the nasdaq indicated down 8. that was the strong average on a relative basis yesterday, and it has been positive at one point this morning, but now it's down and then the s&p is down about 6.39 if you look at the chart where it turns into a triangle at the end. >> triangulation >> that's the word for the day make sure you join us tomorrow "squawk on the street, triangulation. ♪ ♪ ♪ >> good morning. welcome to "squawk on the street," i'm carl quintanilla with david faber from international trade to currencies to amazon, senator bernie sanders will join us at 11:00 a.m. to talk about his criticism of the company and jeff bezos this week futures are a bit week after yesterday's upside reversal and europe and japan saw a reversal among automakers as the u.s.

considers new tariffs. our road map begins with the trump playbook, and he promisesing about news for american autoworkers and considering new tariffs on imported vehicles. toyota sufrpg toyota sunk on that news. >> john flannery saying it will not show profit growth and we'll have more on his comments that scared the market about ge's dividends. >> elon musk's meltdown. he delivers a twitter tirade essentially declaring war with the automotive press and the media. meantime the trump administration launching an investigation into the -- if it's found that imports are threatening the health on the auto industry. wilbur ross said the conclusions are yet to be drawn, but he added that looking at the automakers in the context of security is justified.

>> national security is broadly defined to include the economy, to include the impact of unemployment, to include a very big variety of things that one would not normally associate directly with military security, but it is also the case economic security is military security and with that economics security you can have military security >> it went on to say we import about 8 million cars we produce 11 million and not far off from that number and the market for imported cars as the percentage from auto sales has gone from 30 to 48 >> yeah. look, i thought it was a stretch to use defense >> it's very easy -- i've had the ceo of nucor on a number of times and dan d'amico and you

have to import steel and tanks and it's true that the first quarter tho quarter showed dramatic acceleration japan is very big and ermany's down, but that doesn't include mexico, and i think that what the president is reacting to is the fact that he managed to get ford to not build this plant in mexico, but bmw and mercedes right in the president's face built these gigantic plants in mexico, really just some of the biggest plants in the world and even though they do build plants in the u.s. they got had the president got had. >> they built the plants already? doesn't it take years? >> one's not done and the other is coming online >> i thought it would take years to build one of those plants >> will you stop and cost yourself an enormous amount of money? >> you can build a plant in two

years. >> he has not been president for two years. >> they're coming online this year >> you go to the date that ford cancelled and you will see that mercedes and bmw did not cancel and that was rather remarkable and the president didn't point it out he should have, if he really wanted to make his case, but i don't think it's -- that's like we're a weaker nation well, therefore we'll lose the war we're a weaker nation and it's going to be for intellectual property and not autos stolen, intellectual property. >> and also the additional dynamic of u.s. automakers producing cars in china to import them back here. >> it's general motors i mean, look, i was surprised he didn't do it bilaterally south korea is just terrible it's outrageous, but we have a policy in this country and we've always had a policy in 1953, a favorite in south korea in order

to build up trade against north korea, so you would have to undo that particular policy which has always led to horrible trade deals. >> as an investor trying to make sense with all of this with each given day there seems to be something else that pulls you one way or the other whether it's this potential for tariffs and whether it's the steel and aluminum tariffs that are in place. whether it's nafta, potentially not going to happen in terms of a renegotiation that is successful or whether it's the big picture with china and where we are what am i supposed to make of it all as an investor and you seem to be positive personally on these tariffs, but i'm not talking about your personal opinion. >> twofold one is, yes, you would buy gm and ford particularly on germany, japan and south korea. it would raise the price of autos and we put a lot of pressure the fed because the fed is still sagging as the

pressures are temporary. this would obviously not be temporary. >> and the other thing it would do -- we would just have no relations with these countries these countries are based on them flooding cars. >> daimler gets a quarter of its revenue on the u.s >> you want to short those markets? >> 98% of our imports on passenger cars come from five allies, mexico, canada, japan, eu and south korea almost all of it >> i'm not saying you destroy their economy, but you would make it so that they'd go into recession. >> at what point do they start to fight back in a cohesive manner. >> we wouldn't get much sales. >> we don't do a lot of business with the eu as a country >> not nearly as much as they dump on us there are tariffs on everything we do and they have to roll those tariffs back >> we are bad on their truck, but they're bad on our cars.

the president has some sort of art of the deal going, he can go to -- see, when china cut their tariffs they put a lot of pressure everybody else. so now you have to go to the eu and say you have to cut like china did. >> the big push a few years ago, spartanburg, alabama, bmw, toyota, are they done? >> it is so great that you mentioned that those are huge and meaningful and there's been such a spike of imports that you almost have to say wait a second, we have to do another round of this, guys because you did that and now we have to do it again in our country. we see what you did, you went to mexico and opened a giant number of plants and now you will have the plants in our country because you're building too many plants in mexico that's what's going to happen. >> i assume you're not too worried about rising car prices because we've seen deflation and

used cars already. >> we will -- the price of a gm and a ford will go up if they do this they have to. >> right >> because there will be a scarsity scarcity of cars so that industry is hurting, but what really matters here is this is an opening salvo to do these bilateral agreements and south korea. look, if you will make it so north korea demilitarizes why protect south korea by taking all of their cars? >> the chances of the talks given the bellicose words from north korea this morning perhaps are even less. >> you didn't like what they said i remember i was growing up and the three stooges called each other. i didn't think it was that diplomatic. >> i agree >> the diplomacy -- we should move on, but i think they called pence dumb they used words that you

typically use in the locker room. >> what john ledger uses. >> or elon musk for that matter. >> that's where we're all going. ge shares came up with their worst one-day performance in more than nine years john flannery said ge cannot guarantee the dividend at 19 and expects no profit growth at ge power this year and sees the power market remaining weak through 2020 i mean, all of the analyst reports look at sort of no positive narrative being spun and of course, not explicitly. >> i do want to offer one thing on the dividend. >> absolutely. >> we knew it would not have a near-term bounce and he was sober and realistic, but it may have been reinterpreted, and speaking to those close to the company, was there no plan to cut the dividend at ge what i think flannery was trying to communicate and when you read what he had to say and when you

read the transcript, the portfolios of our company are probably going to change. >> it may not be the same company a year from now, and therefore the cash flow characteristics of that portfolio are going to change and so, conceivably your dividend payout ratio will change as a result of that and there's no plan to cut the dividend and it is not >> it's a function of cash flow, and i did everything right there. >> i thought it was worth reading. >> i didn't write it up. >> i did it's ultimately a function of the company and it's the assets and things we do with the portfolio. >> and that was not -- that's what people jumped on. it was an honest mistake and they should have jumped on which was supposed to earn 15 cents. i don't know how big a loss it will be. once again, long-term care back? i thought we reserved that

there were certain line operating things that were inexplicable and the actual presentation was a little less polished than typically you get a david far. >> he had the last management team which promised way too much and was always, i think you can make the argument now in hindsight too positive >> he almost seems to be going deliberately in the other direction. >> the previous year was over promised and under delivered he practiced open. >> this ceo is practicing new time which is better. >> it is better, although it doesn't help when you create momentum given the deal earlier in the week. the stock has life to it people are starting to focus on changes in the portfolio and then this. >> we were in a bull market from ge. >> but there was -- subtle positives. >> really? subtle positives he said we like the confident

tone. >> what's his target ten? the confident tone i heard no confidence. he also said he likes the cultural change. >> do you think it's turning. >> that will be helpful for them. >> it was ready to turn much today after that day. >> listen, we've been told to expect and i know we're going to get before the end of the second quarter some sort of significant messaging on the future of this company. >> right >> and what will stay and perhaps what will go >> that's not that far away. >> no. that's not that far away, but we don't know when. >> it has come together. the more -- what you're saying is you have to do some insurance risk remember, it's an $11 price target i think it is turning in the sense that he likes the way that there seems to be a beginning on getting a handle on how bad the

previous ceo left the company. the previous ceo -- >> of whom you do not -- >> it's kind of like what happened to frank blake at home depot. when stalin airbrushed out some of the executives and the company they were running. and then he sent a very high-level official to run the vladivostok dam project. that's like what happened with the ceos kind of an expunging and airbrushing. by the way, there is a chairman struggling. >> that is correct we will talk about athena. there is a new letter this morning. it is so much fun. >> we'll talk about that. >> they go around the world now. >> everywhere. telecom italia, they're everywhere. >> it's the full employment fact for bankers, advisers and pr firms. >> thanks elliott. elliott has put more business and helped more of

those guys. >> the guy is brilliant. >> smart fellow. >> guys, this morning we are remembering our good friend mark haines who passed away seven years ago today. he was founder of "squawk box" and co anchor of "squawk on the street" we remember him during his steady hand during the dotcom bubble and the financial crisis mark called the bottom of '09 which we affectionately call the mark bottom. our thoughts are with his wife and daughter meredith on this day. >> i like this day and i like remembering him and thinking about what he brought to our network and business news. thinking about how he would process stories today is a good exercise. >> i think he changed everything he was the first person ever to say that he felt that some management wasn't doing

something right. we accepted it even from the 1920s when they stifrt started getting aggressive about managers mark was the first to say that's a mistake. >> he would turn on his prosecutorial demeanor and man, look out >> it was done very -- it was not like a blunderbuss, but they were questions and i just think it's great he was the first person ever to say that business people are not all golden in what they do he was critical. >> which was a switch from financial journalism >> ge said yesterday that insurance looks good let's move over to what the people are saying on -- we like what you're saying, but want as much as celgene which is doing a big buyback. celgene is down 30% and a buyback. he would put the negative in and he would embolden other people to be more skeptics. >> we are remembering him and i guarantee a lot of people in

this building are, as well. >> this tweet storm from elon musk this year he's targeting the media and later on an exclusive with senator bernie sanders and we'll discuss his criticism with amazon and jeff bezos. >>&pnd s a nasdaq, two-month highs and futures are weak "squawk on the street" back in a minute this is your new house. and a perfectly inconspicuous suv. you must become invisible. [hero] i'll take my chances.

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another twitter rapt frnt f elon musk. this time it's about media companies and says the public no longer respects them he went on to add, the problem is journos are under constant pressure to get max clicks and earn advertising dollars or get fired. tricky situation, as tesla doesn't advertise, but fossil fuel companies and diesel car companies are among world's. thinking of calling it pravda which according to some reports is more than just a pipe dream it's something he actually is working on >> add it to the long list of things he's working on i do think there are a lot of things you can charge to journalists, but the vast majority of journalists and i've worked at every network and every newspaper are very antith

ad. >> that's the work that he's familiar with, digital, but -- >> he's great copy he's the great copy of everyone in private industry. >> enormous beneficiary, without a doubt. >> in fact, no media, no musk. >> no musk >> no musk no musk. >> i like that so much of what he does because he needs to constantly raise capital is relying on communicating this overarching sense of himself as bigger than all of us. >> he didn't respond >> let's take jeff bezos and amazon does he say anything >> no. why? that's not his style, so he doesn't get written about only because -- the big things that he does and it's not because he does anything other than issue a

letter >> if you want musk to have less media coverage, shut up, right >> shut up >> musk is behaving strangely. do you think he's erratic? >> do you think it's the pressure of everything he's under? >> i think he has a great life >> he's incredible >> it's amazing. >> they put a man on mars. >> are you jealous >> not jealous i admire what he's able to accomplish to start a company every other day is incredible. he needs more sleep though >> probably more sleep >> i don't know how much sleep he's getting. >> that's the only thing i'm not jealous about. >> you're built for that, maybe he's not. >> your dna is not -- >> i'm not selling newspapers. i don't need musk. >> when we come back, we'll get cramer's mad dash countdown and get a look atht e pre-market and we'll talk to bernie sanders about amazon

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challenging the bears once again. the bears are saying the service revenue stream is as much as it's certainly helped the quarter could be peaking and it's not adding up to margins and it's not as big as you think. she points out the year over year accelerant in the march quarter is responsible for 35% of the growth in the quarter and that is going to increase and what she's saying is maybe we ought to be thinking about some of the parts valuation which goes from 200 to 214, but the main thing is she says the multiples should be higher here. i don't want typically like multiple expansion story, but it is amazing that after this quarter, it only went up one time and it went up 13 to 14 and that's too cheap i think she's very right, and i believe, by the way, that the service revenue stream is based on the app store which we all go to every day we used to go to the food store every day and now we go to the

app store every day. >> someone in the family goes to the app store every day. >> it's too long for most people to read and communicating afficionados as i am. >> you read the entire piece >> no. >> you read very quickly. >> it's a brilliant piece, what can i say? >> it's a little bit too much like -- >> she is still the most influential. >> i am bronski and she is anna karenina >> don't lay down the tracks for me, partner. >> i might have to one day we'll see. we'll see. >> you have to see "quiet place" this weekend. >> i am not going. >> you won't go. >> it's scary. i don't want to go >> let's get to the opening bell and get the s&p at the bottom of

the screen at the big board today it's national storage, and the real estate investment trust focused on self-storage celebrating an ipo, greensky, a digital payment provider >> a lot of retail news we've not yet touched including best buy. we're looking for three. >> why did they give you that nonsense guidance? i will have to go there and rattle some cages. >> they single-handedly made it to handle the quarter and i thought that was wrong the business was so good the comps are so good. people are freaking out and that's a mistake, but the stock is up a huge amount. >> e-commerce is up 12 versus 22 a year ago >> the bricks and mortar part of the business is very, very good and that's because anyone who has been to one lately knows that it's now a learning experience

when you go into one there are people, really intelligent people who tell you you should buy this versus that >> i have three best buys that i go to and every one of them steer me to what they think is the best value i think a lot of people like going to the stores and that's one of the rarities and it didn't do as well and it's a good company now. >> it's been the best performer of every retailer. >> 42% in a year >> it's joined by lb which does cut the guide. 270 to three and comps down two in line. >> there is a hit job out by jefferies today and it is savage, and it basically says that pink is done, victoria's secret is done bath and body works is peaking dividend, remember, yield seven. dividend could be in jeopardy and it was a nasty piece nasty. >> is it right >> he's been right the whole way. he's got an underperform on it

it's victoria's secret >> honestly. >> victoria's secret like there's no tomorrow. >> yeah. >> putting all of those things together, i have weird ideas of lingerie >> we're never getting tucson again. >> i don't know. >> you just made it so we'll never get tucson >> i saw him walking into that fashion show >> i'm going have to ask him to come on. let's call jamie call joe, at least >> anybody else you want me to call i called a lot of people this morning. guys, anybody notice that netflix's market cap is better than comcast a lot of people wanted to make light of that yesterday and it's now only $2 billion away from disney's market cap? >> that's outrageous >> disney is -- >> given what bob iger's done and netflix is up 80%, by the

way, as fang gets another third. fang plus. >> it will pass disney in market cap. >> they continued slightly for another couple of days. >> netflix is the reason the others want to buy stuff which is the reason -- >> that's right. >> netflix, we all use it. if it rains this weekend they should have surge pricing. >> the broadband providers should have surge pricing for those using netflix. by the way, comcast is down a bit. >> yesterday, was there a letter from tci >> it's from the children. remember the children's investment tci fund management and chris has been around for a long time. pretty good performance, they owned 7.5% and they sold it. they didn't do it that well. >> they come out with this letter yesterday and it's chris

hahn with the dear rupert letter. >> we think comcast can lead to a much better outcome for fox shareholders and pay attention if and when it comes which will be after june 12th, as we said >> we'll have to wait until then to see after the comcast shares down and fox is the beneficiary and its shares up almost 13% this year and it started on the idea that it would be a higher bid and there web more regulatory protections than anything that comes from comcast and they have 7.5% holders on their side that sold stock. >> that was right. >> yeah. i suppose. >> should the people, when you speak to them, do they bring up this netflix anomaly that it's outrage outside and worth so much? >> bring it up in what way >> listen, direct to consumer is a key part of the business

consideration for any content media company, that distributes content into the future. we know that bob i ger has been dealing with espn and has made his decision and creating those over the top networks that will house so much of the entertainment on the subscription basis and the entertainment that disney will provide in years to come >> comcast doesn't have the international. >> disney has the billion dollar franchises and it really just doesn't matter versus espn and is this versus calvin coolidge and i'm sorry, versus hoover where babe ruth, how could you make more money than president hoover >> so one of the things where reed hastings is having a better year than bob iger is that what you're telling me >> jeff bezos? >> right >> did you ever meet reit?

>> if you met him on the street you would not know what he did >> regardless if i met him, what would you think about narcos i like narcos. i mean, the guy is just a guy. i mean, he does not walk around like a billionaire he's a guy. >> he's just a guy >> he's just a guy >> just a man. >> just a man. >> just a man. >> bohemian rhapsody >> i love him. every time i want a movie, a series, he's come up with it he's like spotify, every time i want one, it's like they know. they're in here. there are voices i think it was the last implant i had. >> i thought we had frank rich on yesterday, david and the hbo strategy remains we're not going to drown you in content. we're going to give you ten shows we think work, and you'll put value on that.

>> and tell the producers on their hands whether they have a hit on their hands as opposed to netflix. >> we don't know who is watching and we don't know how many are watching i don't know anything. >> i decided that i was never going to watch a move we titles again. >> i watch stuff with titles all of the time. >> i don't even think about it >> i mean, i am a native, and i am a xenophobe, and he's got me watching titles. >> that's good >> by the way, nobody should get in that head of yours and nobody wants to get in there. >> i've got a fire marshall saying you can't have more people in there. >> let's talk athena health. >> why not >> jeff immelt is chairman of the athenahealth >> it costs $160 a share trying to keep a pressure and this

morning trying to put a letter out and it's a fairly long letter in the piece this morning and they go in and we talked to a lot of investors and you've seen a lot of investors and it was a couple of days ago in terms of what their thoughts are and here's ours, that we've got an overwhelming feedback that says sell the company. sell the company, whether to us or other people and here's one excerpt we'll share with you from the letter this morning which simply says more or less the same thing we're at 154 we're up 22% and prior than when we came to the offer and investors expect you to sell, and there's plenty of people out there we think who are willing to engage with you if you choose to do that and this is to pressure jonathan bush and he's an interesting gentleman >> did you read his book >> we can talk about jeff immelt and he's certainly been around his share of m & a and it will

be interesting to see what pressure and choices he presents and what pressure he puts on mr. bush if any, in terms of engaging and trying to get the company up for sale and we'll see what happens >> it's an undermanaged company given the data company it is a data company not handled like a big data company and in the right hands it would be worth more than what it's selling and he's too para -- >> i think you said it all there. >> i got an 800 on the english >> it's a good word. >> jingoistic was, too >> he comes up with winners. >> pastiche you use a lot. >> i would about with pastiche >> i use boarded and i'm not referring to the fire ceo. >> let's get to seema modi and

see what's moving on the floor oil is down a buck >> hi, seema >> after the fed minutes and the late-day surge yesterday and the dow up about 20 points and being dragged down by names like chevron, boeing, goldman sachs this as the ten-year yield dips right below 3% autos in focus and president trump laurining a national security probe into karim ports setting the stage for increased trade tensions and japan's minister of economy said if they were to go ahead with such wide-ranging trade restrictions it would blow the global market into confusion we're looking at european and asian automakers taking's hit. >> take a look at the u.s. auto name and ford and gm trading higher by 1% >> let's talk earnings and victoria's secret and analysts concerned about a billed-up in inventory and the number of stores it has in shopping malls where traffic is declining

best buy, earnings beat up 1.7% and the profit outlook was on the light side and shares down 1% tonight you will get earnings from gas, ross stores and shoe carnival after the bell and further details around the retail and the health of the consumer. >> separately, bitcoin falling sharply and the doj has opened a criminal probe into the price manipulation caused by practicis like spoofing where investors place fake orders to influence the price and it's had a major impact on sentiment and we're looking at it fairly higher today and it was up by 6% yesterday. we do have an ipo digital lending platform, green sky and that was at the higher end of its expected range $23 per share and we are told there is a cnbc disruptor and there have been twice as many tech ipos compared to the same time last year >> carl, back to you >> seema, thank you very much. >> let's get to the bond pits as

the yield falses to below three and get to the cme group good morning, rick >> good morning, carl. it is below three, but many technicians will split several basis points with many sinking to 3.03, a very important historic high and it was a benchmark both on the way up and on the way down. certainly the close below it has accelerated a bit and we have a parallel shift on the curve and we're all down two basis points and very significant basis points especially if you're looking at 7 cents and significant perceived technical resistance where yields fell from according to many technicians that i rub shoulders with on the daily basis and we're looking at april 1st on the ten-year and we took it out and never looked back and we're looking back now here today with boons and they cracked 50 basis points. tell you what, it was very hard to look at the congestion and the treasury marks say many

traders and then to see what was going on with europe and part of it was a catalyst with italy between quality and less quality curves, but in the end the rates are moving lower and even though the spread is still hovering around 250 basis points it is reversing four or five basis points from the lightest levels which are still its widest levels since 1989. turkish lira has not had as much precedent as it has lately and for good reason. emerging markets are getting toasted to some extent and look at the one-week chart and the central bank raised rates 300 basis points to 16.5% and look at a 20-year chart and you will never see the five-handled trade and we barely missed it yesterday. if we switched gears to another currency which is always active especially if there is a perceived risk on, risk off dynamic going on and it's to some extent and the safe havens are moving better as the dollar

yen and the dollar not in its favor as you see in the two-day chart and if you open it up this is a significant area to pay attention to as is the dollar index which had to close above yesterday and it has backed off a bit, but not very much we want to pay attention to the final direction as we go into the holiday weekend in deference to that new level. 94 handle dollar index carl, jim, david, back to you. >> we'll talk to you in a while. rick santelli. we are getting news on uber and the ntsb looking into the arizona crash. josh >> the ntsb just now releasing its preliminary report about the ongoing investigation involving that fatal crash of a pedestrian and one of uber's self-driving cars in tempe, arizona the pedestrian was dressed in dark clothing, did not look in the direction of the vehicle until just before impact the pedestrian was pushing a

bicycle that did not have side reflectors and the report also notes, carl, that the pedestrian's post-accident toxicology test results were positive for methamphetamine and marijuana. the vehicle operator that engaged the steering wheel left it a second before impact and began braking less than a second after impact carl, back to you. >> issue jjosh, thank you very o that getting breaking news from the white house. the president writing a letter to kim jong-un saying that the meeting with north korea ask singapore and singapore is off for the betterment of both parties and the detriment of the world will not take place. i pray to god they will never have to be used. i felt a wonderful dialogue was building up between you and me and ultimately it is only that dialogue that matters. some day i look very much forward to meeting you in the meantime i want to thank

you for the release of the hostages that was a beautiful gesture and was very much appreciated. this is again, president trump, i was planning on meeting with you, sadly based on the tremendous anger i feel it's inappropriate at this time to have this long-planned meeting >> well, you know what does that say about china? >> china didn't help >> the president has made reference in an obscure way to what he believed seemingly was a meeting or at least communication between china and kim jong-un that turned things away from what had been a very positive track >> you said that on friday >> it comes a day after the north koreans said and appeared to show the destruction of one of their testing sites which

they opened to some foreign journalists. i think at least one u.s. journalist was witness to that, but the market did take a bit of a tumble >> it should, just in terms of the fact that things went up pretty nice he what's really obscuring is the defense stocks were after a downgrade the other day talking about how the trade was over it's hard to believe the trade was over to walk away from talks with north korea which is what precipitated the decline >> does it mean the safety is off now regarding trade then in terms of world trade? >> it's full steam ahead on tough positions on trade. >> it does seem like that. yeah i think this is the navarro camp, not so much a globalist camp, but i thought -- we didn't talk about wilbur ross who

offered a considered approach and he must be in sync with what the president is saying. i don't think the president blindsided mr. ross. i think they said we'll be tough, but we'll get it done wilbur ross is very harsh on china. >> you mean the line between navarro and mnuchin? >> and i think the comments today took account what is the president going to do after some unnamed north korean official called his visit -- what did he call him? dumb >> she has a name and she's the north vice minister of foreign affairs who also said, by the way, if the talks were called off they could face off with north korea in a nuclear to nuclear showdown and she did call mike pence a political dummy. so these are the comments in part that the president's letter

is referring to as based on the tremendous anger and open hostility in your most recent statements. >> the south koreans have to get involved we protect them. >> they were involved. >> they've got to say this, we can't do this. >> who do they have to get back to >> south korea stands the most to gain and they have to come back to the table and say listen, guys >> the president writes this missed opportunity is a truly sad moment in history. mirnel caruso-cabrera, and we've been talking about the line between trade and diplomacy here what does this mean? >> the president has made it very clear that he sees the situation with north korea as very, very clear in his mind, and to echo david's point

earlier, i just spoke with a source at the white house who tells me indeed those statements that david was referring to is exactly what has engendered this letter from the president to call this off, this meeting off. i am not convinced this is the end of it. this back on board and to behave in a different way and to effect change in that matter. so let's see but certainly they are quite upset about those comments that have been made in the last 24 hours by that north korean diplomat >> it's very hard to know what happens here he's called them all kinds of names. and then showered him with praise and nowthis. >> he started out calling him rocket man that wasn't necessarily something you think anybody could come back from so although by the way, the back and forth when it was at its heated did not have a particularly large impact on the

stock market >> no. >> so it's unclear this could go back towards the response is going to be. how measured it's going to be. opposed to what it's been. >> it wasn't quite the zenith but he hoped there was more to come >> when he was running ciaen went over there a couple times >> he made everybody look back the president said so. >> it was a bit of an evolutionary >> the original reaction from the stock market when the president first had those fire and fury comments was quite negative and then over time, they almost became to the back and forth that has happened between the two individuals. >> and let's remember they cancelled summits in 2004. they cancelled summits in 2012

so even as this was being planned, people were remembering their pension for setting up things they would later take down >> absolutely. and ultimately, the core issue was the u.s. has always made clear this was never going to happen unless kim jong-un was willing to talk about denuclearization et redefine it and there was intense skepticism that ultimately when push came to shove, he was ever going to do that if you're going to try to get that from him in advance, it was going to be extremely difficult. once again, though, this may be part of a negotiating tactic or ploy to see if they can get him back on board with that kind of agreement. >> especially since it's been three hours since he was on fox this morning and said he might be willing to look at things like phase in of denuclearization that was three hours ago >> things happen fast.

>> the trajectory of these talks, the best part was with south korea. what do you think south korea says and does here they were really the winner in this >> south korea is going to do everything possible to try and make this happen the one thing i would say about south korea is remember that their interests and our interests are not necessarily aligned. what his -- what president moon's concern is is peace on the korean peninsula those who are tlar with those going on suggested that denuclearization was lower among his priorities compared to a gauarantee of peace on the peninsula where he lives and where the country that he governs. that is very different than our primary object ive, which is denuclearization of north korea. so the two countries look at the situation slightly differently, but it's a pretty big gap

talking about the ultimate goal to be. >> for moon, it has been the notion of reunification one day has been a big reason he's built up the political capital he has. >> a lot of people just kind of felt it would be like east germany and west germany which was a miracle. that was president reagan. but president trump's pulling back from that now >> it's been a day for cars and now this crisis is a real bad day. >> they are flying >> i would also highlight this is a time when north korea invited international journalists when to come see the dismantling of their nuclear testing area a lot of people have seen a that in a hollow light. the place had collapsed. it wasn't really usable so it's

a hollow gesture at this point and by the way, if they have already succeeded in their nuclear ambitions of having an intercontinental missile that can launch a war head, they don't need it much anymore they have already aremoved >> as a reminder, the president took questions from reporters earlier in the week where he said there was a substantial chance this would not work out take a quick listen to that. >> there's a chance it will work out. there's a very substantial chance it won't work out i don't want to waste time so there's a substantial chance that it won't work out and that's okay. that doesn't mean it won't work out over a period of time. but it may not work out for june 12th but there's a good chance that we'll have the meeting >> he also went on this those comments to talk as well about the benefit. s that would come to the north korean economy and reference the

points that you were making. he didn't say this, but he did imply. >> we watched that live on power lunch that day it was extraordinary to watch. he said kim jong-un will be very happy. he will be very safe and he will be very rich if he does a deal. he made very, very clear what the u.s. was willing to offer in exchange for denuclearization. what was also interesting about that news conference was it made clear what the hierarchy of desires was for the president. what he said china and the border every time i think about china trade, i think about what can they do for us on the border with north korea so he clearly prioritizes trying to get a deal with north korea over all the issues we talk about a lot related to trade >> thank you for that. we'll continue to watch this development as the president has called off the summit with north korea in singapore set for the 12th of june

he'll have stuff to talk about >> including a lot of rumors that the president -- that opec is going to make some calls. >> and then disrupted the entire tax business it's not a disrupter officially. >> you're coming in tomorrow >> i don't think he takes those. dow is down 146. "squawk on the street" is back in a moment. whoooo.

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welcome back to "squawk on the street." dow is down almost 165 points here as the president has called off the summit with north korea. that's where we'll begin >> the summit officially with north korea in singapore is is off. and stocks are sliding on the news we'll bring you the latest on the unfolding situation.

>> whiplash on trade the president also signal iing new set of tariffs may be coming for imported cars. auto stocks are moving as the roller coaster of trade announcements continues. plus elon musk's twitter tirade the ceo goes after the media and the media's business model let's get straight to michelle for the latest on the president's decision to call off the summit >> supposed to happen june 12th, but the white house released a letter from the president to kim jong-un of north korea officially calling it off. he cites very specific reasons based on the anger bdisplayed in your statement, i feel it's inappropriate to have this long-planned meeting the statement referring to is one diplomat who said whether the u.s. will meet us at a meeting room or encounter us at a nuclear to nuclear showdown is

entirely dependent upon the decision and behavior of the united states. also calling vice president pence stupid probably didn't help either in the last 24 hours. so that would be one of the reasons why a spokesperson at the white house telling me very specifically that statements in the last 24 hours are what has caused this withdrawal from the meeting. we wait to see if this is a negotiating floi ploi at this point maybe to get them to change their tune and attitude ultimately, what the white house wanted was for kim jong-un to agree in advance that these discussions would be about denuclearization of his country by our definitions in the united states back to you. >> thank you very much we watch the market reaction here dow down 144 joining us is former ambassador to nato and greece nick burns. thank you for coming on last moment how are owe reacting do you see this as a negotiating

tactic or is this going to be the new course of action for the administration on north korea? >> i think we're witnessing diplomacy in action. and trafrankly i think presiden trump is right the north koreans have issued wildly irresponsible statements against the united states. yesterday threatening a nuclear war against the united states. this is not the actions of a sincere, consistent leader in kim jong-un. and president trump has shown a willingness to go to singapore to meet him one-on-one, but we haven't seen that kind of consistent response back and i think in the the letter today, president trump said he's still willing to meet, but not in an atmosphere where the north koreans are making these kinds of threats so i think it's probably the right move by the united states to push the north koreans back a bit. let them know about the minimal conditions that need to take place for a summit of this nature >> the how do our allies

respond? >> very important now that president trump keep the prime minister of japan close together with us. i expect that he is probably talked to them already or he will to explain his reasoning. i think if those three countries can stick together you have a united front the key question here is president ping of china. is he going to help the united states give a dose of reality to the north koreans or is he behind the north koreans trying to actually water down the objectives of the united states. i think that's an unanswerable question but one that the trump administration is going to have to figure out. >> ambassador, your point about what they have said or at least what kim's lieutenants have said makes sense. but the president has threatened them with fire and fury. the likes of which the world has never seen is that the appropriate rhetoric to set up a summit >> that was the rhetoric of 201

when the united states and north korea were exchanging a war of words. that was last year president trump has beenen consistent over many months saying he's willing to meet. you have not seen that kind of rhetoric from president trump over the last three months we have now seen it from north korea when the united states says that the purpose of this summit was to begin the dismantle me dismantlement of north korea's nuclear program and president trump has actually been i think trying to stretch the margins of what the united states can do in the last week. so i think north korea has made a miscalculation here. we'll see in diplomacy that countries need to engage in this kind of rhetorical fist to cuffs before they can get to a summit meeting. so maybe a summit meeting is in the offing of several months from now but i think frankly this kind offen strength from the united states is a good thing right now. >> any evidence of historical behavior of the north korean regime whether kim jong-un would

indicate they are going to get this thing back on track >> it's really hard to say the north koreans the clinton administration try ied to negotiate. the north koreans violated that agreement. george bush negotiated in good faith. i was part of that administration the north koreans violated that. so i think we have always understood that we have o to have our eyes wide open in negotiating with the north koreans. we expected more consistency than we have gotten from the north koreans. obviously, the north koreans are not going to agree to a schedule to dismantle their nuclear program, not going to agree to consistent negotiations, the trump administration calculate used there really wasn't a basis for a june 12th meeting in singapore. >> what about some of the rhetoric from john bolton, the new nsa adviser? references to libya, which ended with gadhafi getting killed.

did that play a role in the thinking of the north koreans in terms of their change in tone? >> it may have i think it was a mistake for john bolton to have used the libya example as the model for what he wanted to see in north korea. libya ended with the death of the libyan leader. the north koreans obviously weren't about to accept that as the basis for negotiations but it's subsequent days it's made clear this wasn't his model. and he speaks for his own administration but i think it was a great mistake. maybe intentional by john bolton to try to lead this negotiation down a different path. >> so before we let you go, ambassador, what are the next steps here >> i think it would be a great mistake for the united states to go back to a war footing there are no easy military solutions here they are all bad

i think if we keep on the diplomatic track, keep japan and south korea with us, try to bring china back on board, sanction north korea and hope that the north koreans will come back to taunlks in a more reasonable frame of mind, that would be the best way forward. i hope that's what the trump administration will do >> and key economic sanctions on north korea as well. >> very much so. because that's the leverage that the united states and the west have certainly. >> thank you for joining us. >> pleasure, thank you >> we're going to talk about the market impact this morning the dow is down 120 off the initial lows he does end the letter by saying if you change your mind, don't hesitate to call me or write does that give the market some hope >> i think you're seeing the market coming off the initial bottom realizing that this may be a form of negotiation

but the other thing that's got the market thrown for a bit of a loop are these new auto tariffs. and we're back to nose to nose if not on war fair and negotiations certainly on trade policy and what's going on. so this week we have had enormous swings. monday looked like we were going to be getting along with china and making great progress. the two things were combined the assumption was that the president wanted very much to have this meeting and he was going to bend over backwards to get the support to work on kim and then that all got somewhat mashed up as the week moved on then late yesterday trump seemed to be calming things down again. now we came back in with auto tariffs and that's got everything back up in the air. >> when you see swings, the market is relative to what's possible

we haven't really seen it. >> you saw a rally when it looked like everybody was getting along. then you saw the corrective selloff. we retested the s&p moving average. then you bounced off that thanks to the fed minutes and late yesterday the president was back in an upbeat move mood about trade and what was going on >> let's also bring in brian gardener to this discussion. he's the director of research. for the investor impact, i wonder if there's a trade story in terms of the market reaction. president trump said directly in a news conference that when he thinks of china and trade, he thinks of the border with north korea. with this summit off, does it increase the likelihood we could see stricter and more harsh trade policy with china? >> i think you certainly raise the prospect of harsher rhetoric i'm not sure that the policy is

action is going to follow the rhetoric i think that's why the market is not selling off more than it has this morning both on the tariffs and the north korea diplomatic situation. the markets have kind of the gotten used to an administration approach of throwing a lot out and having to walk it back or seek a compromise that's less onero onerous. so i think on the north korea situation, we may rhetorically lean on china. i'm not sure that we have seen too many examples so far where the policy follow through has followed that rhetoric >> so as a policy analyst, the trade war is on hold we're talking about new tariffs. the summit was being planned now it's off how do you know what to discount and what to ignore and what to put aside? >> it's a great question i wish i had a coach ed answer.

but going back to my original answer, which is i think investors have to discount most of this. because i think there's now 18 months pattern that the administration and the president will throw out all sorts of ideas and threaten sanctions and whatnot. but the follow through really has not been there and so i think investors now have a pretty good idea of what the mo is, which is heated rhetoric, weak policy is or it's certainly not threatening policy to the markets so become in thewinter when th trade war really started to heat up and we saw 700-point selloffs, we have gotten through that and investors are kind of shrugging their shoulders saying this is what it was like and never ever happened. so why are we worried about

this so that's where we are today >> whether it's right or wrong remains to be seen thank you. the dow now cutting losses down 125. >> when we come back an interview with the fed as we have three fed officials today dow down 122 "squawk on the street" is back in a moment. you're gonna do great! thanks, dad! break a leg!

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we are awaiting comments from the president expected to sign part of that rollback to dodd-frank awarding the medal of honor. we'll see if we get comments on the cancellation of the north korean summit. the dow is down 133. steve leaseman is is in dallas with another important interview. hey, steve >> good morning. carl i'm here with the federal reserve president on disruption and technology let's talk about the news that's out there. how does this play into markets and the economy? this idea of the very important summit being off now >> i think it's going to be a surprise to everyone i didn't even know this was a possibility. and i think it will have implications from an uncertainty perspective. they don't know about where policy is going to land. and i think this has the potential to add to that in that

these geopolitical risks really do have implications for how this will take place >> you have talked a lot about the uncertainty around trade that showed up in the minutes yesterday. i want to say two or three times. this is the idea of the uncertainty surrounding trade. this is an issue at the forefront for the fed right now. >> it is when i talked to business leaders, i want to know what investments they are going to make long-term that are going to transform their productive capacity and when businesses don't know what the rules are, they all tell me we're reluctant to make big bets and commitments on investments in the future. this has real implications for the like lihood we're going to see quick movement to a nutra jekt ri if that's going to happen >> does this negate the positive effects of the tax cuts. >> it's a downside risk. and there's uncertainty has its

own contribution then we have to wind up and figure out what the policy winds up being and if the policy turns out in certain ways, businesses may go forward. but the uncertainty your at a fork in the road and there are multiple ways you can go what i'm hearing from businesses is that we're going to wats and we're going to see what happens. that will offset sot some of the impact >> let me get to the core issues of monetary policy the market pricing in two additional hike this is year do you see a reason to do those two on top of that >> when i started i was at two and then the tax overhaul there was the fiscal package and i move ed d to throw there was a lot of stimulus. i'm comfortable with three right now. and so i think the market price our communication has been consistent with that if you look at the summary of economic projections and all those sorts of things. but i'm always looking to see is the economy coming up stronger

than expected, coming in weaker than expected. so i'm going to make sure that my decisions and the counsel i give to the board is that let's let the evidence tell us we're on the trajectory it's expected or not >> one of the other big issues that was discuss ed yesterday i the minutes is this issue of how close are we to the end point and the terminal rate? what's the neutral rate? where do you stand on the issue? there was a comment that a few people on the board think we're close to being there before too long >> yeah, we have lots of discussions about that my staff talk about this all the time our folks have the view that neutral is somewhere between 2.25% and 2.75%. >> so that's three rate hikes away >> that's close. one of the things we're trying to get a handle on is are we seeing signs of overheating and how adegrees i-should we be as a buyer. >> i want to interrupt you on that the issue is very important.

because really the question you need to act to go further than neutral to slow down the economy. if you had to make that choice now, how would you answer it >> i would say no right now. for me, we get to neutral. and then we let the economy work now i know that we hit our target of 2% but we hit that for one month or a quarter. we have not been consistently at that level we have seen inflation taper off. so i wonlt take the sign that we have hit the target at one point as declaring victory i want to see how the economy plays out. and i really do not want us to contract and really derail some of the momentum that we have seen in the economy. >> speaking of inflation, the issue of oil is out there. another level of uncertainty here what affects do you see it having on the economy? >> oil, as you know, goes through so many of the products that we use that is going to affect things. i was talking with my trainer yesterday. and he was complaining about the

gas prices and how it was playing out. so it is definitely going to have an impact on our economy. but one thing i would say, i remember back in the early 2000s when oil i was at 20 and people said if oil goes to 50, we're going to have this huge reception. businesses make adjustments to make sure that their experiences don't go into a lot of volatility so i'm going to take a wait and see attitude it's going to put pressure on prices but we'll see how much businesses respond and how much consumers do >> thank you for joining us. >> good to talk with you as always >> toss it back to you guys and the big story on north korea carl >> steve, thank you. i love that real world reference to inflation getting gas price indicators from if his trainer thank you very much. when we come back, we're expecting to hear from the president later this morning we'll take you there live as soon as that happens

another check on the dow it's down 168. so moving south. it's really the financials and big. energy stocks that are the biggest losers "squawk onhetrt" t see will be right back ♪ approaching medicare eligibility? you may think you can put off checking out your medicare options until you're sixty-five, but now is a good time to get the ball rolling. keep in mind, medicare only covers about eighty percent of part b medical costs. the rest is up to you. that's where aarp medicare supplement insurance plans insured by unitedhealthcare insurance company come in. like all standardized medicare supplement insurance plans, they could help pay some of what medicare doesn't,

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time now for the spotlight a look at how the market impact to call off the summit with north korea could impact >> we did get a reflex move down there's a share that does track south korea. it ticked down by about a percent and a half it was obviously linked to the news of the calling off of the summit it's a look at the longer term if you go back to look at a year to date version of this, march 5th this etf closed at 71. a little almost 72 and once there was a plan set for this summit with the president, it ticked up 6% so obviously it is link ed to th

fortunes of a potential peaceful solution there and maybe people trying to game out with the trade implications from the summit. samsung is 25% of this etf >> gdp and the whole stock market value it's not as if people are carefully deciding what the impacts of this are. but it's just a little bit of an automatic reflex trade that's going to happen when you don't know >> you also see ripple effects in some of the uncertainty safe haven trades gold higher. >> and emerging markets followed the exact path with less dramatic move as the south korea move this isn't investors collectively saying we know what this means and it's bad things it's just that quick rush to a trade. it's a continuation of yesterday's market before we had that comeback in the afternoon in the u.s it was kind of a risk off day

yesterday. so in a modest way, picking up where that left off. >> we're watching for further changes. when we come back, morgan brennan investigating the battle between illegals and the law are you surprised to hear it's not legal here? airbnb unwelcome guests, a lot more on that investigation coming up in the next hour

good morning, everyone here's your cnbc news update at this hour. the summit with north korea is off. the white house releasing a letter from president trump to kim jong-un saying, quote, due to the tremendous anger and open

hostility in your most recent statement, it was inappropriate at this time to have the long-awaited meeting, end quote. it comes as north korea announced it dismantled its nuclear site in a series of huge explosions as journalists looked on you're looking at pictures of the site before. it was closed. that site is where pyongyang conducted all six of its underground nuclear tests. in iraq a suicide bomber blew himself up at a crowded park in baghdad killing 7 people and 16 more were injured officials say they intercepted the bomber as he entered the park, but he managed to set off the bomb before being caught blue flames are the latest natural fete nphenomenon being n at the volcano in hawaii the geological survey releasing this video the flames are produced by burning methane gas just below the surface. that's the news update this hour a busy news day. i'll send it back to you

>> thank you, sue. welcome back, everyone, to "squawk on the street." live from post 9 at the new york stock exchange an hour into trading and it's been an eventful session the dow is lower down 194 s&p down 19, which is about three quarters of 1% at one point the nasdaq went positive and then we got that news that president trump officially cancelled the singapore summit with north korea on june 12th and things took a turn for the worst. >> the president did call off the summit with north korea, which was scheduled for june 12th we have details from the white house and a look at away we might hear later on today. >> a couple updates. i spoke to a couple aids who say it's possible we'll hear directly from the president at some point this morning. although things are a little bit influx, as you can imagine, with the dramatic changes we're hearing from the pentagon unit there's no change in alert status for u.s. military forces

in the region. so that indicates sort of a status quo situation there meanwhile here's the excerpt from the letter that the president sent to kim jong-un this morning canceling that summit he said sadly based on the tremendous anger and open hostility displayed in your most recent statement, i feel it is inappropriate, at this time, to have this long-planned meeting what the president is referring to is a statement from north korean officials referring to mike pence, the vice president, who had invoked the libya model in terms of nuclear negotiations you remember that gadhafi took steps to give up his nuclear arsenal early in the 2000s but that ended badly for him as he was killed by rebels after the u.s. supported military action in libya later in the decade so the vice president invoke in

that possible outcome in terms of the north korean negotiations north korea responded to that. here's their statement i cannot sup is press my surprise at such ignorant and stupid remarks gushing out from the mouth of the u.s. vice president. so that is apparently the statement now that president trump is is responding to. the north koreans calling the vice president ignorant and stupid now the president canceling that summit that had had been scheduled for june 12th in singapore. there was some speculation that this summit might not happen through the day yesterday. now we get the final determination here from the president. in his letter to the north koreans, the president raises the possibility that he might continue to talk to kim jong-un and the north koreans saying if you'd like to speak, please reach out and also saying he had been optimistic about the dialogue developing between the two. the president seeming in that letter to give an indication that he had been privately speaking directly to kim jong-un. we'll wait for some confirmation of that from the white house if we can get it. if there were direct talks between president trump and kim jong-un as opposed to talks just

between the militaries or the diplomatic core of both countries through the south koreaen s, which we had understood leading up to today a lot of moving parts here but ultimately us it looks like the president is taking a page from the art of the deal and walking away from the negotiating table at least for now. >> we can confirm we're set to hear from the president in a little under an hour 11:30 a.m. eastern time. we'll take it live just a question for you to follow up on china is the trade war still on hold got those threatened tariff this is morning on autos and china finds itself square ri in the middle of what's happening in the u.s. and north korea >> this is all of a piece. you heard the president saying that he was extremely frustrated he felt and came up to but didn't quite say that he felt that the president of china provoked kim jong-un to take a tougher line on the nuclear

issue in order to excerpt for leverage in the united states in the trade negotiations the president saying he wasn't blaming anybody for that he might do the same thing if he was in his position, but also saying that he didn't like it one bit. and putting the chinese on notice that he knew what they were doing so now where does that go. that is going to be some question here moving forward whether the united states takes a tougher line we'll have to wait to talk to some of the trade officials at the white house to get an indication of what happens next on that front. as of yesterday, wilber ross was scheduled to go to china at the end of next week to negotiate with them and continue the conversations forward. the trade war being put on hold. they put a hold until that dialogue was complete.

>> the dow is down 214 the s&p is down 21 ten years below 296. markets are react ing ing to al this as the president calls off the summit joining us on his investor day is doug peterson, the ceo of s&p global good to see you welcome welcome. you had a long discussion with policy analysts about how investors navigate these turns in policy or at least rhetoric ideas? >> first of all, i would always expect the announcement today was going to introduce unsurgeonty. what have generally been positive markets you have growth around the world. interest rates although they are starting to increase have been low. and conditions are favorable so it does not surprise me that this coming into the news today will have a negative impact. >> does liquidity affect some of

the turns that we're seeing? >> i haven't seen a lot of problems with liquidity in the markets. there's strong liquidity around the globe. but it's a sentiment it's a way that traders are getting in i wouldn't be surprised if this creates uncertainty. >> what does it do for your own business i think you were looking at going into china pretty soon when it comes to rating some of its bonds. >> we have a very strong position going into china. we have been there since 1992. in the overall china story, one of the positives is that last year the chinese agreed to allow rating agencies to own 100%. it's been a positive dialogue with the regulators and we're going to start the application process and go in full bore in china. >> for a stand alone business in china. >> rating ghesic market. right now only 2% of the bonds that trade in china are owned by

foreigners and it still is really a bank centric market the banks on the bonds they are the ones that make the loans. we see over time it's going to shift to the types of capital markets you have around the rest of the globe we want to be there as it starts changing >> certainly plenty of debt to rate over there. >> no shortage of that there's some who say it's been rated perhaps more highly than it should be do you worry that once you drod a sense of reality if you do that there's some blowback >> there already are loans and debt, which is rated offshore. we have a very robust business rating chinese debt offshore and you can see today what are some of the differences between the on shore market and offshore market there could be reasons why debt is rated higher on shore we think what's most important is chinese investors and regulators want transparent. they want consistent approach to ratings. and thiwe think it's a great tie to enter the market. >> corporate, financial

institutions, municipalities, we plan to cover the entire market. >> remember when u.s. ratings were sort of lit sized in a way when certain levels were at risk you don't think that would be more acute in china? >> our business is one where we're completely independent we have no interest in the outcome of the ratings it's an independent opinion. it's a credit opinion. we have had pressure before from both ends and we're used to living with that >> are you done with the litigation involving the crisis. >> we have settled recently some final cases where we're down to a handful of cases which will not have any meaningful impact >> i would think you have a wrapped audience given the performance in the stock markets. you're a $50 billion market cap company. it's that long since it was from mcgraw hill? >> it's been about the last five years since we have taken on a

completely independent approach to a company of that scale >> what's the main theme to try us to share with that base today that perhaps somewhat different or going to be more of the same. >> we're going to continue with the same approach to help iing h markets delivering essential intelligence and powering markets of the future. we're entering a broader theme of technology as well as a customer focus that we haven't really had in the past >> what does that mean >> we started investing much more in technology across the entire company we recently did an acquisition of artificial intelligence company. we added that to the portfolio >> so we're incorporating as one of the most critical themes across how we think about the way we run the company and deliver to our customers >> do you have a sense of whose bonds would have a lower rating if the u.s. were to go to a trade war with china who would suffer more? >> i don't know.

i'm not a credit analyst on the floor. so i don't want to try to second guess my analysts. >> you got to give us an update on how it goes in china. that's a fascinating move. >> we're pleased thank you for having me today. we're looking forward to getting into the china market. >> thank you coming up, just under an hour from now we do expect to hear from president trump speaking live at the white house straight after sending that letter to the leader of north korea calling off the june 12th summ summit market reaction, the dow now down a little under 200 points we'll take you there live as soon as it happens "squawk on the street" will be right back ♪ when i first came to ocean bay, what i saw was despair. i knew something had to be done.

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veteran china watcher and steven roach says a steep in stocks could be on the horizon what's making him so nervous trading nation we have more squauk coming right

up

time for the santelli exchange >> good morning, david thank you for joining me today we have three minutes olympic let's go fast. with respect to what's going on in italy, emerging markets, the turkish leah, some of the spreads in europe, some of the sovereign rates. it's been a big week >> it's been a huge week that's been going on in europe. let me put this in context for you. we do a little study and look at words that the fed says in all of their speeches. right now, we are at the words using uncertainty or words that would suggest that they are not sure about the future at the lowest level in the crisis area. >> what does that mean >> they are sure about what's going on that's why fed policies are pricing in 100% chance of a rate hike 40 days before it happens but that doesn't square with reality like italy, like turkey.

>> this was a time where global dynamics was mentioned it might have slowed down some removal of accommodation it seems as though we have ramped that up at least an octobertive and now not in the vision of the fed. do you find that normal? what do you think? >> it's very low they are not talking about the grand sum of all of their speeches he mentioned uncertainty, but he was an outliar than the broad politic. >> so it doesn't represent what your software tells you their thought pattern is >> he's worried about uncertainty and the stuff that he's hearing that's not what you get from the fed. that's why the markets got the rate hikes priced in >> it reminds me of parents of teens that pretend they have it figured out. when the teen is gone, they are pulling their hair ut. that's like what the central bankers are going through. >> when you get that certain and price everything in, you then run the risk that the surprise

comes in italy, turkey, south korea, even some of the economic data in the u.s. moderating not bad, but moderating there's a problem >> that's unique and i appreciate some of the tangents of your studying is hard data and soft data being consumer confidence. >> explain the divergence. >> the soft data of the surveys are on the moon leading the fed and everybody else to believe this is the greatest economies that we have ever seen the reality is inflation as well the reality is their surveys are asking opinions. if you model it out, they don't work that well and this is the common mistake the fed makes. the surveys say here comes the growth in inflation. we have to raise rates it doesn't show up they invert. that was 2004 to 2006. that's a real risk they are going to make that same mistake now.

they are going to keep raising rates because they are certain that inflation is coming back. and in the year, they are going to wind up creating a slowdown >> this is a holiday week, but watching interest rates and the way they have been moving, there's going to be a pause in consolidation to lower levels on rat rates. that has to be monitored we have to find room to put all the tightenings within the yield curve. >> i agree with you about that we have to find room with that if we're going to start thinking these tightenings are coming, weaver going to crypt the curve. that has implications as much as they try to pretend it's a different economy. it does matter >> thank you have a great weekend back to you. coming up, much more on the developing story this morning on north korea. the president is expected to speak in the next half hour. the dow is now down more than 200 points bonds are higher as the uncertainty trade ticks on we'll be right back.

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welcome back to "squawk on the street." i'm dominic chu. markets are hovering near the low end of the day worst performers among the s&p

500, crude prices hit their lowest level in more than a week leading names to the down side, range resources, apache and eog as well, down more than 2% in early trade iing. shares of exxon as well down 2%, on pace for its worst today in a month. i'll send it back downtown to you guys at the stock exchange sara >> energy the worst performing group, dom thanks the u.s. pulling out of its proposed summit with north korea in june. with reaction -- by the way, the stocks are reacting as well with the dow down more than 200 former ambassador to the republic of korea, thomas had you been -- thomas hubbard thank you for calling in we had seen relations sour a bit when it comes to that open rhetoric between the u.s. and north korea in recent days. >> i don't think we should be totally surprised that the meeting has been postponed

but even as late as yesterday, the preparations seemed to be under way. i think there are a lot of reasons that have caused this -- this breakdown in the movement towards the meeting. but fundamentally, it was probably a bad idea in the first place, the gap between the united states and north korea is so longstanding, it's so great that somehow the idea that the two leaders could get together with only minimal preparation and solve the problem was probably doomed from the outside. so president trump seems to have left open the room for further talks, further leading to, perhaps, a summit meeting later and, you know, maybe that's a good thing. >> ambassador, kim has left the

country for the first time in a very long time some say ever. they just destroyed a nuclear site or said they did. why was this doomed from the start? did you not think they were making some overtures? >> well, i think the basic problem is that our main objective is denuclearization of north korea. the abandonment, the dismantlement of north korea's nuclear programs the north koreans have indicated that they're prepared to talk about denuclearization of the korean peninsula, but they mean something much broader involving the presence of u.s. forces in south korea and our own strategy in the region. we differed in our definition of denuclearization and, unfortunately, i don't think the

two meetings by mike pompeo in north korea and any other dialogue that has gone on has yet served to narrow that gap to make a successful summit possible. >> what do you predict the conversation will be like between president trump and president xi following this letter >> it also is, i think, a shout across the bow to the chinese. president trump, at least, has said he thinks one of the reasons the north koreans hardened their attitude is that the chinese, particularly in the second meeting xi jinping had with kim jong-un somehow put a damper on the process. i'm not sure that's true, but seems to believe that and made that public. and that will add another complicated factor to the

already difficult u.s./china relationship. >> do you predict the north koreans will come back to the table as president trump did leave -- seemed to leave the door open to at the end of that letter >> we get back to a process of dialogue with the north koreans, to my mind we should be starting with the president, which would start with senior officials sitting down, senior north korean officials and working to lessen the gap between our positions. again it was a little unusual for the secretary of state, mike pompeo, to make these two visits to pong i don't think. the only other secretary of state who ever visited north korea was madeline eine albrigh. i was with her on that trip but that involved a lot of working level, senior level discussions

and we need to get back to a more traditional process. >> thank you for joining us by phone, former u.s. ambassador to the republic of decreea thomkor hubbard. the president will be speaking live in the next half hour here. we, of course, will take that live on squawk alley and a lot more on the market we'll be speaking with ian bremer at the top of the 2:00 p.m. hour as we watch markets sell off big uncertainty about what happen happens on trade with china and, of course, where that fits in with north korea. >> indeed. when we come back on "squawk alley," morgan brennan on short-term rentals and the law airbnb unwelcomed guests back in a moment st year. that's great. but the market was up nearly twice as much. that's a tough pill to swallow. exactly. so i started trading. but with everything out there, how do you know what to buy? well, i think my friend victor has just the thing for you.

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