a.m. on wall street and "squawk alley" is live ♪ we're gonna rock it down to electric avenue and then we'll take it higher ♪ ♪ we're gonna rock it down to electric avenue and then we'll take it higher ♪ ♪ working so hard like a soldie can't afford a thing on tv ♪ ♪ deep in the heart i abhor you ♪ >> good morning. welcome to "squawk alley." i'm carl quintanilla with morgan brennan and jon fortt. apple warns the stock may fall iphone maker is have iing to diversify on its screen suppliers. joining us to talk about it and all the headwinds, walter

isaacson, ceo of as pen institute. >> the trade wars. certainly, too, if there's going to be a downdraft on buying apple products in china simply because they're not as cool and not as popular we're already seeing signs of that we're seeing the jet makers say their demand is weak also the iphone x, especially at its high price point, hasn't caught on. finally, apple hasn't really produced that new product that's a must have that drives everybody into the stores. so, things are not looking so good for apple these days. >> walter, a couple of worries i have about reports like this and

people's tendency to react to them, number one, it seems there's less visibility into the overall supply chain for the iphone than ever yes, there's a new iphone x. there's also new iphone 8 and 8 plus they're continuing with a full line of iphones. when there are that many components in the system, in the supply chain, it's complicated it's really hard to tell what's going on quarter to quarter, just from looking at that. and then there's talk about maybe the iphone being down. but what's replacing it? is somebody really gaining share on apple is there any kind of credible contention that samsung is having a surge on this latest line of phones i haven't heard that it would have to be that the premium end of the smart phone market is just collapse iing. wouldn't it? >> yeah. but the premium end of the smart phone market collapsing is not good for apple and certainly not for theiphone x. no, there's not a lot of transparency in the supply chain but there are a lot of tea

leaves that you're beginning to read and, finally, you know, it's just a longer term issue i teach a class here at tulane, all 18 to 24-year-olds, studying the digital revolution there's not that excitement. they aren't carrying their iphones. certainly they're not wearing the apple watch. and, no, samsung hasn't capitalized on that yet. but you don't feel that people are trying to save up their money to buy the highest-end iphone you're right even though the transparency on the supply chain isn't great we're getting a lot of data points that this is not going to be a blowout quota when earnings are reported in early may. >> ggb capital manager joins us as well. good morning to you. this is historically more about capital return we know their ginormous balance sheet, their relatively modest

valuation. why are those things not working for the bulls? >> people look further ahead lack of products for consumers consumers taking more time to upgrade, moving from 7 to 8, 8-to-then x. a lot of people are still signature at apple 6 and 7 and not upgrading as quickly then you look at other companies, they're all nibbling away at apple's field. even samsung and apple are not seeing big market share changes, you see that the chinese manufacturers and brands coming up as well so, apple is just being attacked at all fronts. >> so, hans, are you contending that at least in certain regions, certain markets, the premium end of the smart phone market is diversifying there are these other players that are moving into that tier and taking share from apple? is there data to support that or

do you expect we'll see it soon? >> no. what i'm saying is that i think the premium phone market is just not growing as quickly people are not changing, upgrading their premium phones as quickly as they had done before that's number one. number two, instead of upgrading premium phone, more people are just -- new buyers are buying the medium or low-price phones instead. so both the growth for apple just slowing down on all fronts as a result. >> we're going to keep our eye on apple obviously now down more than 3.5% as the dow is now down 184. gentlemen, the other headline out of the ft to get to is about the treasury department reportedly considering declaring a national economic emergency to impose new restrictions on chinese nvestments, it would give the president power to restrict semis and robotics. targeting those fields as a push to acquire u.s. tech firms

walter, this goes to the heart of what a lot of people worried about, made in china 2025 initiative, the way they want to capture ai and robotics and autonomy, much like the japanese did with the cars in the '80s. >> exactly and china is doing a huge amount of investment not only in the fields you correctly pointed out, carl, but even in the live sciences, crisper technology, all these things the china 2025 initiative is certainly not -- it goes back to our talk about apple it's not going to help the notion of buying american brands over there i do think, though, that the chinese have too often taken the intellectual property of the u.s. and it is both the competitor as well as a trading partner, but the competitive side has become problematic. and i think some of these restrictions on the type of technology that they get when they do investments in the

united states, i think siphius has been right in cracking some of that down now we're seeing a move to broaden the role of siphius as far as investment approval agency so that joint investments in china with u.s. companies are going to be restricted i think in this world it probably does make sense to make some restrictions on what china can invest in, in national security type industries that, as you said, will hurt the trade relationship we've already seen direct foreign investment from china going way down in the past year. this is not good for companies such as apple that depends so much on the chinese market. >> and certainly, hans, this ip situation is a big one given the fact that so much of the deal making we have seen in recent years has involved china. does this put a damper on capital flows? if it does, what does it do to

tech valuations? >> i think a lot of people in the u.s. cannot realize that chinese tech development, a lot of it is not government influenced or government controlled a lot of investments are made by the chinese tech companies on their own, especially the companies we all cover like alibaba and so forth so even if there are no restrictions or there's some restrictions, it doesn't really matter to how chinese company technically will develop on its own. look at stem graduates each year each year the number of science, technology, math, engineering graduates in the u.s. versus china, china has 4.7 million as of two years ago and u.s. only has 600,000. the numbers do favor china developing technology on their own. in the influence of government in investing in ai and other areas, i think, is a bit overblown. in this current environment it's easy to paint china as the

enemy. >> hans, it sounds like when you start putting out those numbers about stem education, it sounds like the next push here should be immigration, immigration reform and hanging on to some of those folks who, say, are educated here and keep that education base in the u.s. rather than going back to china. >> that's exactly right. but the current political environment doesn't make it easy for people to stay it's hard to get visa extension. it's harder to be -- not be harassed from time to time about incidents. and it all adds up to make it easier for people not to stay here as long and go back to china instead. and that's not good for the u.s. >> finally, guys, want to get your take on youtube today corporate ad dollars could potentially be at risk after a report that advertisements for over 300 companies and organizations, including some tech giants at major retailers ran on youtube channels which promote white nationalism,

naziism and pedophilia we've seen youtube go to some -- actually, platforms that almost entirely curated by human beings, walter are they trying to get ahead of this >> yeah, but i don't think they're getting ahead fast enough i think this is a huge story because 80% of the advertising dollars in america now, including people who want to advertise online, on cnbc and great services like that, tend to go to google, facebook or youtube. those big companies. and they're done through algorithms that try to incent whatever content causes the most engagement ie, which is the most inflammatory not what's the most true and what's the most valuable and most informative and it's very hard to do that all by hand. but we need a shift so that the ad dollars don't keep going to these inflammatory sites, fake news sites for that matter, we go back to the way where the revenue goes

to the people creating the highest value content. so, what should happen is advertisers and their consumers should say if you're advertising on these sites, we're not going to buy you we're going to call you out. and that will make google, youtube, have to really address this problem, which they haven't fully done yet. >> so, hans, does this call into question the whole era of programmatic advertising we're in, the idea that we're going to follow the person, the demographic around the internet, around mobile without regard to where they actually are? they're going to see your ad no matter what you're looking at. if you've got to be careful and it certainly seems you do, about where your brand is represented, shouldn't you go to places that are curated instead of just following people around? >> michael jordan had a famous saying that republicans buy shoes, too in this scenario, both brands as well as the platforms need to do

a better job you should obviously be more careful of how your brand is being associated but if there are folks who don't mind that and still want to sell more products, that's where the media comes in and more of the third-party industry watchers come in, to monitor and report on these things. only through sort of public pressure and consumers demanding better treatment or elsewe'll continue to have situations like this the platforms and the brands both are making money from making more sales. and in the age of personalization, it's getting harder and harder to monitor what's going on. because what you see is not what other people see. >> you said it, hans, right there. that sort of sums up where we are in these times. >> yep. >> walter, hans, have a good weekend. see you next ime. >> you, too. and taking a look at shares of general electric, those are rallying today, up about 4%.

as are shares of baker hughes, majority owned by ge that's off the highs of the day. but better than expected first quarter results really leading to the rally here. health care renewables, transportation helped grow earnings oil and gas do continue to be challenging divisions. expectations coming into these results today were very much lowered and tempered ahead of time that being said, beats on the top and bottom line, the company also reaffirming its 2018 guidance of $1 to $1.07 share adjusted and cash flow 6 to 7 billion for 2018 it says it's on track to exceed its cost reduction goal of 2 billion for this year. it did, however, record or reserve a 1.5 billion. this is related to the wmc investigation that's been under way with the doj over the past couple of years due to the precrisis subprime mortgages that came out of ge.

in terms of additional updates on the s.e.c. accounting investigation that's also under way, company not giving any update on that, saying that it's still ongoing. but in the earnings call today, ceo and chairman john flannery called this the first report of 2018, said we're seeing signs of progress he also gave an update on the portfolio review, looking at all options, no sacred cows. that seems to be the term he likes to use they're reviewing a number of structures in great detail the board, including the new board members ahead of that shareholder meeting tomorrow are involved in that process that they are, quote, being deeply thoughtful about this, purposeful about this and will give you an update in the next couple of months. i also spoke to cfo jamie miller today as well. there's been a lot of focus on the dividend which you'll recall got cut late last year analysts coming into the report, whether we'll see another dividend cut geviven the cash fw

circumstances. we have no plan to cut that dividend china, they're keeping a close eye on that, given the rising trade tensions and the fact that it is such a big market for ge lastly, talked about digital you know, there was that "new york times" report that came out this morning ahead of results. sort of looking at all the cost cut that's happening in that division you'll recall a couple of years ago former ceo jeff immelt had been sort of branding ge as a digital industrial company they said it's still really important but they are very much streamlining and focusing how they're moving forward with digital and with tech and some of these other initiatives that they've been investing in so heavily the last couple of years. >> we heard a lot about it over the years. that's expensive stuff to make these smart machines we'll watch ge not far from session lows as the dow is now down 225 getting a market flash on tesla. for that, we'll go to dominic chu. dom? >> tesla is following the rest of the market toward the lows of the day.

what are the other motivating factors could be a bloomberg report, saying that tesla, the electric car maker, is facing a separate probe with regard to possibly workplace safety. this is in addition, says bloomberg, to the probe earlier this week opened by the california occupational safety and health administration with regard to alleged workplace safety violations. remember, cal osha, that regulatory body says they take all these allegations seriously. also tesla saying that for the first probe that they are cooperating with the agency but that those allegations are baseless so, something we're watching, jon, as we keep an eye on tesla shares during midday trading back to you. >> thank you, dom. ahead, still more on what apple supplier changes and iphone sales could mean for earnings, which we'll get in a little over a week and it's 4/20. snoop dogg's capital venture

firm will join us. more "squawk aeystll" raight ahead. stay with us 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. take a look at the dow laggards this morning. apple carries a lot of weight, down almost 3.5% intel, microsoft, ibm, almost exclusively tech as we continue to watch trade fears hit tech

companies in the crosshairs. larry summers had an exclusive chat with our sara eisen earlier. take a listen. >> i think the odds of recession are about 20% a year it's better than even that we'll have one some time in the next three years. exactly when, i don't know. >> major averages are sliding as apple drags the dow lower, despite those gains in other component ge joining us now for more, tom lee, head of research at fund strat global advisers. thanks for joining us here. >> thanks for having me. >> odds of recession, 20%, especially when you're looking at the yield curve and the moves there, you think that's right? >> i'm pretty sure larry was just talking about historical. i think the chances of recession in any year is one in five but, yes, the yield curve flattening is something that no

investor should be ignoring. we're at 18 basis points at this speed it could be inverted by the end of the year. inverted curve, without understanding the fundamentals, would be a very negative signal to the markets. >> so you believe in the in infallability? >> yes it is looking forward but it tells us that long-term projects have less value than short term. that's why the curve inverts and front-end loaded can actually flatten the curve. >> thought the curve could invert in six months if he's right and it does happen, why are you still so constructive >> that's an if, right it doesn't have to invert but at the speed it's going to invert before the end of the year i think midterms are going to be an important time. i think the curve likely steepens if we get gridlock again in washington. >> why would that happen, just

out of curiosity >> well because what we don't want -- we don't want to have additional fiscal measures that increase the deficit, raise our funding costs. that, again, will presht long end of the curve gridlock means nothing happens and the curve gets deeper. >> it's been rising on the heels of higher crude prices is that masking broader softness in equities right now? >> well, in the past week, maybe even the past two weeks, really fang and energy have done all the heavy lifting, right >> yeah. >> everything else has been stuck. i think it's actually really bullish for energy to rally. one, oil -- commodity related countries are 40% of gdp if oil rises, the rest of the world is actually getting better growth energy had a generational low last year. i think energy is one of these

places where the next decade could work. >> you mentioned fang being an important driver facebook held up pretty well, given all the heat that mark zuckerberg was facing. netflix had a quarter that knocked people's socks off. what does that action say to you, especially given that so many of the companies that represent fang are dealing with so many issues and still managing to power higher >> the four fang companies are five or six. these are very special companies. they do have, you know, real moats and real pricing power we actually treat it separate from tech and consumer we treat fang as almost the 12th sector some of them are expensive the real opportunity for new money is in industrials, energy, materials, financial. >> is that where you would be telling investors to be investing right now? >> yes especially if we think that the

ten year is going to reach three. then you want to be pro-inflation and pro sentiment. >> you think it will reach three soon >> i think it's a when, not an if in ten years it's 6 or 7%. >> temper once said called me when it's four, right? bill gross famously said 2.6 key levels at which it poses real competition for equities. what's the number for you? >> we've done a lot of work on statistical analysis and looking back in the '50s 4% really is the break point where it starts to deraid above four that's the critical level. >> you still like bitcoin given the conversation we're having? >> yes punxsutawney bitcoin is saying the winter is over i think we're getting a lot more signs that you should be adding to your crypto exposure here.

>> tom lee, we'll leave it there. thank you very much. news alert out of washington let's get to our john harwood. john >> jon, fascinating development in the trump/russia situation. democratic party has filed a federal lawsuit in manhattan against the russian government, the russian intelligence service, wikileaks and the trump campaign, alleging damage to the democratic party as a result of the hack in the 2016 presidential election. democrats are using this as a venue of putting more pressure on the president, on his campaign while the bob mueller investigation goes on, while the senate intelligence committee investigation goes on. not clear whether they can ever get any discovery against the russian government, for example. other countries have sovereign immunity from lawsuits they say it damaged their -- trespassed on their private

property and, therefore, they should be able to get to the russian government more significant, of course, is it singles out players within the trump campaign who the mueller investigation and the senate investigation have shown were involved in exchanges with russians george papadopolous, rick gates, paul manafort and donald trump jr. who had that meeting at trump tower. the democratic party did the same thing after richard nixon was president, after the watergate break-in and they settled with democrats on the day that nixon left office not necessarily a fanciful lawsuit but another way of putting political pressure on the trump campaign guys >> john, we'll see where that goes john harwood in washington john, thanks. our next guest says stop

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shares of facebook still haven't completely recovered after their dramatic drop from cambridge analytica revelations. our next guest's firm is calling for oversight committee at facebook good morning. >> good morning. >> since you're asking the board to take a more focused look at certain types of risk, even using microsoft's difficulties in the past with the justice department, the adjustments that they made as a bit of a template, facebook is hesitant

to do that why do you think that is >> well, i think we need to really start and begin looking at the beginning of, you know, two pieces of this what's the problem and what's the solution we filed the shareholder proposal because we think that the board really needs to have a board structure for the 21st century. so, we're seeing year after year more and more problems we're seeing privacy we're seeing fake news we're seeing ethnic violence we're seeing mental health issues and year after year we're seeing apologies from mark zuckerberg and we're not seeing the solutions. clearly something needs to change there's a lot of solutions out there right now. and a lot of the solutions we support. they're good governance structures that are being recommended. we are suggesting a risk oversight committee. risk oversight committee should emphasize is not an idea that we came up with the conference board has been suggesting that companies need to have that broad, big picture

look and really can benefit from having these risk oversight committees we see companies like banks, large financial institutions that have significant social impacts that really can benefit as well. >> it seems like the structure of facebook with mark zuckerberg basically having all the votes that matter means he doesn't have to listen how does your approach differ in a case like this do you have to make a broader public case or have the threat of something else worse happening if facebook doesn't adopt this sort of structure that you think is best >> we are patient and we are persistent and i think that's really what it's going to come down to obviously, mark zuckerberg has controlling shares so we'll be putting out our ideas. we're very much looking forward to the annual meeting may 31st to make our case, to explain to our fellow shareholders why a risk oversight committee would

really benefit the company and really help position it to succeed into the future. >> jonas, if the company doesn't take your recommendations or doesn't apply something that you would deem appropriate, taking a look at these broader issues and risks, will that impact how you're invested in facebook? >> i think it's important to realize that there are certainly significant problems and we have these significant concerns about the board structure. there is value in facebook there are things from a financial point of view, from social point of view that are beneficial and we see that value. there are these problems as well and we see this really as an opportunity for the company to make that pivot. mark zuckerberg essentially recognized this point himself when he testified in front of congress he said that the company did not take a broad enough view of its responsibilities and we would very much like him to put his money where his mouth is on that point and put in place a governance structure

that will really help it have that broader view. >> or his mouth where his money is, i guess, as the case might be jonas kron from trillion, thank you very much. >> thank you for having me. let's get a news update at about half past the hour sue herera is at hq again. good morning, sue. >> good morning, carl. good morning, everybody. thousands of students nationwide are walking out of class to demand action on gun reform it comes as florida police investigate a new shooting that injured a high school student in ocala. the walkouts are also commemorating the 19th anniversary of the columbine high school massacre in colorado china says its relations with the u.s. are at a crossroads and criticized u.s. restrictions on chinese investment in american technology it called it unreasonable, economic and scientific bullying the legion of honor award

presented to syrian president bashir al assad in 2001 has been returned to france this, after france joined the u.s. and britain in bombing syrian targets over an alleged chemical weapons attack. the french government began a formal process of stripping assad of that award before it was returned. visitors will be able to say a final farewell to former first lady barbara bush today, lying in repose inside a houston church her funeral is set for tomorrow. you are up-to-date that is the news update this hour back downtown to "squawk alley." carl, back to you. >> sue, thank you very much for that. let's get the european close as well. seema mody is back at hq hey, seema. >> on pace for their fourth positive week. i will point out we are off session highs. mario dragi on the negative impact of a trade dispute on growth more of that to come meantime, currencies have been moving, continuing to drop against the u.s. dollar. take a look at this.

a two-week low for the uk pound in reaction to comments from mark carney in an interview with the bbc, indicating that an interest rate hike could be delayed, citing brexit uncertainty and what he calls mixed economic data on the inflation front, something we've been discussing here as well carney's remarks coming ahead of next month's boe rate decision moving on to tech, european apple suppliers are under pressure today after morgan stanley cut its june quarter estimate for iphone sales based on the firm's channel checks and weaker than expected data from china. next week, european trade will take center stage, both french president macron and german chancellor angela merkel are set to meet president trump at the white house. the trade dispute has put europe in a somewhat uncomfortable position trying to protect european exports to the u.s.

while still remaining open business with china. something to keep an eye on ahead of next week morgan, back to you. >> we definitely will, seema seema mody in new jersey, thank you. as we head to break, another check on ge. it's up almost 4%, lifting the dow out of what could be a much steeper loss has the giant finally turned a corner re'll discuss that next. mo "squawk alley" after this break. i'm not a bigwig.

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we continue to keep an eye on shares of apple, down for a number reasons of about 3.25%. josh lipton joins us from chicago with more on that. josh >> as you mentioned it's down more than 3% right now, negative for the year the latest bit of downbeat news here, note from morgan stanley's katy huberty, forecasting an in-line march quarter but lowering june quarter iphone unit estimates to 34 million that is down from nearly 41 million. remember the street is at 43 million. huberty cited poor checks with iphone suppliers and weaker than expected data from china important here, huberty does remain positive on apple, saying the story remains intact, provisions are approaching a trough and buy back remains a

source of downside protection. no doubt it's been a tough week for apple. bulls on thursday, bank of america, merrill lynch and jp morgan warned their clients that e phone sales could come in below expectations after taiwan guidance citing weaker demand. apple's attempt to secure a second supplier for its high-end smart phone screens reducing its reliance on samsung has hit a snag, that lg is failing to make them, falling behind schedule. apple has that much less bargaining power over pricing. guys, back to you. >> josh, big story today we'll watch that closely josh lipton for us watching apple. we're watching ge after the company reported beats on opening and for the quarter. signs of progress in its performance despite weakness in power. we're joined by steve whitaker from ubs to talk about where the company is headed from here.

thanks for joining us. >> good morning. >> street team is a bit split. steve tusa this morning said our bearish thesis remains in tact where are you? >> about 8% upside from today. and the reason i see that, it was actually the first piece of good news, first decent quarter we've seen in a long time from ge, the absence of negative knews is actually positive when i think about what's really going on, there's tremendous weakness in the power markets. they've got challenges in multiple business units. aviation was strong. our evidence lab saw after market picking up significantly. and it did it was even better than we thought. health care was also positive. and i think as they get their arms around the cash generation from quarter to quarter, they start to eliminate some of the downside questions that are out there in terms of liabilities that are outstanding, such as the billion and a half charge,

reserve they took today. as those start to put away, investors can start to think about the fundamentals of the company again, which john flannery and his team and the new board that is coming together has a chance to really start from a much better baseline here. >> so, steve, in light of that, i'll ask the same question i asked ge cfo jamie miller earlier today. are investors going to look back on this quarter as sort of the bottom, as the quarter where the turnaround really started to begin to take root >> i think what they're going to be able to do is look back on 2018 as the bottom, right, and 2019, even if power markets don't recover, they're finding a way to take cost out in an aggressive way to still drive margin expansion despite weak power markets. that's really the trick as well as looking at the portfolio a little more objectively again.

i think that getting lean in the organization, a lot of things tell us that there are better quarters ahead the reason i'm not quite willing to say this quarter, ge capital has liabilities that have to be settled, there's still some investigations that have to be resolved down there. >> looking at the strength in aviation and health care, given the governance we got on the call from john flannery, do you think a breakup is still in the cards potentially? >> i think there's an enormous amount of value to focus i think we're seeing that across conglo conglodmerates and john is the poster child for that. it's on the table to believe that ge will continue to exist in some form, it just may be a more focused corporation. >> certainly a lot of cross currents to consider, especially after this one we'll continue to watch it steve win kochoker from ubs.

thank you. as we head to break don't miss a cnbc exclusive from federal reserve governor lael brainard that's coming up 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.

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every stay is a special stay at holiday inn. save up to 15% when you book early at hollidayinn.com save up to 15% your company isok early and the decisions you make have far reaching implications. the right relationship with a corporate bank who understands your industry and your world can help you make well informed choices and stay ahead of opportunities. pnc brings you the resources of one of the nation's largest banks, and a local approach with a focus on customized insights. so you and your company are ready for today. i'm melissa lee in for scott wapner on "the halftime report," watching this stock's next move very closely sam poser joins us live with a

big warning. that all starts at noon today on "the halftime report." carl >> all right see you soon something john boehner knows something about when he joined us last week viewer also want to know if you use. >> no. i've never used it. >> never >> never, erev used it i don't expect to. 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.

a prophetic tune from not too many years ago >> love that song. >> money -- anyway, senate minority leader chuck schumer announcing a plan to decriminalize marijuana at the federal level. pot is now legal in 39 states. this includes legal or recreational use with regulatory policies becoming more favorable, investors are moving in. we're joined by the managing partner at the snoop dogg led firm casa verdi capital. you're investing in ancillary businesses around pot, not actually in growing pot itself, as i understand it but some of these things seem like they're just, you know, regular technology companies

square for pot, for instance how exactly do you analyze companies and opportunities as being particularly driven by the growing marijuana industry >> exactly, well, we're looking at one of the most compelling themes in a generation the growth of the industry is spectacular. we're talking about a $10 billion industry today that could be $75 billion to $100 billion in the next ten years. so what we look at is how are companies going to be structurally fundamentally part of the landscape to help the industry grow. so from the company you're referring to, green bits, the recent investment that happened was announced a couple days ago. what they're doing is not only are they the point of sale inside cannabis retailers, but they automate the compliance, which makes them serve a very specific purpose for the industry itself. >> so is that compliance piece really where the opportunity

often is because otherwise, i would think these are agricultural companies or these are payments processing companies. these are companies that could serve a pretty wide swath. is it that combined with the fact they're investing in being able to know the minutia of sticky issues that this particular industry has? >> exactly the cannabis industry has a lot of regulatory issues and especially on the state level, they demand a lot of knowledge on what's happening with products. so whether it's tagging products when they are sort of six inches tall at the plant level to understand movement, to the retail level, understanding where product is moving from the shelf to the customers it's tracked on a daily basis, which makes this particular nuanced industry bringing specific technology to handle those needs. >> you mentioned regulations on a state level. do you think that the regulations need to be sort of updated and written on a federal level for this to really take off and to really see truly

meaningful adoption and sales of the sector >> absolutely. i mean, you know, we believe that it's only a matter of time for this to happen obviously, the bill by senator schumer is a great step in that direction. so we absolutely think that federal legalization will help to put us on par with countries like canada, which are already on the way to legalizing later this summer. >> do you think this administration will actually do that >> it's unclear. i mean, certainly, you know, it's been helpful to hear positive sentiment with president trump and senator gardner coming to some understanding around the federal government not interfering with what's happening at the state level. that's a positive signal whether it happens in this administration or the next, we'll have to see. >> we have seen in states where it's gone legal, the infrastructure surrounding

industry, namely financials, hasn't come to the business. and i just wonder why we would think that would be any different if there were in fact federal decriminalization. >> in terms of banks supporting the industry >> yeah, exactly >> yeah, i think that's actually a huge part of it. when you have federal legalization there, you know, our banking system is regulated by the federal government. so at this stage, they're very cautious to touch the space. so when you -- >> you think it's more -- you think their hesitation is from regulatory fears, not public relations fears? >> exactly i mean, if you look at the statistics, you know, 64% of this country supports cannabis legalization i think we are hitting the tipping point of public acceptance of cannabis, so i think now it's much more about the legalization and getting the sort of laws in check to help things move forward. >> all right well, we'll see where it goes.

thanks have a great weekend >> thank you more "squawk alley" in a mant with major averages coming off the lows of the session. s&p down just under 20 points. more "squawk alley" back in a minute

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oil was a big story from the get-go this morning as the predtweeted, took it to opec, said they're not playing by the rules. talked about fully loaded ships at sea that did take the wind out of oil sales for a while on the cusp of bogue positive now, down just 7 cents >> when you look at energy stocks, in response to the move higher, we have seen in crude oil in recent weeks, they are the best performer in the past month, this past week. this speaks to the fact when you had headlines like earlier in the week of opec looking at maybe, hey, $80 to $100 for a barrel, it's not going to be a straight shot up you know, also keeping an eye, speaking on energy prices, on ge those are higher after earnings and also baker hughes is also higher today and pivotal software, which is

trading right here behind me >> just about to say, speaking of best performers, it is up 4%. that's good for dell, which still owns a good 70% of pivotal. >> and ge is an investor there, too. >> earnings next week. 3m, caterpillar, coke, lock heed, boeing, comcast, twitter, and a lot more let's get to melissa >> welcome to "the halftime report." i'm melissa lee in for scott wapner two big movers we're focusing in on general electric and apple ge surging, but off today's highs. the stock is now negative for the year with us for the hour today, steve, josh, john, and surratt we'll get your take on both in a minute, but let's get to morgan brennan with the details on ge he's live at the nyse. >> that's right, so we had a