly i've been taught by you that that is the case how do i change my view in light of what's happened >> i don't want you to change your view. i don't oopt the president doesn't want you to change your view either. look he'll say to both of us, he himself believes in free trade,

okay but you cannot have a large major country like china engaging in unfair trading practices. his vision, the president's vision i've heard this a number of times is in order to clear out a free trade path, we've got to ask china and take whatever actions he deems necessary to change their ways. they are putting up trade barriers closing markets, jim stopping investment as i said. they're forcing technology transfers and they're stealing intelectual property that is the path to true free trade and that is the path to electric growth. i don't want to filibuster let me put one more point in this please don't blame trump blame china. china has been the problem mr. trump is involving himself and reacting to the problem on behalf of american industries.

but china started this years ago. you know that. i know that. we've got to bring them into the great -- the great arena of nations but they've got to behave themselves. so i think this is a good exercise that will lead to better economic growth >> larry -- >> yes, sarah? >> it's the process that people are coming out and being critical on. just tell me if you agree with this what it seems to investors and to a lot of us watching is that the president fires off a tweet or a threat, and then you and mnuchin and navarro come out and sort of walk back the worst case scenario with some soothing words. is that the strategy here? >> well, look. the president has had some soothing words, too. for example, he tweeted about his respect for president xi, and i've said on the air a couple of times the president has said to me, please go out there and tell folks that he has nothing but respect for president xi and president xi's negotiating ability.

on the other hand, take a look at what china's responses have been you're just blaming president trump. take a look. china has been tough ideological, mean. read their press releases. part of this reason for considering a second action, a second 301 action is china's response to the first one was completely unsatisfactory. and it wasn't very diplomatic either so it takes two to play this game and the president's got to stick up for himself and for the united states. so i just don't buy this look, there will be back and forth here a couple months to go before any real action. so far, there are no tariffs you understand that. there nor tariare no tariffs th. we'll see how the chinese react to it. also discussions going on. communications continue. treasury secretary mnuchin among others is having these discussions. that's a good thing. so this can be worked out. i just -- look i know i'm working for president

trump but you know, i backed almost all of his policies i didn't like the blanket trade initially but that got fixed with the exclusion but here's my point. he is responding to decades of misdeeds by china trade. he just is and it's high time we did that just have to do it >> larry, it's david the focus, though, of what we're hearing from you and others in the administration does seem to be on the thefts of intellectual property the expropriated intellectual property on these jbs. you know this documentary on this six or seven years ago. the obama administration did make some progress in slowing the chinese military from their organized attack on our corporations in terms of cybersecurity. but why are tariffs the right answer to the theft of intelectual property why isn't there an assimet rick

response the u.s. can follow as opposed to tariffs >> there may be over time, david. there may be look, the u.s. trade rep, ambassador robert lighthizer has filed a suit in the wto against these unfair and illegal trading practices. so there's that. but i think the president, you know, he's a bold guy. a lot of leadership here tariffs get your attention china has done the same thing. president obama mentioned it president george w. bush mentioned it president clint on mentioned it, but we've never stayed the course so the practice, what i'll call the malpractices, continue i don't know whether we'll have tariffs or not i wouldn't take it -- i would take the president's arguments quite seriously. we may on the other hand, we may be able to settle this with negotiations we will see how this thing turns out. but somehow, don't blame the u.s.

>> larry, ip in particular in deal with understanding what they're taking, what they're not taking, that's a complex issue very hard to monitor easier to look at a trade deficit and figure out, okay, we'll apply tariffs. when it comes to this area where you guys seem to be very focused, very hard to measure whether you're making progress or not >> that may be i think that's a fair point. i also think that's not an inseparable barrier. but i accept your point. trade game is a tricky busines , that's all i can say technology is the heart of our innovative entrepreneurial economy. and we can't be in a position of having our chinese trends just stealing our best stuff. we can't -- >> larry, to that point. to david's question, so to david's question, we're all here trying to gauge the level of success in these negotiations. is there like a minimum deliverable that would allow the u.s. to walk away from this saying we did what we came to

do >> that's a great point, and i think the answer ultimately may be yes i think there may be conditions laid out on both sides i think that's under discussion right now. so those are -- you're absolutely right that has the -- at least the patina or aura of a proper negotiation. but standing behind that is the stick of tariffs that's part of the president's way. so we're going to have to honor that but this will be complicated this is a process, as i've said, many times it's going to go on for a while. it's going to include a number of, shall we say, arrows in the quiver my view is, look i'm an optimist. i think this is going to work out. i think the president's tweet this morning was great the chinese will come around because they know it's the right thing. i think that's a great thing >> larry, you and i like nafta initially. nafta, 4-1, went the peso, we

did this now it's 18-1. now the whole difrential has changed because of that currency don't you have to tell the president that this has to change right now because we're getting killed by nafta. >> which -- nafta has to change? or the currency? i'm sorry. which one? >> yes, well, nafta -- remember, nafta, we negotiated, the peso was 4 to 1 now it's 18 to 1 the mexican advantage is extraordinary. how can the president not urge walking away from this deal given the hole in the financials have changed since it was created. >> well, look. you're right we should have much greater currency cooperation for north america. the u.s. does pretty well with the canadian loaney but not the mexican peso i have no specifics to offer this morning but i will say progress is being made on renegotiating and recalibrating

nafta. good progress is being made on that >> and so one last question, larry othe mechanics regarding china and any bilateral discussions, can you give us the lay of the land at this moment? who is talking to who? are there meetings on the calendar if not, any idea when they might be >> i don't want to go there, carl, yet. i will just say there's constant conversation constant communications on that. communications is a good thing, right? i'm communicate with my friend david faber, with my pal jim cramer it's great stuff sometimes we agree sometimes we don't but we work it out it's a long-term process >> it's great having you back. come back to set sometime. >> i want very much to do that and i can't help myself. i just think -- this story -- this story, which has caused uncertainty, is going to have a very optimistic ending that's my view thank you. i'll be there soon

>> larry kudlow at the white house. larry, our thanks to you see you soon >> let's get some reaction now mike santelli with us, steve liesman. what strikes me is how optimistic someone like larry is versus what we're hearing from president trump which is a lot tougher rhetoric maybe that's the strategy. larry is talking about a trade coalition of the willing he says he doesn't like tariffs. that's not what we're hearing from the president >> i think that larry is saying, listen, i don't like tariffs but china is not fair. and the world agrees with it he didn't say that the president is willing to harness germany and france but germany has got such a big trade surplus with us. it's hard to be able to go with them but, yes, i worked with larry for a long time. you always come back and say, the world is a better place. and that's what larry is about the world is a better place. and that always made me feel that the glue between us, yes, growth, better place and i like it.

i don't know >> did you agree that he doesn't believe this is doing any harm to the market? which isn't -- by the way, not entirely difference. goldman's saying today this represents minimal risk to s&p earnings that's a different question than stock price. >> larry is making a bet the next three weeks there will be earnings that will make it so you should be focused on earnings there's been this terrible vacuum there's nothing going on williams-sonoma earnings not a lot of earnings. >> not yet >> mike looking into earnings season do you expect to hear anything in the guidance? are you expecting positive numbers? >> i certainly would expect positive numbers i think they're almost in the bag. but i expect the commentary to be kind of similarly vague and impressionistic as to what larry laid out about this process, which is not a lot of detail on exactly what the map looks like to get to that positive outcome he talks about not a lot of illumination on this $100 billion in potential

imports we might impose new duties on. so a lot of this stuff i do remain -- does remain a little bit of this cloud out there but mostly on psychology rather than on financials. i agree with that point. it's not really something that is on a day-to-day basis, should be of massive concern to the market reminds me of an exaggerated version of ebola the market was going down for a month and then treated every day on ebola headlines because it decided that's what we needed. >> trade protectionism >> no, it is a big deal if it gets to a nasty point but the market was already doing what it was doing before we fixated on every wiggle of the trade debate >> steve >> i think there's a market out there in understanding the administration out here. i was listening very closely to larry. listened to your excellent questions. i've got two scenarios here. scenario one is, this is a reasoned, controlled, deliberate well thought out process where the administration has thought this through, conceived of the

economic fallout the other scenario, which i don't know which one to believe, but i think has equal probability of existing is this is an off-the-cuff sort of randomly generated process where people like larry and secretary mnuchin have to go out ex-post and explain this as a reasoned, deliberate, controlled process i don't know which one investors should believe one, the first scenario, has potentially positive or negligible outcomes. the second has very uncertain -- i'm sorry, positive outcomes the second is very uncertain and negative outcomes and i think you have to weigh it and what happened is friday, the second scenario is the one that dominated. today we're listening to larry and it all seems to make sense another tweet tomorrow could change that and maybe we're back to the uncertain scenario again. >> one thing we did not get to with larry are some of these reports the chinese are starting to study the potential impact of a devaluation. >> right >> either as a negotiating tool

or if they wanted to offset the impact of a deal >> but it sure is important to recognize they have the -- they have u.s. dollars. the only thing you can do is recycle and buy u.s. debt. i think the whole weapon -- y it's true if they make it so their stuff is cheaper, it doesn't really matter. they flood the stuff they feel they need to put people to work. they flood us. that's just the way they do this there's this false story going out that they will sell our treasuries >> just want to point out, one thing i've been looking into is the provision of services to the chinese. something like 30 or $40 billion chinese tourism in the united states they go to our colleges. all of that is essentially an export of services and if you think the chinese won't do that, they use that in their dispute with south korea they slapped whatever it was, some kind of tariffs on that trade there. that's a place where the chinese come come in and there are tools

on both sides. i don't know what your probabilities are for, do we ever get to this point you think, hey, it's several months down the road the earnings are going to be great. the tax cuts are going to trump it and, therefore, we don't have to worry about the trade issue >> you are saying that they've -- you really believe that they might cut back on coming to our colleges since they are the fafest growing group and their pay their own way and a reason why a lot of colleges are able to stay in business because they pay full price? >> jimmy, do you think this is a battle of how crazy each side can be and in that case, i'm not sure who wins i'll tell you why. because i don't think the chinese government has any accountability to its people the way the american government has accountability here in the united states. if they want to punish their people, they'll do it and pay no price whereas if we want to punish our people, we'll pay a price for it >> there's a -- that's a point, although we've said they crave social order and unrest is --

does not make them -- >> president for life. we always think president for life what happens if revolt >> by the way, xi speaks tomorrow, china time >> let me ask, steve, north korea over the weekend, the chinese are saying we're not going to send a lot of stuff that could be weaponized why was not not regarded as an olive branch to the president? >> i think it is there's some progress in north korea and maybe even progress in nafta which you're correct about is really -- it's a big part of the game nafta and china are two separate big issues out there, but if there's progress on nafta if we can make some agreement there and take that uncertainty off the table, that's what i'm focused on from an investment point of view. it's the uncertainty and the question which i think sarah was really getting at and we got out on friday with mnuchin which is process. do we believe in the process do we think the process is one that's under control and deliberate and the more the administration shows that, i think the more the edge comes off of this whole trade dispute.

>> steve, we'll leave it there thank you. mike santoli, our thanks to you as well. here's what national economic council director larry kudlow just told us about the market moments ago on the show >> i don't like blanket tariffs, but i've also talked for years about how china is getting away with stuff they shouldn't get away with. this president has some backbone others didn't. he's raising the issue in full public view. setting up a process that will include -- may include tariffs hopefully mostly negotiations, but you can't rule any of that stuff out. i don't think this is damaging the market at all. >> let's get both sides of this argument former gm vice chair bob lutz joins us, also former ambassador to china and former commerce secretary under president obama, gary locke secretary locke, what are the administration's chances of succeeding in bringing the chinese to the table to get a better, fairer trade deal by

threatening these big tariffs? >> well, obviously, america has grave concerns about some of the economic policies of china the fact that so many sectors of the chinese economy are off limits to u.s. and foreign investment the requirement that if there is investment, it has to be less than 50% and requirement of joining up with partners in china who can then take our technology and run with it so those are legitimate concerns but i don't think that tariffs are the way to get at it we need an international coalition to impose similar restrictions on chinese investment overseas. and i really think that's the way to get at this issue of intelectual property and force transfer of intellectual property if we have a trade war, i believe that china has more tools at its disposal that will ultimately hurt american companies and the american consumers more than it would

hurt chinese companies and chinese consumers. >> can you elaborate on that what specifically are you looking at which industries, area of the economy are you thinking of the nuclear option of devaluing the yuan >> so much of what american companies use by way of components for the things they manufacture, whether it's semiconductors, integrative circuits or electronic components are made in china so that will increase the cost to american companies making their products less competitive overseas or less competitive even here in america also so many of the consumer goods that americans take for granted every single day come only from china. so whether it's shoes or apparel, if those are subject to the tariffs, american consumers are simply going to have to pay more out of pocket which means less money to buy an american automobile or take that vacation or save for a college education of their children whereas china

does not have to buy things made in america they don't have to buy that boeing airplane. they can buy airbus. they don't have to buy american soybeans they can buy from brazil brazil has a surplus of bumper crop of soybeans and the list goes on and on. so i really believe that in many cases, the american companies, manufacturers, consumers have no choices but to pay higher prices if there is a trade war. >> bob, do you agree that china's got more leverage when it comes to this trade tit-for-tat? >> no, i don't and what we're talking about here is like a patient who is seriously ill and has been seriously ill for a long time. and the doctor prescribes a medication that's going to cure the illness. and what we're talking about here is side effect, side effects, and we're all going nuts reading the label about potential side effects we have to live with the probability of some side

effects, but as larry kudlow says, china is behaving in an illegal manner such as no other country is behave, and if you just look at the example of automotive tariffs, they have got a -- now almost the world's largest automobile industry. they certainly have the largest automotive market. 25% on u.s. cars 2.5% on anything produced in china? it's absurd. we haven't been uncle sam for the last 20 or 30 years. we've been uncle sucker. before china it was japan. we let them get away with hollowing out our electronics industry consumer electronics, automotive industry, motorcycle industry. you name it. these are middle class, industrial jobs that have disappeared. and president trump, god bless him and more power to him, is absolutely determined to redress

this balance now as larry so correctly said, president trump is a very bold president. and he throws an extreme position out there, which is his style, and then he negotiates down from that extreme position. i am absolutely convinced that there will be a reasonable negotiated settlement, and i will tell you certain segments of the american -- if we do have a trade war and we can't solve it by negotiation, yeah, some consumer prices may rise but i ask you, is it normal for a dvd player to cost $19.95? if it winds up costing $25 or $26, so what if we get the basic problem solved >> nobody has dvds >> a great company like gm moeb is more familiar. they played by the rules they're making a killing how can we say that there's some who don't know how to do it and

other companies are just doing so great because they play by the rules? i'm struggling with this explain it to me >> first of all, the chinese automobile industry is now in a situation where the quality and the safety standards and the reliability are such that they can begin to export cars why should we accept for, by the way, general motors produces in china about 99% of the volume. there is 1% of general motors volume that is exported from china if the prices go up on that so what? but this isn't about protect anything single industry or company. it's just using the leverage that the united states has to get china to play by the rules like everybody else. >> gentlemen, we have to leave it there we'll continue to debate this as we see the president's strategy playing out.

we've run out of time. bob lutz, gary locke, thank you. >> thank you big interview. g.g mornin dow up 280 more "squawk on the street" after this experience a blend of refined craftsmanship... ...and raw power, engineered to take the crown. presenting the all-new lexus ls 500 and ls 500h. experience amazing, at your lexus dealer.

dow up 255 another top story we're following all week mark zuckerberg preparing to take to the hill tomorrow and wednesday. the stock is down more than 10% for the year he's set to face a grilling. for more on how you trade the stock, what it means for business, yusuf from sun trust the fears are overdone the stock is a buy you're not worried about what we're going to see play out on capitol hill over the next two days >> absolutely i am and i think investors should be. but, remember, i think this is not a facebook issue i think this is an issue that really permeates the industry at large and facebook certainly is the best example of how things can go wrong that said, we, so far, have seen that the government has had a

very hands-off laissez-faire approach to this whole data privacy issue. i think europe is moving much, much faster than we are. what you're going to see this week are the politicians trying to catch up with what's been going on in europe for some time so, yes, i think short term, it will have a negative impact. i think probably things get worse for facebook before they get better but our channel checks with advertisers and even looking at some data on consumer attrition, you know, keeps us positive on the name and i don't think this changes our thesis for the stock over time >> have you been following cnbc's reporting on cube u, another firm just suspended from facebook it's a data analytics firm after cnbc found it was using similar practices to cambridge analytica? isn't this just a sign that there are more dominos to fall and it's going to be very hard for facebook itself to get a handle on it >> absolutely. i have no doubt. that's why i said earlier things

from a pr standpoint will get worse for facebook before they get better but you have to sit down and talk to advertisers those people struftrusting face with their ad dollars. very few of them have told us they're pulling any of their ad budget from facebook the worst commentary we heard was that people are keeping an eye on it but so far, they are not doing anything >> quickly, isn't it about the users? i know you keep saying we have to watch the reaction of the advertisers. but isn't the risk the consumer exodus, the 2.1 billion facebook user base worldwide? >> absolutely. so we've looked at that. and, you know, so far what we've seen is that there was a dip in -- or a pick-up in attrition from the #leavefacebook over the last couple of weeks but it seems that has stabilized. and you can go back and look at major data breaches that

happened around yahoo! equifax and anthem health over the last few years and that typically tends to be relatively short lived. and i think this shall pass, too. >> wow well, we will see. youssuff squali, thanks for joining us before mark zuckerberg's appearance on capitol hill he's got a buy 225 price target more reaction to larry kudlow and a brewing trade war, perhaps. dr. ron paul will join rick santelli for a special santelli exchange dow close to sessionig hhs added to gains following kudlow's appearance. we're up 264 alerts -- wouldn't you like one from the market

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with stocks seeing a volatile series, how should investors plan to protect their portfolios find out on "tdirang nation.cnbc.com. more "squawk on the street" coming up.

at ally, we're doing digital financial services right. but if that's not enough, we have more than 8000 allys looking out for one thing: you. call in the next ten minutes... and if that's not enough, we'll look after your every dollar. put down the phone. and if that's not enough, we'll look after your every cent. grab your wallet. (beeping sound) (computer voice) access denied. and if that's still not enough to help you save... oh the new one! we'll bring out the dogs. mush! (dogs barking) the old one's just fine! we'll do anything, seriously anything, to help our customers. thanks. ally. do it right. let's get out to rick santelli for a special edition of the "santelli exchange.

take it away, rick >> thanks, david i'd like to welcome former texas congressman, former presidential candidate, dr. ron paul. dr. paul, thank you for taking the time this morning. >> rick, great to be with you. >> all right, listen very fortuitous. an op ed in "the washington post." it will play right into our discussion this was written by janet yellen among others entitlement programs support older americans and those with lower incomes. this demographic problem is faced by almost all advanced economies and cannot be solved by a vague call to cut entitlements -- terminology that dehumanizes the value of these programs to millions of americans. dr. paul, in theory, this makes a lot of sense but to those of us that are deficit hawks, debt hawks and

central bank hawks, of which you're almost a founding member of that chapter, does it really matter why this is an issue that's going to come to pass, and it needs to be dealt with your thoughts? >> unfortunately, for my experience in washington, they will not deal with it. i think it will lead to, you know, a very, very destructive system that we have. that's what we're marching onto. when a country spends way beyond its means and it's facilitated by a central bank that prints the money, the deficit gets so large they cannot liquidate the debt by paying it off or working harder or raising taxes or cutting spending but the debt will be liquidated and that's what they're working on a little frustration with the fed today because they're printing a lot of money. and they still haven't gotten that inflation rate up enough because real debt has to go down that's what they've done in the past it's ironic we pass out stuff for free and then decide we're

going to destroy it by taking it away from them by charging, you know, the average person, the middle class, with higher prices it makes no sense whatsoever and, yet, i believe the debt will be harmful to a lot of peoe not just the elderly. >> when it comes to trade, dr. paul, these issues that i'm sure you're keeping up with them, it seems to me that it's not an easy issue especially for people like you and i that have contemplated ourselves to be free market traders. although really the system that has evolved -- and you can see it by those who do not agree with president trump, that they're more like managed traders, which is just as not free capitalistic. can we do things that appear not to be free in order to get more free on the level of trade >> well, i think this is the whole problem. they're blaming a free market

and capitalism for all these problems i think you said the right word. it's manage trade. wto and all this, they manage the trade and is mismanaged. so a tariff can't fix this a tariff is a tax and tax is on the people who live in the country who raises it. i do not see how you solve these problems by saying this taxes the american people, poor people that might be enjoying $25 tennis shoes will have to pay $100, that doesn't help anybody. i see it as a moral issue. it's your money. you worked for it. you get to spend t you ought to be able to buy the car you want. if we can't compete, why can't we compete are we lazy? >> i saw the time, so real quickly, doctor. i want to throw another angle into this. doesn't manage trade also carry another cost that we're not discussing if we wanted to truly keep it apples to apples your final thoughts, sir >> absolutely. and the cost is the mismanagement and the

malinvestment that goes on with the federal reserve. all this stuff is mistake made by artificially low interest rates. we have a reserve currency in the world, best export are our dollars. if we can buy stuff by printing money, why not do it then we correct it by coming in and taxing the people? no we need to cut a lot of spend ing, sound currency, get the fed out of being the taxer by monetizing the debt, which then goes back to a tax as the prices go up. so, this monster that we have will not occur if you didn't have the mismanagement and the interference by the federal reserve system. >> i tell you what, a lot of people agree with you and we also agree on what needs to be done the problem is mobilizing on that dr. ron paul thank you for joining us today david faber, back to you. >> thank you, rick santelli. now time to get over to john fort.

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spotlight. china in trade war concerns. >> counterintuitive in a way you would think our big tech stocks are mostly under pressure because of the potential threat of u.s. regulation chinese tech companies would not be subject to that kind of regulation china tech stock etf, a guggenheim-sponsored fund is down more year to date than the u.s. stocks are. what this tells me really is that mostly this whole category of stocks has had a very hot money, crowded trades, lot of momentum investors that have been in fang and fang-like stocks in the u.s. have also owned things like byview, alibaba. that's more than a quarter of this guggenheim fund it's up more on a one-year basis than the u.s but i do think it's interesting and suggests that maybe our fang

stocks are really not just going down on all the facebook regulation talk. it's really kind of a rotation or profit-taking move. >> man, it's good to have you back. >> thank you good to be back. >> when we come back, kara swisher is with us "squawk alley" starts in a minute

>> good morning. it is 8:00 a.m. at facebook headquarters in menlo park "squaum alley" is live ♪ good morning i'm carl