tv Squawk Box CNBC May 29, 2018 6:00am-9:00am EDT
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good morning welcome to "squawk box" on cnbc. i'm andrew ross sorkin along with joe kernen. melissa lee is with us today becky has the day off. our guest host is noah blackstein let's show you u.s. equity futures at this hour tuesday morning, after what was a three-day weekend. those celebrating and honoring those on memorial day yesterday. the do you low looks like it wi off about 162 points the s&p down about 18. the nasdaq down about 38 italy's president blocking the nomination of a euro skeptic finance minister this prompted the leading populist political parties to ditch their plans to form a government there are growing concerns that fresh elections could take
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place. the yield on the two-year note hitting its highest level since 2013 italian banks are also selling off this morning as well we'll show you that. you can see right here, stocks across the board europe is just -- there's no freefall here, but we are off in a meaningful way finally the euro hitting -- that's a quick look at the i tall yaitalian banks. >> and the banks would be holding the bag if there's a problem with the debt. >> there's a number of other european banks that hold -- >> that hold italian debt as well french banks for instance. >> german banks. >> yes >> we have not seen the euro there in a long time
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there's a real possibility -- >> this is an existential crisis for the euro >> third largest economy in the eu -- >> is this the conversation we're aving? >> back to a brexit type situation. what do we call it frnlg>> ilatleave >> that sounds like the restaurants. >> which we don't -- >> which we don't talk about anymore. >> i don't know. he was part owner. was that his >> he owned some of those restaurants. >> okay. you will tiptoe more than i do >> any way, on the notion that we could see an italeave if there are elections, we are seeing a flight to safety. check out the yield, 2.864%.
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and watching gold prices firm, 1,302. oil prices are dropping this morning. saudi arabia and russia saying partner producers may increase production later this year wti down 1.5%. in corporate news, j.a.b. holdings is buying a majority stake in british couffee shop chains you're from canada, you know how to say it? >> manger.
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>> did you know that >> i may have. >> if you look at how to pronounce it, noah, since you will be speaking like that, it says do not overdo the managege. >> what you are reading off of this is how manger's president said to say it it's not pretty manager, they almost changed it several times because they were trying to expand internationally they say it's stuck, people can't pronounce t i'm okay with that >> if they're eyeing an ashagia expansion, that will be challenging. >> the deal is worth about $2 billion including debt this deal is the latest in a string of deals for j.a.b. holding.
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china's ant financial raising about $10 billion from a group of global investors. why was it called ant, do you know. >> you looked up the origin. >> because it's smaller. >> they are trying to help small business everyone is a little ant >> ants, when you put them together, they're powerful >> they are. >> carry stuff around. have you seen that there's been a couple of movies. >> about ants? >> yes >> another guy we don't probably -- any way, this latest funding round puts ant's financia evaluation around $150 billion that's compared to 60 billion after the previous fund-raising back in 2016.
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and verint systems is in talks to buy nso group nso develops mobile surveillance tools and has reportedly developed ways to hack iphones. andrew, they gave this to you. you will give it the excitement and the attention that i think it deserves. catching our attention giving background to the theory that redstone and moonves have been feuding, moonves saying redstone has been stepping on his territory since she took power. and redstone has been pulling to bring cbs and viacom together. moonves has been opposed
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she apparently not only went to get -- or verizon was trying to get to her, she said we're not going to do a deal until we put the companies together she went through robert kraft to make that happen there's a handful of other potential bidders in the story it's a worthy read it does lay out how the soap opera is unfolding we don't know the end though >> or what's what happening inside it must be a huge distraction for both companies >> huge distraction. they've been managing, to the extent that you can manage >> do they have a choice at least in terms of viacom, if they don't merge with cbs? >> are you a shareholder >> i don't own either. >> if you were a shareholder of cbs or viacom, do you think there's a breach of fiduciary
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duty >> that's hard there are multiple voting class shares i'm not a lawyer i would say les has done a good job with the assets over time. at the end of the day probably proper management gets the value for the company significantly higher there's such a management focus and distraction on this politics, what happens to content, programming and the franchises there's a lot going on in media today. it's not a great time to be distracted as far as i'm concerned. >> now to geopolitical news. it sounds like the u.s./north korea summit may go ahead as planned. eamon javers joins us from washington with the latest. good morning it was a frenzy of activity and diplomacy over the weekend as both sides tried to get the summit back on track last week the president canceled it on thursday but then on friday said the summit could be back on. over the weekend, we saw a surprise meeting between the leaders of south korea and north
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korea. there you see some pictures that emerged from the region. we saw the top north korean nuclear negotiator arriving in beijing on tuesday and an american team arrived in north korea over the weekend to plan for that summit you saw that hug, signing some documents, making some agreements here. both sides, north and south korea suggested that they wanted to move forward with this summit so we'll see whether that can take place the president for his part in the united states over the weekend tweeting out, urging this summit to move forward. here's the tweet he put out over the weekend about the "new york times" suggesting that they had gotten a report wrong, that there was not enough time to have this summit he said the failing "new york times" quotes a senior white house official who doesn't exist saying even if the meeting was reinsta reinstated, holding it june 12th would be impossible, given the lack of time and amount of
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planning needed. wrong again. use real people, not phony sources. but that was a real person who was briefing white house reporters. i was in the room when the official suggested there was not enough time. the president pushing back against his own staff here who did not think there with you enough time to get this june 12th summit under way. the president anxious to make that happen. here's another tweet talking about where we are in the process. he says our united states team arrived in north korea to make arrangements for the summit between kim jong-un and myself i believe north korea has brilliant potential and will be a great economic and financial nation one day kim jong-un agrees with me on this it will happen so that's where we stand as of tuesday morning. we'll wait and see what the day brings it looks like all sides are pushing hard to have this summit happen, whether that can take place on june 12th or not remains to be seen clearly there's some momentum here on the diplomacy side
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>> they went back and forth in different publications about -- and finally decide the source existed but the source didn't say what the "new york times" said what the source said. but now you are saying the source did say that. >> the source said that both sides were running out of time i was in the room for the briefing >> running out of time that's different -- >> they do these with senior administration officials the ground rules are you can't name the official, but we're sitting there looking at him this official suggested there was not enough time. he said june 12th is in ten minutes in an xexasperated way. in the nuance, did the official say it was impossible or unlikely this could take place the official was clearly suggesting it was very, very difficult for it to take place the president suggested there was no source at all that's simply not true >> i don't -- i think it could
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be on and then back off again, and then back on again, back off again. i think there's plenty of time for more on again and off agains >> it feels like it. >> are you sure it's going to happen do you have a high degree of confidence that it will happen >> i don't have a high degree of confidence in anything these days it seems very uncertain. but it seems like both sides are pushing for it. >> they went into radio silence. our guys were there for three days in singapore. they were playing cards or something, nothing happened. >> right our u.s. delegation was stood up by the north koreans >> right >> and now -- >> now it's all smiles again you have to admit trump's tweets, sometimes you think people want him to show more restraint with his tweets.
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his tweets in this case were almost gripping with restraint will we ever know why it was off with china >> the president said last week he could tell you later, maybe years later and you could write it in a book the president pushed away from the table saying i'm not doing the summit, they've been disrespectful with us. and then something happened, within 12 hours the president's tone changed dramatically. maybe he got what he was looking for behind the scenes. maybe he got the north koreans back on track and suddenly that radio silence turned into communication again. who knows. we don't have all the facts here >> okay. all right. eamon javers, thank you. three-day weekend. >> that's over with now. on monday mornings, i should do week, then -- too grim >> it is >> wouldn't get as many
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retweets >> except it's tuesday, which is good that's good. >> better than monday. >> now back to the markets oil dropping sharply this morning. jackie deangelis has a look at what drives that sometimes equities go down when oil goes down. we were just complaining about $4 gas >> we were talking about it last week we saw that plunge last week after the marketstarted digesting this chatter that maybe the russians and saudi arabians may stem some of the perceived losses from other opec members, iran and venezuela. opec will meet on june 22nd. so far the cartel has stuck to production cuts of almost 2 billion barrels a day. but the market was worried about the iranian barrels coming off line, about 500,000 barrels, and
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worried about venezuela. estimates there say we could see another 500,000 barrels come offline out of that country. add those together, that's 1 million barrels we're worried about. opec has not said anything formally last week crude was trading comfortably over 70 after running up in anticipation of the holiday weekend, summer driving. now it's well under 70 and seems to be declining. two other factors to consider here u.s. production has been rising steadily and demand forecasts have been robust so very quickly you have a market that is still working through excess supply tightening quickly at this time there is chatter behind the scenes that this is politically motivated. that the saudis are doing trump a favor to bring that balance back to the market even though they have a favor in keeping prices high. >> were they jawboning >> not jawboning, but going the other way. we were talking last week about gas prices over 70 if they keep it balanced around this 70 mark, plus or minus
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five, that's good for them >> jackie deangelis, thank you >> sure. >> 60 is just about right. 55, 60 that's a sweet spot. >> a good spot >> keep us drilling here >> that's a sweet spot where it doesn't impact equities dramatically on a daily basis. >> put it around there if you can. >> i'll work on it let's check on u.s. equity futures. once again, we're holding steady here at this early hour. dow jones looking to open lower by 160 points. s&p looking down about 19 at the hope joining us is drew mattis and noah blackstein continues with us good morning, drew let's start off with what's going on with italy. are we going to -- how you are deciphering this and putting this into your market equation if at all? if you look at how markets traded around brexit, that was the best buying opportunity
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looking back on it >> longer term there is a global shift towards populism it's happening and it will continue to happen it's not everywhere. even within europe there are places like spain moving towards a more centralist government what's happening in italy is an italian issue that only reverberates throughout the rest of europe because of the euro. you know, but if you look back at the euro crisis, italian bond yields were above 7% once again, the move has been dramatic, but we have to look at the absolute levels at times >> how does this factor into what the u.s. does in terms of monetary policy and if there is an issue in europe, the ecb is likely to remain accommodative the u.s. may be tethered to what is going on abroad a
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>> if this was the janet yellen fed, i'm sure they got more guidance out of washington than out of canton, ohio or austin, texas. globalism was more important in the last fed this is a new fed, i'm not sure what powell is looking at. having said that, we priced in three rate hikes, it's hard to get a fourth one with all the stresses in europe right now that's why you're seeing the ten-year close to 2.85 >> drew, your view on rates? >> we would agree on that. we would look at it slightly different. we think where the ten-year yield is dictates where the fed funds rate is at the end of the year we think the fed is taking cues from the markets they don't want to invert the yield curve. as much as economists will tell you it doesn't matter if the yield curve reverts, most portfolio managers would tell you that means you're moving towards a recession. the fed doesn't want to signal
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that >> any risk of contagion if italian bond yields remain high, morgan stanley came out with a note saying banks will feel the pain if yields remain high we were talking earlier about some people think it's an italy crisis because italian banks hold much of that debt other european banks hold it as well >> and the central bank as well. this is like a relationship. just because the relationship is over doesn't mean you're over it because we made it through the european crisis doesn't mean we addressed all the issues we addressed the liquidity issues addressing liquidity issues, puts austerity on and bringing in 1 million workers has created social dislocation what you saw with trump with the tax cuts and regulatory reforms in the u.s., the ecb better take a page out of that book. they need fiscal stimulus, not through spending, but through real tax cuts and incentives growing out of this is the only
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way out of it. if they continue to dillydally with 87 regulations on the proper size of banana, this will continue to happen >> it's the third biggest european economy when you look at u.s. holdings, do you think there's risk at all of contagion, even if it's a psychological contagion where you see a hit to those stocks now even though it's not fundamentally warranted. >> psychologically, yes. but if you look at some of the data we are getting today, u.s. consumers expectations of their income six months from now, on a net basis, it's at a multi decade high. u.s. consumers seem like they're confident on what's going on in the world. i'm not sure how swayed they will be by italy the u.s. i think is somewhat insulated by this, even though market participants will be more worried about it. >> are you worried
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>> worried is a strong word. i work at an insurance company, we're always concerned about what is the worst that could happen my guys in italy are looking at what we should be thinking about in terms of italy, spain, and the rest as i said, spain looks like it's heading in a different direction than italy, and it very much is an italian issue that's reverberating throughout the eurozone rather than a eurozone issue reflected in italy >> we need to look closer at that situation in italy. i'm willing -- >> that's a conversation you think -- >> it will happen. next month but now i'm -- >> you are going to take a closer look as a vacation? >> no, like a work thing >> like a trip >> you want to take squawk on the road >> i'm going to go, but now i'm going to write it off, i think
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>> i see how your mind works >> now that you're announcing this boondoggle, that may not increase the likelihood of it happening. >> i will bring back -- >> information >> does tuscany -- >> pasta >> information or pasta? what are you bringing back >> i'll get a closer look. always a good time to get a closer look. >> fruits and vegetables, remember, you can't bring those back >> people are in such a good mood all the time. >> have you ever had a bad meal in italy >> never had a bad meal in italy. >> great wine, amazing food. >> olives. >> yes >> thank you, drew >> yes >> noah is sticking around. when we return, apple planning high-end screens for next year's new iphones. and box office bust or not the latest "star wars" film falling short of estimates we'll have those stories and more when "squawk box" returns
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♪ welcome back to "squawk box. apple may be using high-end technology in the screens of all of its iphone models next year the tech giant could use oled panels in all of its phones. so far only the iphone x uses the technology the iphone 8 and 8 plus both have lcd screens shares of apple suppliers reacting to that report. japan displays stock fell as much as 21%. it's one of the main suppliers of lcd screens for the iphone. worth noting, oleds are more
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expensive and there was a few that they were going to build other phones that would be even cheap their were all going to be l.e.d. >> much harder to do that. but the supply constraints are tremendous right now samsung is the sole producer of oled screens for higher-end phones and use them for their own phones where will they get the other oled screens from? >> andrew always calls it the x. i don't know if it's because of the sites he's visiting. >> i want to call it the x >> i know. >> seems cooler to have the x. the x phone. >> definitely freudian >> no, no, no. >> okay. now i think you protest too much let me get to this this is an existential question. will it be forever with "star wars"?
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is it always we thought iger, whatever it coast, it was worth it >> tell them about the numbers i have an answer >> they're still good. they're not horrible numbers i don't know how you get used to han sol being h lshgsolo being >> tell them about the numbers >> "solo" napolian solo, remember him >> no. >> "solo" took the top spot but well below expectations. the newest "star wars" installment took in 103 million in north america over the holiday weekend. the last film made 220 million in its debut i'm more excited now about "incredibles 2." pixar is never --
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>> "incredibles 2" coming up and jurassic -- some good films. >> so what's the solo -- >> here's what i have to say on the solo piece the question is whether you have to think of these films like marvel films not all marvel films are like rocket ship sul successes >> i'm worried about those, too. would you go to ""deadpool"? >> they're doing three marvel films a year the reason these films when they were working is because you knew what you were getting and "b" they were once and never >> the last one was six months ago. >> there's another one coming out in '19 so if you're going to do them constantly, you know you will not get -- it's not even about
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the quality. it's just pent-up demand for the story. >> nothing is there. >> they're not filming in space? >> no. >> it's a green screen >> yeah. >> the mullfranchise can't be compared totally to marvel the characters of marvel developed over the years >> coming up, trade fears. they told me ten times trade fears. what trade fears why hyatt is making a big bet on china. stay tuned you're watchin"sawk x" og qubon cnbc he intended to keep it. then he met the love of his life. who came with a three foot, two inch bonus. for this new stepdad, it's promising to care for his daughter as if she's his own. every way we look out for those we love is an act of mutuality.
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welcome back you're watching "squawk box" live from the nasdaq market site in times square. good morning welcome back to "squawk box" here on cnbc look at u.s. equity futures on this tuesday morning after a three-day weekend. the dow looking like it will open off triple digits nasdaq off about 40. s&p off about 21 points. also making headlines, nissan may cut north american production by 20%. this coming as it copes with falling profits in the u.s., which is its biggest market. and the nikkei reporting that cuts are already in progress at two plants in the u.s. band thre in mexico but no workers will be let go. hyatt is making a bet on
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china. eunice yoon has the story. >> reporter: i'm coming to you from the city of the terra cotta warriors ceos are gathering behind me in western china and they're here to celebrate the opening of a new hotel in what's become their most important growth market the ceo said to me that he wanted to be the ceo behind the scenes he took me to the operation center, which he described as the heart of the house he said the technology here is so much different when it comes to china because of the staff and the customers are so digitally savvy. this is what he had to say >> you also see some more advanced technology in china than elsewhere i think you'll start to see more official recognition as a means of gaining access to different parts of the heart of the house. there's some interesting advances i think china is ahead of the
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curve. i think a lot of the best new technology advances will be born here and then be able to be applied across the globe >> he said the plans for china are ambitious. he told me currently they have 19,000 rooms they plan to double that in four to five years. that would represent more than 30% of their put chfuture growtd that's despite the fact there are trade tensions going on between the u.s. and china he said he doesn't see any impact rite now. guys >> great, eunice got to keep moving keep moving forward no matter what preparations expected to get under way today for president trump's possible summit with north korea. liter kim jong-un and the president tweeting just moments ago. we put a great team together with our talks for north korea meetings are currently taking
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place concerning summit and more the vice chairman of north korea is heading now to new york a sol lit id response to my letr thank you. joining us is jim vanderhei. is it going to happen? what do you think? >> i assume it will happen i think both parties want it to happen the president is out on a limb here he feels when he talks about it internally this could be his great man moment, the way he leaves his mark on his presidency my assumption is the news conference of this has been dizzying, every day, every hour he's going, he's not going there's going to be a lot of that back and forth. a lot of posturing the assumption in the white house and the preparations being made point to this is going to happen >> it hasn't happened in 60 years, but there's another piece in the "washington post," he's the worst negotiator in the history of the world you know, columnists write about
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it they reread art of the deal and point out shortcomings and that, saying he's a terrible negotiator is he the world's worst or the world's best >> on north korea, if he gets the deal he's talking about, he can call himself a great negotiator there's no doubt if he could figure out a way to get verifiable denuclearization on the peninsula, that would be huge the skepticism comes from people involved in negotiations in the past that it's hard to do. the idea that north korea will give up its nuclear arsenal, the one asset that gives it any power and meaning on the national stage a little harder to see happening. i will say to trump's credit it's not like previous approaches have worked this is a hard problem to solve. he has come at this problem with more unpredictability and now they're talking.
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the question is what comes out of that and what do we have to give up to get something verifiable with north korea. you are seeing this play out in trade negotiations with china, we may be willing to give compromises to the chinese because we need their leverage with north korea >> i would say you go back to the iran deal. we wanted that so badly i think that we -- if you want something too much, you're not in a good negotiating position this involves not just what we give up to north korea, but you just mentioned it, it can affect all of our negotiations with china. if you want it so badically, you c -- badly, you can get taken advantage of it's fraught with risk >> that's the worry. i tend to fixate more on china and north korea. because china is looking at us, looking at a 25, 50--year look
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look at us and seeing how trade goes and how short our attention span focus is and they are trying to exploit that this is not rocket science we understand what the end result needs to be we understand where the chinese can be helpful and can't be helpful. the more trump wants it, you're right, the more dangerous it is that we give up things in north korea, china or iran that could have much bigger consequences long-term. >> i'm still following axios i don't follow a lot of people >> god bless you >> stopped following politico. it's about 90/10 in terms of positive/negative -- negative/positive coverage i don't think that's a wrong time 90/10. sometimes i see axios -- i think jonathan swann goes on fox, seems reasonable
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then i see some of the click bait headlines that come from axios. everybody has to do those, don't they, to make it in this world >> i don't -- you and i talked about this before. i don't agree that -- >> you don't see click bait? i'll go on the website and give you some clib back bait. >> have at it. >> i'm still following you >> god bless you for that. >> you're on probation >> why am i on probation >> pry to go 75/25 90/10 -- ♪ >> am i right? >> at least 75/25. >> he deserves 75. >> we'll have a cnbc debate on this topic how is that? >> i don't know. >> politico is done. that's gone. you know -- any way, thank you, jim. >> take care. okay coming up, starbucks across the nation, they're closing today for anti-bias training
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a live report from a store straight ahead we'll talk about it. four hours this afternoon. the nation without starbucks, we'll see what it's like. later, we'll welcome mohamed el-erian and at 8:20, the winner of the indy 500 will pay a visit to the "squawk" set you're watching "squawk box" on cnbc the governor has declared a winter weather emergency... extreme risk of burst pipes and water damage... soon, insurance companies won't pay for damages. that is, not if they can help prevent damages from happening in the first place. at cognizant, we're turning the industry known for processing claims into one focused on prevention with predictive analytics, helping them proactively protect the things that matter most. get ready, because we're helping leading companies see it- and see it through-with digital.
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welcome back on this tuesday. we have seen futures worsen just a touch. the dow jones looking to open lower by 184 points. s&p down by 21 points. we are watching what's going on in italy the notion that the five star and the lega parties could combine and have a referendum this year on whether or not italy stays in the european union, that's spooking investors. >> let's talk starbucks. i've been drinking my iced coffee this morning.
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thousands of starbucks company-owned stores will close this afternoon for racial bias training, this after a clash in philadelphia where two african-american men were refused the use of the restroom and kate rogers has more. the coffee giant will be closing about 8,000 company owned locations like the one behind me here at about 2:00 local time for that racial bias training, which will reach 175,000 or so u.s. partners or employees. the company has said the training is not mandatory, but it's for any partner who wants to make starbucks a more welcoming and inclusive space. in a preview released last week starbucks said each store will receive a toolkit that will allow employees to work together in small groups. the training will focus on understanding racial bias and future trainings will focus on
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all aspects of bias and experiences. the goal is to make sure everyone who enters a starbucks store feels safe, welcomed and included starbucks says this is the beginning of the actions it plans to take. it does not come without a price tag. there's multiple estimates out there that the company could lose 12 million to $14 million just for closing this afternoon alone at these locations back over to you >> we look forward to hearing more about it. i imagine we'll hear a lot about how this training goes i've seen some of the training >> and >> it's interesting. there will be groups of people with ipads they'll go through the worksheets there's a documentary, a short doc that's completely and utterly moving i think it could force some very interesting conversations. i mean, it gets very deep. the real question is whether people can handle some of these conversations. these are -- >> what gets so deep
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the notion that peoples unconscious bias is going to be exposed? >> you have to think about who will be around the table, depending on where they are in the country, what the mix of people is. i could see this working very, very well and in certain conversations this ending in tears. i think -- it is a very conscious effort by the company to go deep you watch these videos, you really have to start thinking hard about some of this stuff. i don't think any other company in america has even approached it anywhere near this. you look at -- i wrote a column about this you look at how the nfl is approaching race in america, they don't want to have the conversation these guys are bringing it right -- all the way down to every single worker, whether you're sweeping the floor or whether you're a barista >> will they set the standard for other companies? >> the real question is how this is ultimately received does it work first of all, in four hours they
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won't change the world they won't change -- it's hard to say in that four-hour period they'll end racial bias. anybody who thinks that -- >> probably not? >> i think it's a start. i think it's a start if it's received well, you think about 175,000 people having that conversation, and that conversation getting multiplied when they go home and talk to co-worke co-workers it will happen over weeks and months and we'll see if other companies look at this as a model. it's interesting >> i think so, too. >> some of this stuff will be available online later today >> coming up, we will find out why the fbi is telling you to reboot your home internet router this morning. in the next hour, mohamed el-erian will join us. stay tuned, you're watching "squawk box" on cnbc
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host noah blackstein he's got a couple of stocks we want to look at. you have three you've talked about a couple of these on the air with us nvidia you like a lot. >> i do. >> and you still like despite what's been a hell of a run. >> it has had a hell of a run. for the most part it's close to 70% of revenues. the other 20% is data center i think as this evolution continues towards the buildout of data centers and processing power, nvidia is in the driver's seat. >> when i say it's been a hell of a run, let's look at this stock. up 75% for now >> what do you think the company can earn at the end of the day >> that's my question. >> i think it's in the mid-teens. you can tell me what multiple you want to put on that. whether it's in gaming and all the demand for gaming with sports and everything else when you look at data centers,
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anything that you want to do in ai you need nvidia chips >> you also like baba. that's alibaba >> i do. >> how much of that is a play on this ant financial >> not much. >> i could make the argument that ant is not factored in enough markets hit a markoff algorithm. if you look at the next three years, there's 70% of e-commerce in china their take rate is a fraction of what amazon and other parties charge they've been putting heavy subsidies into the cloud and financial services as well there's a lot of margin. >> i don't worry, i actually think potentially sometimes i think the better play is tencent. i don't know if we can show that it's been on a tear. and "b," not just the stock
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price been on a tear but actually their business has been on a tear. >> i've owned both but tencent has a huge component of gaming still today. it evolved as a gaming company tencent leads in payments for sure through the wechat app. >> that owns the whole country >> correct it's the dominant. >> still provide cloud to all of china. >> real quick because we've got to go, arista networks >> stocks pull back after it >> we will continue that thank you. >> thanks for having me. coming up, special guest host in the house. muhammad el-erian. we'll get his take on the global market stay tuned you're watching "squawk box" on cnbc running a small business is demanding.
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investor alert worries of political turmoil in italy weighing on global markets. guest host muhammove hauhammad n here the latest from washington coming up. and class pass is expanding. now you can work out in more than 20 countries so there's no excuses. >> when joe drops -- >> 1,001 >> company ceo joins us as the second hour of "squawk box" begins right now ♪
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live from the beating heart of business, new york, this is "squawk box. >> good morning. welcome to "squawk box" right here on cnbc we're live at the nasdaq market site in times square i'm andrew ross sorkin along with joe kernen and melissa lee. futures under a lot of pressure this morning some political turmoil out of italy. more on that in a moment you're looking at the dow there off about 200. let's get to other points. it's a very big week for trade discussions. wilbur ross and robertlight hoo -- lighthizer is going to be lo meeting. nafta is going to be at the center of talks today.
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trying to push those blocks. also we're going to be getting the latest reading on home prices latest s&p case expected to show a 6.7% year over year increase for the month of march it's slightly less than the february jump of 6.8%. have a short week ahead on wall street. mike santoli joins us with more. >> plenty to watch even more this morning than we thought going into the weekend the interesting thing is this comes in a neutral position. i guess the question is is it stable -- basically halfway between the january highs, the february lows. it's also, you know, with this morning's indicated losses will be back to the year to date flatline the question is why is that? this push/pull between fundamentals and what had been a
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rising interest rate story seems like it might be changed it seems what we get this week is some kind of reaction or a stress test of this trading range based on a risk off type feel with bond yields coming down also the economic data coming in at a little less hot also in a midterm election year. that sell in may thing seems to be more stubborn and tough >> it does feel that the onus is on the bulls at this time. zbl >> it does now we have to see what the bulls need >> yeah. that fed meeting is going to be key. thank you, mike. italian stocks plunging dragging down global markets this morning the country's president blocking the nomination of a euro skeptic finance minister that move prompting political parties to ditch their plans
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and now growing concerns another election could take place. the yield hitting its highest level since 2013 this morning. that's the biggest intraday jump since 1992 here to discuss all of this in the global market, mouhammad el-erian i could almost feel it, the consensus with all of the never ending parade of guests and strategists that we have on. got really top heavy in terms of saying that global stocks represented better value than what we had here and we heard that the economic fundamentals are improving over there. the central bankers are still yaess over there but the valuations are much lower in all of these markets. so try to focus over there it's so hard for the average investor here to do that do we really need -- aren't domestic stocks a pretty good
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place to be? it turns out, i don't know if it was the place. you sound smart to say go over there. but what happened to that growth did everyone believe it so that was the top? did it change? >> well, first good morning and thank you for having me on i think the mistake people made is to think something had legs what happened last year was four different influences the u.s. was policy led. deregulation, tax cut. europe, just a natural healing process. you can walk but you kbt rcan't. developing countries were bouncing back. and then people saw these things happening. and they said oh, this is it we're in a phase of synchronized growth we're not. we were just in a lucky coincidence. people are now realizing the only economy with real legs to it was the u.s. economy. >> there were no structural
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changes to the entitlement state. >> that's it and no real policy changes >> in europe but still -- i mean, for 30, 40 years the u.s. always grew faster because it just had a more dynamic economy. they don't have the same structural problems. and that hasn't been fixed but for some reason we thought they had done some needed reforms. italy certainly hasn't >> it was the result of a natural leading process. people forget that economies heal that doesn't mean -- >> are you worried about the eu's, is there an existential threat to the union now with the euro >> what we're witnessing is a big political miscalculation by the president. it shows a lack of understanding of anti-establishment politics >> this is in italy? >> in italy. and the problem for the markets -- that's why the markets are reacting this way. because once again we may have
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an election where europe is a central issue. we should have learned from brexit you should not have a national election where you put europe as a central issue. but the president has inadvertently put europe at the center of a domestic debate. >> you sound like a globalist now and you are. but you sound like one saying we shouldn't have an election where people are allowed to vote -- >> on the contrary >> but the problem in the uk was that they voeted on it and cameron shouldn't have put it up for a vote >> no, no. what i'm saying is there are deep structural issues that result in low growth that have to be addressed. there are political problems that have to be addressed. >> what finally happens with italy? will there be a possible italeave >> we'll see a series of downgrades on credit ratings it will become close to a junk
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credit that's important because of what it does to ecb support this nervousness is not going to go away any time soon. that's important because it has two spillover effects on us. one technical and watch tonight because we're going to figure out who are long carry trades. >> you're not ready to call the end of the euro or the eu at this point >> no. i think that's a difficult call. what we learned from 2012 onwards is political will is really deep. really deep. so i'm not ready to call the end. >> this is -- >> the other permutations of who's holding the back on all of this broadly speaking >> italian banks >> that we know. take us farther out. >> people as joe said people fell in love with the international story to carry trade. so you have a lot of carry trades in both domestic and international bond funds so that's going to be an issue
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and then the dollar is going to continue appreciating from here. something i've been saying for the last few months. be careful of the dollar appreciating that means within the u.s. you're going to have a domestic differentiation in stock performance. that's what we should expect >> when you say bond funds, plain, vanilla, safety sort of bond funds or more exotic bond funds? >> certainly the more exotic bond funds, the dedicated funds. but also the traditional bond funds have been stretching for yield. and it's been a nice low volatility environment but the worst thing that happens to these bond funds is when they get caught offside, suddenly people say why did you take so many offside bets. so it tends to be to close the trade at the wrong time. >> these bond funds are going to be impacted by what's going on in italy through the carry trade. if we're talking about the same bond funds, they went out on the spectrum when it comes to
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emerging market debt which is also not working in their favor right now. hit on both sides. >> three sides >> okay. what's the third >> one, local currency debt in emerging markets two, government bonds in europe. three, those who don't hedge and most do not hedge the currency effects >> i see >> that's why today is going to be interesting because you can get some sense of how far offside is the market technically. >> is there contagion worries from italy or is that not the right word because germany doesn't seem it's firing on all cylinders >> so a stronger dollar is somewhat of a head wind to exporting companies. and this is going to lower global growth. this is going to lower european growth >> do we need to start worrying about europe again, portugal, spain. will you see other countries' yield rise are they stuck where they are now? >> so the one good news out of
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all this, the silver lining is the ecb is less likely to stop qe and less likely to -- >> is that good? you're happy about that? >> i'm not happy, but if you are a financial investor, that liquidity helps you. i think -- and i've heard you say this -- distorts markets when he was looking at what the u.s. stocks have done this year, this is good we have transitioned to a higher volatility regime. >> it'll hold our yields down too. >> what's scarier to you right now? italy or brazil? >> you got to be more scared for italy than brazil. brazil is not systemic enough. >> a vacation or an investment >> i'm coming to italy with you by the way >> if you're in the bond market, traveling a different story. >> you're in the bond market, what's worse >> italy >> so once again you've been
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thinking a lot, i see. you know what i mean you watch the mets, but you probably -- >> the 0.500 mets? they were 12-3 when i went to see them >> you're saying 0.500 to me like it's a bad thing? thank you. when we come back, we have a lot more with mohamed. and then michael froman will be joining us after the break and later, how are small businesses feeling about the economy? paychex ceo mahis going to be h. and as we head to a break, a look at european markets red across the board everybody down about 1.5%. you're watching "squawk" right here on cnbc imagine traveling hassle-free with your golf clubs. now you can, with shipsticks.com!
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and robertlig lighthizer are go to be traveling to talk on many agendas for the trump administration want to talk about what's going to happen in paris tomorrow, but i want to get it where you think we are with china vis-a-vis where we are with north korea. because to me that is the big cloud or overhang on whether this is going to turn out to be a positive or negative situation. >> well, secretary ross is expected to go to china later this week to try to continue those discussions about trying to reach a trade arrangement the question is whether they'll go down the path of shopping list approach and having china agree to buy more airplanes or soybeans or lng from us. or whether they'll go down the path of trying to get china to fundamentally change its industrial policy regarding forced technology transfer and intellectual property rights i think the chinese are prepared
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to engage in the first area and to give what they call tweetable deliverables to the trump -- >> i haven't heard that before >> i think they're interested in a serious discussion in their china 2025 strategy which they believe is working to their advantage. >> do you believe that china had a role in the breakdown of these discussions with north korea >> i'm no expert in north korea. i think there are a lot of different factors going on there personal and otherwise i think we have to see how it plays out and whether it comes down on june 12th or not >> hi, mike. in six months' time, what's the most probable outcome? one, nothing much has changed. two, that we have a trade war. or three, we have free by fairer trade? >> i think you've got to look
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place by place the first which is a marginal change we agree with a list of things they'll buy more of from us. but there's not a fundamental change in policy that with nafta perhaps we reach an agreement with mexico and canada with the rest of the world we have various threats of tariffs hanging over their head and we try to negotiate one off on their part whether it's on steel or other products >> and in terms of -- krista -- is she here today or tomorrow? >> i think it's tomorrow >> you think it's monday today, but it's really tuesday. i don't know if you were focused on this, but just a week or two ago, you heard from the prime minister in canada say they were
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very close on nafta. and then you have the president say, of course, that he still wants to rip up the whole thing. so what's the reality? >> you know, i think there's a deal there to be done with creativity on everybody's side i think all three parties have been working hard to try and find creative landing zones for a solution at least on the autos issue. there are a lot of other issues in the agreement that have not really been resolved and they do need to be resolved if there's a comprehensive agreement. i think the challenge is under the law that dictates how a trade agreement is to be taken up by congress, it's very difficult to see how this gets done over the course of this year with the remaining time. that means we're looking at perhaps a new congress next year perhaps one in democratic control taking up the nafta
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discussion >> at the same time, you get the feeling that mr. lighthizer is running as fast as he can. he's effectively at the forefront of renegotiating three major trade agreements on three major fronts simultaneously. can you give us a sense of how difficult it is? there's some notion that in the nafta agreements or the nafta talks, i should say, there's some momentum going into prils a -- april and that sort of broke away >> he's a capable ambassador he's been involved in the trade area for decades but it is difficult to sort of fight a three-front war, so to speak. he isdeeply involved in china, in nafta in cleaning up the korea agreement. and of course with europe and the rest of the world, negotiating one off deals in order to eliminate the threat of tariffs being imposed. either on steel aluminum or autos. there's a lot on his plate
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he's got a very good staff there at the u.s. trade representatives office but there's also a lot over trade. that makes it more difficult >> we've got to go, but the trump administration has said they've made enormous progress on trade how would you grade the administration >> you know, i think they have done -- they've made progress in bringing attention to various issues like china. i think there's now a global consensus about some of the challenges that china poses. they made less progress on delivering new agreements. it's pretty easy to rip up agreements it's much harder to negotiate them they're work on that and i think the proof of the pudding will be in the meeting we have to see what they come up with before we can assess whether their approach has worked or not. >> thank you so much great to see you this morning. coming up, with small business representing nearly 95% of all u.s. employers, it's an important indicator, the health and direction of the economy
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if you've got a router at home, you've got to listen to this story the fbi is urging you to reboot your router to stop russian malware. the fbi warns the malware can steal information and spread viruses. most routers do not have anti-virus protection so the fbi suggests you reboot your router, upgrade your firmware, and change the pas wosword. >> easy for you to say >> actually this is a complicated thing to do. >> unplug it, wait 30 seconds, then plug it back in >> we have roku ten different things i don't know where they are. >> you got to call your people >> don't you have staff, router person to deal with these things, joe?
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>> i have a magnolia best buy type situation >> call your manager >> unplug it and plug it back in >> there's not one plug. i don't know where it would be >> the router is the single point of entry of internet to your home. >> jeeves knows how to do it talk to him. >> it's probably in your guest house. >> coming up -- there is wi-fi out there. it does reach out there. >> he's probably got ten routers. >> if you take the elevator upstairs in the house -- >> the fourth floor, west wing >> that's wapner coming up, markets, jobs, wages, and more with guest host mohamed el-erian from allianz. check out the futures at this hour more on -- just google it.
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good morning welcome back to "squawk box" here on cnbc we're live at the nasdaq market site in times square among the stories front and center this hour, tesla seeking to dismiss a securities fraud lawsuit that has been filed by shareholders and plaintiffs claiming the automaker made false statements about model 3 production tesla said it discussed its issues in frank and plain language but there has been a lot of pressure on that company over several past weeks there are questions continuing to circle about whether they'll get production on track and be able to make some of those estimates out there. also today is the day starbucks will be shutting its doors for anti-bias training this follows the incident after
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two african-american men in philadelphia were arrested after waiting for a companion to join them that's going to be a big story also hormel foods recalling pork and chicken products including spam and black label loaf. thank you for the tunes, guys. those products may be contaminated with pieces of metal. four customers have reportedly suffered minor mouth injuries. >> hormel. >> yeah. did i say -- >> i thought he said hormel. >> but, you know, spam spamming the globe spam eggs and ham. spam >> yeah. hawaii >> hawaii loves it dinty moore. they used to send us stuff we had more spam paraphernalia and it all used to be on the set everywhere remember >> in the old days >> they boxed it all up and i took it home >> probably still -- you could still eat it
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>> it's on ebay. paychex releasing its report on the state of small business in america joining us more to talk about this marty mucci of paychex. great to see you >> good morning, thanks. good to be here. >> continued pressure of the tightening labor market. how bad is it out there? how hard is it to find workers >> well, it's been pretty tough. while optimism is up for the business -- for small businesses, they do feel right now that their biggest issue is recruiting in hiring and retaining those hard to find workers. but right now we did see a little bit of a bump this month and more positive job growth so we've had sustained moderate job growth for small businesses. that's a very good thing the other thing is, wages still hanging around 2.6%. we'd expect more in this tight labor market >> where is it hardest to find workers in the country, marty? >> right now it seems to be in the west although the south is hiring the most, the workers are there.
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they're able to find folks in the south. going over 3% in the south and you're seeing construction there pretty positive as well. in the west, it's probably the toughest to find right now based on what we're seeing >> so marty, help us solve this puzzle lots of job creation people finding it hard to get the right person and yet two things haven't moved. like you said wage growth is still pretty stagnant. and labor participation is stuck at pretty low levels what's going to give in the next few months >> well, i think it's -- you know, it's got to be the wages, i believe. it's funny one of the things we are seeing is the nfib and optimism index is also there's a positive feeling on earnings. there's a positive feeling on capital investment it seems to be the dollars from tax reform are going to earnings growth and to capital investment
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opposed to the wage growth i think that's going to have to give to be able to bring these workers out of kind of out of not participating and into the participation of the market. >> so we should see -- do you think that we will see wage growth back to its peak levels we hit summer of last year >> well, i think so. it seems to me it's quite a big question given that tight labor market i think you're seeing the tax reform dollars go to other things like investment in automation we are seeing that and you're seeing some of that go to benefits as well to attract employees. but i do think if you're really going to pull those employees in, particularly if you're a small business, you're going too have to have a wage increase particularly for those tough jobs to recruit for. >> all right marty, we're going to leave it there. thanks a lot for your time >> okay. >> marty mucci, ceo of paychex he mentioned wage growth that he thinks that we will have to see
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wage growth amongst small business we'll see that wage pressure do you think we'll see that more broadly? >> i do. i think we're going to see two things happening first, wages going up. and second, labor participation going up but at a slower rate. then the other takeaway is that with small companies investing more in technology, when we finally get an answer to the productivity puzzle. people have been spriessed why do we see all this technology changes how we do things and yet the productivity numbers have been so sluggish. part is it's been a long time to change business models it takes a long time to invest it's just an issue of lag. if he's right and i hope he is, we could see higher wages and higher productivity growth >> where are you on growth in the u.s. what's your estimate for this year >> i'm relatively optimistic i think we do 2.5% to 3%. >> 3% is different than 2.5% there's a political sort of sense that 3% changes the sort of conversation.
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>> if we see infrastructure, we get to 3%. i think that is the key issue. and i wish congress was focusing more on that issue because we've he dad deregulati. it does boost growth and if we can just get the infrastructure done, then the u.s. would break into a high growth -- >> so handicap that possibility. i think politically it's low technically it's not complicated. politically it's low right now >> so therefore you're not at 3% >> that's why i'm at 2.5% to 3%. this economy has legs. and if wages go, we're going to have investment and consumption kicking into high gear at the same time. >> okay. so if you were on the board of the fed right now, you would be telling our new or semi-new now? what are we calling him? >> who >> our fed -- >> he's new. >> new enough, right
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you'd be telling him what? >> mr. chairman, keep to three hikes this year. the market has priced that in. we have transitioned to that regime without major breakage. you are delivering a beautiful normalization. steady as it goes. >> if we start seeing wage growth, wage inflation, if you will, what sort of pressure does that put on the fed to maybe go beyond 3%? >> it tips the balance of risk towards 4% i think 4% will become the balance of risk. the baseline remains three hikes overall for this year. >> while i have you here, bitcoin. i'm curious where you stand on bitcoin. >> first i think the technology is really important. and there's going to be a wider option two, i'm not a believer that bitcoin is going to disappear. i think bitcoins stay but form a smaller function
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think of them as a commodity not a currency the worst thing is to call it a currency because it gives this notion that it's going to grow and be a medium exchange and central banks will accept it but that's not going to happen it will play a role in the infrastructure. >> how do you value it as a commodity? >> so i think, again, we've settled. i always said it's between 5,000 and 8,000 is -- two is the visionaries thinking this is going to be a currency and the third one was the bandwagon people they're gone >> will the fed have a digital currency of its own? the st. louis fed has already put out white paper on the subject saying there's a place for digital currency maybe not the one we have now. but corruption is an issue amongst governments.
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runaway inflation is an issue amongst governments. >> we're moving away from cash go to sweden and you'll see how fast one can move away from cash so is there maybe a role for cryptocurrency in the future yes. >> so the fed, a government issued currency -- >> it's going to take many years. it's not going to be something we'll see in the next five years. >> why not >> because i think that people's habits and people trusting the new medium of exchange doesn't happen overnight, melissa. >> do we think about cash, though andrew, do you think about cash? when you pay with your phone, do you actually think about the unit in which that payment is happening? >> never and i rarely -- i -- if i get mugged, i have a problem because i'm not carrying any cash anymore >> would it be a stretch for you to say i'm going to trade in a federally backed digital currency >> no. >> don't extrapolate from
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andrew cash still plays a pretty important role >> what do you think, joe? >> very, very insightful >> wow >> wow >> who are you talking about >> when you said don't extrapolate from andrew. >> i thought this was a breakthrough >> you meant across the board. >> after 20 years i thought we were going to have a breakthrough >> cut the last part off and we'll be back with mohamed with a lot more coming up -- i have cash i feel naked without it. no one needs to think about that anyway, coming up, doing push-ups and burpees around the world. class pass is expanding. the company's ceo joining us in a bit. plus the vegas golden knights go all in they scored like six goals or something. anyway, finals that's straight ahead. "squawk box" returns after the break.
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on the ice, game one of the stanley cup finals kicking off. it's facing off, maybe last night in las vegas. you don't kick off no one kicks the puck. >> sometimes they do sometimes they kick the puck with their skate >> once in awhile. but they're facing off all tied up in the third period. found the net to give the golden knights the lead for the rest of the game that's good news for vegas the winner of the game of the first game in the series has gone on to win six of the last stanley cups and as i told mohamed who's following this, to see a team from one of the most morally, ethically bankrupt and built on greed and deception, to see them face the golden knights, it's really -- it's great for the sport, great to see it
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happening. anybody that put down money on the golden knights, i think, back in the beginning of the season -- i think it was 5 o -- 500-1. >> we should feel sorry for our friend ben white he's a big supporter >> another reason to feel happy for las vegas. front page story in "the wall street journal. it gives background to the theory that redstone and moonves is keeping cbs from being bought redstone is said to be trying to add former time warner ceo dick parsons to the board to help her secure new directors redstone has been pulling to bring cbs and viacom together. moonves has been opposed michael wolfe will be joining us in the next hour to discuss this whole drama. >> which the plot is thickening. andrew, i just saw a drudge
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headline about the -- some antitrust guy talking about at&t/time warner it's weird it's the same day as the summit isn't it >> it is >> isn't that weird? >> big day depending on what you're interested in. >> handicapping it -- >> there's two soap operas going on >> what's more likely, that's the pinthing. but for some reason i'm under the impression that at&t made a great case. >> that's the general consensus. >> but a judge, if he decides it's up to just one guy. you could appeal one guy too it's not over until the -- >> until the supreme court sings. >> none of them are good anymore. you know what? you can usually go with yogi >> people don't think about this enough it's possible they could approve it and start adding their own conditions to it which would actually change the way people are thinking about
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all of these other mergers >> that's what the doj urged in their closing. >> and people don't think enough about that as a possibility. sort of a way to thread the needle >> it's not over until it's over the hardest thing about predictions, if you're trying to make them about the future they're much more difficult. coming up, the ceo of class pass and more. and more from guest host mohamed el-erian of allianz. coming up top of the hour, wilbur ross is set to head back to china ecout talk about that. chk the futures this morning. down 177 on the dow.
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♪ welcome back to "squawk box. fitness membership network class pass expanding internationally the popular app plans to launch in nine new countries by the end of 2009. joining us with more on the news is fritz landman we've had him on before. good morning to you. >> good morning. thanks for having me >> so tell us, what's this big expansion mean and how much is it going to cost you >> well, it'll cost us quite a bit, but we think it's worth it given the opportunity for studio fitness and gyms for the aggregator so we haven't launched that many new cities in the last two
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years. in q4 last year, we launched ten domestic cities. we changed a lot of things on the model. things are working well. there's global demand for studio fitness and gyms we're going to a bunch of new markets especially in asia and the uk >> last time you were on, you were thinking of moving in a direction of -- i don't want to say become a media company, but in terms of changing the model or adding to the model, this idea that people are going to subscribe and do things on their app as opposed to even go to the different locations. is this another strategic shift? >> this is not a strategic shift. this is more of just an expansion against what we're already doing that's working well what you're alluding to is we launched class pass live which is a at home high intensity interval training program. you can get a great workout in a hotel or home in 30 minutes. we're still doing that
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that's for the u.s. only we haven't built out the infrastructure to support that internationally. what i'm talking about today is really taking our footprint as this network of great gyms and studios and we're now going to launch that all over the world starting this summer especially in the uk and we're going to push hard into asia as well. >> and how much of this is about capturing new customers that are based, for example, in the uk or elsewhere or at least starting with the base of customer -- and you can tell me. if you're a u.s. customer today and i happen to travel to london or to paris or wherever, can i then use the service there >> you absolutely can use the service everywhere so that's part of the rationale. class pass is now working super well for people. we've made updates to the model so you can now go to your favorite studios as many times as you want. we have more gyms that have joined really it's about going and capturing the global opportunity. we have a bunch of knockoffs in
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different countries around the world and we've proven with our expansion into london, australia, and canada we can extend the model everywhere. >> he's a globalist and a global traveler, but are you also -- he likes to go to the gym >> i don't i wish i did but fritz, pushing -- the other side of andrew's question. you have a great charge. at what point do the studios push back saying you're diluting other revenues >> that's a great question we don't see it as arbitrage we've proven with 90%-plus of our studio who is joined the network are still in the network and actively using it. we showed them the revenue is incremental to their core business we protect their pricing power by requiring you to be a subscriber to come into the class pass network and get access to our prices since we're moving only excess capacity in these studios, our customers understand that sometimes they can get into a place.
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sometimes they can't but they -- you know, our customer is really somebody optimizing for variety they want different kinds of workouts, different studios, different gyms so we tell our partners to sell as much as they can to the direct brand loyalist and then be willing to make the tradeoff of better prices in exchange for some scheduled uncertainty >> right fritz, good luck with it we're going to -- maybe we'll try it out maybe joe when he goes to italy is going to try it out >> we'll have to get you guys into the studio. we keep threatening for you guys to come work out with me >> we're on the case let's get back to our guest host this morning allianz chief economic adviser mohamed el-eri el-erian 7:54 i don't know how much time we have, but i want a longer discussion about inflation and the fed. last week we decided they were not behind the curve they're great. they're super. they're doing everything
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perfectly well seeing what's happening in europe, i wonder whether we've got one too many rate hikes in the cards at this point about what actually occurs i don't know >> i don't think we do as yet. and because the impact on the u.s. from the higher dollar and from lower global growth is not going to be enough to derail economic growth here exports simply aren't big enough it may have disproportionate impact on corporate earnings >> that's a head wind, sit not >> a stronger dollar is a head wind however, don't underestimate the underlying strength of the economy. >> it's really about 2.5% gdp growth don't say to 3%. you say 2.5% we don't get infrastructure we're probably not going to get infrastructure so your forecast is 2.5%. you said it. you gave andrew only 2.5%.
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>> do you remember nine months ago when i told you we're getting out of the new normal? that the new normal was a great way to describe the past not the future >> that's getting out of the new normal >> it makes a big difference 0.5% over time makes a big difference secondly growth becomes more inclusive. thirdly, we're looking at a monetary policy. >> embrace the growth and down play it at the same time which is a tough -- that's a tough way to sort of thread the needle >> no. no, no, no >> okay. but my point is -- let me ask you real quickly does the problems in italy and europe overall, if that causes rates to go up even though they stay at zero, if rates go up over there, maybe the differential between ours and theirs -- >> so it will delay rates going up there >> even though they may go up. >> you saw what happened to the bund today
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that's why our 10-year's lower who would have thought it'd be below 2.9% again >> mohamed, stay with us talk down the economy a little more from 8:00 to 9:00 stay with us >> talk down another big hour of "squawk box. after the break, they'll continue to battle and we'll talk china trade talks that's coming up in early june what it means coming up. and then going to war over the future of cbs. michael wolfe will join us to talk that. and we'll talk starbucks and the closing. back in a moment a basketball costs $14. what's team spirit worth? (cheers) what's it worth to talk to your mom? what's the value of a walk in the woods? the value of capital is to create, not just wealth, but things that matter.
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hewlett packard enterprise. clouds, apps, and insights faster. global market alert. we'll tell you what's at stake for the euro straight ahead. new out this morning, president trump tweets that a top north korean official is heading to the u.s a live reportfrom washington coming up. plus the final lap will power joins us on set the final hour of "squawk box" begins right now ♪
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live from the most powerful city in the world, new york, this is "squawk box. >> good morning and welcome back to "squawk box" here on cnbc live from the nasdaq market site in times square i am joe kernen along with andrew ross sorkin and melissa lee. becky is off this morning. our guest host, mohamed el-erian let's get a check on the futures this morning down 178 right now on the dow. that's the implied open. 177. down 44 on the nasdaq. that's pretty significant. and down 20 on the s&p 500 we're also following what's partly responsible, at least, for this developing story that comes from the continent italy. the euro hitting the lowest levels of the year after that country's president blocked the nomination of a euro skeptic finance minister and that move prompting italy's leading populist parties
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elections will now have to take place. look at the spike in the italian 2-year note yield. as you can see, that's pretty significant. and then you're seeing that spread to the equities of the italian banks. down 6%, 4.5%. two of them already penny stock over here. >> you can take a look more broadly at others. deutsche bank down 5%. our guest host mohamed el-erian. earlier you said this was a miscalculation by the president of not appointing the original, possible minister. euro skeptic minister. was the miscalculation that he should have done that knowing that he had before been skeptical of being in the european union but keep it in his cabinet opposed to opening the door >> that's right.
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he should have respected the outcome of the election. he should have given the new government in fact, he just miscalculated in blocking the appointment. he said he wanted to avoid market turmoil but he didn't realize that the market would see through this and ask what next. when the market asks what next, you get the turmoil. this is a big political miscalculation it shows you a misunderstanding of the antiestablishment movement >> when you go in the office this morning and pull up your screens and the market opens at 9:30, what are you going to look at first or maybe even markets that aren't open necessarily at 9:30, maybe they're open now what will you look in terms of gauging how bad the contagion is or e the fear of contagion >> greece has widened, portugal as widened
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i think the most exciting thing for investors right now is mispricing should italy be wider than 2-year greece? no if the eurozone goes, then they're in a much worse position than italy there's a lot of mispricing that occur when you get a sharp move overnight. that is what i'd be looking at is the various mispricings takes place. >> we'll have more from you throughout this hour president trump confirming in a tweet that meetings are -- want to take one last look at mohamed -- taking place with a possible summit with kim jong-un. let's get to eamon javers with the latest high level official is headed here according to the president. >> yeah, that's right, joe i'll bring you that tweet here in a second. what we saw over the weekend is all sides really scrambling to walk back from some of the nuclear saber rattling we saw toward the end of last week amid the collapse of the u.s./north
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korea summit that the president announced at the end of last week over the weekend, all sides scrambling to put this back together again including a surprise meeting between the leadsers of north and south korea. this is unexpected, but we saw the video coming in over the weekend of the two leaders hugging each other and making some progress diplomatically we also see the top north korean nuclear negotiator arriving in beijing on tuesday that is today and heading to the united states at some point here an american team also arrived in north korea over the weekend to plan for a summit not clear exactly when that summit can take place. whether that'll be june 12th as it had previously been scheduled or some other date but we saw this tweet from the president over the weekend very anxious to put to rest the idea that there's not enough time here for the summit to take place on the date he has chosen, june 12th. here's what the president tweettweet ed over the weekend blaming "the
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new york times" saying it's not possible even if the meeting were reinstated holding it on june 12th would be impossible given lack of time and the omit of planning needed. wrong again. use real people, not phony sources, says the president. the problem here for the president is that there was a real person and a real source associated with that it was a senior white house official who briefed reporters in the press briefing room i attended that briefing at the tail end of last week in which the administration did suggest there was not enough time to get the meeting together by june 12th the question is whether the president was sort of unaware of that or aware of it and just deciding to blast "the new york times" anyway. in either case, what he tweeted was not accurate then the tweet you mentioned coming a few minutes ago earlier this morning the president tweeting out some optimism here saying, we have put a great team together for our talks with north korea meetings are currently taking place concerning the summit and more the vice chairman of north korea now heading to new york.
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solid response to my letter. thank you. so the president here suggesting that his letter last week calling off the summit has produced some results behind the scenes and now things are more or less on track we'll see whether we get the summit and whether it happens on june the12th as the president wl prefer all sides moving ahead diplomatically now back over to you >> i'm just looking at -- the federalist has a different -- i don't know i don't know i do like -- i know that >> the federalist isn't in the room >> i know they weren't in the room, but media doubling down on the notion that that was what was said just the way it was said >> the question is, joe, not what was said but that the president suggests in that first tweet i read you, the president suggests that there was no source here nap this was made up entirely -- >> what day was that >> this would have had to have been friday, i guess i'd have to check my notes
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>> it's tuesday. is this an important enough subject to still be talking about with all the other stuff with north korea >> i think so, yeah. >> all right >> because it shows the president how eager he is to get this done. how at least it would appear that he is off the page with his own administration he's pushing back against his own administration officials in the press briefing room suggesting there wasn't enough time i think that tells you the president's state of mind here in terms of how anxious he is to get this done. he really wants this summit. >> all right many people would like something good to happen from it, probably joining nous for what's at stake for china, joining us now economic studies senior follow and huhchen center not a great day to bring up the
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"squawk box," davi celtics. >> they put up a good fight. >> the minute i start sort of hoping for a team, it's like all over anyway let me ask -- let me start with you, derek where are you at since you follow economics you think we only do 2.5% this year >> you don't want me to answer that question. i don't think gdp matters. so i'd take you on a track where i care about household income and labor force and people should stop using gdp. >> really? >> yeah. >> just because it's a false flag or something? why doesn't it matter? that's like saying don't follow the dow anymore. follow, i don't know, some other measure. i mean, everybody follows it anyway, right? that's what you see in the headlines. >> it's true if you want to say it matters to market sentiment but we created gdp because we couldn't measure stuff that actually matters which is how people are doing, whether they're working, how much money
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they're making, gdp per capita doesn't mean anything. there's no such thing as distribution of gdp. it's a 1930s statistic that we need to get rid of sorry, i didn't mean to take you off track. >> that's all right. we'll talk to you about china then a lot of what's happening with the summit has to do with what's happening in china are you optimistic we finally get some type of trade deal that benefits the united states >> i think in the short-term we will i think we've made the deal. we agreed to the deal basically three weeks ago and have been working out the details since. we let zte off the hook. the chinese agree to make a lot of u.s. purchases in the next couple of years so we get more for exporters. this doesn't change the fundamentalal problem that the chinese are a bad trade partner and our relationship with them is deteriorating if you're looking at the short-term, we have a deal in place. it'll probably hold up and there's some benefits to it.
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if you're looking at the long-term, we haven't made any progress >> all right david, your view on this and other issues in trade? i mean, i don't know what happens with nafta now either. >> i completely agree with derek. the danger here is president trump and his administration will agree to sell some more soybeans to china and the chinese will promise to buy. cyber spying and basically creating an environment in china where they want our innovations and don't want to pay for them and don't want to give us a fair shot but that stuff will fall by the wayside. i think it's really unfortunate. the president had a chance here to unite the allies and the global business community to get china to do -- play by the rules. i'm afraid he's blowing it >> and you think it should be handled how then >> first of all, i think you need to bring your allies with you. i think starting with auto and
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steel and aluminum tariffs is counterproductive. that's not the future. he's alienating our allies and the australians. i would not have dropped the transpacific partnership i would have changed it. it was a move to encircle china. and i would have made sure i had a unified negotiating strategy from what we read, it was embarrassing the cnbc alumni club was fighting in beijing in front of the chinese with mnuchin and navarro disagreeing. now they're sending wilbur ross to make the europeans feel good. then solve the china thing at the end of the week. it seems to me like amateur hour >> i guess whenever you judge anything, you've got to look at the predecessors was anyone doing it right in the previous two or three administrations? >> no. i think the era of strategic dialogue where we could make the chinese more like us had failed.
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and i think there was a moment to do something bold and aggressive in a way i think the president identified the problem. he doesn't have a -- but he got distracted because of his fixation on the bilateral trade deficit. and so i think it's unfortunate. because he could have had the rest of the world and the american business community, the global multinational community, and even a lot of workers in the u.s. behind him if he had a more coherent strategy. >> we got to go, but in the aeis, was it that bad, derek >> sometimes i agree with them sometimes i don't when they change they've changed a lot. i don't think this is done by any means. i do think the president right now is looking for a short-term fix. you raise the possibility of the north korea summit being tied to this i think that's entirely likely you get the summit you stabilize the situation in 2018 but this administration will be back to confrontation with the
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chinese by 2020 because, you know, president's own words and thinking about the issues demand that >> all right for those that don't know, david, the hutchins center is glenn hutchins one of the minority owners of the celtics have you seen that big ring? >> i would wear it if i had one. >> watching that game was -- >> tough >> lebron. that's all you can say >> that's all you can say. he's amazing >> it is why is golden state favored? i guess because of the -- anyway thanks, guys got to go. why do you think they're favored? >> because three-point -- yeah when we come back, how the next iphone model could change we'll give you some -- i don't know if it's gossip, but we got some on that also we'll talk about the winner of this year's indy 500 race ringing the opening bell at the
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nasdaq but first he will join us stay tuned you're watching "squawk box" on cnbc your muscles look good, but we should be seeing more range of motion. i'm fine. okay, well let's see you get up from the couch. i'm sorry, what? grandpa come. at cognizant, we're uniting doctors, insurers and patients on a collaborative care platform, making it easier to do what's best for everyone's health, every step of the way. you may need more physical therapy. ugh... am i covered for that? yep. look. grandpa catch! grandpa duck! woah! ha! there you go grandpa. keep doing that. get ready, because we're helping leading companies see it- and see it through-with digital.
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session, the first in a shortened trading session. the dow is now looking at down 177. down 19.5 on the s&p 500 in europe, of course, the big focus is what's going on in italy. could we see elections later on this year which would be a referendum on whether italy stays in the european union. on that we're seeing jitters across the board the mib is down almost 3%. and the dax is down 1.3% kkr making news buyi ining privately held bmc software for an undisclosed amount. hopefully soon we will find the price that kkr bought it for meantime, uber is to resume talks in abu dhabi
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services were suspended there two years ago. they have continued to work in dubai. interesting story there. we talked about this earlier, but it's getting a bit of a buzz online right now apple may use high-end technology in the screens for all of its new iphone models next year. this according to a report from south korea's electric times the tech giant could use oled panels in its phone. so far only the iphone x uses it right now. it's more expensive. shars of apple suppliers reacting to the report japan display stocks fell as much as 21%. it is one of the main suppliers of lcd screens for the iphone. meantime shares of universal display is rising this morning there are reports prior to this that there would be a slew of
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iphones that would be cheaper. they would have to have led screens. >> the notion here of universal display being up is samsung is the only producer for the oled screens currently. they would have to find another supplier so oled could be -- >> the question is how you could have a -- how you could create a competitively priced phone using oled technology. because it's a very expensive technology >> that i'm not sure of. but that's why analysts are very skeptical between that and the supply constraints >> right. >> is that what the iphone xxx has that you use >> the iphone x you're talking about? >> it's just -- okay let's go you had to be watching earlier when we were in the chair. do people watch for three hours? >> i don't think so. i think people come and go >> they come and go in the
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morning. >> they watch "fast money" for the whole hour >> well, yeah. >> you're here today you're here. >> i'm here. i'll be there later too. >> i know. but you're here now. >> and i love being here, joe. meantime, qualcomm expected to meet with regulators in beijing this week as the chip maker looks to get final approval. caught in the cross hairs of rising trade tensions. sources till reuters approval of the deal would depend on the progress of broader bilateral talks. some people even saying that zte is not going to help the deal get greased through. coming up, the triumph on the racetrack. i was watching i was. i was watching and it was cool and i'm excited to meet this guy he kind of looks like tom cruise, actually like, he's kind of like a good looking tom cruise 37-year-old australian driver
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will power he was excited after the race. i honestly looked over, he was more excited to come on the show he's going to join us on set after the break. this is my headquarters. this is where i trade and manage my portfolio. since i added futures, i have access to the oil markets and gold markets. okay. i'm plugged into equities - trade confirmed - and i have global access 24/7. meaning i can do what i need to do, then i can focus on what i want to do. visit learnfuturestoday.com to see what adding futures can do for you.
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less than five laps to go. never looked back. this is his first indy 500 win he joins us now at the nasdaq market site. he's going to be ringing the opening bell and they mentioned that -- i mean, you've had an unbelievable amount of success. you're the most successful penske driver ever on these races. and you hadwon the indy series before but never won the indy 500 you've been close a few times. and you won another big race earlier and they said you might have cracked a little smile but not much you went yesterday -- you went absolutely wild as did your wife it was -- andrew cries at starbucks videos i cried a little bit at watching someone get this excited you're 37 and everybody, all your colleagues, all the guys you raced with said sometimes a fluke wins but this one deserved it it was cool. >> thank you >> you come down yet >> i haven't i haven't really slept i think i got two hours' sleep in the last two days
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but just amazing for me. that's why i was so emotional. i'd won so many races. i'd won the series and the 500 is the one race you need to win to be very accomplished so it's just over the moon with excitement i mean, it's just -- i can't believe i won the indy 500 >> are you happy to be -- i was looking around for something to do on sunday and i found it. i said we usually have the winner on so i decided to watch it and i think abc, you know, fine. you don't want it anymore? good let nbc have it. i think nbc is going to bring this back. especially after watching that race, how great it was how did you know not to -- you had enough fuel so you didn't have to stop the other guys messed up by waiting for yellow flags so they had to stop. the three guys in front of you >> the three guys in front took a big gamble in strategy they weren't really in the game unless they did something like that not banking on crashes which
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bring out yellows. then you can turn the fuel down and don't burn the fuel. you know, they were very short and we had plenty of fuel. we were on a strategy that put us -- >> did you make that decision before you even start or you guys are talking saying we should -- >> the strategists on the stand are just telling me what fuel number to get. because you can adjust the fuel number on your steering wheel so you can run much leaner and burn less fuel but you go a bit slower i really have nothing to do with the strategy they tell me what to do. >> you can't say to them, actually, i disagree with you. >> well, i can i usually have roger penske on my stand >> that's not a good look. >> definitely don't want to tell roger that's not the right strategy. >> are you getting calls from potential new sponsors what does this mean for sponsorship for you? >> it's great. i've had verizon on my car for almost ten years now
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so, you know, we've had a great partnership. i hope to go throughout my career with verizon on the car it's an honor to win with those guys >> from a driver's perspective, what makes the indianapolis 500 so special what is it ic thats it really hard? >> it's the history that makes it so special. it was the 102nd time it had been run your average speed is generally 220 miles an hour. >> average speed >> average speed that's not your top speed. >> peak? >> probably, i'm sure you're tickling 230 in the race at times. and in qualifying, you do 240. you know, top speed, cracking over 240 it's crazy >> i'm trying to figure out -- i'm not saying that indy lost its way, but when i was a kid, i
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knew the drivers i knew andretti and, you know, rahal, all these names it needs -- it can be brought back, i think, to its prior -- because it's that compelling to watch. what happened? did nascar take over >> no. they split in '96 they split and created two different series and that just halved the field and halved the fan base. and now they've been on the upswing. it's coming back to where it was. >> nbc is -- i talked the last nbc is very excited about bringing the indy back and promoting it it's not going anywhere. it's 102nd race. anyway, that was a good one yesterday. and you got an allergy to milk but you drank it anyway. that's how excited you were. >> i didn't care yeah i'll be sick but ill drink it because i'm not going to get to
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do this many times in my life. >> your wife was cute too. she could barely put a sentence together it was good. congratulations. >> thank you >> and i think ringing the bel is no big deal today so just don't be nervous but you can do it at the wrong time >> oh. okay yeah >> theoretically >> don't be too early. >> no pressure anyway, great to see you >> thank you so much couple stories to bring you up-to-date on. front and center right now, two of canada's biggest banks have been hit by a cyber attack canadian and imperial bank says they were both contacted by the alleged perpetrators claiming to have stolen the information. it's not known if any customers have lost money just yet but we're going to keep our eyes on that story as well. nissan planning to cut north american production by as much as 20% this is according to japan's nikkei business daily. coming in the face of eroding
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profitabili profitability. and the latest "star wars" movie, it took the number one spot at the holiday weekend box office, but "solo: a star wars story" took in substantially less than expected and the weakest debut of any "star wars" movie since the franchise was relaunched in 2015 and lots of debate about whether they came forward with the film too quickly just six months after the last one whether this is comparable to the way marvel is now doing three films a year the whole idea is to uptick all these. >> they want to milk the franchise. >> not only that they're now building "star wars" attractions down at disney world, disney land so this all has to -- they've got to keep it going >> this is a whole new generation of fans, right?
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let's get a check on the markets at this hour we are off the session lows after the -- off of the, i should say, morning session lows premarket lows the dow looking to open lower by 163 points s&p looking to lose 17 points. the pain and uncertainty being felt across europe as italy is going through its own political turmoil right now as to whether or not stay in the zone. the dax is down 1.2% the ftse down 1.2% as well check out the euro as you can imagine, dollar strength here in response to this we do want to check out shares of big banks the u.s. banks we've been highlighting the action all morning as you can imagine, the european banks lower. so are the u.s. banks. this could be not necessarily fear of contagion. but the fact the 10-year yield is moving lower, that has traditionally been sort of what has pointed thee banks in
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whatever recent months we're seeing u.s. banks across the board lower as well. coming up, a lot more to talk about two big media stories we are following this morning first in exactly two weeks expecting that federal ruling on the at&t/time warner tie up. could have huge implications for the sector could have huge implications for m&a across the board and there's the war over the future of cbs. we'll talk to michael wolf who has insight in all of this "squawbo rur iju a mentx"etnsn st 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?
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♪ welcome back to "squawk box" on cnbc. time now for sectornomics. we are focusing on tech and the sector's most loved stocks dominic chu joins us with that >> so as we talk about the 69 stocks that are within the s&p 500 technology sector, it's probably a general rule of thumb that analysts are mostly bullish, widely bullish on the stocks in there. but there are a handful of well known names where they are very
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ube uber-bullish we took a couple and put them up here to show you how bullish they are first of all, facebook 93% of them actually say that that stock is a buy or an overweight rating. visa around 89%. microsoft, 85% alphabet the parent company of google, 89%. and broadcom, 95% of analyst who is cover that stock say it's a buy or an overweight equivalent type rating. now let's look at the analyst upside price potential here. because these people have put target prices that imply some of these stocks could have a pretty good run ibm, for instance, based upon the average target price could have a 17% upside move micron, 26%. facebook 20% and western digital 33%. just some of the big names out there that are among the most loved in the analyst community certainly ones to watch if, of course, the analysts are right
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back over to you guys. >> thank you for that, dom meantime, we are two weeks out from the date by which a federal judge expected to rule on at&t's bid for time warner. that decision could have a huge impact on an offer by comcast for 21st century fox assets. joining us now is michael wolf from activate. michael, good morning to you >> good morning. >> curious where you stand we were talking about it a little bit earlier today maybe it was during the commercial break i'm not sure we talked about it on air whether in fact the at&t/time warner deal will go through. there's a report in "the new york post" citing a professor well known and very well respected from wharton saying he's looked through all of the transcripts and things, he thinks the government made the case >> that's not the consensus. there are clearly overwhelmingly people believe that the
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government hasn't made its case. and even most recently, the judge was skeptical about witnesses that came forward from comcast that showed that comcast really didn't use its purchase of nbc for negotiating leverage. >> i happen to agree with you, michael. but it was -- it's a provocative view the other question is, when and if the decision comes down to the degree that there is this prevailing view -- i don't know if it's now become the conventional view it will be approved what are the chances it's approved but with a series of restrictions or other things that come with it and then therefore how does that impact everybody else >> there's been this discussion over and over again that the merger would be acceptable if at&t allowed somebody else to own the turner networks. the problem with that is that cnn is a huge part of the value. if you look at what most people are watching on television
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today, certainly live television, it tends to be sports and news. you've got cnn which is one of the most important news franchises it's not just on television but online one of the top apps. it's actually the top news app in the app store so it doesn't make sense for at&t to bargain out the turner networks including cnn >> let's switch gears if we could. big story on "the wall street journal" today sort of laying out the soap opera that has become this situation. your take on how it ends >> there are two issues at stake here one is value what does cbs need to do to increase its value and the other is control a number of outlets have reported that verizon has made an offer, at least approached shari redstone about buying cbs. so what les moonves is trying to do here is to ensure he's able
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to deliver the highest value for shareholders a merger with viacom which has been struggling for many years and although it's in a turnaround, still cbs' performance has been fantastic in the last years. >> let's assume for now because the other conventional wisdom is the family always wins in that it's hard to see the delaware courts effectively saying, sure, cbs, and sure every other dual class sharer company in america, go ahead and dilute down your control holder's voting power. if the redstone family wins on that score, does she, therefore, turn around and say, okay, les moonves. you know, you tried to knock me out, i'm going to knock you out. because by knocking you out, therefore all of a sudden you have a big management question >> i think there are huge management questions here. the street has had a lot of confidence in les moonves. his track record has been unbelievable and i think the bigger issue
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here is that the street is concerned about the value that gets lost in the potential viacom merger versus cbs being sold to somebody else. especially losing les moonves who is likely to stay around for the next couple of years i think that even if cbs loses, i think we're going to see a reconciliation between shari redstone and les moonves. >> you assume rationality will prevail. >> not sure there's rationality always here. >> okay. great to see you >> great to be here. appreciate it. coming up, thousands of starbucks stores across the country closing this morning for anti-bias training we'll talk to dyuzr xtan pdene
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starbucks closing almost 8,000 stores this morning nationwide for racial bias training it is in response to the arrest of two black men who used a starbucks -- actually, they were asked to leave while waiting for a companion. joining us now america first policies economic policy adviser andy puzder. welcome to "squawk." good to see you again. >> good to see you, thank you. >> we were talking about this earlier. obviously racial bias won't end
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with a few hours of racial bias training, you know, in one day what do you think starbucks gets out of it? what do you think the workers truly get out of it by spending a few hours thinking about these issues >> there's a couple of things. one is they're really very intent on maintaining their -- what you call their ambience the feeling when you go to starbucks. they want to appeal to a certain demographic. it's kind of a progressive, inclusive demographic. so they want to get -- they want people to know they're very concerned about these issues i think that's a positive thing. so there is a business benefit to this. which you can't deny but i don't think the fact there's a business benefit means they're insincere about this andrew had a good op-ed on this this morning you're never going to make the far left happy they're going to complain no matter what you do but you can do something in the interest of your company, preserving your reputation you don't want to be known as a place that racially discriminates. but it can be something you sincerely believe in i think the management at starbucks does believe in this
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i think they get two benefits out of it. >> we were talking earlier how this could potentially backfire. there's a lot of good intent embedded in this, but at the same time there's a huge rusisk. how would you weigh the risk/ risk/reward in this? >> their growth has slowed their stock -- the stock price has stagnated. they're overpenetrated there are too many coffee places if they start to alienate people in middle america, if they feel like a place people don't want to go to, i think the bigger threat here isn't that they're having this racial sensitivity training the bigger threat is they're going to let anybody into the restaurants. they already have something of a problem in the restrooms with people using drugs i saw a picture of somebody with drug paraphernalia on the changing table in a starbucks. if it starts to become a place where you don't feel like it's for you, they're actually
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pushing this, we're the third place. drink coffee at home, work, or starbucks. if it starts to feel like starbucks isn't that kind of place when you're in st. louis or memphis or nashville, that could hurt >> let's talk about that balance. th that third place idea had been what howard shultz has talked about. yet by opening up the store by the way he's describing, he does make it, perhaps, more complicated than it's been in the past you could say, for example, by the way, a mcdonald's, by the way, always -- i don't know if it was a third place but has been a very open door kind of place. but by the way, there has been racist incidents at those places there have been drug paraphernalia. you can go on youtube or google and you'd see lists of that. starbucks for the most part thus far has avoided that >> well, they have avoided it. i think what this policy
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implementation with respect to the restrooms and not having to buy anything to be in the place, they may have gone too far there should be more openness than they had. they have to address the problem of employees, you know, kicking out people that are just sitting there waiting for a third peeary to show up which is what happened in philadelphia i think they've gone too far it could be a problem for them they're smart people howard shultz is a genius at this i'm not going to be critical of anything he does we'll have to wait and see what the results will be. he may have over extended. >> andrew, going back to the training issue the sicience on unconscious bias is compelling. do you think starbucks will have a demonstration effect that other companies will feel compelled to follow starbucks in they wer terms of training? >> they might. but it will be those to a similar demographic as
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starbucks. those that want to be this progressive, inclusive kind of company. if you're a company that isn't trying to, you know, appear more of a social warrior, you don't want to get involved in this and i've got a -- i just read a book that has a chapter ceos gen these kinds of issues, and the point is most ceos want to keep their company neutral. you know, they don't want to be out there either for or against various social or political issues or parties because they don't want to alienate people on the other side that's particularly true with national companies like starbucks. you know, a lot of, you know, look, starbucks appeals to progressive and inclusive people my wife is conservative. she goes to starbucks. i go for her sometimes you're appealing to a broad group of people. >> i think in this particular issue -- the issue of race and racial bias, i would not necessarily put in the political context. do you >> i was saying social issues or
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political. if you're a ceo, you don't want to get involved in either. i would say this is a social issue. i don't think racial discrimination are political issues i think we should do all we can to eliminate that kind of bias, but i think you don't want to get involved in either side too strongly because you're afraid you're going to lose business. look at what happened at disney. they're going through the same problem. >> andy, thank you. >> good to see you, thank you. we'll tu arernnd jim cramer will join us live from the new york stock exchange. for your heart... your joints... or your digestion... so why wouldn't you take something for the most important part of you... your brain. with an ingredient originally found in jellyfish,
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down to the new york stock exchange jim cramer joining us now. we have a lot of cross currents in terms of yields in italy and the dollar and here we are we're global again, jim. we're looking for something because we're out of earnings season, but i think italy, in large part, is to blame for this 115 on the euro, right. >> right i think you're right we're looking for something to talk about i remember we look for something to talk about back in november 9th of 2011. stock went down 390 points jpmorgan went from pa to -- 35
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to 33. many people managed to scare people out i don't want to be one of those people there will be no contagious but people will be saying that for a week or ten days we need a new government in italy that is sensitive to businesses neither is a fascist party let's get that off the table, too. >> i was needling mohammed he said mocking. i was needling him about the gdp and i think i was channelling you a little bit i don't want to misquote you, but last week you think 3.5 is possible on gdp? >> yes yes, i do. that's because i want to make america great again. i was wearing a smarties hat great again and they thought it was a make america great again i'm not political and i happen to do a lot of work and i come
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back with 3.5. i would love to come back with 2. but my politics might say i should say 5 or 2. but what matters is that they're on fire and putting good numbers up i like to be political but i can't. >> we need some more kings to get to three. >> yeah. >> kings mu. >> he's a good writer. >> it's love we have a history. toyway, jim, we do, o. see you in a couple of minutes
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back to our guest host we have literally about 40 seconds. you have ten seconds each for four things that investors can actually do. >> a long-term investors don't get shake out of the trades now. there's lots of mispricing in trade. three, favor the u.s. >> go trade. >> yes. >> mispricing is out there. >> three, favor the u.s. over the rest of the world. four, favor domestic oriented over international. >> sounds like three or four of the same.
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>> no. within the u.s. focus more on the domestic oriented companies. >> like multinationals. >> got it. thank you. >> thank you. >> good to see you. >> good to be here. >> you've been razzed enough for two hours? >> no comment. >> you loved it. >> he's ready to go. >> i'm glad the mets are doing better than the cincinnati reds. "squawk on the street" begins now. ♪ good tuesday morning welcome to squauk on the street. market gets back to work today after the memorial day weekend futures down the focus on italy as government falls apart. euro's long-term survival being questioned europe is red. flight to safety back home 10-year yield 2.88 road map begins with the
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