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

continuing trade tensions with china. moments ago larry kudlow, white house national economic council director joined us listen to what he has to say about the threats of the president's tariffs. >> please don't blame trump. blame china, jimmy china has been the problem mr. trump is involving himself and acting on the problem on behalf of american industries. china start this had years ago you know that. i know that. we have to bring them into the great arena of nations but they've got to behave themselves i think this is a good exercise that will lead to better economic growth. >> and for more on this exercise, we're joined by chief u.s. economist steven gallagher and oppenheimer chief strategist john stoltis good morning to both of you. is this just necessary trade pain there tends to be this political heat around whatever the president does he has a certain flare to him.

you could make this argument that we've been on this path with china that's been unsustainable, a legacy of world war ii, and something had to shake things up. >> something had to shake things up and trump is someone who will shake things up. that's what he does. he certainly has done it this time around. he's absolutely right. there's a lot of legitimate gripes and legitimate complaints i agree with you, we can't keep on this same path. china has been growing at a very strong pace and taking over industry after industry, especially our technology industry we have to protect it. i think it's more the way trump is going about it that is the problem. he's going outside the wto, outside of different conventions. it's the trump style we'll have to see if it's successful or not. it can be. it just poses a lot more risk for the economy and the markets. >> john, you said in a note that the earning season could provide a welcome respite from worries about tariffs and trade. 17% is the bar

expectations for growth. >> yes. >> s&p earnings. is that a high bar, low bar? how much are we worried about that >> actually closer to a realistic bar. >> okay. >> based on the fact that we've had now, if i'm correct, about six consecutive positive earnings growth seasons behind us last one, i think earnings were up around 14.7%. now this is the first quarter where we may begin to feel a little bit of the tax reform boost, depending upon what companies have been doing to position themselves within that area so, we feel very encouraged that this will at least be an offset. while we experience volatility, it's going to continue the wonderful thing is at this point -- i really do say that. the wonderful thing is that it is not a trade war it is not even a trade dispute i think it's what larry said, larry kudlow trade tensions maybe you said it, jonathan. i think that may have been a

possibility what it was going by i caught on to that. it is trade tensions this has been in existence for a long time. it's time to resolve it. it's time for the training wheels to come off of china's -- the way we treat china it's time for china to be the nation it is, second largest economy in the world in terms of national economists. >> i get the concept of trade tensions we have steel and aluminum tariffs just put into place on china and a number of other countries. at what point -- so many people on, stephen, who says the fundamental story remains intact, growth, earnings growth. what point does that begin to change when companies say inflation is beginning to hit our bottom lines? when they come out and say there's tech backlash and this will begin to impact our earnings when does that happen? >> pricing is certainly one of them impose the tariffs, you can expect price disruptions more than volume disruption still demand people want to eat soy beans.

it's a matter of how we route the soy beans to the global marketplace and there's price disruptions up until then. you say it's tensions. i think we're seeing it with nafta. you mentioned the steel and aluminum solar panels and washing machines, too. the rhetoric has gotten intense. there's the process now. they've gotten the complaints. they're waiting for public statements they're going to come out. specific tariff items. the momentum is building here. i think it's too early for the economy to react negatively. it's too early to make any near-term adjustments to the economic outlook yes, it is and kudlow could be right. this could turn out positive if we open up china more. we could be better for both economies. it's just one of more risk right now. and i think when and if they impose those tariffs, i think that would be the real negative for, i think, firms trying to be

certain about their investments, where they put a plant do they put it in china, malaysia, wherever and then the price factor cost of goods. >> john, when tax reform was still just an idea, right, wasn't even near legislation yet, we had analysts doing hockey chart, hockey stick charts on the impact to cash flow, impact of earnings it's much different on this one, right? >> yep. >> no one is trying to model out the effect. >> it's the interesting thing. people have really held back in our case, for example, our earnings forecast for the s&p 500 for this year, even our target, does not really take into account the full effects of what might come from tax reform. yet we're already seeing the benefit. tax reform is creating liquidity for corporations just as the fed begins to reduce liquidity that could be an offset to that risk of inflation, risk of higher prices, input costs due to tariffs or whatever. >> it's interesting.

i feel like i've heard different things from each of you. you talked about i think the president's tone and his approach to dealing with these trade issues john has said this isn't really even much of a trade full-blown dispute at this point. at what point do we know exactly what it is that we're dealing with is it going to take several months, several quarters for us to be able to define, is this a war, a skirmish, just a dust-up? >> it's building now i think it take ace couple of quarters even a couple of months is too early. the rhetoric is going to continue the threats of retaliation and retaliation against the retaliation will continue for a while. precise tariff amounts for us some time this summer. and we'll see china's reaction to it. china not back down the way mexico and south korea have. i think that's our real risk

but we're not going to know that for probably a couple of quarters. >> bit of a game of chicken. which is possibly another thing that could have some sort of tariff on it stephen and john, thanks a lot. >> thank you. sticking with trade, there's another retaliatory weapon china may be keeping in its back pocket boycotting u.s. brands seema mody has that story. seema? >> a strategy china has used before last year beijing sterd an unofficial boycott of south korean goods from cars and entertainment in response to a launch of an anti-missile device if the u.s./china trade dispute escalates, china could resort to a similar boycott of american brands, a move that would inflict pain on iconic u.s. companies like nike, apple, starbucks, that have been expanding and investing in china. china's growing appetite for u.s. products. in total the top 20 s&p 500 companies that generate nearly

$160 billion in sales from china. semi conductors, a big growth opportunity, intel, qualcomm, micron, texas instruments. it's not just chips and consumer goods. exports of services to china have also become significant according to the u.s./china business council from 2006 to 2015, u.s. services exports to china increased more than 400%, including travel, key component to usgdp similar to what we saw at the height of the china/south korea conflict, we could see fewer chinese tour groups coming to the united states. chinese travel to the u.s. is already on the decline, but perhaps of larger concern is if china retaliates through the currency or treasury market. china's central bank adviser said rather than investing in u.s. government debt it's better to invest in some real assets.

that, of course, has been challenging, given scrutiny of chinese investments in technology firms in the u.s. carl >> seema, a lot to watch as you're investing in this environment. thanks seema mody when we come back, facebook suspending yet another data analytics firm that was using data just as cambridge analytica. we'll check in with kara swisher, executive editor of recode on another big week. the dow up at 254, moved 200 points or more for 11 out of 12 sessions we're back in a minute you know what's awesome? gig-speed internet.

you know what's not awesome? 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. mark zuckerberg prepares to testify in front of congress tomorrow and wednesday in a post on his page he wrote today we're taking another step, establishing an independent election research commission that will solicit research on the effects of social media on elections in democracy the goal of the commission is to, quote, get the ideas of leading academy iks on how to address these issues and hold us accountable to make sure we protect the integrity of these elections on facebook. the company said they would suspend another data analytics firm after cnbc discovered that they were using data much like

cambridge analytica. kara swisher joins us. what do you make of this commission >> okay. something they should have done before it's good pr, i suppose. i'm not sure what it means it seems rather hefty. i would like them to run it well i don't have a commission at ricoh discussing journalism but fine i don't know what to say you would be on it, carl you would be on my committee. >> it's a deliverable to bring in ahead of tomorrow >> yeah. i think it just looks impressive i don't know that they need a commission as much as they need to put commissions in place. >> rules and regulations that are policed properly i don't think it's that easy it's certainly not that hard

to do it in a really quiet and deliberate way where you're really managing it it's a question of management. that's what we're really talking about here and lack of management before this and finding this new one that you all did, you know, there's not just going to be one there's going to be dozens of these problems and figuring out how to get the data back, which is impossible, is another issue. what data was lost, informing people of the data that was lost it's a massive task for him and a manager and a big challenge. >> thanks to nbc before bringing it to our attention. how is facebook not finding and identifying these situations themselves right now >> i think it's a difficulty they weren't policing them in the first place. how do you know which ones are bad? not just bad actors but people that went out of business. i can think of a dozen companies on facebook that were using its data many years ago. what happened to them? what happened to that data

where did it go? it just -- unfortunately it's so big and large and complex, you're not going to be able to chase down all these things. and then i think the real question is what are they going to do now to make sure it's locked down? that means making choices, some of which have an impact on the bottom line. that's what i want to hear about mostly i don't know it's just a lot -- to me that's the thing that washington likes. but i don't think it's necessarily a thing that's particularly effective it's very nice to have a report. i don't know i don't like commissions i don't like blue ribbon commissions on anything. >> kara, how much is riding on this zuckerberg testimony before congress a few months ago, people were talking about mark zuckerberg running for president, which i thought was silly. >> me, too. >> not just what he says but how he looks saying it to the impact, potential regulation or just people's attitudes about facebook, how much is riding on

it >> a lot i think people have not seen a lot of mark zuckerberg you and i have, obviously. i did a famous interview that suddenly everybody is noticing today when he sweat, walt mossberg and i have done and he has improved dramatically since then he's still pretty awkward. he was awkward in the cnn interview. i don't know if you saw it he's better on the phone he's talking so much, he has not stopped talking now. he did well on the phone it goes up and down. in person under all those lights, i can't imagine how -- i think anybody would wilt and so i think that will be -- people will be focused on what he's wearing if he's not in a hoodie i guess there will be a hoodie joke. in general i think he will do all right. he has probably been well coached. he's not the most comfortable public speaker but that's all right. he's ceo he knows how to lead hopefully, he can answer questions. i hope it doesn't happen, what happened to jerry yang, if you

recall, about a decade ago or more where they call him the moral pigmy because of moral issues with china. that was a bad look for jerry. that's the problem, some politician grandstanding 100% chance of that. >> that's generally how it works. >> yeah. so -- >> if it's not lawmakers, kara, in the past week or two it's been his competitors tim cook with you took a shot at facebook. >> yeah. >> if you missed it, here is what tim cook said. >> we're looking at every app in detail what is it doing is it doing what it's saying it's doing is it meeting the private policy that they're stating, right? should we raise the bar even more we're always looking at improving and raising the bar. >> mark zuckerberg, what would you do >> what would i do i wouldn't be in the situation.

>> now we've got steve wozniack saying he's going to delete his page is there a sense they're being ganged up on for better or worse? >> i don't know that you can gang up on billionaires but all right. okay i'll bite. you know, i don't know i don't think tim was taking a shot if you listen to the whole interview, he was being very thoughtful about issues. what's wrong with him commenting on it? doing normal consider -- i can't believe i'm considered tough because i'm saying normal things it's just that he was saying something and very thoughtfully about the issues and talking about them a lot of people there don't do that it was a little bit of a dig but it wasn't -- believe me, it wasn't a really good dig, as far as i could tell. i think mark called it extremely glib i don't think it was glib if you listen to the whole answer it was thoughtful. everyone is going to pile on,

obviously, on this thing but who cares? >> now jack ma getting into the action. >> what is he saying >> he said senior management should take responsibility. >> yeah. >> now we start to work on it. i will not make a comment about facebook but will say facebook 15 years ago, they never expected this thing to grow like that. >> i don't know why that's an excuse that's an interesting thing that's been going on well, he's so young and he's not -- it's just he's a very competent adult and we should treat them like adults and hold them to account like adults. what i did like about the interview with tim cook, he sounded like an adult person these people are adult they're not young men that need to be coddled and we have to stop coddling them they took these jobs, they built these platforms. they're responsible for running them if they can't, somebody else should it's pretty basic. i think mark is fully competent to do it and very smart, very

earnest. and deserves a chance to defend himself in front of congress he has to get to work to making it work. i don't think that's too much to ask for anybody, given how much they're paid. >> before we let you go, tim wolf was on our air last week and made the argument, don't fix facebook replace it then he tossed out the idea of apple getting into the social media service business. >> no. >> this idea that they could do it and bundle it as a service and sell it with their hardware and have the privacy credibility. what do you think of something like that? >> i think ping. you don't remember ping but i remember ping. it was a terrible disaster. >> yes. >> no, it's not. they could buy something, i guess, but it's not in their wheelhouse and they know it. they didn't do a very good job on ping. they laugh about it today. google didn't do a good job on social media it's good at search. facebook will be replaced by time and other innovation, just like aol was, just like they all

will be. just like all of us. i sound like a death monger. but it will get replaced because of innovation. that's what will replace it. nobody can create these things they just happen we'll see where this goes. we'll see. >> thanks for joining us. >> thanks for the pick-me-up here, kara. >> very nice reference, college reference. >> kara swisher. when we come back, trade on a local level. we discussed how a trade war would impact the broader economy. up next, we take you to the port of charleston in south carolina where there's a lot at stake checking on tech stocks at this hour, they've been hit hard by all of this volatility but it is the best reporting sector in the s&p and the nasdaq is up currently 1.8% nasdaq could have a 1% move today, the six time in seven days more squawk alley after this at&t gives you more for your thing. your getting the best but paying way less thing.

now get 50% off a smartphone. more for your thing. that's our thing. visit att.com at crowne plaza, we know business travel isn't just business. there's this. a bit of this. why not? your hotel should make it easy to do all the things you do. which is what we do. crowne plaza. we're all business, mostly.

play [music plays]his". [dog barks] [concert roaring] [music stops] dinner in 5. when everything's connected. it's simple. easy. awesome.

welcome back south carolina has many of the industries that could feel the impact of tariffs. brian sullivan is in charleston. good morning, brian. >> reporter: everything is local, including trade and tariffs. whether or not it's an import tariff on an american made good into china or vice versa, it all comes back to the men and women engaged in moving around goods and services, manufacturing stuff, et cetera by the way, the level of investment is truly incredible they widen the panama canal so bigger ships can come through. a lot of the east coast ports are not ready for those massive ships that hold 14,000 of those containers on them each ship

we spoke to the president of the south carolina port association and he told us when it comes to shipping, whatever you want to say, the trend is bigger. >> the big trend in our industry is handling big container ships. we're all trying to raise our cranes and deepen our harbors and build new capacity. >> reporter: we can argue it's unfair or damages manufacturing workers in pennsylvania. who knows? here is the thing. the taxpayer, all of us, are spending a lot of money on these projects port of charleston over $500 million. savannah, nearly a billion jacksonville, spending a couple hundred million and bridge in new york just got raised $1.7 billion. private money but state-backed funds as well. all in all, $3.5 billion just on

the east coast to make these ports deep enough to accommodate global trade if the tariffs are enalcoholed it could slow down these trucks behind us here that could cost revenue on stuff that you and i and everybody we know is already helping to pay for. >> brian, you bring up such a good point infrastructure projects that are already under way here in the u.s. what's the sense on what tariffs could do to all of those volumes? >> reporter: thank you, by the way. i would define it as wary, not worried. right now, most people we talked to hasn't been a whole lot control group is small most folk weiss talked to said a, either the tariffs won't actually happen or, if they

happen, up double digit percentages nearly every year here the wave of growth has been so strong that either they don't think it will happen if, it does happen it will be strong enough. as you know, morgan, this port gets paid by the box, as they say, these intermodal containers the more that come in, mortgage the port makes the more they can pay everybody that works here and around it. so trade is not just about somebody making a car in ohio and then selling it to china or europe it's about the truck drivers, guys running the tug boats and 6 million men and women who work for the port of charleston it's a global story but an extremely local story as well. >> you warm my heart using the term intermodal. >> intermodal. >> brian sullivan. >> don't get in trouble, guys. european close here. seema mody is back in hq. >> holding on to gains

russian stocks are getting a lot of attention today, getting hit. rtf is down 12%, russian etf seeing its worst day since december 2014, following the latest attack on syria and washington's decision to impose sanctions on a number of russian government officials and oligarchs set to close below 12%. back to trade, european investor sentiment came out this morning. it declined in the month of april. experts say it's tied to trade uncertainty. not enough to push stocks into negative territory deutsch bank, getting a boost after announcing that john cryan is out and christian sewing will be the new ceo, continuing its restructuring efforts. shares up nearly 2% today. it has been a big under performer in the banking index down around over 15% the past 12

months m & a to speak of. novartis to acquire avexis for $218 a share that represents an 88% premium shares of avexis up nearly 80% today. back to you. >> seema, thank you very much. we'll continue to look at trade from every angle we'll talk to jaeremy segall in couple of minutes. s&p up a full percent. more "squawk alley" in a moment.

[whistling] hello. give me an hour in tanning room 3. cheers! that's confident. but it's not kayak confident. kayak searches hundreds of travel sites to help me plan

the best trip. so i'm more than confident. forgot me goggles. kayak. search one and done.

>> good morning, everyone. i'm sue herrera. president trump plans to meet with military leaders today after he threatened, quote, a big price to pay, end quote, for a suspected poison attack in syria. a magnitude 6.1 earthquake striking western japan before dawn this morning. at least five people were injured. that quake significantly damaged roads and buildings and nearly 1200 homes are without power a topless protester with the words "women's lives matter" written on her body in red ink

charged at bill cosby as he walked into the courthouse for the start of his retrial cosby was not touched or injured. open ing arguments are scheduled for a bit later today. exercise can keep you healthy even if you have a high genetic risk for heart disease that is according to a new stanford university study of about half a million middle aged adults men and women who were physically fit had a 49% lower risk of developing heart trouble. so, everybody get up and move. that's the news update this hour i'll send it back downtown to you. >> all right sue, thank you very much as you were talking, sue, we're getting some testimony that mark zuckerberg will apparently read in front of the house committee that he testifies in front of on wednesday. some of the highlights we're seeing here, quote, we didn't take a broad enough view of our responsibility and that was a big mistake. it was my mistake and i'm sorry. i started facebook i run it and i'm responsible for what happens here. he goes on to say there's no

question we should have spotted russian interference earlier and we're working hard to make sure it doesn't happen again. another thing i saw, guys, i want to be clear about what our priority is. protecting our community is more important than maximizing our profits. advertisers and developers will never take priority over that as long as i'm running facebook kind of an echo of what he said in prior conference calls. >> i don't know if this number has been out in particular talk about him saying profits don't necessarily come first later in the testimony he says we now have about 15,000 people working on security and content review we'll have more than 20,000 by the end of this year think about that in terms of pace of hiring they're going to add another third again of the number of people 5,000 people just in the next eight months, it sounds like. >> and i think that's really critical you're talking about hires and you're talking about costs that are going to hit the margins and the bottom line.

as soon as the earnings we get in a couple of weeks certainly something for investor s to watch all right. markets surging this morning with the dow up more than 300 points nec director larry kudlow joining cnbc earlier today, talking about free trade and the path to economic growth. >> 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're putting up trade barriers, they're closing markets, jim they're stopping investment. as i said, they're forcing technology transfers and they're stealing intellectual property that is the path to true free trade. and that is the path to economic growt growth. >> for more, let's bring in jeremy segall at warton school thank you for being here today. >> happy to be here. >> what is your takeaway on

larry kudlowe's comments and everything we've seen in trade with china in recent days and the effect on the markets? >> i think larry was the man to be there i was sorry when gary cohen left if there was anybody that i wanted to replace him, it's larry. we know he's committed to free trade. he's also committed to fair trade. if he can get trump's ear, we'll have fair trade. mexico, canada, eu, if we have a temporary trade agreement with south korea. so, you know, i'm hopeful about the outcome of this. but, of course, we are in unchartered territory here we haven't had a president for decades that has gone this direction. so certainly there is some uncertainty that the market is

concerned about. >> given the fact that you're hopeful on how this all sort of shakes out, you called the correction in equities back in late january, early february is that where you would be putting money right now? >> really now we're looking at a market that's 17 1/2 times this year's expected earnings that's extremely reasonable, even in an environment of rising rates. i think actually if i were to say what's more of a threat to the market -- and i don't mean a big threat over here i still think the fed and rising rates are being more troublesome in the second half and political uncertainties. midterm elections. i don't think trade is going to be the main issue in the second half of this year. certainly right now, while we're doing the negotiation, it is the primary issue. >> so, what are some other potential culprits, professor? tech regulation has been thrown at us, rising cost of servicing record levels of corporate debt.

something else >> i mean, i would say number one the interest rate increases. i still think we're going to get four this year although i think the fed obviously looks at the situation each time. and i think the ten-year will be 3.25 by the end of the year. it's 2.80 now. that's an increase and i think, you know, the markets say -- the betting markets say good chance republicans are going to take over the house of representatives. i lost my earpiece here. i'll put it back in. house of representatives that will be a challenge also. >> so just real quick before we let you go here, it sounds like you're not concerned about a flattening yield curve we're hearing that from folks coming on set lately. >> but look where we are if we go to 3, 3.25, we're in the low 2s on the short terms. even three and four will not flatten the curve this year.

and curves are a lot flatter and low inflation periods. if you look historically, like the 50s and 60s, than they are in high inflation periods. i'm not worried about flatten g flattening, certainly in the near term. >> professor siegel, always great to get your thoughts thank you for joining us today. >> thank you very much. >> more "squawk alley" straight ahead with the dow near session highs, up more than 300 points [fbi agent] you're a brave man, mr. stevens. your testimony will save lives. mr. stevens? this is your new name. this is your new house. and a perfectly inconspicuous suv. you must become invisible. [hero] i'll take my chances.

trade continues to take center stage after the president announced those trade tariffs against china. focusing on retail giant amazon, taking aim at jeff bezos rick caruso joins us to talk about the emphasis from the white house on amazon. rick, thank you so much for coming on. >> good morning, carl. how are you? >> good.

there's a discussion at this table, which you may have seen last week, in which the guests argued that amazon had taken away something sort of unquantifiable from america, not to mention retailers do you agree >> amazon has been great for retail everybody can acknowledge that amazon is probably one of the smartest online retailers on the planet today they have made a smart, strategic decision to open physical stores. one, that tells us that a hybrid model where you have digital and online retail is very important. the second that they've also shown us is a path to success. the competition just on price doesn't work you have to compete on knowledge, knowing your customer, being convenient retailers need to getout of their swim lane, brick and mortar retailers and actually swim to where the customer wants them to be and service them

well i think it's been great for retail the physical interaction, the social interaction with their customer, the sense of discovery and the sense of experience is critical to an overall retail strategy. >> do you think there's any argument that they've been positive for retail, job creation or even the american mall could you even begin to build that argument? >> the american mall has its own problem. i predicted four years ago that the indoor mall, unless completely reinvented, is going to fail. and we're seeing that. traffic continues to go down in indoor malls many of these retailers that are suffering are suffering because they're stuck in an environment where the consumer just does not want to go let's take a look at retailers that have failed and why they've failed and they failed because they've stopped evolving innovation, in any business, is critical retail is a tough business

you have to constantly be innovating to follow your customer i don't think any of us would wake up in the morning and be excited to go to toys r us a lot of discussion on why toys r us failed. they failed because they were no longer relevant to their consumer and the consumer is the one that we have to be listening to so the good retailers, many of which are growing, many of which are opening up new stores are doing great. >> hold tight. we want to get to kayla tausche in d.c. where there's been a mark zuckerberg sighting kayla? >> john, we did just see mark zuckerberg entering the office of senator bill nelson, one of the lawmakers he is meeting with today on capitol hill ahead of multiple days of testimony both in front of senate committees as well as house committees a few moments ago before this meeting, the company did post zukerburg's testimony, about seven pages, to one of the committee's websites it is a detailed apology from

the company where zuckerberg says that the company's idealistic he details what the company has done to bring good to communities like those ravaged by hurricanes but also says they have not done enough to stem malevolent forces that have now gotten the company in congressional crosshairs he did not answer questions from reporters when he went into senator nelson's office. we'll see whether he is more willing to speak to reporters on his way out of this meeting but certainly there will be many opportunities, not only for reporters but also for lawmakers to have zuckerberg potentially on the record this week. john, back to you. >> thank you, kayla tausche in washington wearing a dark suit and dark tie. very appropriate for testimony rick caruso, i want to get back to you lots of action out of washington, potentially affecting companies, including

the president's trade policies to what extent are you going back and penciling back, again, projects that you're working on, based on potential tariffs that are now bubbling up? >> i'm not concerned about that. i think the president -- i can't obviously speak for him. i think the president is using that as a way to negotiate better deals i think overall strategically, it's a smart thing to do to have better trade balance i support that i look at the key fundamentals, consumer confidence is good. we have growth in the overall economy. our properties are up double digit in terms of traffic of sales. we're dealing with best in class retailers that are showing signs of real growth i'm bullish on the economy we're building more projects and plan on doing that for the foreseeable future. >> rick, before we let you go, we've had a number of folks, including former fed chair, janet yellin in recent weeks

call out valuations that are oversteched. what's your take on that >> i think valuations are overstretched. asset classes have a lot of stability and long-term growth that the stock market becomes volatile, there's much more certainty in the real estate market that's probably causing a compression in rates and returns in the real estate market. >> rick, really appreciate your time good conversation and important issue to keep our eye on we'll see you next time. >> more "squawk alley" straight ahead. first, rick santelli, what are you watching today >> well, i'm watching lots of the same issues being discussed this friday. but a completely different response in the market place we're going to talk about trade and other issues affecting today's upside to the equity rks tethbrk.maetafr e ea you know what's awesome? gig-speed internet.

you know what's not awesome?

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. getting some headlines from the president's cabinet meeting, which has just taken place we expect tape playback in a few moments. in the meantime, a couple headlines. apparently told reporters if china hits our farmers bah they think it hurts me, then we will make it up to the farmers. that's via reuters also saying they'll make a decision on a response to the suspected chemical weapons attack in syria very quickly probably by the end of the day asked about whether or not a military option was something the white house would consider,

he said nothing is off the table. so we'll see if we see the pictures >> major indices don't seem to be responded too much to those headlines, but we'll see how it goes >> we are riding close to session highs. eamon javers, we have been watching mark zuckerberg on his visit to the hill, and now these headlines out of the cabinet meeting. >> we have some mark zuckerberg news at the white house, too larry kudlow criticizing mark zuckerberg's fashion sense earlier today here at the white house, saying he wondered if he'll be wearing a hoodie and t-shirt to congress, that he should get some fashion advice before he gets to the hill that was something that happened here at the white house. also, we're monitoring this cabinet meeting where the president has just said he's making a decision now within the next 24 ho48 hours on what to do in response to the horrific attack that we saw in syria over the weekend. the question is, what are the military options on the table for the president of the united states and how is he going to respond to the possible russian involvement in the region, guys. >> let's get to the president.

>> begin by condemning the heinous attack on innocent syrians with banned chemical weapons. it was an atrocious attack it was horrible. you don't see things like that as bad as the news is around the world, you just don't see those images we are studying that situation extremely closely. we are meeting with our military and everybody else and we'll be making some major decisions over the next 24 to 48 hours. we are very concerned. when a thing like that can happen, this is about humanity we're talking about humanity and it can't be allowed to happen so we'll be looking at that barbaric act and studying what's going on we're trying to get people in there, as you know, it's been

surrounded so it'sard to get people in. not only has it been hit, it's been surrounded. and if they're innocent, why aren't they allowing people to go in and prove? as you know, they're claiming they didn't make the attack. so if it's russia, if it's syria, if it's iran, if it's all of them together, we'll figure it out and we'll know the answers quite soon so we're looking at that very, very strongly and very seriously. i would also like to provide an update on trade negotiations we have a situation with china where we have a very good relationship with china, and i think we'll maintain that relationship i'm very good friends with president xi i have great respect for president xi as you know, i spent two days in china. the president spent two days

with us at mar-a-lago in florida. and they were four great days. with that being said, china has been taking advantage of the united states for many years really, if you look at it, since the start of the world trade organization and they have really done a number on this country and i don't blame china. i blame the people running our country. i blame presidents i blame representatives. i blame negotiators. we should have been able to do what they did. we didn't do it. they did and it's the most lopsided set of trade rules, regulations, that anybody has ever seen with that being said, we have many of them, nafta was a horrible deal. we're renegotiating it we'll see what happens but we're strongly renegotiating nafta. if you look at the european union, they have tremendous

barriers, trade barriers we essentially have bad deals with everyone. we're close to finishing a deal with south korea, which was a horrible deal. it was going to give us 200,000 jobs that didn't exactly happen it gave them 200,000 jobs. we lost jobs and it was a horrible deal and that's being renegotiated. and we have a long way to go, but we've made tremendous progress we're fairly close on nafta. if we don't make the right deal, we'll terminate nafta and make the right deal after that. but we have a chance to make a deal on nafta. and as i said, the north korea and south korea situation, which complicates it, the deal that we have with south korea, i think, is going to be, i think it's going to be a very fair deal we want a fair deal. and we don't have fair deals north korea, by the way, as you probably have seen we have been in touch with north

korea. we'll be meeting with them some time in may or early june. and i think there will be great respect paid by both parties, and hopefully we'll be able to make a deal on the denuking of north korea. they have said so. we have said so. hopefully it will be a relationship that's much different than it's been for many, many years this should have been done by other presidents and they decided they didn't do it. they couldn't have done it but it would have been a lot easier if it were done five years ago, ten years ago, 20 years ago. a lot easier than now. but we have a meeting that is being set up with north korea so that will be very exciting, i think, for the world i think it's going to be a very exciting thing for the world we're going to be talking about opioids today. opioid destruction and drug destruction, as you

know, we strengthened up our southern border. last year, we had record low numbers. this year, they have gone up to a certain extent it might be because our economy is good and people are trying to come into our good economy but we're putting the national guard and military at the border we're beefing up the border patrol who have done a fantastic job. i.c.e. has done a fantastic job. and we will take care of that situation. we need a wall whether you're a republican or democrat, we need a wall and it will stop your drug flow, it will knock the hell out of the drug flow, and it will stop a lot of people that we don't want in this people from coming into our country right now, we're putting the military and putting the national guard and we're going to have very strong borders. we have strong borders now, but they'll be much stronger and with that, the cabinet meeting will begin we're going to be discussing a lot of different