the yield is slightly higher than friday at the close all of this are things we'll be picking up with squawk on the street in a moment be sure to join us tomorrow. we have a lot to talk about tomorrow for now over to "squawk on the street." ♪ welcome to "squawk on the street." i'm carl quintanilla with jim cramer and david faber the trade war is on hold with chinese. europe has gains german markets are closed today. ten year below 308 highs on italian bonds road map begins with a china trade war on war min knew shin saying no tariffs yet. china actions and north korea will be key, the president said.

the company reaches a deal to merge transportation unit with labtech and google the subject of 60 minutes last night highlighting the company's power and whether it's stifling online search competition stocks are poised if are strong open after the treasury secretary today said the u.s. trade war with china is on hold. discussions have resulted in meaningful progress revolving more than increasing exports take a listen. >> talked about technology transfers. we talked about market reforms we talked about then lowering tariffs, opening up markets to u.s. companies so i think we've made very meaningful progress. now it's up to us to make sure we can implement it. >> and up to the markets to debate what exactly we got here, jim. >> yeah. we talked about it we talked about it of course they talked about it but did they come to an agreement? that matters

what bothers me tremendously is the two wins with agriculture and energy, well, we don't have nearly enough energy to make any impact in terms behalf we can sell you can fall back on l & e they're spoken for. >> they are the two big exporters. well, what to come is free report and the one, of course, that exists. >> right. >> and those are to your point, those are predone years in advance. years out. >> yeah. and the big project is all spoken that's l & g spoken for. they would never be able to get the money if it weren't -- >> can they sell more agricultural products? well, what does that do? so what they opened up to more ag it's not like we -- there isn't 20 billion of ag. >> they already tripled their soy purchases from the russians. >> yeah. if they knocked out every single contract they currently have to

import ag and we sent them ag, i don't know whether we would have any ag for this country. these were not wins, so to speak. what do they do about trying to make it so they don't steal our intellectual property? well i don't know how do you trust an verify that kind of like anti-missile treaty the market wants an end and that's what we're seeing wow, it's an end if that's the end, i guess we kind of didn't get much. but i know that's hearse but i'm looking at the two different things we're suppose to have gotten energy the oil is spoken for. everything is spoken for. >> let's say that doesn't amount to as much as the administration may say. we move on from the rhetoric of a trade war and it's a headline number that doesn't live up and nobody checks on it a year or two now, it's better for the stock market, isn't it >> okay, two different worlds. it is great for the stock

market because basically what they're saying is there's a frame work if there's a frame work, there's not going to be a breakoff of talks, to so speak and there will be something that comes out. i know there was a group within the white house, which larry kudlow is not a part, that pushed out gary cohn he would have liked the deal very much, i believe former goldman sachs person widely viewed as a globalist there are people in the white house are worried about what the plan is to take our intellectual property and i think it's -- if this is the case, then the soft line, not the hard line won. and we're off to the races for the stock market i wish that we could clarify exactly what we got. because i don't see anything. >> certainly no dollar figure on that and to your point, i mean, again, i'm quoting dan d'amico this time because he's vocal about it did the president blink? china and friends appear to be carrying the day

there's that component within the white house that said that the tough work still remains undone. >> and some division in terms of at least the language we've gotten from mnuchin versus lighthizer, for example. some questioning whether everybody is on absolutely the same page. or how big the discrepancies is between the two. >> ambassador lighthizer comes out with comments on saturday. i guess we'll be down at the open and secretary min knew shen spoke and said we'll be up i found myself thinking what if mnuchin had spoken on saturday and lighthouser spoke on sunday. >> mnuchin would come out on sunday. >> the whole thing would have had no impact whatsoever the fact is, and larry kudlow comes on at 10:00 and moves it back there's no doubt in my mind that there are people who are not

happy within the white house, but there's also no doubt in my mind that wall street laps it up if we get this and talk about how good business is in this country, wow and if we're not going to have a slow down of world trade, wow. so this last comcast -- >> yes. >> they're not minded to intervene for regulatory standpoint on a comcast offer. >> yeah. we're awaiting the regulatory approval on fox's bid for sky which is below that of comcast much will take place in early to mid june we'll get more clarity and a lot things involved in our parent company including the potential bid for fox assets. >> when you hear secretary speak this morning what you hear is win-win i want to know what we want.

i want to know because i can't figure it out. >> the chinese, according to eunice yoon this morning are framing it as a win-win. we're not selling less we'll buy more we probably would have done anyway. >> right. >> there's no curves on the high-tech. >> no. >> that's what light heister his focussed on, in particular the forced opening of your different systems to the chinese and things of that nature. and not making progress on that, which the administration has said many times, in which they open the 302 investigation on is one of the keys in terms of really taking prosperity, future prosperity from the u.s. >> you're dead right i'm confused that's all confused because this energy component, which was mentioned time and time again where is that what are they saying trade in 2021 will ship some natural gas

of which is one day's worth in china? >> apparently we got a lot of l & g in alaska. >>well, we don't have a way to get it out of there. >> not yet anyway. >> everybody wants to be happy, i'm willing to be happy. i think it's just nice. >> we're going to talk to kudlow at the top of the hour don't miss it. ge is up in the premarket. the company reached a deal to merge the transportation division with wabtec the latest in a series of moves to prune the portfolio shareholders will get a 50.1 stake in the combined company, david. as you said, likely more to come. >> yeah. we've been talking about for some time ge is looking at the entire portfolio you had a number of new directors come in. the guy who ran data for many

years. they're taking a look on things. what i heard, the company is moving what conceivably will be a far larger announcement about its future that might involve other potential divestitures we've said this -- i've been saying this for months this, however, is one that many anticipated, jim, would happen, but the sense is that the price that they're at least -- according to the business, it's a reverse morris trust it won't be taxable to ge shareholders who will own 50.1% of the company and get a payment to ge, as well, from wabtec, this is a number they say, above, what analyst said estimated the business was worth. they're getting a positive performance this morning in the stock morning, at least before we start trading. >> we should remember the ge comcast deal

where you basically at that point it was 51 -- 50.whatever it's more owned by ge. but the $2 billion and change is what i care about. because you're chipping away at what people are worried about near term. why do we emphasize steve tu is a so much? he was dead right the whole way down he came on our show and reiterated his negativity. now we're beginning to say, wait a second maybe there's a $15 floor and they keep doing things right and the bears have to cave it's a bull/bear story look, did they get a good deal they got a better deal. >> right. >> i don't know how they end up on winding this. how do they unwinder baker hughes let's not obscure things best thing that happened with ge is $72 oil that was the win for them.

>> yeah. >> also, almost got back to where it was the previous ceo did a lot of things in oil. >> you forgot his name. >> no. i'm a diplomat i gave a commencement speech this weekend i'm a diplomat like begangun gh. >> ge's managers will be part of the senior management team. >> the ceo is from ge. a ge person. >> i thought it wasn't i thought it was the current guy. at wabtec rafael santana. >> yeah. the guy is running currently from wabtec. >> raymond bedler. >> and talking about a $1.1 million tax benefit the synergies. again, it goes to the idea that, okay, the assets we have are worth more than the market. >> yes. >> it's going to be levered

about 3.4 times. it has fairly high free cash flow characteristics they expect to delever it quickly. and the key is they're at the bottom of the trough they have the affected multiple on wabtec's stock price overall being applied to the ge business. >> do you think is says what we're doing is not valuing the current divisions correctly? >> maybe. >> right. >> maybe >> depending on what they do do they do something with aviation i'm not saying they're going give us an announcement. >> what is aviation worth if it was out there on its own >> i thought it was worth the company. >> i know. >> there's a lot of debt >> and it becomes an issue. >> two out of three jet engines in service are theirs. >> yeah. could you do a reverse trust with aviation sometime is there something out there that would work? >> and steve would have to say,

listen, crow isn't the best tasting. >> ouch. >> wow jim mentions the commencement speech at bucknell's 168th commencement. didn't take place yesterday. the keynote was delivered by our own jim cramer spoke about the lessons he learned and overcoming failure to achieve success. >> when i finally want to do a job it was justice system. i defeated yielded the victory first lesson, it's okay to fail! but it is not okay to quit [ applause ] you have more strength within you both physical and mental than you know. but use it more wisely than i did, please. >> jim's stepdaughter charlotte was among those graduating his wife lisa is a trustee at the university an em passioned speech. >> you made my day it was charlotte's day

not mine my wife's day. not mine i was thrilled for the opportunity and the president does a great job my message was a simple one which is that i had a lot of reversals and i got sick and i did -- i failed. but i kept going and i just refused to quit and that's what i want people to understand don't give up on your dream because you fail once, twice, or three times. >> that's a good message. >> i brought my 48 rejection letters with me. they were yellowed. >> that's what you were holding. >> yeah. it was every single rejection letter including one from the philadelphia that said i have to be discouraging. [ laughter ] what a great message for someone coming out of school i've got to be discouraging. >> how many of those places exist anymore? >> i say cramer won! when we come back, is google

too dominant critics of the company sounded off last night on 60 minutes we'll tell you what they said. also, we'll talk trade with the chief white house economic advisor larry kudlow at the top of the hour. dow hasn't been above 25 k since march 2016 "squawk on the street" back in a minute 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. holiday inn express, (slow jazz music) ♪ fly me to the moon

♪ and let me play (bell ring)

google was the subject of a 60

minutes piece last night a number of critics said google is stifling competition. among them was the cofounder of yelp. >> if i were starting out today, i would have no shot of building yelp that opportunity has been closed off by google and their approach. >> what way? >> if you provide one of the great content that is lucrative to google and seen as potentially threatening, they'll snuff you out. >> what do you mean? >> make you disappear. they will bury you. >> google responding saying our responsibility is to deliver the best results possible to our users. not specific placements for sites within our results >> i remember when jeremy's stock got hit because of this. and this was nothing new whatsoever so let's make that point this was a long standing play from jeremy.

i understand they did change the algorithm and it hurt it. >> this is something we'll discuss more and more. we have already over the last year, i think, start to focus on the market power you know, on squawk allie, karl, you have people on to talk about potential stifling of google or amazon i did think it was interesting take a listen the treasury secretary joined the squawk gang earlier this morning they asked mnuchin about his view of the tech giants. he engaged on it take a listen. >> i think these are issues that the justice department needs to look at seriously. not for any one company but, obviously, as these technology companies have a greater and greater impact on the economy. i think that you have to look at the power they have and it's something that the justice department, i hope, takes a serious look at without me making any comments whether they

should be or shouldn't be. these issues deserve to be reviewed carefully >> i hope it's something the justice department looks at. that's not his area, as he said. still interesting here. >> i think that the administration has always said these companies do a great job the treasury secretary out of sync, i believe, with the notion that anybody other than the justice department can comment on this. it's none of the treasury secretary's business. >> maybe true. that may be rue. >> i think he watched 60 minutes. >> he did. he said he hadn't watched it. >> okay. he read the transcript -- >> no. >> why did he comment? >> people are aware of this. it's not an issue we're discussing with regularity. >> but still there was nothing new. i mean, maybe we're adopting -- maybe european attitude toward business.

>> we'll find out over time. >> we cave to the chinese. that would be a narrative. that's not my narrative. we'll get cramer's mad dash and count down to the opening bell in a moment. take a look at the premarket, and the exchange this week or today celebrating fleet week with the united states navy, united states coast guard, and the united states marine corps.. they'll help ring the opening bell in about nine minutes

all right. a little more than six minutes before we get to the start of trading this week. as we almost wrap up the month of may here. >> yes. >> i want to talk micron. >> great news today. micron is hosting an analyst meeting. if they raise guidance dramatically, earnings will raise from 3.12 to 3.16. people were thinking 276. >> you talked about it last week on mad dash. you spoke about it positively. >> yeah. i said it's going up for them to say it's so strong will reverberate materials reported last week and people didn't like what they said because of some issues involving display chips. but that's not this. this is flash. flash is okay. you're going to see the semiconductors and even some of

the semiconductors thrown away last week. i think this is more substantiative why tech will move up. people will say wow. there must be incredible demand. we were concerned last week. very bullish. >> okay. we'll keep our eyes on micron and ose soatthascied stocks. we have an opening bell five minutes from now stay with us

hi, kids! i'm carl and i'm a broker. do you offer $4.95 online equity trades? great question. see, for a full service brokerage like ours, that's tough to do. schwab does it. next question. do you offer a satisfaction guarantee? a what now? a satisfaction guarantee. like schwab does. man: (scoffing) what are you teaching these kids? ask your broker if they offer award-winning full service and low costs, backed by a satisfaction guarantee. if you don't like their answer, ask again at schwab. if you don't like their answer, jeff and market volatility into retirement. isn't top of mind. that's because they have a shield annuity from brighthouse financial, which allows them to take advantage of growth opportunities in up markets, while maintaining a level of protection in down markets. so they're less concerned with market volatility and can focus more on the things they're passionate about.

talk with your advisor about shield annuities from brighthouse financial- established by metlife. . you're watching cnbc "squawk on the street" live from the financial capital of the world the opening bell in a couple of minutes on this monday morning not a whole lot in the way of earnings or macro data but the trade deadlines are helping futures. judging from the way they stand now, close to a 25k at the open. >> very significant day. i think a lot of money is going to go to big caps. a lot of money that was about i would say the caterpillar, boeing, back in play these chinese situations we always see the trade off of. the ag story could be a big one for deere which is up nicely mostly what it is a sigh of

relief day they're we're not going off the cliff, as some might of have thought. we're trying to get, we were trying to get what it means for alaska in terms of natural gas what it means in terms behalf we can send from the free port. i'm sure you can say it was a big win but a lot of this had been talked about before but there have been issues i think we'll say we're past that and if we're past that, let's go back to what was so good that's what i see happen. >> okay. i think better moment to buy than this. >> okay. yeah. >> you're nodding. >> i'm trying to understand the real implications. we won't know for years to come. >> right [ applause ] next week we'll get a different

tweet. >> thank you well put with that caterpillar is up 2% deere up 2.5 boeing up 2.25 s&p at the bottom of the screen. [ opening bell ] the members of the u.s. navy, coast guard, and marines ringing the bell thanks to them, as always. and the nasdaq is electronics manufacturing specializing in communications network and semiconductors we'll watch the space, as you mentioned. my gron guidance a few moments ago. >> yeah. not to mention nxp a great parameter how things are going with china is up almost 3% this morning. >> yeah. nxp a deal we've been watching for i think it's almost years now. >> yeah. up from 92. >> up from 92. and took out a couple of hedge funds along the way. took out a number of trading

desks. it's people on trading desks it spread so much pain now it's back to 114 127.50 the deal moves up on the hopes that things with china are getting better and therefore it would no longer be caught in the cross fire not much on zte. >> no. it seems to be connected to. >> yeah. and what is distinguishing between? that it's a regulatory issue >> yes. >> not a trade issue. >> correct. >> and yet it's very much when it first happened thought to be a trade issue. >> it was thought to be connected overall. and wilbur ross took pains to say it's outside of the framework of the trade talks it does appear that xi asked trump to do what you can here to help us out. we're going to lose a lot of jobs when zte can no longer access u.s. components and therefore has to basically shut down. >> right. >> because it was violating various rules regarding shipments to iran. >> right.

>> that's prior. >> i find, look, we can do it another way. there was group who felt that they had to win on trade but it would have hurt the stock market and there's another group that can claim a win on trade and get the stock market to be good. and i think the president was sensitive to what would happen and i say that because the president said he was all the way when it came to the statement. and the group that wanted the stock market to go higher prevailed. how about that >> boeing is up. we didn't talk about it being a big beneficiary perhaps increased orders perhaps the market plays that possibility. >> it's a situation if there were many buyers if china didn't want it but the market was concerned that those buyers would be -- and now they're in great shape. i think, by the way, if the president said we won the right

to be able to make so the chinese are not going to build planes and they'll buy from boeing, i think a lot of people would have felt better we know that the chinese are out there trying to build planes. >> yeah. especially wide bodies. >> yeah. along with robotics and ai and new energy. >> those would have been big wins they're suspended and making planes and the planes would have been boeing. i would have said wow what a win. that's a win. >> we'll ask larry how close they got to some dollar figures in terms of purchases. when we thought it was the story last week, people pointed to boeing because it's a lot of money you got to make up. >> yes and a plane is an easy way to do it for the time being all 30 components on the dow are green. cat and boeing are leading the charge. >> i think it's incredible people decided it's over let's move on to the next. nafta and let's see how nafta goes. >> right. >> mnuchin was not as optimistic, at least didn't sound as optimistic.

>> no. it will be very confusing because a lot has too do with autos and the german companies and bmw and mercedes continuing to build in mexico and the president was able to get a floor plan squelched to mexico that will be front and center. but the idea that we won against china is in the air. >> regardless of whether we do. >> right well, i think a lot of people in american business, particularly in technology are more focussed on the theft of intellectual property, the inability to actually do as you want in china as the company would have have to share so much there and it's not clear what progress has been made on that front or what is yet to come. >> right a couple of calls to get to. snap they go to neutral. for over a year. >> i loved that report because basically this is what analysts should do that's what i wanted tusa to do. say listen we said to sell it.

we said at 20 it was not that great. and, you know, we wanted to declare victory. they're trying but there's no sense for us to keep a sell on it. and that was just really good research we got you higher. we're not going to stay negative that was the take away. >> i think their language was point made that's what they believe they have done. >> how great when great research firm says get out of this. and then when it gets to ten say we don't care. that's good research. >> right as opposed to being attached to your call. even when it's a great one as tusa was on ge do you attach yourself to it too long in part because it's helpful for your image, your profile, and ultimately your compensation these are analysts not getting compensated any longer that changed a long time ago if they want to make money, it comes to other things. >> right very much so it seems to be more important than ever, which is shocking to

me. >> you know it. >> yes. >> on the flip side b of a cuts campbell soup to sell. they say too early to buy. shares, of course, down almost 40% in the past year. >> down another 2 plus percent today. >> pine on that that change in leadership in the quarter. >> that conference call was a call basically we're in disarray. can we have a little bit more? no they don't have a strategy i remember when david was here saying they paid a prettiy penny. >> yeah. the cover bid i'm told fairly it was a big differential between what they paid and what the runner up bidder was willing to pay. >> not true negotiations and they did say that the dividend they're going to stick by th dividend chb is important.

but, by the way, you remember they went toward fresh food and snacks what you fell -- i don't think they meant to say this was that basically you could read it as, hey, we screwed up and maybe we ought to go in a new direction. >> what direction would you have them go in to staunch the losses they were seeing in share from their old business, so to speak, which was putting a lot of salt in the can. >> i don't know. thank heavens i'm not there. because i wouldn't know what to do i think that it was a good acquisition and they haven't been able to make money with it. i think snacking, as we know, is something that americans like to do so that was a good idea. but they just felt that we need someone new. it was unceremonious. >> campbell is a bite-sized snack for a company.

>> a sears situation >> no. >> i'm saying versus what it was. i didn't mean sears in terms of -- >> i'm just saying -- >> campbell's -- >> i could come along and make a bid if they want to. >> the family never wants to sell. >> no. they haven't wanted to. >> it's time what i read the conference call i would have said, you know, we tried. let someone else try we tried. >> dow up almost 300 25k for the first time since march 16th keep your eye on that. >> remember it was over? the market was over? it's clearly not over. and everything is reacting to the deal like suddenly the stock is going up it hasn't been going up. do people say wow schaneer that's spoken for, too the market is so bullish and you start thinking where was the people -- where were the people who said when the ten year gets to three we're done.

where are the done people? what happened to the done people >> i don't know. china trade war. we're done there were so many people who were done. we're not done will those people come on say, you know, -- >> we'll ask know how many people shipped to bitcoin. >> we're hanging above 3% a lot now lately. >> right where is bitcoin >> i don't know. i lost sight of it. >> heads bitcoin wins. tails stock market win >> not my thing. musk unveils new specifics for the model 3. he'll want to sell a higher priced car before he sells the $35,000 model that was touted for awhile upping the chart 500 the debate rages on. >> musk seems to have a new announcement when the stock is headed lower he -- the specks look great.

a little expensive it goes zero to 60 in record time and just keeps the balls in the air. >> he does he said shipping a minimal cost model three is the path to losing money and dying, in his words. you want to sell a higher margin car before you start selling a lower margin car >>well, that wasn't his strategy he changed his strategy when it suits him. it's his company it's a private company still waiting for the sugar daddy to suddenly appear. >> somebody that will say i'll do a preferred or something like that give you another $10 billion or $5 billion >> yes some company with a long-term vision. >> maybe the vision fund. >> bad vision fund. >> it's possible. >> he's got another one coming. >> yeah. >> musk just under shorts he can put out a press release and then

everything is fine again imagine if ford came out and said, you know, that $30,000 car that we -- that's $70,000. okay you know, it's better than we thought. it's $70,000 that's fine. chevy volt $80,000. i mean, these are amazing things no one can get away with this. mary barra if she could say i'm changing my mind people would call -- >> i know. tesla or netflix or amazon are judged very differently than their competitors, so to speak. >> right they get the ultimate free pass. now amazon and netflix, to their credit, amazon's credit -- >> and they're growing incredibly quickly amazon and netflix. >> 40% growth. amazon makes money that distinguishes from tesla. >> yeah. >> don't you think it

distinguishes? >> yeah. i don't mean -- versus their competitive set, they, however, judge differently. amazon versus walmart, for example, or netflix versus any other media companies. but not to say they're similar to tesla. >> if jeff bezos said i have a rock ship if anyone wants to go to the moon, sign up the line would be long and then he said we have three rocket ships. he would say he did it if musk did it we would say yeah he's got it. and say i can do it twice as fast as bezos. people would say okay yeah. >> keep our eye on tesla today your point about the call of musk continues. >> yeah. >> let's get to bob this morning. hey, bob. >> good morning. a nice move to the upside. the right sectors are moving

i mean sectors are moving. we have semiconductors moving up, industrials moving up, energy materials is all of your group. take a look at the big industrial names of course, this is sort of trade related but caterpillar, deere, boeing doing well. we have new highs in the industrial group csx, union pacific and the railroads are at new highs textron at a new high. semiconductors not breaking out in any big way but the move that the trend has been decidely up in the last several weeks. so micron with the great guidance this morning is sort of leading. intel and invidia, the whole group is moving to the upside here let's look where we're at. we're at an interesting moment now. because the market is coming back to a bit where stocks are because sick kls are leading there's some hope we will not have a trade war more importantly what is going on elsewhere

commodities. three-year high for that the u.s. dollar had a one-year high the ten year treasury is near a seven-year high. what we've got here is a rising stock market which rising interest rates that's a very interesting scenario now you can do fine here as long as the economy keeps improving if you don't, then you've got a lot of problems. we have a lot riding on a slowly improving economy now. you see what is going on watching the market overall. high data and low volatility they tend to slow down a little bit. there's where we are so far in the last month here. tech stocks, energy stocks, materials, and industrials all the stocks have been moving forward. if you look at the high data versus low volatility. these are stocks that generally have momentum. there in the last few weeks it's the white line the high beta names. the microns, lab research, the netflixs of the world. they have been back the low volatility names the companies like coca-cola, exxon, pepsi,

they tend to basically move sideways at that time. we have a real biforindication in the market going on back toward the traditional and particularly the high beta names. we're basically done with the first quarter. here is the key, companies who have given generally positive guidance about the second quarter are outperforming those that don't we have 38% of the companies had their estimates raised for the second quarter based on what is going on in the first quarter in the commentary. and year to date they're up nearly 6%. the group estimates raised for the second quarter groups that did not, about 46% are trading down 3%. there is biforindication earnings matter. indexing hasn't taken over the world at this point. and companies that are guiding positively are seeing estimates move up and their prices move up that's going to continue into the second and third quarter the good news is by and large

the guidance is pretty good. just over 300 points now carl, back to you. >> the bond pits this morning and check in with rick santelli at the cme group in chicago. >> good morning. rates aren't doing anything aggressive, but they're holding on to what cumulatively has been an aggressive move up two basis points but 30 year bonds are up one they had an important level last week in the form of 3.22%. that was the high. it took it out but it eased back a bit and that's something to pay attention to one week of two-year note yields, even though we aren't doing anything big today, we held the gains something interesting is happening. if you look at bund yields they were down three basis points from 58 to 55. it's over 250 basis points it's a three-decade we have to

go back to 1989 to find a wider framework for the relative value between ours and the european curve. something to pay attention to is the italians and how that's figuring in. of course, it made all the news. the new coalition prime minister, all of this is in the news but what isn't necessarily so much in the news is how nervous the relationship with the eu may be as their rates now are over 230 basis points and continue to rise that's a two-year chart. these are the highest yields since july where the congestion is in the middle of the chart. let's switch gears to the currency in europe that's one week chart of the euro versus the dollar not looking so good. one week of dollar yen we're switching it around. it's proactive dollar. you can see how well it's performing against the yen and some of the trades reversed put the yen front and center along

with the euro by international investors in 2017 to dabble in that was europe. and let's look at the dollar index. since november 1st, 2017, we can see at the highest level since december but maybe the most interesting fact here of all is not only is the dollar value continuing to move up, everything from corn to gold seems to be moving up, as well, especially in the energy complex. carl, david, jim, back to you. >> all right, rick talk to you in awhile. when we come back, the president's chief economic advisor larry kudlow will join us talking about trade fuelling this morning's rally and the s&p exactly a two-month high going back to march 21. the dow a little bit longer. high since march 16. we look at 25k once again. whoooo.

when it comes to travel, i sweat the details. late checkout... ...down-alternative pillows... ...and of course, price. tripadvisor helps you book a... ...hotel without breaking a sweat. because we now instantly... ...search over 200 booking sites ...to find you the lowest price... ...on the hotel you want. don't sweat your booking. tripadvisor. the latest reviews. the lowest prices.

running a small business is demanding. and that's why small business owners need more. like internet that's up to the challenge. the gig-speed network from comcast business gives you more. with speeds up to 20 times faster than the average. that means powering more devices, more video conferencing, and more downloads in seconds, not minutes. get fast internet and add phone and tv for only $34.90 more per month. comcast is building america's largest gig-speed network to give small businesses more. call 1-800-501-6000 today. on the dow, nearly every component is green except for merck led by cat, ge, boeing and etx, we've watched some of

ese ade thtrheadlines. dow up 294 we'll get stop trading with jim in a minute. at crowne plaza, we know business travel isn't just business. there's this. a bit of this. why not? your hotel should make it easy to do all the things you do. which is what we do. crowne plaza. we're all business, mostly. ♪ how do you know you made the right call...ne plaza. ...you just do. the light beer you've been waiting for has arrived. lower carbs. lower calories. higher expectations. corona premier.

is it to carry cargo... greatness of an suv? or to carry on a legacy? its show of strength... or its sign of intelligence? in crossing harsh terrain... or breaking new ground? this is the mercedes-benz suv family. greatness comes in many forms. lease the glc300 for just $449 a month at your local mercedes-benz dealer. mercedes-benz. the best or nothing.

sure. mom,what's up son?alk? i can't be your it guy anymore. what? you guys have xfinity. you can do this. what's a good wifi password, mom? you still have to visit us. i will. no. make that the password: "you_stillóhave_toóvisit_us." that's a good one. [ chuckles ] download the xfinity my account app and set a password you can easily remember. one more way comcast is working to fit into your life, not the other way around. ♪

let's get to jim and stop trading. >> people are looking for a potential winner here. i would point to intel intel does a huge amount of business with china. i could have done apple, but everybody knows that everybody knows cat and boeing i just breathe a sigh of relief because intel is such a good company. so much business in china. it's very undervalued. so i just want to throw a nod to -- everyone is buying everything i'm uncomfortable with that, but one that you'll not get hurt with is buying intel they're having a good year, and this is very good news for them. want to have something that people buy that they'll not get crushed on when the fundamentals come down. >> interesting to see some of these multinationals lead but also russell, a fourth record day. >> that is really, i think, the underlying bubbling of people that wanted to buy things that wouldn't be hurt by china and aren't going to be hurt by china. that i really like american economy is so strong.

when secretary mnuchin talks about 3%, that was going to be a dream at one point now it's just reality. the american economy is really -- >> the list of all-time highs today to that point, adp, jb hunt, robert haff, csx these are all -- >> campbell's was such a dreadful call. freight, freight, freight. able to raise rates. all the trucking companies able to raise rates american business is just terrific, and it isn't talked about enough so, there, i just gave it a nod. >> jim, you'll stick around. >> yeah, why not larry kudlow is coming up. >> larry kudlow is going to join us the chief economic adviser to the white house on this trade deal with the dow up 273

welcome to holiday inn! thank you! ♪ ♪ wait, i have something for you! every stay is a special stay at holiday inn. save up to 15% when you book early at hollidayinn.com

♪ good monday morning. welcome back to "squawk on the street." i'm carl quintanilla with sara

eisen and david faber. we hit 25k for the first time since the middle of march as the white house says a trade war with china is on hold. that's where our road map begins china trade talks, tariffs on hold as negotiations continue. the president promising great things for american farmers. we'll get the inside scoop from top white house economic adviser larry kudlow in a minute >> watching the markets, stocks surging amid easing trade tensions dow jumping 300 points led by strong gains from caterpillar and general electric >> and ge, that company is planning to unload the bulk of its transportation business to rail equipment maker wabtec. >> first up, let's look at this market dow up about 276 points. so we are bouncing back strong comments over the weekend from secretary mnuchin saying trade war on hold. clarifying this morning on "squawk box" saying meaningful progress was made between the chinese and the americans on trade talks. the dow is up more than a

percent. 1% gain for the nasdaq as well, up 70 points and the s&p 500 led by some of those cyclical stocks like industrials >> industrials, multinationals but also the russell as small cap action continues its winning ways >> i think that's the underlying bull market was in that group in the underlying not only call it bear market but the crossfire market that people were very unsure about going up today and you can see that these companies, like a caterpillar, really have been kept back people think this is over. they think it's over really kind of interesting moment >> also shows the market can rally. these big multinationals the dollar is up again today that was seen as a new headwind for this market. a threat to corporate earnings we're not as strong as we were over the last few years but the dollar is at multiyear highs it's worth watching that relationship between stock not only a direct inverse correlation but we'll watch. >> what happened to the high

water mark comment of caterpillar. how forgiving is this market we were throwing away caterpillar because they basically told us, it may not come together this year. that may have been the past. we have a selective memory in this market and the selective memory says, you know what it was always china. because everybody costs is up. energy costs are up and the dollar is going the wrong way. maybe it was always china. maybe the whole time it was china. >> so you think we can add to our levels above the april highs here to what degree is the path to 2,800 now fees iasiblfeasible >> i'll have to wait until next quarter but a lot of companies going up that have somewhat negative things to say we've forgiven them or forgiving them i can't tell which there have been stocks that have just been trashed and got bids underneath and the small cap rally was about, you mentioned economic data.

employment, employment remember the jobless claims. the four-week average was the lowest since 1969. what a staggering statistic. >> that's when we had a guns and butter economy >> speaking of stocks trashed and have a floor under them. ge would be amongst them and benefiting today, up 2.8%. not necessarily related specifically to china but more so because of this deal that was announced early this morning combining transportation business with wabtec a reverse trust transaction. it will be tax-free to ge shareholders who will own 50.1% of the combined companies. both stocks are doing well on the strength of this deal. $2.9 billion will also be paid from wabtec to ge, but essentially you're valuing the ge transportation business at roughly $11 billion when you include a tax benefit of a little more than a billion dollar that is a number that seems to be above what many analysts had been valuing that business at. it's a cyclical business

it's near the trough it's coming out of it a bit. going to do about $750 million in ebitda this year but seen to go as high as $900 million in 2019 but ge is happy that they were able to get a multiple that was on wabtec's stock price and that stock had moved up lately because of speculation about a potential transaction. seeing their annual synergies there. they expect it to close early in 2019 this is one that's been, guys, rumored for some time as a divestiture candidate. they didn't sell it. it's being merged into the existing operation and 50.1% of that will be owned by ge shareholders but what is yet to come is perhaps a larger announcement from ge about some of its other bigger businesses, whether it be health care or aviation, and we'll see what we get there. not expected at least for

another month or so. >> but isn't it amazing, half empty, half full glass, we were valuing this company at the ebitda trough. and then suddenly we're valuing it ebitda height look at that range that you talked about so people thinking about four, five times ebitda. >> nine times. nine times multiple. >> that's the win. that's the win for flannery. he said, look, this company shouldn't be valued at trough. it should be valued at normalized at -- the orders were good but they weren't spectacular now people are saying, you know what we didn't give it away and i like that. if you're a ge shareholder, you have to be happy >> stock is up almost 10% from the last earnings report wondering about the cash squeeze update >> cash squeeze in terms of what >> just the cash burn and the capital position one of the big focuses -- >> yeah it is. we didn't get any potential update from ge management. it was wabtec's management which

will run the combined company that was on the call in this particular business for ge, ebitda is a half of what it was not that many years ago. but again, it's coming out of the trough but there are other ways that ge has. they do have -- they are going to be able to potentially exit some businesses and create value and, to your point, not necessarily have people as fo s focused or as concerned about cash >> one of the things we're beginning to value ge, not on earnings, which were going down, but on asset value meaning that it's no longer losery. this is a very good asset valuation so now we're starting to look at some of these other businesses and say, well, maybe we are under valuing them. >> we'll see if they respond to that over time >> this is a good moment to listen to what they did with -- declaring victory. >> move on >> wouldn't that be a nice thing -- >> when we refer to tousa, steve

tousa, longtime analyst at jpmorgan, a negative call on ge for some time but has maintained that very negative tone. >> is that fair we pick on him >> you've said nice things about him. >> the president, meantime, active on twitter this morning talking about china and trade saying that under our potential deal with china, they'll purchase from our great american farmers practsically as much as our farmers can produce. just where do talks stand? joining us from the white house is our former colleague turned director of the national economic council larry kudlow. good morning good to see you as always. >> thank you, carl appreciate it. >> everybody is hungry for some color on this. different ways to value or put a mess rick on what we're getting here is there a trade deficit number? what can we add to what we know? >> the communique, which really was the framework for the whole agreement is a very important document although it didn't have details, carl, this is not a term sheet

for corporate finance deal this is a very complicated negotiation with the two largest economies in the world but if you look at it, it talks about opening markets. it talks about reducing barriers it talks about reducing the trade deficit. i regard it as a growth document because if china lowers their barriers, whether it's tariff or nontariff barriers, we will export enormously as the president said, we'll sell every farm commodity in the book we'll sell all the energy, all the lng, manufacturers the united states is the most competitive country in the world right now after our tax and regulatory reform. so these are sort of like peace treaties in a sense. the fine print, the details will come later we're making terrific progress on a topic which everybody knows is very difficult but we must do this because the unfair, illegal

trading practices have to come to an end. >> all right so how will you measure progress, and what will you do over what time period if that progress is not being met? >> well, look at wilbur ross going to china this week or next week, i don't know he's going to be the lead guy. probably ustr will be with him they'll walk through a lot of the commodity purchases. they'll walk through a lot of the tariff and nontariff reductions this is not like a government of china buying a couple hundred billion dollars of food products, all right? that's not the way this works. these are by and large private sector transactions, as you can imagine. so this is a big step. wilbur is going to walk through a lot of things over there and come back and make a report, and we'll begin to move on there's always communications here regarding one of the absolute essentials, which is the technology piece, right? i mean, we cannot allow the

theft of ip. we cannot allow the forced technology transfers that's america's golden jewels, america's bread and butter and we produce technology that nobody else does we invent it we apply it. that's why our economy is growing so rapidly we can't let that be stolen. and that has to be protected so that's also ongoing while secretary ross goes through his commodity issues >> larry, jim, good to see you, sir. >> hi, jimmy how are you? >> i'm trying to understand our framework. the chinese are a communist country is a controlled economy. i'm trying to understand why we think that some of their companies, so to speak, will actually do what we would like is a command economy why can't the chinese just say, we're going to do this and do this tomorrow because they are indeed as we know in control of their entire economy >> it's not -- i don't think

it's entire. about more or less i don't want to get in trouble here, but more or less half the chinese economy is private run half is state-owned enterprise of that half, the soes which you are referring to, their state banks finance them so it's phony profits. they sell things at losses the banks give them loans that are all nonperforming. i don't have a precise number, but as you can imagine, several trillion dollars worth of nonperforming loans. by the way, one of the things we've been talking about is to let american financial companies go in there and actually try to help them out to work through these nonperforming loans and to set up asset managing companies without the state interfering or creating levels of bureaucracy and that leads me to another point, what carl is raising.

regarding the forced transfer of technology, one of the ways to solve that is to let american companies or any foreign companies own their companies, jimmy, in china. not 49%, which forces you to put the blueprint on the table for the provincial governors and then they take all the technology information we own it. and actually, those in our meetings are amenable to that. i think you'll see some progress i don't want to get too detailed but you'll get into the 50% zone pretty fast. so we will own them, and that's a good thing and they will open the doors and change their rules to permit that >> larry, the stock market is up very big on this do you think it's premature? do you think what we should say is, what we're doing is we're talking. and if they come to the agreement we want, then you should believe the trade war is over and if they don't, we're right back on with tariffs because if we give that away, we are making it so that we may not win in the

longer term. >> look. i think progress is progress, jimmy. i think, again, in terms of the long term. i'm a growth guy if china reduces -- if any country, by the way, especially china reduces their trade barriers, their investment barriers, they take off market opening measures, if they have the rule of law, we, the usa, will be able to export innumerable volumes of goods and services, okay that's really the key thing here in terms of the near-term, long term, we're making progress. we have wanted to do this. the president is now signaling his support for this action. our team is very gratified and so forth, but i'll raise another point regarding the issue of tariffs. i'm not a big tariff guy as you know i'm a free trader. sometimes selected tariffs go a long way this kind of negotiation, and the president has said this many

times, tariffs are suspended right now as per mr. mnuchin that's a good thing. but you cannot remove tariffs as a negotiating tool or an enforcement tool from this process. you cannot do that and, therefore, i don't think we're saying tariffs are over. far from it. i think right now we're in a good talking stage, and we're moving forward going to be very positive for economic growth if we can get this done. it's already positive with the markets and so forth but as a free trader, i totally agree with potus tariffs will play a role in the negotiations and perhaps the enforcement. that's the way it works. >> larry, wanted to ask you -- it's sara -- about nafta the wall street editorial board said he set his boss up for an embarrassing political and economic failure have the odds risen that there will not be a renegotiated nafta

deal by the end of this year >> i think lightheizer is working. we're all working. there's a lot of communications back and forth perhaps more coming this week. i don't think the congressional time table is quite as strict as speaker ryan may have mentioned. we want a good deal for the usa. and we're looking through a whole bunch of issues. many of the items in that treaty have already been successfully renegotiated some of the items remain unfinished so we're running through a continued, very serious process to get it done there's a willingness on our side and canada and mexico to get this done. but, of course, the united states has to act in its own interest as these other countries will, too. so it's not dead, sara, it's still coming >> is there an agreed upon timeline between china and the

u.s. in terms of when you'd like to reach a deal by, that is something that's going to be done >> i don't think so. i'm not aware of any and i'm pretty close to the process. just kind of moving step by step beijing meeting was first up washington meeting was second step both meetings were rather successful we've got this document now. the communique the framework, if you will and now secretary ross is over there. you can see step by step, david. and i don't think we should hang timetables on this this is my own personal take we're moving faster than i would have predicted three weeks ago and i very much want to get it done as long as -- as long as it's a rule of law market opening deal which is enforceable, you know, i worked for ronald reagan many years ago. trust but verify >> right well, on that note, specific to some of the criticisms that are

we making enough progress on things that technology companies have been particularly interested you know, theft of intellectual property you discussed it the lack of ownership of their businesses over there having to open everything up are we making real progress on that front as opposed to just simply having the chinese say they'll buy more stuff from us in. >> you know, i've seen and heard -- there's formal and informal, but i think we've already made a lot of progress on the ownership side, david which is essentially you linked it correctly you linked it to the technology transfer i think that's really important. regarding the broader questions of the theft of ip, it talks about china patent law that i don't think we have any guarantees on yet. i don't want to attack the chinese because i'm glad they're working with us. i just don't think anybody is satisfied with the ip side of

this >> larry, there's an audience this morning looking at all of this and says separate from any negotiations with the chinese, where is the u.s. maiden 2025 plan where is our own 2025 plan and i wonder if we should expect some effort that is just about us, not so much about what we expect the chinese to do >> well, carl, i'm not much of a central planner, if you hadn't noticed these last 25 or 30 years. we have a plan it's call economic policy. and president trump, lower marginal tax rates on business and investment, it's working the economy is growing better than 3% the last four quarters the atlanta fed gdp showing 4% in q2. that's their view. i would be thrilled if it were 3% again massive regulatory rollback.

ending the war against energy. ending the war against investors. president trump is -- wants to reward success, not punish success. look, you know, we talked all about this when i was up there, and these things are -- now they're legislated now they're part of our policy and i know it's just a year, year and a half, but i think you have to say the early returns are good that's our 2025 plan is a long cycle of prosperity, and i sincerely believe that we are entering a new long cycle of growth and prosperity and the components -- you go through it on friday in jobs and wages, business investment is doing extremely well for my friend jim cramer, and i think it's paying dividends already. these are good, pro-growth policies, very much in the tradition of john f. kennedy and ronald reagan. that's our long-term plan. carl, i don't want to disappoint you, but the soviet union had all these five-year plans. didn't really work out great for

them >> larry, with the tax reform -- >> yeah. >> -- which i thought was remarkable with the deregulation that i think is working, do we have a chance to not have out-of-control deficits? is this just possible that like president kennedy when he cut the captain gains rate as you taught me that we may be in a moment where we are possibly headed more towards, let's just say, a balanced federal deficit than worried about out-of-control which we would have been, maybe even a year ago? >> well, fair enough look, you know me. i believe growth may not solve the entire deficit, but you know, the revenues are coming in the cbo, which is never agrees with us on tax cuts. their reestimate from pretax cut to post tax cut gave the corporate revenue side another, i think, 460 some odd billion dollars. and the whole economy of about

$6.5 trillion in added nominal gdp. if my number, 6.2 or 6.5, cut me some slack but a huge increase in nominal gdp from which, at a roughly 17% rate, we generate revenue. so what's happening already is the revenue numbers are going up with the growth numbers and the deficit numbers are coming down. we have a lot of work to do. i believe, incidentally, that business tax cuts will absolutely pay for themselves at 3%, 3.5% growth. regarding the rest of the budget story, it is a question of political decisions and political will and, of course, good policy to limit federal spending we still have to work on the entitlements, both the large entitlements and the small entitlemen entitlements all that is under process. mick mulvaney is the omb director and is as good as it

gets it's a long-term process but i think, jim, the first answer i would say to you is, right now, year one or year two, the deficit story has come back down that's what the cbo numbers, and that's all static. they won't acknowledge the supply side growth effects of my tax rate reduction okay i understand that. but the fact is their reestimates are very positive in the direction of lower deficits. >> with all this growth you're talking about, larry, the dollar is back on top you've always talked about king dollar and why you've been an advocate for the u.s. to have a strong currency. but do you not see it right now as a threat to these double-digit earnings growth we've seen the export growth you're hoping to see it's already wreaking havoc on markets and bonds? do you still want to see that dollar strong? >> strong dollar attracts investment domestically, staying in the country and from around the world. i don't want it to go up 15% or 20%.

i don't want to get into a dollar discretion. we don't have targets and so forth. we don't do that we are aware of it, obviously. from the way i look at the world, gold is soft. the dollar is strong that's a good thing. to me, it reflects noninflationary growth you've had a little bit of a rise in ten-year treasuries to, what, 3.1% or so most of that, except for a bit of oil inflation, most of that is real growth expectations are rising. i don't want to comment on the price or value of the dollar i'm just going to say it looks steady it looks steady. king dollar has always been steady that was my vision when i coined that phrase, i didn't even know how many steady, reliable, valuable i don't have a target. i'm just looking at it steady steady is good you know what steady means,

sara steady means investors from all around the world come to the u.s. because we are offering them the highest after-tax returns and a safe currency and the rule of law. and we are in better position now than we've been in many years and it's not just that i'm going to make it bipartisan. democrats, republicans we're in better position now and we have been in many years low tax rates. low regulations. and an attitude that favors success and a rule of law. and the steady currency plays right into that. i'm not here promoting in 10% or 20%. that's not my view i'm just saying steady is really good i'm looking at steady and that makes me an optimist >> how do you think this framework with the chinese affects cross-border m&a and individual names that have sort of been caught in this like zte or nxb, qualcomm >> well, look, i can't comment on the companies, carl if you're asking me about zte, i

might have a word on that. i can't comment on the cross border action. >> you did say some things about the zte deal, the small changes around the edges i think you said that could be made in terms of the sanctions against that company. some people are saying it's separate from trade talks. others seem to believe that somehow it's a part of it. which is it? >> well, fair enough look in very broad generic terms, since we're engaged in trade, it becomes part of the trade discussion if you will president xi asked president trump to take another look at it and president trump agreed to it as we're all saying, secretary ross has got the play on it. secretary mnuchin, myself and others, this is primarily an enforcement issue. it's not really a trade deal and nobody should assume that there's going to be a penalty-free change here believe me do not assume that they're not going to get off

scot-free. if -- if there are any changes in the remedy, and that's up to the recommendations of secretary ross, if there are, they are going to include very significant fines, very severe compliance measures, a new board of directors, a new management team and i've said that before and i'm just echoing the discussions that we've had with mr. ross and mnuchin and the president and many others. so there might be something around the edges i'm not a lawyer or judge, but it's just going to be around the edges. they broke the law they broke the law on several occasions after being warned so even though president trump wants to help president xi, in the middle of these trade talks and just as importantly if not more so, middle of the korean peninsula talks, that's good that's what leaders do you know, we can't drop our rule of law, and we won't >> larry, if we look at the

energy deal or the framework, we've already agreed in november of 2017 to a deal with the chinese for alaska nothing new there. we do not have enough natural gas to export because most of the contracts have already spoken long term for the two facilities we currently have all of the oil is spoken for that we export how many gains do we have there and how much can we make from farm export because we're already able to export everything we want to the rest of the world >> all right good questions i'm not an expert in all the sectors, but jimmy, there are longer term lng contracts. that's very important. both the export, the refinement and the terminal building and those are pretty big numbers i've seen some of the estimates. and you can discount them present value or not, but they're very big numbers we sell china a lot of coal. and i think wilbur ross is going to negotiate that when he goes over there

regarding farm, a lot of people think -- people that know more about farm than i do -- think that we can easily double. the numbers were posted. i am just saying, a lot of people believe we could raise the farm exports from the united states in the sales to china, i don't know, maybe double them. double them. and the manufacturing side, we'll have to wait and we. technology is one of our great manufacturing businesses and i think we want to look at that manufacturing area but it has to be to everyone's -- has to be to the satisfaction of the united states that the rule of law will prevail so we'll make the trades if we can. but financial services is another one. i know that's a smaller component, but i've heard privately in the discussions and the engagements between meetings that the chinese are, in fact, very willing to open the door to a lot more financial services. so i can't give you specific

numbers, jimmy i'm just going to say those are the areas we're targeting. i've read some of the newspaper articles we don't have enough things to export what's your growth estimate? i'm going to grow the economy. i'm going to suggest growing the economy 3%-plus the next ten years. if we do that, we're going to have more of everything. and that opens the door to export sales i mean, that's the right way to deal with trade imbalances, wouldn't you agree i don't want to stop imports i want everyone to have choice the rule of law, we've got to do what's right, but let them lower their barriers and play by the rule of law and that gives us a chance for massive export sales. that's a pro-growth way to solve these imbalances >> i do not disagree if they let it so that we don't have to be just 50% owner if they let us sell as many cars as we want and if they just say, you know what, you can always sell apple here. we'll not restrict apple

then we'll get our way and that would be a very big deal >> the ownership thing, jimmy, you get this, because of your knowledge. the ownership thing is vital we're working on it and making progress on it i think i'm going to have to jump >> no, we appreciate all the time today >> thank you very much >> so generous thank you. larry kudlow director of the national economic council outside of the white house. all of this, the market hasn't really moved a lot, although larry gave smus some touchstone and news >> i think we got more than ag and oil. if we can ever get -- david spoke on this a lot -- if we can ever get free raeign for our companies to be in china without so-called joint vent ures that e know steel technology and i've felt dramatic reduction on top of what we could, then larry is right. it would be very meaningful. >> that's a big one, man because those are a conduit to basically technology transfers

that then benefit chinese champions in the future. big deal in our debilitating potentially to the prospects of our own tech companies which has been a concern of this administration >> larry kudlow wanted to give us much more than we heard before thank you, larry kudlow, for really explaining a lot. >> the market didn't blanch at the prospects of tariffs as an ongoing tool in enforcement and negotiation. they said that's the way it works. >> but look, there was a time when i was worried about apple not being able to sell iphones the conversation has really gotten away from that. and that's how apple can really expand all the components in apple. i'm using apple as the rubric for, you know, i was very concerned that our companies that had done well in china were finished doing well. boy, is that off >> jim, thanks for hanging around >> thank you, guys >> what is on "mad." >> we have iff paid too much for an israeli

company. we have take 2 one thing that's hot is video games. and spencer rascoff. how can you explain the new business model of flipping homes. can't wait for that show >> see you tonight >> thank you for letting me be here let's get back to the white house. eamon javers there on china negotiations and nafta which he said was still cooking. >> classic larry kudlow. optimistic, pro growth a guy who kills them with kindness in a town that's often more of a knife fight. but i think you have to look at two comments kudlow made there one was, in talking about the details of this communique, in terms of the understanding between united states and china that they came to over the weekend saying the details will come later that's all being ironed out right now. wilbur ross is going to china to hash out some of the specifics we don't really know exactly what this agreement is going to include. the tariffs are not off the table. tariffs are suspended per steven

mnuchin who said that over the weekend that the trade war is being put on hold. kudlow very clearly there laid out the idea that those tariffs could come back in the form of a threat in negotiations ongoing with the chinese so the president is taking the tariffs off the table but putting them in his hip pocket he's going to keep them available as the negotiation continues. that leaves us sort of where we were with the exception of the idea the tariffs could come kick into gear this week. so we know that that sort of pause in the negotiations are going to continue. but we don't know where this is going to end up. >> thank you very much, eamon javers at the white house. some ongoing headlines from scotus dom is watching that >> this could have wide ranging effects on what happens with employment in this country the supreme court has ruled on ideological lines, 5-4, five conservatives against four liberals, that companies are now going to be allowed to enforce arbitration agreements in terms of employment agreements meaning

employees are now -- or could be now required to legally sign arbitration agreements and forgo their rights towards class action lawsuits down the line. this is a big deal for a lot of employees out there under these agreements an estimated 25 million already have agreements in place with their employers that they have to go to arbitration rather than a lawsuit in case something happens with the dispute so, carl, a very big deal for a lot of americans out there when it comes toworkers rights. we'll keep an eye on what happens with other impacts on the market but a very big deal from the supreme market. >> dom, thank you very much. dow up 353 here. highs of the session after our conversation with larry kudlow mike santoli has our etf spotlight. >> taking a look at not just the dow but other mega cap stocks to other smaller stocks in the market last week the roussell 2000 almost held the market together, making new highs as the rest of

the market didn't do too much. today you see the opposite of that that seems to be what's happening now. i'd look at a few etfs that illustrate this. the xlg. this is the biggest 50 u.s. stocks out there obviously, huge multinationals you see they are actually slightly lagging now on a one-year basis but look in january at how far ahead that white line was, the mega caps to the small caps. russell etf. it built up tremendously mega caps were up by 11 percentage points over the russell, and here you see on a year to date basis how much of a lead the russell 2000 has built up over the major caps now the question today, does today or this current period represent a reversal where we see mega caps start to win again? sara earlier mentioned it's happening despite the fact the dollar remains firm. all these are big questions. to me, it doesn't really matter how the market gets it done. it's not a better market when

smaller caps or mega caps are leading but indications for how people allocate their bets when we come back, a lot more on trade and white house top economic adviser larry kudlow's comments to us. dow as we said now up 360. two-month high and better for quk t see "sawonhetrt" is back in a minute.

welcome back to "squawk on the street." i'm sara eisen with carl quintanilla and david faber. pretty broad base. the dow up 350 points. all sectors in the s&p 500 are positive right now led by industrials, technology and consumer discretionary looking at 1% moves here for the s&p and the nasdaq moments ago, larry kudlow, director of the national economic council telling us tariffs will be a part of the

ongoing china negotiation strategy listen >> you cannot remove tariffs as a negotiating tool or enforcement tool from this process. you cannot do that and, therefore, i don't think we're saying tariffs are over. far from it. i think right now we're in a good talking stage and we're moving forward it's going to be very positive for economic growth. we can get this done already positive for the markets. >> how should investors read all these comments in negotiations let's bring in macro strategist and libby kantrell, pimco's head of public policy alan, when you hear tariffs, doesn't quite sound as scary now that we've continued to see deal-making and what kudlow himself called a peace treaty with china >> it seems once again the u.s.' bark is a lot less, not as bad as its bite, so far. it's, so far, what we can tell, it's sort of the trade issues in

advance. it's not over and done it's nothing that's really very specific in terms of where this is all going it's not surprise to me to see this happen in this way. the sequencing of, put the trade stuff aside and let's get on with north korea for the time being and then get back to the trade situation. >> all sorts of media reports. some painting it as a u.s. win some saying china had the upper hand what do you read what went down? >> in some reasons it's too early to tell and depends on your measure of success. if you're looking just at the trade deficit, if china is sincere about reducing their trade surplus with the united states, and you know, importing more of our u.s. goods, then that is likely a win however, in a big however here, the real reason we're even talking about this is because of the ip theft and forced technology transfer and you know, as you saw -- as you heard director kudlow say, there

haven't been many details about that we're looking at that as a measure of success i think it's very unclear whether the united states is -- whether this is a victory or not. >> in terms of market implications, big relief rally on this from those comments from mnuchin over the weekend saying trade war on hold. does that mean that the risk is sort of being eliminated from this market? >> i think really just for the time being so it's not a sell in may and go away kind of story this is -- you can buy in may type of story and probably buy a little bit in june as well but it's not necessarily a story you can see the rally persisting on the basis that trade is a nonissue, say, in august, september and beyond >> you do have some thoughts on the intersection between these chinese negotiations and the summit that we expect to have with the north koreans in june how is that going to work? how does one affect the other? >> i think that's exactly right. our view is that you will likely not see, obviously, the tariffs

or the investment restrictions i think that's a very important point here because these investment restrictions in some ways from what we understand were thought to be quite draconian. you're not likely to see either of those being implemented before the june 12th summit with north korea in singapore i think how that goes, how that -- if that summit is successful and leads to more discussions with north korea, then absolutely that will inform our posture toward the chinese as it regards to -- as it relates to trade but if that doesn't go well, i think you can see more of the chinese hawks in the administration maybe taking forefront. more on the back burner here but you can see them sort of prevailing if you -- depending on how those north korean talks go >> alan, mr. kudlow once again referred to 3% gdp growth not just this year but for many

years to come. when he says those things, are you a believer >> no, unfortunately.. i could be a believer for the next couple years. 2018, 2019 will be good years but there will be payback. 2020, 2021, for example, will be softer >> why is that >> typically you get the good news in terms of expenditure coming through and then you compare it to three, four, years out it wears off over time basically. so you go back to trend. and trend will still be near enough 2%. >> very quickly because it's your expertise are you a buyer of the dollar here >> i think so. we've had a very nice run. we're on for another leg but in the meantime, i'd say look, we've come quite far, quite fast just take a breather >> alan raskin and libby cantrell, thank you for weighing in when we come back, students from around the country compete at the national economics

challenge with hopes to be the next yellen or powell. get a behind the scenes look in just a moment. it took guts to start my business. but as it grew bigger and bigger, it took a whole lot more. that's why i switched to the spark cash card from capital one. with it, i earn unlimited 2% cash back on everything i buy. everything. and that 2% cash back adds up to thousands of dollars each year... so i can keep growing my business in big leaps! what's in your wallet?

small caps, outperforming large caps by a bit this year. giinone said the rally is just benng.find out why tradingnation.cnbc.com more "squawk on the street" after this

at crowne plaza, we know business travel isn't just business. there's this. a bit of this. why not? your hotel should make it easy to do all the things you do. which is what we do. crowne plaza. we're all business, mostly. let's get to the cme group in chicago rick santelli joins us with the santelli exchange. rick >> good morning. thanks, david. i like to welcome my first guest of the week, peter thanks for taking the time >> always great being with you >> i find it fascinating as you look at the various stories on employment and the state of economies of the biggest developed economies, what we see is that the u.s. right now, 18-year low, 3.9% unemployment rate. japan, 24-year low, 2.4% the uk, one of their metrics, their three-month metric of

4.2% the lowest in 43 years my question is a simple one, peter. central banks really target the unemployment rate. yet, as we just noted, three major economies with historically low unemployment rates but yet the output of their economies at least 2 out of 3 is certainly lacking in central bank policy in japan and the uk certainly isn't moderate or removing enough stimulus. your thoughts how to put all that together. >> they look at the numbers, their models when they see unemployment rates this low, they see resource utilization is being used up n that implies potential inflationary pressures in employment if there's less bodies around, they think that, okay, then the remaining bodies you have to pay them more. you have to pay more of those on the sidelines to come into the workforce. so again, it gets around to what their models tell them and historically speaking, rates at

these levels reflect the scarcity of workers implying that you get wage pressure to follow >> do you think this is the end result at these particular rates, central banks and their models were expecting with regard to the japanese economy and where their inflation rate is they have a 2% target. they're nowhere near it. >> yeah, the 2% target, of course, has just been an arbitrary number pulled out of thin air it's not based on anything and central bank target inflation rates aren't necessarily what's good for the economy but their own calibration of monetary policy >> what's the down side to this, let me interrupt you so the bank of japan has just portfolios filled with financial assets, as do some extent some economies like the eu. with all of these in their files and in their portfolios and now quarantined, not being able to be traded by investors, doesn't that calibration have a dark side

>> there is no question. they've distorted markets around the world, of course and interest rates at levels never before seen. they don't understand inflation is a symptom of an underlying economy where they're trying to target a the symptom to create an outcome on the economy. >> you know, peter, we're just about out of time. wouldn't it behoove these central banks to find a metric where they could do some producti productivity, especially in the case of japan? that seems to be the problem your final thought >> no question productivity has been the missing piece and kept growth from accelerating faster than it is one thing that you do when you lower interest rates, you don't encourage savings. savings equals investment. if you get more investment you get more productivity. >> excellent peter, always interesting, listening to your views. sa sara, back to you. >> rick santelli, thank you. let's send it over to jon fortt

with a look at what's coming up on "squawk alley." good morning. >> good morning. there are headlines about google and anti-trust the alphabet stock doesn't seem to be taking a hit we will dig n should investors worry about anti-trust scrutiny on google? will it bring more problems? so no matter what you trade, or where you trade, you'll only pay $4.95. fidelity. open an account today. you'll only pay $4.95. attention homeowners age sixty-two and older. one reverse mortgage has a great way for you to live a better retirement... it's called a reverse mortgage. call rfree information kityour with no obligation. it answers questions like... how a reverse mortgage works, how much you qualify for, the ways to receive your money and more.

is forever grateful. thank you very much. someone who has served this agency with extraordinary skill and devotion for 30 years, gina haspel congratulations.

there is no one in this country better qualified for this extraordinary office than you. by the way, if you don't agree with that, please let me know now before it's too late immediately. have to do it quickly. you live in the cia. you live the cia you breathe the cia. and now you will lead the cia. congratulations. okay that means we're keeping her, right? that's what we were waiting for.

they love you. they respect you they respect you a native of ashland, kentucky, gina's father served in the u.s. air force. she spent much of her childhood overseas from a young age she was instilled with a deep love of our country which, combined with a thirst for adventure, that led her to the cia. throughout her storied career at this agency, gina has truly done it all she has completed seven field tours, served as a case officer, recruited assets, run stations, captured terrorists and disrupted networks that proliferate deadly weapons they send those weapons all over and you catch them you're going to get even better n now, better than ever before you're the best. you're going to be better than ever before and we're giving you the resources to do it

our enemies will take note she is tough and she will never, ever back down i know her i spent a lot of time with gina. gina played a crucial role in the fight against al qaeda, first day at the counterterrorism center was september 11th, 2001, and she tirelessly hunted terrorists for the next three years she went on to become deputy director of the national clandestined service and most recently deputy director of the cia. during her decades of distinguished service, gina has earned the george h.w. bush award for excellence in counterterrorism and the intelligence medal of merit. most importantly, she has earned

universal respect, admiration and trust of her colleagues here at the cia throughout the government and all over the world, gina is truly respected and today we also mark another proud milestone as gina becomes the first woman ever to lead the cia. that's big now gina will lead this agency into its next great chapter. gina assumes the role of director at a crucial moment in our history. we are reasserting american strength and american confidence and, by the way, america is

respected again. you see that instead of apologizing for our nation, we are standing up for our nation and we are standing up for the men and women who protect our nation we will be count iing on you to confront a wide array of threats we face and to help usher in a new era of prosperity and of peace. since the cia's founding more than 70 years ago, its courageous operatives have combined ancient craft with modern marvels to achieve unsung victories in every corner of the globe. i see what you do. i understand what you do and it's incredible. marked on the hallowed walls of this building are the stars honoring the cia's fallen her s heroes, who gave their last breath for our nation.

though many of their names remain secret, their stories of service and sacrifice and daring will live for all time today, we think of them and we honor them by pledging that the patriots of the cia will have the tools, the resources and the support they need to accomplish their incredible, complicated and oftentimes very dangerous mission. the exceptional men and women of this agency deserve exceptional leadership and in gina haspel, that is exactly what you're getting. director haspel, congratulations again. i know that you will thrive as the agency's director and help keep our nation safe and strong and proud and free good luck.

god bless you. and god bless the men and women of the cia god bless america. and i just want to thank everybody in this room for doing such an incredible job, and for giving gina that unbelievable support that she needed. it took courage for her to say yes, in the face of a lot of very negative politics and what was supposed to be a negative vote but i'll tell you, when you testified before the committee, it was over. there was not much they could say. there was nobody more qualified than you and you are going to do a fantastic job, gina. thank you very much.