it's 11:00 a.m. at ibm headquarters in new york, 11:00 a.m. on wall street and "squawk alley" is live ♪ ♪ yes so crazy right now most incredibly your girl b ♪ ♪ ready ♪ ♪ history in the making part two ♪ ♪ so crazy ♪ >> good wednesday morning. welcome to "squawk alley."

i'm carl can't nil la, morgan is back with jon fortt and myself busy morning. >> we're kicking things off with ibm, the stock getting hit again this morning, despite beating on tonight and bottom lines for the recent quarter, on pace for its worst day since october 2014 big blue issuing a lower than expected full-year forecast when it comes to eps in particular. miss in storage hurting growth in the current quarter, but margins overall seem to be the problem here coming in a couple of points light. it's got to be frustrating for the folks at ibm because it seems like they can't win. you know, they get dinged for sort of managing earnings over a period of time, hey, there's no revenue growth, is the complaint. now they have revenue growth but your margins aren't as good as we would expect. the cloud story is at the core here and you can't help but draw a line from disappointment in oracle's results when it came to cloud where people are expecting to see a lot of growth and now the disappointment in ibm.

you wonder if these companies that have been strong in the past will manage to reform late their cloud stories so the street gives them a break again. >> stocks down 7% right now. pretty dramatic move for ibm and certainly i mean after last earnings, the narrative there was we saw the stock run up on this, this idea that finally this turnaround is taking route. and we get the results yesterday, you strip out currency, you look at where some of the sales did come from, sort of the more legacy businesses and investors are skittish here. >> there are companies, clearly, that have managed to turn around their stories. microsoft, a little bit of a different case i would argue they're underlying results always look pretty strong but there was this margin compression, the multiple compression, i should say, from people just sort of not believing in the company overall. satya nadella was able to turn that around, sony recently able to get out from the shadow of legacy business. ibm having a hard time. >> at these levels, ibm was at a worst day in a couple years and

at these levels, go back almost to 2013 to find a drop of 8% on april 19th of 2013 we'll watch that meanwhile, take a broader look at tech, sector coming off its bests day in more than a week, positive for the year, netflix has made its way back to all-time highs amazon coming off its best day of 2018. gene munster joins us this morning, and jason callcanis inside.com founder and uber investor good to see you both >> good to be here. >> good morning. >> gene, to what degree, if you look at some of these charts that look like double tops, has technology gotten its groove back >> i think it's -- i think they do have the groove back and it's testimony to investors understanding that the fang in particular, but tech more broadly, is going to be stealing market cap from other companies over the next decade if you look at what amazon has done in retail, but you start to think about google what they can do in a.i. and disrupt other

businesses, i think that piece is a sign that tech will be in its groove for years it will have bumps but the underline secular story is still powerful and is good tofor thes stories. >> i can't imagine you disagree and this whole conversation we've had for the past month about data and regulation, was that it? was it a bump? >> yeah. looks like zuckerberg's media training paid off big time he basically snowed everybody and there's going to be no changes. i think facebook has clear seas ahead. i think he did an amazing job deflecting questions and, you know, obscure fiing what is actually going on at facebook. they're not really making great changes but consumers don't seem to care and it's not going to change netflix is on a tear obviously we've been saying hey this could be a quarter million subscribers for the last two years. that seemed laughable two years ago and now seems obvious. i will tell you right now i think maybe 25% of people, 50%

of people will have a netflix connection so we could be looking at 500 mill people with that subscription and what they can spend on content is obviously going to be extraordinary. these companies understand disruption so they're becoming disruption proof they're figuring out ways to innovate internally and block other companies, including startups, from coming at them. advertising based startups having a hard time in silicon valley. >> what is the next chapter, do you think, in this content relationship with silicon valley we've got spotify that has gone public and seems to be doing just fine thus far netflix had the strong results we've got this shift in this kind of rebundling comcast and netflix cozying up closer than ever before. does silicon valley still need content in the same ways and how do you expect that to take shape differently over the next few quarters >> i think what you're going to see is in particular, amazon and

apple increasing dramatically their spend on content obviously video content original content and right now they're about a half and eighth of where netflix is but they could double and triple that spend over the next couple years. so i think what you're going to see in particular is netflix still do what it's doing, but these other companies, apple and amazon in particular, are going to throw one other angle out there which is, the future of content isn't just going to be video content and music and published content, i think you will see these come together my bet is that apple goes -- this texture acquisition they did last week for basically publishing content, you pay 10 bucks a month for magazine subscriptions on-line, but i think they will bundle all that together and you will see an offer that has music, video and ultimately publishing. look for that in the next couple years. >> yeah. a lot of discussion about -- >> a no-brainer. i would say that's a no-brainer. we've talked about the concept of an apple prime and them

charging one fee for your apple care or storage and music and now texture, maybe they put magazines in there and newspapers and, of course, they're starting to dip their toe into content, although the content to date has been absolutely horrific we'll see if they get better at it. i don't think apple will be good at making content, i'll put it out there. >> baby steps. don't judge quite yet. guys the other story is tesla, the company is looking to ramp up production of the mod 38 to 6,000 cars a week by the end of june according to this internal memo from musk musk calling the around-the-clock production great prevision and better performance from contractors as they try to fine tune some of the automated elements of this production gene, i'm wondering how close are you watching it and are you unnerved by a pause in production at all? >> no. it's a good thing because they need to pause production to overhaul, to make a step function up in terms of the speed of the factory and to

answer how closely we're following this like a secondhand on a watch and we're laser focussed on this t drama is great this internal memo, lays the groundwork of how they can get to 5,000 cars, the target for the june quarter, and elon musk taking a micro managing approach on expenses as well. the concept, one thing that does irritate me is that elon musk clearly is at war here with the doubters and that's not a good situation but i'm still a believer in tesla. >> jason, every time elon musk or not every time but many times that elon musk puts these sort of forecasts and guidance numbers out there, particularly on production for tesla, he tends to fall short. does it even matter? when you look at how far the stock has come in the last couple years >> yeah. and full disclosure, i'm a huge tesla super fan and humble brag, driving all four cars for the

last decade, and i've driven over 20,000 miles on self-driving, i love this product. this is essentially the iphone moment for tesla you have a lot of doubters, the iphone, nothing more than a glass slab, nobody wants it, it's late. doesn't matter it's the product stupid. the product the model 3 is the greatest car made. if the product is that good, one like elon musk who can land two rockets simultaneously back from space is going figure out how to get from 3,000 to 4,000 to 5,000 cars the fact that people are so critical of tesla and elon is just the nature of the fact that elon sets incredible goals that are industry changing. it's changed the entire automotive industry. they laughed at him and now they're all chasing him. people will throw rocks at you for trying to change the world, but at the end of the day it's the product, stupid. look at the product. it is transcendent it is the iphone of cars. >> yeah, but okay --

>> the greatest selling car in history. period. >> great commercial for tesla, but at the same time, if you can't hit your 5,000 a month target what do you do? set a 6,000 a month target i mean i'm personally getting kind of tired of - >> yeah. that's what talented people do. >> but at a certain point -- >> it's moon shot. it's called a stretch goal. >> but when you promise people cars, you got to deliver cars. eventually, maybe not soon, because he's great, he's landing two rockets simultaneously, but eventually you have to deliver the cars you promise people, right? >> jon, betting against elon musk is a money-losing proposition. anybody who bets against him -- >> i'm not betting i'm just saying. >> i know you're not betting we're all going to sit here and throw rocks. nobody would place that bet. it is a stupid bet he will sit all the targets. he's sleeping at the factory, dialed in, hyper focused that is not somebody you want to doubt. he is a killer he is going to crush it. he's going to hit all the targets eventually and anybody who is driving the car will tell you they love it and will not

shut up about it that's what you need to know if the product is transcendent everything will follow give the guy a little time and watch the magic. >> i mean, there is an element of scale here involved as well, but that's why there's the debate to see if he can pull this off guys, the last story today - >> he's got it. >> marissa mayer breaking her time at the internet giant and whether there are things she wishes she had done differently. she told the "times" i'm really proud of how well, we did. i think overall the team and the company were dealt a very tough hand great results for shareholders but the home run would have been a standalone company and then a complete comeback. took some shots at icon as well as -- and lobe as well about short-termism here how much of a point does she have and how much of this should she have said prior to leaving >> well she's pretty political too. that comes from her time at google she is very measured in her

words and i don't blav hblame he for holding off until this period it gives her a platform to go and relaunch what she's going to do the timing is right. she's very strategic around that ultimately it remains to be seen what she's going to do i was trying to read between the lines and it's hard for me to interpret does she want to be a vc, be part of a company in the future i would just say it's great to have marissa back in the flow. i followed her for all of her tenure at yahoo as an analyst and em kreex itted to see what she does. >> this is a line that jumped out to me in this interview, i'm proud of what we achieved at yahoo! that said we had a quickly decaying legacy business all we managed to do was offset the declines that doesn't sound very good for verizon which bought yahoo!? >> yeah. i like the candor. i think she's trying to do a little public therapy of like

hey, my time there wasn't exactly a win, but it wasn't exactly a loss and we all know this if you look at the history of aol or yahoo! or the tech companies that went into decline you're managing the decline and she managed the decline well she turned around the culture, got a lot of shareholder value out of it and she had the sharks and, you know, basically driving the business, not the product, and so i think it was one of these missions where she got paid and she landed the plane safely, which is the best you could hope for i'm trying to figure out also what's the point of this story now? she's got some little incubator going, looking for a job, or maybe a couple job offers or wants to start a company i think she learned a lot and so i never underestimate anybody. i think she could come back and start a company or join an early stage company. she could become a venture capitalist lot of options she's very bright, young, motivated and i think she learned a lot. obviously when you go run one of those companies, aol, yahoo! in

decline, you learn a lot about what can go wrong in business. >> all right as we covered a lot of ground, always leave it to you to light the fires. gene munster and jason callcanis, see you next time thanks. >> okay. >> when we come back, an exclusive sit down with wisconsin governor scott walker and later, that exclusive interview with blue origin ceo bob smith. that's coming up in just a few minutes. "squawk alley" back in a moment. ♪ >> are you going to be sending space tourists up to the edge of space before this year is out? >> we hope so. we think we still have that possibility of getting that done this year, but the thing we always want to make sure we do every time, whenever you're talking about step-by-step development or operations we're going to go when we're ready and safe f oorur passengers. >> are you going to go up? >> i am. >> can i go up >> you bet no more lugging your clubs through the airport or risk having your clubs lost or damaged by the airlines. sending your own clubs ahead with shipsticks.com

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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. if we find ourselves in a broader trade war things won't happen buyers of companies around the world include americans buying chinese and taking advantage of chinese opportunities, chinese buying assets in america that's on the investment side. the -- we are huge markets for each other >> that was goldman sachs ceo lloyd plank fine on this morning with wilfred frost back out to wil sitting down with another special guest in chicago. >> john, thanks very much. indeed, sitting down with governor walker. thank you very much for joining

us and for having me here in your state today u.s./china business summit, you have been growing exports to china at about 20% per an them and seem to be the beneficiary from china with the foxconn deal how concerned are you about the elevated trade rhetoric webetwe china and the u.s. >> this session is why i am here and it's important what you've got is a situation where more than political leaders at the state, federal or international level, if you've got people investing in states like wisconsin and just across america, that will help deal with that trade imbalance. that's really the heart of what president trump is talking about, trade imbalance, you move more investment and more opportunity and more human capital, is benefiting in places like wisconsin, that will help the rest of the trade imbalance for the country. >> the trade rhetoric has been strained, the headline level in recent months. do you get the feeling that things are actually progressing a little better than that when you're having conversations

here, or is there a rel threat of an elevated trade war >> we've seen last year alone a biggest increase to china, mexico and other countries and we continue to have in terms of exports, china, for example, is our third largest behind mexico and canada, obviously being here in north america but also, imports are -- china is our number one import in the country, but we see increasing foreign direct investment from china, companies in europe, all over the world that's the governors level, i say the governors are the ones you should watch when it comes to trade. >> do you think the foxconn deal goes ahead or a risk the plug could be pulled given some of the rhetoric >> the good news, they're moving forward and excited about me being here today talking about foxconn. that's a $10 billion investment. 13,000 supporting jobs all the direct, 20 to 25,000 jobs out there and the supplier chain. good example, oshkosh

corporation, another great wisconsin company, they do about $300 million worth of supply chain each year. that's 700 companies, about 140 different communities in my state. foxconn will do four times that. >> switching focus away from the u.s. china discussion, speaker ryan was on our air yesterday, retiring from political life, will he be missed within the wisconsin political sphere >> no doubt about it he's one of the most consequential political leaders in the last quarter century, a thought leader, not a political leader -- i've known paul since i was young, grew up 15 miles down the road from each other since i was a young man. what i love about paul ryan he's always about policy. the reason he became the speaker was not because he sought it, because some of the others admired him and wanted him to be there. he will be missed in the only in wisconsin but in america and i hope even though he won't be in office he will have influence on american political policy. >> you're committed to re-election? >> absolutely. i love this job. big deals like foxconn make me excited about going forward,

seeing that through, making sure that benefits people all across the state of wisconsin and hopefully, with events like today, attracting others, maybe not as big as foxconn, but other investors from china and anywhere else around the world to do business in wisconsin. >> to round things off, lloyd blankfein was optimistic about the broader u.s. economy here, your unemployment rate is below 3% to what extent do you put that down to things at the federal level from president trump, the tax cut and things like that. >> i think we're going to start to see the benefit of that i think it only gets better. in my state the typical family, mom and dad work, two kids at home, save $2,508 is important on a day like yesterday when i signed a child tax credit, a reason it's such a benefit for taxpayers in states like wisconsin. i think we're in the early stages of seeing the benefits of the tax cut. the president, vice president and other republicans can do in washington is talk about it more more people in the state think it's just for businesses or just the wealthy. that's not at all true in my state and other places

across the country, good, middle-class working families will benefit the more we see them invest in the economy the better we saw even before that, 2.9% unemployment in wisconsin. the lowest it's ever been. why wef shifted from jobs jobs jobs to work force the ones we want to attract to get the work force for the next several years. >> thank you for having me i'll send it back to the studio. >> thank you very much wilfred frost in chicago when we come back a first on cnbc interview with former cambridge analytica director brittney caseser, fresh off her testimony before parliament in the uk yesterday where she said, quizes and apps on facebook gather data from much more than the 87 million so far mentioned by the company dow in a narrow range, one of the narrowest since january. "squawk alley" is back in a minute

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facebook users may have had their data harvested by cambridge analytica, that according to former company insider turned whistleblower brittney kaiser at a uk parliament committee meeting yesterday, she also explained some of the company's data collection tactics >> i would see questionnaires, for example, there was one called "the sex compass" to find out what your personal preferences were privately and then there was another one on your music personality. these applications were designed specifically to harvest data from individuals using facebook as the tool. it can be inferred or implied

that there were many additional individuals, as opposed to just the ones through aleksandr kogan's test whose data may have been compromised. >> since leaving cambridge analytica earlier this year, the former director of business development has been critical of the company's tactics. kaiser is working alongside jeffrey wornic, early investor in uber and airbnb on initiatives to improve data collection frantransparency brittney and jeffery joins us on a first on cnbc interview. good morning and welcome to both of you >> good morning. how are you? >> first of all, doing great, i want to start with you, more than 87 million, people are alarmed about cambridge analytica, but i want to put the brakes on that a moment because the real issue with the kogan data sense was they were collected under the pretense that they weren't going to be used for commercial purposes at all. there wasn't a problem with having quizes that harvested

people's information lots of people were doing that are you saying these other cambridge analytica quizes were above board legit and maybe people just didn't understand how the data was being used? not necessarily against the terms of service, just that's how it worked? >> of course i think there's a very low amount of data literacy around the world. when you agreed to terms and conditions of using a facebook app, such as these quizes, which were very popular a couple years ago, personality quizes such as which disney princess are you, these were created by probably thousands of companies around the world and you agreed to giving your data when you sign in using your facebook log-in. i think it's also important to point out that that's really the tip of the iceberg facebook collection a fraction of the amount of data that companies like google collect on you. i think the real conversation is a little bit bigger, which is the lack of transparency around

what data is collected about individuals and how that data is used and monetized >> yeah. jeffrey, there's some pretty strong language being used right now to describe the collectors of data. i believe you've used some of it i saw a headline that you called companies that collect data, data rapists i don't know if that is what you actually said. there are a lot of companies that collect data and have been for a long time. amazon collects data, walmart collects data. do you expect those companies that collect data and use it for internal purposes to compensate people >> i think if the data is used specifically for inhouse uses, i don't expect there to be any compensation because they're not monetizing the data. i think if there's any effort to monetize the data the question is, is who owns the data and who has the right to monetize it so it just depends upon what the uses, if -- to the extent that

somebody is using the data to sell advertising space back, you know, then there's compensation involved >> is there a difference though between -- >> for them -- if they use the data for them to understand you better and provide a better service specifically for you, and don't use anything other than to provide you value with respect to your relationship just one-on-one with that firm, i don't see any problem with that but there stills has to be acknowledgement about product rights >> amazon is also using it to market third-party -- >> again, if they are using it -- if they are using it to market products -- the only use -- the only appropriate use of the information is, i bought a book and that's it or i bought whatever i bought on the platform if they are using that information, then to sell more products on that platform, then they are using my information to make their platform more valuable without compensating me so again, if i'm an in put into their production function i

should get compensated for being an input into their production functions. these platforms are unique in the past we were not inputs now we are an important inport for the production functions but we're not getting any compensation along the way so that's why it becomes an shuey i referred to earlier is, it's an issue of property rights we have a problem of the fact of the tragedy of the commons we don't know how to define this so given the app of defining it and being the curator of the platform, essentially ownership of that information. i don't see anywhere where in any contracts that they basically become the owner of the information and if they're just a curator then anybody should call up amazon and say i want jeffrey's data as well. i might be useful for me as well, give it to me as well. so the point is, it's our data we own it. and to the extent that it's used out of the context of just us buying something, you know, then the fact is, then they should come back and say to us, i would

like permission to do it and i'll compensate you for it >> brittney, i know you guys -- brittney, i know you are talking to us today because you are looking to change the way data is handled and bringing the, you know, control of that data back into users' own hands but whether we're talking about cold air or facebook, or the amount of data that google collects, looking at many industries isn't the genie already out of the bottle in terms of how much data is out there on consumers already? how could you possibly reign that back in >> it's not about reining it back in but moving forward from where we are today we start to view our digital assets, our personal data as our property, then we can start to change the terms and conditions, social contract and the actual legal contracts that we have with our usage of these different platforms. so as jeffrey said, if companies are going to be monetizing our

data, we should share in that. it's the same as if airbnb model where they allow you to monetize the value of your property, which is a physical property, a house or an apartment, you are given transparency for what people want to use your property for. they let you know, you agree on a price and you're paid before you hand away the keys right now, when you sign up to terms and conditions, not only do most individuals not have the ability to fully comprehend what they're agreeing to, but there are not full transparent permission structures into what that data collection can then be used for onwards that's where the big controversy comes in it's not that cambridge analytica or any other data analytics companies were breaking laws, because i believe that they weren't in the most case none of these companies are breaking laws. they're doing something that is legal, and our legislative and regulatory frameworks have not caught up with where we are with these technologies

so because the regulators are always going to be behind, the legislators are going to be behind, we need to change the model with which we're interacting with companies that are doing the data collection. >> brittney, nobody forced people to take these quizes and maybe i've been in the technology game for a while, nothing is free, some of us knew information was being harvested here can we protect people from themselves truly say they own their information and facebook says it's your information, if you want to use facebook you need to give us this information, can we stop that transaction from taking places say no, wait, you really don't want to be telling them that because they will use it to make money and not give you any at a certain point isn't it relying on the user to get wiser to the game? >> of course and that's why i said this is also a problem of data literacy. individuals need to be educated about what this actually means if your data is your property

and other people are using it, what transparency is there what kind of permissions and permission-based structures are available for you to make those decisions? right now you have some privacy functions in terms and conditions which are constantly changed by facebook, by google, by all of the platforms you use on a day-to-day basis. it's very hard to keep up. it's a huge gray area that you don't understand all of the types of data that are collected about you and how those are going to be used so if we're going to enter into a new set of terms and conditions, a new social contract, where individuals have visibility over what's collected and knowledge of what that could be potentially be used for, then individuals can opt in in europe that's part of the law. it's just the united states of america where we're a default opt-in country you're already opted in unless you opt out. >> i have something to add on that i disagree with the frame. if i put my car -- >> unfortunately -- >> if i put my car in a parking lot that doesn't give the right of the parking lot to sell my

car. okay i'm only giving them the right to park my car, not to sell my car. so i think the way you framed it is incorrect >> well, it is an important topic for people to pay a lot more attention to now because of the recent disclosures thank you, brittney and jeffrey. >> thank you, guys. >> we'll be having that discussion for a while, thanks jon. >> let's get to seema moody and the european close which closed six minutes ago. >> carl, european stocks are on the rise, this as a heated debate takes place around inflation. unfortunately see that the ftse 100 is leading the way as the uk pound has take an sharp turn to the downside here's the story uk consumer prices falling in march to its lowest level in more than a year now at 2.5%. now this is contradicting this idea that wages and inflation would rebound in 2018, still most economists expect the bank of england to go through with a rate hike next month taking a step back, though,

eurozone inflation rose to 1.3%, but that missed estimates as well well below that target of 2% the euro at 123 today. earnings painting an interesting global picture a look at france, moving higher after posted better than expected quarterly sales, getting a lift from chinese demand for baby formula, the yogurt maker citing improved dairy sales in europe and signs in growth america, stock up year to date. hine na ken lower after posting lower than expected beer volumes, a dutch brewer. they say demand in europe was hurt by cold weather but they add that an early easter calendar boosted sales in north america and sales were better in asia as a lunar new year resulted in double-digit growth shares down by 1.5%. german chancellor angela merkel is set to visit president trump next friday. trade most likely on the agenda.

mr. trump has complained about the german trade surplus in the past merkel's visit will come three days after french president macron is scheduled to visit the white house. this year taking a look at global markets you'll see the s&p 500 is outperforming the german dax largely due to the trade uncertainty, given germany's reliance on exports. carl >> seema, thank you very much. seema moody. dow up 25. a news update with sue back at hq. >> good morning again, carl. it is a busy news day, everybody. here's what's happening at things hour. southwest airline passengers from that doomed flight finally landing safely in dallas today they were forced to land in philadelphia yesterday after an engine blew. one passenger who was nearly sucked out of the window later died firefighters battling wildfires across the southwest and southern plains. high winds spreading the flames and prompting new evacuations near colorado springs. that fire is now zero percent contained. cleanup efforts under way in

hawaii after historic rainfall dumped more than two feet of rain the damage includes washed out roads, gutted homes and multiple landslides and the world surfing league calling off an event in australia gu dew to shark attacks. it follows attacks on two recreational surfers this week alone. they suffered leg injuries, one was serious, and you see one being transported to the hospital that is the news update this hour "squawk alley"s ckft a icbrk. iba aer but so is my lawn. it's been worn down to ugly thin grass! now there's new scotts thick 'r lawn, the revolutionary 3-in-1 solution for weak lawns. with a soil improver to strengthen roots! seed to fill in gaps! and fertilizer to feed! the result, up to a 50% thicker lawn after just one application. ♪ ♪ now yard time is our time. this is a scotts yard.

welcome back to "squawk alley. the race to space is on. jeff bezos' blue origin making waves out in colorado springs this week, showing off a new engine for its new suborbital rocket, new glenn. i spoke with blue origin's ceo bob smith about the path to profitability and why blue origin thinks it can get tourists to the edge of space as soon as the end of this year take a listen. >> it's a massive piece of machinery and we're excited about because it because we had a hot fire on that engine and that engine has run for 114 seconds at 65% power, which is really exciting. which means we've demonstrated this engine works and works well and that's kind of a revolution

in terms of that engine technology because it's a really reusable engine. we've designed it for reusability. >> i think a lot of americans don't realize that some of the most sensitive, security and military missions, right now, in terms of space are being powered by russian-made rockets. this actually represents really kind of a shift. >> it is. >> in terms of american manufacturing. what's the opportunity there >> the opportunity to replace those rockets and get on to american rockets supplying american astronauts and american payloads it's exciting to do that this is actually something that we developed on our own dollars, so we're excited about the commercial opportunities that's going to give us when we fly it on new glenn and get selected by united launch vehicle logan as well. >> you mentioned it flying on new glenn, which is blue origin' orbital rocket under development. the fact that you're looking to potentially sell this to other companies like united launch alliance, kind of i guess business opportunity does that represent and is that something that's going to sort of be

considered an additional revenue stream >> absolutely. fundamental at our core we're a propulsion company, a lot of propulsion capability. we started with be-3 as an offering for our new shepherd and we're offering that out as an upper stage as well and put that version of upper stage on a new glenn vehicle, offering it out to other customers as well same with the be-4 we've offered it to ula and whoever else will come out and say they need a new engine. >> when is ula going to make the decision when will we hear the announcement >> we think it's very soon and we hope we're getting to the end of thor in yagts we are demonstrating all the characteristics for their vehicles and it's performing very well. >> you mentioned reusability and the part that plays within this rocket engine. >> yeah. >> reusability i know jeff bezos who is the creator of blue origin has talked a lot about this and how the economics around future space travel hinge on that. what does that mean from a blue origin's standpoint?

>> for a couple different things one, this engine getting back to it, is really one of the key technologies that makes reusability actually work. i mean it would be like having an expensive car and then throwing it away every time you drive it it would be very expensive to do that if you have the most expensive part of your car, an engine, that would be reusability it makes sense. we spend so much time in development, seven years developing this engine to make it reusable. this engine will perform 100 starts, 100 full missions that we would be able to do if you think about how many times you're going to get to fly that, one of the most expensive parts of any engine, any rocket, you have this engine that's going to get reused. >> how much does that lower costs to be able to do that? >> public studies on a launch vehicle basis actually show that about 75% ofthe costs, 50 to 75%, is actually in the first stage. so if you actually have a reusable first stage like we're planning on new glenn, you should get to 25 to 50% of the overall price down on that overall rocket it's going to drop prices

dramatically it just makes it more available as well. that's another big opportunity that we see, is that you're going to get to fly and when you want to fly as opposed to trying to schedule three, five years out ahead about when you will go fly. >> with new glenn under development, you have probably a couple more years before we see it make its maiden flight, you're already signing up customers, how is that process going. >> it's going very well. there's great excitement about a couple different things. one, we are bringing that price to the market and that's an exciting price to some of our customers but we're bringing a larger capability, larger payload capability we've talked in the industry about mass, how much you can get up, we haven't talked about the volume character tests a seven meter fairing the largest in the area, you can launch multiple satellites at once constellations or two satellites at once we can do that in the larger faring. >> are you going after military contracts a" sne contracts a as well? we will make this available for

commercial, national security. >> should we consider your hat in the ring with this competition afoot in the air force right now? >> we don't talk about our strategy but we will be available and are talking to all of them. >> in light of that what is the space industry and blue origin's part look five, ten years from now? >> we will have, obviously, flying space tourists. we will be flying payloads as well we will be i think the preeminent engine provider in the country. we'll also have our new glenn vehicle we'll be using not only for civil and commercial but for security payloads as well. at that point we will be in very much the position that we want to be as we stand today. >> so guys, that was a big chunk of of our interview with bob smith. i should note that this was the first time he's been on camera for an interview since becoming the ceo of blue origin so the fact that they have this new rocket engine on display at space symposium in colorado springs this week and that coming after having the new

shepherd capsule and reusable suborbital rocket on display last year speaks to the fact that blue origin competitors should be taking note. they are moving forward. >> is it clear yet how the space tourism business is going to work i mean i imagine you will have to pay a big chunk of money, like a trip around the world, they're going to have to build a lot of luxury around that, i imagine, and then take selfies in space what's the payoff? >> i think the space tourism is one piece of this. you have the space tourism with the new shepherd product they're looking to do, you know, as soon as the end of this year, but then you have the other orbital rockets that will do the missions bob smith was talking about. selling the rocket engines to other companies, there's really only one other major competitor in the u.s. market, aero jet rocket. >> in the next say four years you will be in space, you, morgan brennan >> i would do it. >> i know you would. >> i'm game. >> i know you would. we look forward to that live shot >> it will be a --

>> when we come back, speaking of safety, the aftermath of yesterday's southwest engine failure, and crash landing ter phil lebeau will have the we'll be right back. ♪ feel that? that's the beat of global markets, the rhythm of the world. but to us, it's the pace of tomorrow. with ingenuity, technologies, and markets expertise we create the possible. and when you do that, you don't chase the pace of tomorrow.

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we will reveal which one >> and firestone says it's a screaming buy today. it's all coming up we'll see you in about ten minutes in halftime. >> thanks. as we go to break, west texas making another move higher today. did crack 68 got to 6845 before now settling back to 67.91. we're back after this. you know what's awesome? gig-speed internet.

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southwest ceo gary kelly speaking out following yesterday's fatal accident and emergency landing of a boeing 737. our phil lebeau has that in chicago. phil >> saying the company will accelerate its engine inspection program. quick update on where things stand on the investigation the ntsb will hold an updated press conference this afternoon at 4:30 to tell us the latest. when you look at the engine that is build by ge and saffron, there are more than 13,000 in service. they're flown by more than 300 airlines metal fatigue may have caused the engine failure when they took a look at the plane, it showed the engine's fan blade, where it came off may have been metal fatigue. general electric is the maker of the cfm-56 engine along with

with its partner, safran they have 40 people who are a part of a team now working with southwest. as for shares of southwest, they are accelerating their engine inspection program stock sold off a little yesterday, but today, you can see, it's up more than 3%. guys, back to you. >> yeah, transports overall doing very well today, phil. up almost 2%, several week high. thanks, phil >> "squawk alley" is back after this hi! i'm mike ditka.

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the coachella tallies are in beyonce is setting some records. her performance was live streamed by more fans than any other set at the festival. more than 458,000 viewers tuned in for the youtube live stream sort of redefining coachella a lot of people said this week >> you actually can't go on youtube and find the full live stream in its entirety it was, once it was streamed, that was it. apparently, she'll do another live stream. i can imagine that many more people are going to tune in now. >> a technical achievement live is hard to pull off she did it pretty flawlessly and, i mean, the cultural relevance that she pulled off here, the marketing is

priceless. >> on a week where the irs can't keep its own technology from failing under the weight narrow range 111 points on the dow so far it's the narrowest since january 23rd, and of course, amextonight after the bell, we'll watch that as the earning parade continues. let's get over to the judge and the half >> and welcome to "the halftime report." i'm scott wapner our top trade this hour, blankfein on the record. speaking out for the first time about reports he could leave the firm by the end of the year. what we learned today and what it means for the dow component and the banks. with us for the hour today, joe, jim, steve, pete, rob is with us as well. of ubs private wealth management, one of barron's and forbes top 100 financial advisers let's begin with cnbc's exclusive interview today with lloyd blankfein, sitting