good morning it's 8:00 a.m. at twitter headquarters in san francisco, 11:00 a.m. on wall street and "squawk alley" is live ♪ ♪

good wednesday morning welcome to "squawk alley." i'm carl quintanilla with jon fortt, morgan brennan at ge's shareholder meeting outside of pittsburgh. the first annual meeting for john flannery who took the reigns in august a lot more is coming up. we are watching the markets try to bounce back from early losses, down about 200 points early in the session in and out of so-called correction territory. after that big move in rates we've seen, 10-year is holding above the 3% mark today that started the year as you know at 2.41 dick is the former chairman and ceo of wells fargo and can talk about the macro and financial backdrop good to have you back. good morning. >> good morning. >> lot of discussion about what higher rates mean this time around given record levels of global debt and business debt nominal to gdp is 3% some magic number for you?

>> no. i'm surprised it took us this long, frankly, to get to 3%. i think the bond market is saying that the growth, international growth, is going to continue. the stock market not so much but i think the bond market is right. i think we'll see increasing rates. you know, if you take historical perspective, the 3% is still a very, very low rate, given the level of the stock market and given the economic growth that we've seen in the last two years or last two years, particularly. >> is it normal relative to what corporate leverages and where corporate ex-financial short-term obligations are that seems to be the worry the business models built on cheap credit, when they will feel the pain much more quickly >> i really don't think so i think that, you know, if you think about it, the debt that is on the balance sheet today is at much lower rates than today.

people -- what corporations were doing when they saw these unusually low rates that they didn't believe would last very long is they put debt on their balance sheet at very low rates. you know, now they can borrow short and, you know, they're in better shape because they put this debt on, not worse shape. >> so dick, what signals are you going to be watching for in the economy for when rising rates are really starting to have a broader impact is it something in consumer behavior or what >> i think it -- in my opinion, it's how these rates relate to history. i predict the future by looking back and these are still very, very low rates, and i think you have to see the 10-year at, i don't know, 4.5, or something which is where it historically is before you get exceptionally concerned. the point is if the rates are going up because the economy is strong, that's good.

and you would expect that to be the case when you have low rates, that's a signal that the bond market thinks the economy is not going to do very well. so -- >> yeah. >> and there's other factors that you put into this these are historically low rates. i think actually in sympathy with the fact that now almost everyone believes we're going to have at least three fed increases and over 50% probability of 4, you're in sympathy with that and the whole world's interest rates are still low. you've never seen, at least i've never seen, when i've been in business, the whole world's economy doing well we have low inflation around the world, we have low corporate taxes in the united states, deregulation, things are good. >> you know, you're right about using history, although for every strategist, dick, who says that this is classic late cycle

behavior, watching rates and commodities increase and price and yields going up at this time, others say, that central banks have distortsds the cycle beyond recognition because of the tools they used over the last nine years. do you believe that or not >> that is absolutely -- absolutely they still are after eight years now the fed is still buying 10-year bonds we don't know what the market rate for a 10-year bond is we won't know until the fed quits interfering with the market and i believe that quantitative easing 2 -- 1, 2 and 3 were a disaster. we've never seen this happen and their pr departments say they saved the world. >> so how long until -- at what balance sheet level do we start to get legitimate price discovery then >> well, as soon as they stop buying, is the first thing i forget how long it's going to take to do that. i wish they would stop now then the question is, when do they start selling

and, you know, they're going to sell very, very slowly i just want them to stop buyin so we can really get transparency for the long-term bond let me just point out, never -- at least to my knowledge in history, has the federal reserve and central banks around the world interfered for six years with long-term bonds this has never happened before that's why we could get some surprises. >> i want to get in a question on the ipo market. maybe this is a stretch but there were a number of companies taking on debt rather than go public in the past couple years. do you expect that to shift, perhaps, a little bit more toward going public, not only does the ipo market seem to be pretty good right now, but now that rates are going up? >> yeah. as i said, i think the corporations were smart. they felt that these interest rates were unusually low, again because of central bank

interference you know, equity is a higher cost than debt so they did equity not only was it cheap, but there were not a lot of -- the debt was readily available for companies that didn't have at lot of cash flow so, you know, it was pretty loose during those times why not do it. >> yeah. >> they were smart >> finally, dick, one quick question on just financial names, the stocks, j pm below 110 today, goldman is below 239. you have to go back to thanksgiving i mean, once we've cleared out sort of the noise from the quarter, that's not a good -- charts don't look good over the past week. >> it's surprising they had, you know, financials had record earnings far above, you know, as you know, earnings are about 6% throughout the s&p, about 6% higher than analysts'

expectations so far, and banks benefit from rising rates. so this says yet again that the market is not perfect and these, in my opinion, physicaunless you believe the world is coming to an end, are buying opportunities in things like financials that should be doing better as a result of rising rates, not worse. >> yeah. there's some fierce trade debates going on right now regarding financial stocks always good to check in with you and we'll talk to you soon, i hope thanks >> okay. now back out to morgan brennan at the ge annual meeting where ceo john flannery just addressed shareholders hey, morgan. >> hey, jon. that's right a few moments ago in these tents behind me, ceo and chairman john flannery speaking to shareholders and retirees for the first time saying that he is keenly aware of the financial pain the company's woes have caused and discussing all of the

changes that are under way at all levels of the struggling industrial company >> it's a lot of change, change is not easy in any organization, in a large organization we have 126-year history, but we've been through this before. we understand how to evolve when we need to that's really what you're seeing in a company right now i'm confident a lot of heavy lifting going on right now but the company will be stronger as we come out of this phase. >> reporter: now at this annual shareholder meeting, a number of proposals are on the table the two biggest things to watch, the remaking of the board as that shrinks from 18 down to 12. you have eight directors retiring today, three expected to come on with this meeting that's after three other director changes late last year, including a board seat for trion partners the other thing to watch whether

kpmg stays on as ge's auditor. that is a century plus relationship between the two, but iss and glass lewis urging shareholders to vote against the continuation, in large part due to the s.e.c. investigations into different accounting issues at the company under way currently. but right now, balloting is happening, folks turning in their ballots, votes have been counted and in a short while we are expecting results from all of these proposals as this meeting continues. back over to you >> all right i know unfortunately you'll be as they come in. comcast formalizing its $31 billion bid for sky, setting up a potential showdown with fox. comcast the parent of cnbc reporting earnings and julia boorstin joins us with the latest >> hey, jon. on the earnings call this morning comcast ceo brian roberts was pressed on the company's focus on buying sky and whether they might be interested in buying other assets roberts said that they loved

comcast's core business and that the sky bid is not a diversion from that, but it's an opportunity, an opportunity not a necessity. >> the question of scale, and looking at the future, again, i don't think we have to do this, i don't think international is broadly is a strategy, i think it is a unique asset in sky's case that fits well within the mix of businesses we've already got and is aligned with our existing strategy of integrating content and distribution >> on the call nbc universal's ceo steve burke was bullish about the ad business going into the upfront ads sales period and positioned what nbc's assets are as a contrast to youtube and facebook and their issues with brand safety and data privacy. >> there's a pendulum swing that happens between traditional linear broadcast and cable and digital and i think for a whole

variety of reasons, advertise erro ers are coming to the conclusion that ought to swing back the our favor. it's not to say that it will but there are signs in people that we've talked to of a coming home to a trusted environment >> reporter: the response to a question about the health of the movie business, burke said that, though, universal, the studio is facing tough comparisons to a record 2017, the studio's model around franchises and animation is working and that studio will start to benefit from the dreamworks animation acquisition starting when the movies come out next year. back over to you. >> that is a busy day on your beat, julia. thanks for that. julia boorstin talking about comcast. our parent when we come back, twitter posted its second profitable quarter in a row after adding millions of users. shares down about 4% former chief dick costolo will join us to weigh in. take a look at dow we were down 200 or so have managed to narrow that to a

10-point loss. we're back in a minute ♪ lower carbs. ♪ lower calories. ♪ higher expectations. the light beer you've been waiting for has arrived.

introducing corona premier.

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. shares of twitter reversing to the downside after its earnings release the company beat on the top and bottom lines and posted its second consecutive profitable quarter. other number, user growth up by 6 million. julia boorstin talked to the cfo and here's what he had to say about opportunities for growth >> video is now more than half

of our ad revenue. this is the second quarter in a row where that's been the case and there's still a lot more room to improve that as we get more video and more compelling ad formats in front of our customers, our advertisers' customers on twitter >> joining us this morning, dick costolo former ceo of twitter and current ceo at core. good to have you back and good to see you. >> great to be here. >> i got back-to-back profits, dau up 10, i mean, there was some discussion about maus on the call any reason you can see for the reversal >> i think it's just the company in their rest of the year forecast not wanting to let the enthusiasm for the great results overheat too much. it's net siegel's first quarter in the chair i think that's fine and i think that's a smart approach on their part it's a great quarter and the people at the company all feel pretty good about themselves right now and i think with good reason

>> dick, with video being more than half of ad revenue now, does this cause some potential challenges in that when i think of twitter i don't think of video first i know it's a big push i know it's an area where they're looking to grow, but there could be volumeatility th because it's not yet the core of the service. >> i will tell you i take a different look at it my look at it would be twitter thrives when these like huge moments an huge events in the world are in front of all of us. the super bowl, you've got the world cup coming this summer, and boy, that's where big grand advertisers spending a lot of money on video want to be, right. they want to be in front of users when those big events are happening and that's where twitter really shines, so i look at that and think that that's a huge opportunity with a lot of upside for the company >> it's funny, dick, the sell side, gave jack a hard time for a while about operations, about

splitting jobs now it's all about improvements to the ad product that ostensibly are jack's doing. >> yeah. listen -- >> do you think things have changed? >> i'll tell you, last year, you know, when the stock was in the teens, jack can't do two jobs, you know, and where is the prg gress and the analyst -- progress and the analysts were rating the stock as a sell and now that it's at 32, because of the work he's done over the past year, it's a buy so the sell low, you know -- sell low, buy high, i'm not sure is the right approach. as you guys know, i've been on the program for the last couple years since i left, talking about the fact that jack is a calm, thoughtful leader, he's put his own team in place, and they've done an extraordinary job and he's getting all the credit he deserves now >> the stock up 100% the past 12 months see jack run i guess is the new headline

>> yeah. cramer this morning said today's result justify the run dick, on the call they did say that gdpr, some of the privacy rules, could have some impact on mau over time. how do you think that could manifest itself? >> again, i think the interesting thing about gdpr and for people who keep hearing this, it's sort of the new european union privacy regulations if you will, i dwell think those turn out to be a benefit in the competitive landscape for twitter because if you think about it, for years, marketers and others have sort of thought that twitter is at a disadvantage to facebook in terms of being able to micro target and use personally identifiable information to really get at details of who people are and where to reach them and what to say to them facebook has sort of all of that and twitter has not much of it with these new regulations, you know, the polarity is kind of reversed twitter doesn't need that information to be as successful

as they've already been, and therefore doesn't have as much work to do to be perfectly frank to scrub that information. it just isn't there already. it's these other companies that are going to have to do more work and jump through more hoops to make sure they can comply with those regulations >> we had aleksandr kogan the researcher that worked with cambridge analytica on cnbc a few days ago and he said if he were doing similar research again today, he wouldn't be tapping into facebook. they've changed the way they handle data. he would be tapping into twitter. jack on the call said that twitter is in a different position in all of this because everything you put on twitter is public by default. but are there dangers there, considering the fact that people are going to be using that twitter data set and combining it with other data sets and people might feel like they got exposed even if twitter didn't do anything wrong? >> i think because it's only your public tweets and because,

you know, lots of twitter accounts don't have personally identifiable information and there are lots of great reasons for that, people in countries where political speech is oppressed don't want to be able to be identified easily so, you know, the state police can come to their house and arrest them, that puts twitter in a great position vis-a-vis its data business because you're just getting the public's dream of publicly available tweets and research institutions and universities and others can use that to predict things like cultural trends and identify other things going on in society. i really think twitter is in a rate position vis-a-vis the data business, particularly, again, as it's distinct from the competitive landscape. >> dick, you mentioned your own tenure back then, i mean, mau, dau data was really -- that was everybody's favorite metric. doesn't seem to be trading as much on that anymore do you think that's true >> yeah. i think -- the short answer is

yes. and, you know, listen, the company is getting great credit for doing a wonderful job between, you know, anthony and now transitioned to ned, as cfo on, you know, really getting the financial part of the house in order. we were always focused on ebitda expansion and revenue growth in the early days, as you would hope the company would be, and once you get that sort of scaled revenue and ebitda expansion you can focus on gap profitability and they've done a great job of that. >> we'll note, carl, they've stopped be talking about logged out users. not one mention of all these logged out users >> maybe they're not pushing that leave that there. >> dick, move on to facebook today. monica, the head of policy management, joined us earlier today to discuss some of the social giant's recent headwinds and policy changes take a listen. >> technology is very good at helping us find some things, so if it is, for instance, a graphically violent video that

is terror propaganda and we know about that video, we can often stop it from hitting the site altogether it's much harder for us to use technology to find things like hate speech. >> sort of goes to your point a moment ago, dick, about some of the company's ex-twitter that will have to jump through more hoops as you said. >> yeah. i think that to her point, i think that machine learning has done a great job of identifying these graphic images and videos and it's just going to have to be the case that we're going to have to put machine learning to work on i dentfying problematic speech it's an issue for all sorts of reasons is that problematic speech, lyrics in a song that someone -- that are popular or is it somebody yelling at someone. there's just work to be done there on the machine learning side so that these algorithms can get more sophisticated but these companies will do it and tr tackle the problem. >> busy day in the space and we

love coming to you for insight see you soon. >> yeah. thanks for having me >> dick costolo. and before we head to break, something to keep an eye on this afternoon. apple's ceo tim cook heading to the white house to meet with president trump and talk trade cook and apple vp lisa jackson were among those at last night's state dinner for french president macron interesting to note, apple picked up lisa jackson from the obama administration where she was head of the v pa more "squawk alley" coming up.

starting a business is expensive. that's why many entrepreneurs rely on their own personal property, like their car or home computer, to help them do their work. but they might not know that those items may need special insurance to protect against costly damage, theft, or liability on the job. trusted choice independent insurance agents represent multiple insurance companies and customize coverage so business owners can focus on business. announcer: to find an agent, visit trustedchoice.com

european markets set to close in a couple minutes and seema moody is here with us at post nine with that. >> jon, european markets are playing catch-up to yesterday's sell-off in the u.s. stocks lower on concerns about higher yields on both sides of the atlantic take a look at the german 10-year yield tested a six-week high before pulling back from those critical levels. this ahead of tomorrow's ecb policy meeting the watch on to see what mario

draghi might say about the recent softening in economic data, specifically on the inflation front and how that could affect the ecb's timetable for scaling back stimulus. the euro not at lows seen since the beginning of march that's a good thing for the european export markets. take a look at credit suisse rising after pre-tax profits jumped 57% in the first quarter. helped by strength in the swiss and asia pacific divisions and in those caring posted better than expected results, up 37% fueled by strong demand for the gucci brand in north america so a comeback for gucci. sky receiving a formalized $31 billion takeover offer from our parent comcast and then saying it is willing to recommend $64 billion takeover offer of shareholders sky up 4%, shire down about 2.5% back to you. >> seema, thank you very much.

seema moody here at post nine. >> when we come back a sky showdown is in the works comcast offering $31 billion for the european broadcaster 21st century fox says it's still committed to its bid the former ceo of tivo will join us to discuss. "squawk alley" is back in a moment your company is constantly evolving. 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. he gets the best deal on the perfect hotel by using. tripadvisor! that's because tripadvisor lets you start your trip on the right foot... by comparing prices from over 200 booking sites to find the

right hotel for you at the lowest price. saving you up to 30%! you'll be bathing in savings! tripadvisor. check the latest reviews and lowest prices.

good morning i'm sue herera here's your cnbc news update at this hour. president trump says he is looking forward to meeting with

apple's ceo tim cook at the white house later today. in a tweet, mr. trump said that they will be talking about many things, including how the u.s. has been treated unfairly for many years by many countries on the issue of trade movie director oliver stone criticizing u.s. middle east policy during a news conference in tehran and commented on the ongoing conflict in syria, saying it has continued due to the creative destruction of neo conservatives in america >> it's so clear, it will be so clear in history, and it doesn't matter who's president, whether it's mr. bush, mr. obama or mr. trump, america will break any treaty it has to get what it wants but in this case there is no treaty, we're outlaws, doing something that is outlawed internationally. spanish police found nearly 9 tons of cocaine concealed in a banana shipment from colombia. a european record for the drugs

found inside a shipment container. six people were arrested in that particular operation all right. you are up to date that's the news update this hour back to "squawk alley. i will send it back downtown to you. >> all right sue, thanks so much. tim cook arriving at the white house for his meeting with the president a few moments ago. eamon javers is there with more. >> good morning. the white house is keeping a little bit mum about what exactly cook's schedule is but just a few moments ago our eagle eyed camera man did capture images of tim cook leaving the southwest gate of the white house which indicates he was in the white house already today and walking across the street to the u.s. trade representative's office there you see tim cook along with his -- what we're told is a sizable entourage, popping over across the street to meet with the u.s. trade representative and we know from canadian media that members of the canadian delegation are in the u.s. trade representative's office now as well perhaps there is an ongoing discussion of nafta taking

place, not clear if that is the same meeting that tim cook is in, but clearly there you see the ceo of apple, one of the most prominent companies, just going for a stroll in downtown washington, d.c. we know he will be back here at the white house, carl, by about 1:45, when he's going to be meeting with president trump not clear whether he will meet with other trade-related staffers here as well before then, but clearly tim cook spending a big day in washington today after attending that state dinner with the president of france emmanuel macron last night. carl >> thank you good looking out, in washington. comcast raising its bid for sky this morning to $31 billion. that's a direct challenge to fox as media companies continue it try to compete for content against the likes of tech giants netflix an amazon. we're joined by tom rogers, former ceo of tivo, former executive vice president of nbc, he's chairman and ceo of target media.

joined by l 2 founder and "new york times" author nyu professor gallagher. good morning to you. >> good morning. >> what do you think ryan roberts' game is here? he said we don't have to have sky, but it's kind of convenient this isn't the beginning of some broader international strategy clearly investors are worried about comcast spending a whole lot of money the stock has been down on that. is he signaling that this -- he isn't willing to play some bidding game here? >> well, i think i am on the side of skeptics of the value of sky, but as between disney and comcast, i come down on the side that this is more valuable to comcast than it is to disney i think both are looking at it as the asset that it might become, meaning its value in creating global content streaming services, particularly in europe, versus the asset it is, which is a deteriorating

satellite platform as we've seen here in the united states with dish, a satellite platform that's lost about 50% of its value in the last year. sky is not far behind on those deterioration dynamics >> more valuable to comcast than to disney or to fox? >> i think sky is more valuable to comcast than it is to disney. i think coto that is that a deteriorating asset, you have to deal with what it is not just what it could become and it is so far out of disney's wheelhouse to be dealing with all the issues of satellite dishes and settop boxes and truck rolls and the things that are at the center of a business like this, hard enough to run when it's a growing business, a deteriorating business is a real drag i think disney would be much better off not putting in a toper bid here, which is going to delude the value of the

overall acquisition, improve the increase of the acquisition by allowing comcast to get sky, figuring out the hulu revolution which would give it control of hulu which arguably as a content company, a play it needs, wants and could manage extremely well. >> right. >> and untangle the rights to the disney product that sky has which are critical for whatever global content play disney wants to pursue. >> scott, do you buy steve burke's argument that because of all this controversy around content on youtube, that isn't properly vetted, advertisers really will turn at least to some degree back to traditional media to spend their money >> oh, that's an extraordinary dose of wishful thinking conservative commentator, a 17-year-old loses a third of her

advertisers in seven days, of the 5 million advertisers, seven, including pet boys and [ inaudible ] stop advertising you're not going to see any slow down in business of these guys you have the two most powerful media platforms in the world that due on ply of facebook and google, a lot of patriotic commonwealth-minded ceos of advertisers that would love to withdraw from google and facebook, but they have no choice this is one of the downsides of a duopoly. people are not returning home. you will not see it in the numbers. >> and to tom's point earlier about movements in more traditional media, do you see the anti-trust threat as acute as it is in social >> you know, it's -- so everyone is trying to bulk up the thing that is driving all of this is you have -- it's the boring stuff in business that matters. it's access to cheap capital amazon and netflix have figured out a way to turn themselves

into software like companies and be valued at a multiple of revenues giving them cheaper capital and the only thing old media has at the end of the day, the best thing they have is scale. everyone is prepping for next season's cage match in the octagon with amazon/netflix and they are bulking up, getting ready for the celebrity death match that's coming our way between amazon and netflix, and all of old media that has to figure out a way to exit the declining advertising industrial complex and move to a fat, skinny, fatter bundle world of over-the-top streaming media. >> they have to figure out data i guess. >> to scott's point, fox looking to exit, is clearly a signal the price of competing in the future media world has gotten much too big. and disney and comcast looking at a stake of this size, the big media companies are saying, if you're going to win, you got to scale up big time.

one major issue relative to the kind of players scott mentioned with google and amazon and facebook, they are entering the bidding for key traditional media assets, sports included. >> yeah. >> and everybody has pointed to sky, particularly in terms of disney's interest, as the sports' interest that it has being critical one thing to keep your eye on there, is that the eu has now mandated that those kind of soccer football rights that are critical to the sky platform, can't have rights, period, of longer than three years. which means the inflation bidding cycles that you're going to see in sports rights over there, exceed even what we've seen here in the united states where you can have much more longer, you know, periods to advertise those -- amore tize those rights. >> with those guys entering, the value of that product will be diminished by virtue of that ongoing bidding cycle. >> we will leave it there.

not the last time we will be talking about m&a in the media space. thanks >> thank you. >> we are watching ge's annual meeting, of course let's get back to morgan brennan who is there live in imperial, pennsylvania hey, morguen >> hey, carl so this meeting is still under way in these tents behind me right now. currently ge management is answering questions being put forward to them by shareholders who are really meeting ceo john flannery for the first time today. they're also counting up the results for all of the proposals that are on tap coming into this annual shareholder meeting we're expecting those preliminary results in just a little while but as all of that happens, we've been here since early this morning, hundreds of shareholders have showed up for this event today we've spoken to a number of them many of them are ge retirees and i'll tell you this area behind me was full of many of those retirees who were protesting here ahead of the meeting. many are very concerned about the company and the company's woes and the impact that has

been having on their retirement and actually, as you can see behind me right now, there are still some protesters here this is interesting because these are protesters from -- current workers for ge they work at the erie, pennsylvania, locomotive plant and their union president peter nollton tells me this is the first time active employees of the company have come in an organized manner to a shareholder meeting. he says they're here for two reasons. first, the fate of the transportation business, which john flannery has said is on the sale block, and secondly the decisions ge has made in the past regarding locomotives and the transportation business. he tells me the work force in erie has been cut in half over the last several years, so these guys are out here because they're concerned not only about the fate of that locomotive facility but what it means for a community like erie where ge is such a dominant force. back over to you >> morgan, thanks for keeping an eye on that for us at the ge meeting today. a lot more "squawk alley" still to come.

rick santelli, what are you watching today as we see the dow dip a little more here >> well, i'm watching the relationship between rates and the equities relationships change over time especially with interest rates in the economy we're going to talk about all that after the break

anyone can get you ready, holiday inn express gets you the readiest. because ready gives a pep talk. showtime! but the readiest gives a pep rally. i cleared my inbox! holiday inn express, be the readiest.

i'm scott wapner coming up on the halftime report is this as good as it gets tore stocks why some are saying the market could be peaking our call of the day is a bullish one on a big internet name

we'll debate it to see if the traders agree with the analysts and john and pete with their daily dose of unusual activity see the names, see the moves, and you'll see them in about 15. >> let's get the santelli exchange good morning again, rick. >> good morning, carl. there's a lot of interest in the reach of 3% and i think it's very much warranted. there's also a lot of interest in the notion of what central banks are doing and how it impacts interest rates remember, keep it simple used to be a time where there was a self-adjustment process to the fixed income sovereign debt markets not only domestically but globally meaning that if the economy slowed down, if our domestic economy slowed down rates would reflect that and move on. that's a good thing. you know, there's a form of supply and demand just like if you have too much corn, too much wheat, there's a self-adjustment. the problem is, let's keep it

simple follow the arrows. the relationship has changed because we now have greater supply which we all know greater and we have less demand, so ein keeping it simple it's hard to run away from the notion that rates aren't going to do more. the fed is going to be buying less treasuries and defendadefil warrant putting more out there when we think about it in simple terms that relationship is less efficient because of central banks and what they tried to do to save us after the credit crisis so where is the next big resistance level in treasuries it's all about time. okay real quickly, this is a chart, a 10-year chart, but it's a monthly chart. now when you look at this monthly chart, you look at some of the key areas and what you find monthly means that every month you put a dot, every one of these a dot for a month well, the most significant recent low was back in 2003 at

337. but if you look at that same period on a daily chart, that point comes out to 311 because this is a daily dot every day. why do i bring it up this truly is the resistance level to pay attention to. go to your monthly chart and check it out for yourself. jon fortt, back to you. >> i'll take it. we love when you go the white board. rick santelli in chicago. quick programming note as go to break, tomorrow "squawk on the street" has a very big lineup don't miss the ceos of amd, chipotle and union pacific that's all tomorrow on "squawk on the street. dow down 62. we'll be right back. that'll crack this case wide open! turns out the prints at the crime scene- awwwww...did mcgruffy wuffy get a tippy wippy? i'm serious! we gotta move fast before- who's a good boy? is him a good boy? erg...i'm just gonna go. oh, you wanna go outside? you gotta go tinky poo-poo? i already went, ok? in the bathroom! as long as people talk baby-talk to dogs, you can count on geico saving folks money.

fifteen minutes could save you fifteen percent or more on car insurance.

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. market's been testing some levels, trying to bounce in the case of the dow, briefly positive nasdaq, though, down about a w arter of a percent dodown 111 we're back in a minute

welcome back which companies are poised to profit from president trump's steel and aluminum tax kaley tausche is outside new orleans with that story. kayla. >> well, it's a surprising set of companies wrrg right behind me on the mississippi river, the largest stealth stash of aluminum is hidden in plain sight. we were turned away on the ground, but we went up in a plane. what we saw from the air was unmistakable 450,000 tons, half a million tons, football fields of bars and beams that trading firms have been holding to try to sell once foreign supply slows down and prices are driven up this week, the spot price on aluminum globally fell as treasury signaled it may relax sanctions on a major russian supplier but the surcharge to get

aluminum here in the u.s., which is known as the midwest premium, it has not dropped it has more than doubled since january and remained elevated which makes the sale of aluminum here in the u.s. extremely profitable we spoke with amos, a local leader here, and he said while port actativity has increased, h hopes the tariffs eventually bring better paying manufacturing jobs >> in my opinion, those would be better jobs to have than just offloading of coils of aluminum or sheet metal >> now, ironically, because the price of selling aluminum here remains high, analysts say stockpiling will not stop potentially an unintended consequence of the tariffs going into effect. back to you. >> important story, kayla. thank you very much. kayla tausche. sticking with trade, shares of rockwell animation moving higher, reporting high growth in china and latin america.

joining us is the chairman and ceo, blake moret good to have you back. good morning >> thank you good morning to you. >> nice beat on eps. pre-tax margins up you raise the guide. there's a div hike what do you say to people who think that manufacturing is actually stumbling in this new environment as it relates to trade at least >> well, we think we're in the early stages of a period of manufacturing expansion. and we support that with the indicators that our business is most closely aligned to, things like industrial production and also in talking with our customers what their plans are for investment and productivity. >> we have seen some clues, though, out of empire and philly, some of the regional manufacturing surveys that aren't exactly showing enthusiasm is that just about concerns in the near term about ariffs >> i think the uncertainty about the tariffs that have been applied, the tariffs that are

being contemplated certainly isn't great for the market, so the sooner those can be resolved the better off we'll be. but the basic need for productivity, to be able to do more with less, to be able to save money, get to market faster, those principles remain constant >> blake, the automotive business remains challenged. i wonder how that fits into the work you're doing in silicon valley you set up this electric vehicle center do you expect that business to turn around or do you think it's changing so fundamentally that you need this electric vehicle work, maybe some autonomous vehicle work, to get the business going again >> so the automotive industry has long been a cornerstone of our prosperity and it remains so today. what we're obviously seeing is the dynamic of new ev production becoming a more meaningful part of the overall business that we do in addition to traditional automotive projects and then

servicing a very large installed base what's different is there's so many new players it's not just the traditional automotive brand owners, and tee be able to engage with them as well as importantly their tier supporters who have set up shop in the valley to be able to co-innovate with the customers as they look not only at new technologies but also new business models. >> blake, we have been paying a lot of attention to input costs ovthe last few weeks, whether it's shipping or energy or raw materials. do you think this change -- if we get some resolution in the trade conversation, in the tariff conversation, does that reverse or if not, how much final stage pricing power do you have to pass that along? >> yeah, so first of all, the largest impact we believe will be what it does to our customers' spending. we're an intellectual property

company, so we don't use ourselves large amounts of iron and steel and aluminum, so it's really going to be the impact on our customers. we do believe that as a global company, we need to be able to manufacture and source and sell our products around the world, and we also need to product our intellectual property. we remain dedicated to the principle of free trade, where companies can bring innovative products to the market and compete and win by being able to provide a competitive cost at high quality >> certainly that's the magic elixir for the economy at large. stocks doing pretty well today appreciate your time thanks for the insight on the quarter. >> meanwhile, dow -- >> good talking to you >> dow flirted with positive action briefly going green, but back down 127. we're going to find out tonight if the earnings parade can help

again with facebook, ford, qualcomm, visa, chipotle, and more >> virtually, we'll get apple, and that talk is higher by about a percent as tim cook is in washington meeting with the president among others >> don't go too far from your screen let's get to the judge and the half back at hq. all right, welcome to "the halftime report. i'm scott wapner our top trade this hour, is this as good as it gets that's the question on the minds of investors today with stocks trying to bounce from tuesday's big sell-off, not doing too well at it right now dow down 128 points. s&p is negative by nearly one half of 1% with us, john, john, pete, ian, the co-head of equities and kevin o'leary is here, the chairman of o-shares etf and a cnbc contributor stocks are getting beat up a bit again