minister with australia, the cycle can be long lasting. australia holds the record of 26 think the u.s. can do ten to 15 years we're on year nine. >> good to see you, david. >> several years away. make sure you join us tomorrow with ken langone. right now it's time for "squawk on the street. ♪ good morning and welcome to "squawk on the street. i'm david faber with jim cramer. we're live at the new york stock exchange carl kwinquintanilla is in chic where we'll have an exclusive interview with mcdonald's ceo steve eastbrook. we're set up for a higher open this, of course, after the strong jobs numbers didn't move the market in a north ward direction on friday.

european market, last i looked, were strong overnight. all in the green italy ftse, we'll call that flat the 10-year note yield did move down over the last couple of weeks 2.9. there's a look at crude oil, of course 65.74. >> yeah. let's get to the road map this morning. and it does start with the stock futures you saw. they're pointing to a higher open optimism now seems to be outweighing feerps of a trade war as the investors look to kick off the trading week. plus, trade tensions continue to simmer china talks and without a deal without much at all, really. president trump saying when you're $800 million down, you can't lose a trade war he'll meet with global leaders in canada.

and steve eastbrook, the ceo of mcdonalds will join us. carl, i know we're looking forward to that sit down, of course, you'll have moments from now. technology investments what are we talking about when we say that? >> well, i mean, they're spending a billion and a half this year. similar amount next year on what they're calling internally, david, the experience of the future, which is things like kiosk ordering but also things like mobile app and delivery and uber eats and just changing the overall experience of how the consumer gets mcdonalds. thinks about mcdonalds it's been about three years since easterbrook joined the we remember all daybre fast. in the middle of fresh beef now. the other initiatives appear to be adding a lot what they call to international lead markets. big markets overseas the question whether or not it will move the u.s. jim, we remember the upside

surprise we got for comps on q1. talk about the consumer, emerging markets, dollar, and, obviously, trade and more with steve in a few minutes, guys it's going to be exciting. >> you couldn't be at a more important juncture at the right time because this guy has continually just said one trick pony the all daybreak fast. you've been talking about i heard you on squawk the amount of innovation coming from this guy. in a period of nine or ten monthsis extraordinary he's making it so you can have an organic meal faster than anybody else it's not talked about enough. >> you're right. and i think, you know, a lot is sort of putting easterbrook tenure, as young as it is, into some perspective i think when he first got here, the first part of his tenure was looking at ways in which maybe the consumer found mcdonalds a little bit less exciting relative to their competitors, right. what can you put in terms of

initiative to change the psychology a lot is about the individual say app or experience. a lot is sort of mind feel how consumers think about mcdona mcdonalds when they walk in and see the space. how dochange the way you're able to price a burger five years from now? a lot of those changes are starting to boil, i think. and we'll get steve's view on when those might start contributing to things like the top line. >> all right carl, we'll be right back to you with that important interview. of course, carl, again, at the mcdonalds hq it's been a -- >> it's been a monday morning. >> the biggest thing is happening. >> we have one deal and it's to be acquired by microsoft for $7.5 million, jim. that's all i know. >> let's put it this way -- i know microsoft had been a quiet huge winner in this round it's almost as if people

decided, you know, satya knows what he's doing. let's buy his stock. the pc business is very strong but obviously, david, cloud, cloud, cloud people want cloud. there's a piece today in research here is one from sun trust amazon, david, i know you covered amazon when it was at $200. >> yes. >> amazon best is yet to come. why?e early on an story. amazon web amazon advertising david, these stories don't go away. >> no. they don't they don't i'm trying to learn a little bit more about this github deal. collaborate to create the future the world's leading software developmenplatrm $7.5 million is the purchase price. it's a microsoft stock it's a not a cash deal. >> really? and the stock is up. impressive. >> you know, you got it here

where is it? i don't see it it will retain its development for will operate independently, they say, jim, as well and the management team will remain in place ata little bit . it's a deal this morning me significant ones for a monday in ju you know, moving into the summer it had been a expected to be a significant beat. >> this is where it should be. we've got news getting ahead again at bristol meyers. when it comes to keytruda. you have to help me, david, there should be far more deals in health care there's too many look what the stocks have done one reat underperformers. now the banks can't merge because of the concentration issues but, david, these companies have been among the worst performers.

i keep thinking i'm going to come in here and see a big deal involving a santa fe involving bristol meyers nothing. they areccepting their underperformance the way i never seen it. they accept their under performance like, wow, we're just not what we used to be. >> i think you're right an expectations there will be something.u mentioned amjen thae cash overseas. >> why aren't they doing something. why are we not seeing, david, the big bristol-myers pfizer that kind of thing. >> we have some other breaking news. >> what do we have >> notion tin addition to the mt boeing it's the territory opened by honeywell and united technologies we'll get to phil. >> reporter: boeing announced it's forming a joint venture

with saffron that joint venture will be building and services auxiliary power units. what is that it's the apu it's a critical compll commercial lanes. it's basically the engine that powers up the main engines and then ao runs the avionics and the power for the planes when theyhe tarmac. either when they're getting ready to leave or when they come back and parking at the gate the apu market has long been dominated by honeywell and united technologies. but now boeing says with saffron it will get into the apu business jim, we've talked about this before it's a about do you have the suite of products when it comes to avionics and services and other components within commercial airplanes honeywell and united technologies have been beefing up in recent years and now you see boeing doing that the global services division, which is where this joint venture will be part of, this is all about building up those services for boeing so it can go to the customers and say wait a second, you don't have to go to

honeywell or united technologies you can come to us and we can deal with what you need. whether tsait's apu or other components boeing forming a joint venture to build auxiliary power units. >> there's been tension among boeing and honeywell doesn't it, again, make it the face of greg hayes, in the face of darius -- from honeywell, saying, guys, look, we won't necessarily keep you in business we're going to compete against you. >> exactly jim, it's out any suppliers out there look at the deal with klx about a month ago boeing bought them. you're increasingly seeing those pp're being acquired or squeezed even further because you've got those three when it

comes to avionics and services for commercial aircrafts. >> okay. phil, we'll keep an eye on shares of those companies you mentioned. thank you. >> thank you, phil when we come back, of course, carl's exclusive with steve easterbrook. 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. sc does it.

next question. do you offer a satisfaction guarantee? a what now? a satisfaction guarantee. like schwab does. man: (scoffing) what are you teaching these kids? ask your broker if they offer award-winning full service and low costs, ed by a satisfaction guarantee. if you don't like their answer, ask again at schwab.

good morning from chicago. we're at mcdonalds and they're officially opening a new corporate headquarters here even in the midst of big transitions regarding marketing, store design, and technology joining me here at the corporate headquarters the new corporate headquarters steve easterbrook ceo and president of mcdonalds great to see you. >> good morning. >> congratulat >> t it monday. thank you for making the trip. it's going to be a fun day. >> yes it's a big day why is this important to the company? >> well, i guess we've tried to evolve the business in a meaningful way i thought it was important for our people but we positioned ourselves in areas where our customers were by competition was where the emerging trends are coming through in society. and we, you know, we have a

wonderful rich heritage. we're based on the edge of the city for about the last 40 something years. it it's been a wonderful facility for us but it was a little detached from everyday life i thought it was important that we, myself included, in the thrust and we're in this vibrant part of chicago called the west loop area we could not be better placed to be competitive in this kind of modern, fast-paced world. >> you like to say you wt to make mcdonalds a modern, progressive burger company. >> right. >> and this is sort of a piece of that. >> it's a piece of it. yeah, absolutely it's more symbolic this is such an attractive area of the city. and if you think about the trends that are going to shape our future, the talent pool will help us win in those little battles that go on is likely to be based down the city rather than in the suburbs. really we're trying to position ourselves for the future not just for today but the future we don't always know what the merging pools will be but i

think the talent pool will be based around the city. >> you have the initiative i guess internally you call it the experience of the future. >> that's right. >> which we have some video of. >> okay. >> people's experience at mcdonalds is about to change if it hasn't changed already. >> yeah. it's a dramatic change if you think about only two years if you're a customer there were two ways you can get served at mcdonalds. walk to the front counter and line up and take your drink and find a table or you go through the drive through. we're introducing many options they can order through mobile. they can come curbside and we'll run it out as well as the existing traditional ways. you can pay in different ways and customize your food in different ways i think we're trying to add more choice and variety also modernize the real estate, as well. particularly in the u.s. they've got a little bit tired looking. part is also having a much fresher and modern, inviting,

warm, engaging restaurant. >> talk about the kiosk specifically there's all kinds of metrics surrounding it what it does to average check. what does to throughput. the speed. >> it works on a number of functions. you're right first of all, if customers come in, they can go to the front counter as they have done. if they want to have a little bit more time they can go to the self-order kiosk and browse through the menu and select and see the broader ranges or may want to customize food. you can pay on credit and debacle and receive table service. you take a little card and take it to the table and we'll bring your food out for you. what we're finding is when people dwell more, they select more there's a little bit of an average check boost. >> it'll be in all u.s. restaurants? yeah we're undertaken a dramatic program in the u.s we're slightly more advanced that the international markets

uk, canada, australia rolled out. france almost. germany arou halfway the u.s. is a little bit behind that we're going to be orming 1,000 restaurants per quarter. >> 10 or 11 per day. >> i mean, the state of this project is remarkable. the project management that is quired around this is immense. and so exactly right it's a thousand per quarter. the next eight or nine quarters and that'll get us caught up in the u.s. as you say, ten restaurants per day opening up in local communities, local communities are waking up to a dramatically transformed mcdonalds. >> you mentioned you're a little bit ahead of this in other markets. that's what people were looking up on the q1 comps thinking if this is what the u.s. is in for. >> they were trying to read it i understand that. thates us confidence in the u.s. our leadership team our operators are seeing the success of elsewhere in the world. i won't promise an absolute carrier. but we know that it helps grow

the business customers come back more often they stay a little longer and they're more engaged with us we know it's the right road to down. that's why we're accelerating so we can't get there quick enough in the u.s. >> i want to give jim a minute to ask questions quick, though, on the consumer. >> right. >> how are they feeling? you got 3.8% unemployment. 17-year low. you got gas prices and interest rates, as well. >> yeah, i think as we're entering the year we thought there would be an uptick in consumer confidence. fuller employment is a good ing. wage inflation is benefitting people's pockets and, you know, also, probably the trickle through from tax reform on the flip side we're seeing interest rates increase a little bit, as well and gas prices when they fill up their car, it costs them a few more dollars. i think at the moment it's uncertain. there's not a negative field but

o boisterously spending. >> your expectations we thought there would be more of a benefit in the business but, you know, it's only been 1 or 2% growth anyway. we're in a market share fight. we're fighting for customers aggressively. >> speaking of that, jim, i want to give you a chance. >> i'm concerned, steve. i'm a mcdonalds guy. this weekend we said, you know, let's try the other guys let's go to smashburger. we waited 15 mninutes and nothing. we went to wendy's 15 minutes if you give us these choices, will we have to wait for 15 minutes? it's too long for fast food. >> of course it's too long, jim. what we're trying to do is provide more ways that customers can order so we can serve customers quicker. so if you can separate instead of having to line up at the front counter and being in one

line you can order yourself and bring it out we can serve the front counter customers. so, you know, we have innovation center here we model all the changes we do we run our menus and almost like a real time customer approach through it to make sure that we don't end up with those little bottle necks that frustrate customers. >> okay. that's important and the other thing, i went to mcdonalds two weeks ago. i drove through. people say what's a 3, what's a 2. they don't know how to order i know how to order. when am i going to cut in front of these people? i won't stay behind these people who don't know how to order! >> jim, you need to download the app, put your favorites into it, we have a geofence of 300 feet around every restaurant. once you breakthrough the restaurant you say i'm ready to order and they'll say do you want to come in the store, curb side pick up, or the drive through? you take control of that, jim.

we appreciate your business. we're ready to serve you in any way you want and you can skip the line. >> this is why this stock goes higher thank you. this is what people care about more than anything you know that. they don't want to wait and don't want to be drive behind who don't know how to speak into a speaker! >> jim, we serve a lot of customers and it's the little details. it's the little attention to details that make the difference because we can get excited about big plans. customers don't care about that. they want to get their food hot and fresh. friendly service, and fair value. that's what we're focussing on. >> customer behavior and the engineering, obviously, is one thing. >> right. >> i have to ask you about trade. >> right. >> i mean, we're saying on "squawkbox" how american the arches are what a powerful symbol it is around the globe you have the french finance minister saying it was more like

g7. >> i think the geosensitivities are height around around the world. part of the way we structure ourself we have local management run the local countries. and i think that helps just localize us as a brand it is a dominant global we want to be the local mcdonalds. we wantble to the frch mcdonalds and the chinese mcdonalds or the u.s. mcdonalds. so in terms of trade otherwise, in terms of tariffs and the things like that, we're not hugely exposed to it because largely most of our goods we buy in country. certainly our food basket is typically locally sourced. certain items like coffee beans and happy meal toys we have to trade those around the world we keeping an eye on what it means if there are tariffs at the moment, we don't feel significantly exposed. >> you think fears are limiting the stock, at least? >> i don't think so. i think, i mean, we've had 11 quarters of growth top line growth. and the markets reacted very

generously to us over the last three years. and i think the reality is if we keep driving the growth and taking care of things and, you know, they will end up being winners and losers in the market share. and we keep positions ourselves on the winning side of that. i think the market will react accordingly. it. every morning we come in he and look at italy, spain, argentina, turkey, brazil. whether it's 4x disruption or political disruption or supply chain disruption t impact have you felt it >> yes in certain markets you absolutely do. interesting we're trending well in italy at the moment we've got a great management team in there and they're excited and investigating and experiencing the future. that's helping a lot things like delivery initiatives help drive growth. there are certain economists and clearly we're not immune from it it struck me a little bit we're not as strong as we want to be in russia. we're struggling a little bit in south korea at the moment.

there are little pockets we keep an eye on. it's the most significant markets that make up the majority of our business are pretty solid economies and pretty solid businesses there. so, you know, we feel we're somewhat safe guarded from that. >> here in the u.s., i wonder if freight or oil are stressing the supply chain, too. >> it's not a big deal for us. i mean, it's a little -- there's a cost but because we have such high volumes, kind of the fuel costs in terms of part of our supply chain is manageable, for sure. and, of course, you know, we're the longest established supply chain we can buy fut on this, as well. what matters most is to our customers. that's why we're sensitive to it because if they've got $5 or $10 less in their pocket something will give. we don't want it to be a visit to mcdonalds or they may want to tighten the

pursestrings. >> american airlines warned fare hikes. is there a national average you would get concerned? >> no. it doesn't influence us. the other thing we see sometimes is some of our restaurants nex door to oil stations, you know, sometimes, you know, if fewer people are filling up, we can sometimes see so of those demand there ease up a little bit. we kind of double click on it. it isn't carrying through to our business in any way, shape, or form. >> some of your competitors had dramatic episodes of late. starbucks shutting down their restaurants for a day for anti-bias training. >> yeah. >> i mean, your bathroom policy faced the same questions in terms of what is abuse of the third place. how do you think about that? >> every business is under greater scrutiny than any time before and, you know, social media allows that to happen and public expectations of how big companies behave are higher.

let me be clear, we have absolutely no tolerance at all of any sort of harassment or discrimination across mcdonalds. one of the benefits we have is local managers know how to take care of cuers. we want to be an warm and inviting restaurant. we don't want anything more complicated. we value diversity and inclusion. everyone is welcome at mcdonalds. >> north korea reports they would li a mcdonalds should they get one? >> i've heard the report, as well i've got to say, i mean, we are in 120 countries so in the majority of the countries in the world and, actually, most recently we opened in kazakhstan that was the only market during my tenure. and opening in a new country is a lot of fun i'm going to say north korea is not part of our discon right yet. but you never say never. >> plastic straws, really quick, has been a bit of an issue there was a shareholder proposal that failed. >> that's right. >> i think you recommended against it

but meanwhile miami, seattle, uk, maybe california now. >> yeah. the whole topic of what they call single-use plastics is on everyone's radar there was a natural history program that came out of the uk. highlighted the issue with plastics in the oceans it captured people's attentions. understandably we've made our commitments about e recycling. reuse or recycle but there isn't currently a viable alternative that's nonplastic at the moment. >> at ale. >> at scale. at the scale we need when you have 60 million customers a day, you need a lot of straws. so but we're working and continuing to explore. we're ng to contribute back in any way we can to society whether it's through training of our people or through environmental standards. the paris climate accord around producing gas emissions.

whatever we can do around waste and recycling is a visible part of our business. we know customers will respond well to any solution we can bring. >> is it nice to have a president who at least reportedly loves mcdonalds >> we love every customer. we love every customer so he's very welcome, as well. i sense he's a regular customer, as well. restaurants but seemingly -- maybe he's home delivery. >> he has the mobile app. >> on the uber at the moment. >> congratulations on the headquarters big unveiling today. >> yeah. customers will be looking for the changes to their neighborhood restaurant. >> right yeah i think, first of all, here is a little bit of fun. i think you've had a chance to taste it we thought we would do something different here it's a one of a kind restaurant. and we're in a fashionable area for restaurants. we want to demonstrate we can have a little twist and sense of humor. and something that will pique people's interest. we have the international menu you had a chance to try the

spicy chicken. there's salads from france, deserts from latin america, loaded fries they're selling pretty well. >> i would imagine so. steve, thank you so much. >> great to see you, steve easterbrook. if you're ever in chicago, thes you can get menu items from around the world so keep that in mind on your next trip. back to you. >> okay. thank you, carl, great job 60 million customers a day i mean, you knew the size of the operation is staggering. >> it makes you happy. what can i say it's a big treat at our house. >> and the 45 seconds we have before we get to the open this morning, anything you're thinking about in particular >> yeah the micron story about the chinese visit. and. >> samsung -- >> yes [ cheers and applause ]

[ opening bell >> windham is a name you know. >> yale. we'll have them on tonight the largest franchise of hotel rooms. it's been a story. this is where the opportunity comes in when they do these stock goes down it's like a 14 to get to the rest of the group would be 18. people have toing loo at this because as something gets out of

the s&p it loses that kind of sponsorship. goes back in the s&p and it's a stand alone. bingo. right back keep in mind this is an opportunity with geoff. >> it doesn't seem to be having an impact on much as the positive or favorable interpretation of the strong job numbers we got on friday and the continuation, at least, thus far in our first minute of trading of the uptrend. >> no. look i think that people don't understand that employment number tends to have legs. most things are forgotten about almost instantly but the employment number when the market comes in, people say, you know, great opportunity. and a lot of people are saying the economy is so strong, they can handle tariffs now the fact is you can handle a certain number of tariffs. you can't handle a constant escalation of tariffs. we've never seen a constant escalation. >> strong words from our long

time allies. certainly in the meetings with the secretary mnuchinded weekend no real word from wilbur ross. nothing. >> and i think both sides are i don't know if you agree with this both sides respect wilbur ross as someone who knows about trade. given his long standing steel work or do you think what people are sayi he's just one more ideal. >> no. i think, i mean, you can't argue with his knowledge base. >> right. >> when he comes on, he certainly knows all the underlying statistics. i think has a general view of it, jim. there's a lot of criticism,over all, i think in the business community for the lack of focus on china and trying to wrap it all and going in all sorts of directions many people would argue that the main threat is intellectual property theft, sharing of

technology in china, their desire by 2025, you mentioned, of course, calling in the suppliers to try to replace so many of the components that they're currently relying on that are either u.s. made or u.s.atented with their own home grown technology. that's where the real threat is. it's unclear how we're dealing with that. >> i totally agree i think that steel is important. as you know from your documentary work, what we should care most about is our security. now we don't want chinese steel in our tanks i think we accept that do we want these joint ventures whatever we do they copy and maybe the joint ventures are to be able to learn about what american express is up to or learn about our great packaged goods are up to. and i think the most difficult one would be anybody in the highest end that is doing great work, that is not easily

duplicated that is, if you're a joint venture with china. >>ight but, i mean, all you have to do is look at cte and the compauna could no longer avail itself of u.s. supplies to put into the funds. an example of how important our technology continues to be for the chinese and the leverage we have of course, many people would go back to tpp and the decision there to pull out of that trade agreement, which seemed to be designed to actually exclude the chinese. by the way, we looked at one name to get a sense how things are going in china nxp. >> nxp. >> look at it today. >> today is a suboptimal today for nxp. maybe you know it's up. >> i don't have a lot to offer on nxp, jim. i continue -- there was a lot of hope early last week that there would be something done with the chinese. >> this is on a qualcomm $127.50 all-cash deal to acquire

nxp has been awaiting the approval from anti-trust regulators in china for months now. as the lone thing they needed to close the deal there had been hope earlier last week and what i'm told is things have gotten a bit quiet. sort of radio silence, to a certain extent, over the weekend. even though the two sides had, i'm told, kind of reached what they agreed were remedies. it doesn't mean the deal is not going to happen. it simply means that once again it does seem to be part of the larger conversation about trade between our two countries. >> i thought for sure it would be this weekend. >> because people hoped it would be. >> nxpi is the barometer. >> yeah. >> if that deal goes through, then you know that there are larger deals being made behind

the scenes it seems as if the chinese government, unlike the united states government, is all in sync an anti-trust regulator would be top down that's because the communist party method of governing is one voice. >> yes. >> and that there isn't, like, a supreme court there. >> many people would tell you it doesn't make sense not to approve the deal we got a month and a half for them to approve it until the two sides walk away. >> why does it never matter in our trade talks. they stumble but the buying continues. the buy in alibaba continues why is there never a read through that somehow those stocks could be in jeopardy. they're being bought as if they're american companies. >> yeah.

they are also domestic consumption aren't they? yeah. >> you would hope if it did get resolved in a positive way, the chinese make good on the continued pledges to increase the imports as they create more of a consumer economy. you have timagine they're going to benefit. >> i like both stocks very much. any time you think, you know, i'm not going to buy a chinese stock, they're the one amazon has been a remarkable stock. alibaba has been great if they have a faang over there. >> alibaba up 21%. by the way, technology generally positive but not facebook, jim you know, they gave deepak excess to data on users and friends. there continues to be focus on what is going on in california. >> yeah.

>> the race there. >> just keeps coming for them. >> i come back to what the ultimate feeling was you put your stuff on facebook do not expect any privacy. and this article today acted as if there's -- let's just say a brief there's some privacy and your carrier won't get what you put in i almost say to the "new york times" just because you're not interactive, because you don't post on the "new york ti site, doesn't an that if you post on facebook you actually have an expectations of privacy. it's almost as if when i read the article, obviously, i'm motivated by anything involving the "new york times" itself. >> right. >> you want to tell the writers, guys, are you on facebook or instagram? do not realize everyone in the world can see it the goal is not to have nobody to see it. the goal is to have everybody see it you don't say i only want my wife and child to see it

you want the world to see it so the article should shift. the article oulde hoe "new york times" isn't able to get to the scale of facebook it should be "new york times" cannot scale like facebook t-mobile will not pick it up sprint has no interest in what we do. we have expectations of privacy but nobody cares. >> right just putting it out. why doesn't the times commission that article when we put it on the "new york times."com people don'tcare. >> let me give you a question, do you notice we've been commercial free? >> yeah. we've been commercial free. >> what is that about?

>> we had a, i mean, not long we had we had to devote some time to mr. easterbrook >> i like commercial free. it almost feels like a soccer time. >> yeah. a little more air to breathe. >> i like it there's a piece call "retail apocalypse is over." they like macy's here. david at 18 i declared the ap k apocalypse over. >> it's not particularly helpful. n not helpful. >> no. it was not helpful always love that scene. >> yeah. i love the smell of macy's being updated. it's a smell of victory. >> yeah. boeing is up boeing is actually up more than utx and honeywell on news of that. >> by the way, gave an interview to the street last week. >> yeah.

he said stocks are much higher the stocks have been selli off on peace breaking out between the north and south. defense stocks go down every time north korea has a mcdonalds cheese burger? >> and, finally, back to microsoft. it's all stock interestingly for github $7.5 million worth. >> and people love t. >> yeah. it's is active. >> yeah that happens sometimes microsoft is -- satya, can we discuss it or not? >> apparently he's coming on "mad money." >> no on squawk alley. >> he knows i can't interview

him. >> it's all about you. >> it's your world we're just living in it. >> let's get to courtney on the floor. she has more on what is moving this morning. >> good morning to you, david. we have another rally going on this monday morning. a continuation, really, of what we saw on friday we have stocks higher. most of the sectors higher here across the board with energy and materials leading the way. health care and telecom are among the laggered we're looking at sectors overseas, very strong. particularly what we saw in asia with the nikkei higher in spain, remember we're worried about what was going on in the eurozone and with spain that is higher by about 1.5% so why are u.s. stocks really shrugging off fears of trade wars and the headline risks? we've got a number of reasons from market watchers and they include, of course, the strong economic jobs data we've been

seeing particularly in the report on friday we have historic low on employment growing wages. corporate earnings those continue to be strong. entally stro.s. corporations political turmoil about italy and spain. we mentioned earlier those are easing the ten year yield below 3%. sitting around 2.9%. and the tech sector has been strong enough to absorb an offset all the shocks we've seen so far so barring any trade jitters we could be in for a bit of a summer rally if you look at the statistics, near the dow nor the s&p has posted a june decline since 2015 so we'll see what happens going forward. the nasdaq, we should point out, was lower last june. and then if you look at the s&p 500 index, we've had 34 1% moves since the start of 2018. that's the most in the first five months any year since 2010 we have several events to watch today when we're talking about individual stock movers. we have the big conference going

on in chicago. we can see a lot of movements out of bio tech and the pharma names. the "new york times" report you mentioned it earlier about facebook potentially giving out the personal data to device facends byt policy and the news we got moments ago about microsoft buying the software developer platform github stocks are higher. back over to you, david. >> a little more active after 9:00 thank you, courtney. courtney reagan on the floor to rick santelli. >> good morning, in the aftermath of friday's employment data, we see the interest rates mostly a parallel shift. one week of twos drifted up and friday's number kept it up it's up two on two-year. the rest of the curve is up one basis points as you see on a one week of

tens, yes, you know, we've been playing under the 3% area, but maybe more importantly when we had our big downdraft based on the exporting of italian low interest rates moving to much higher interest rates for th 48 hour period what we did see, what we did see was our markets responded in a fashion that was very aggressive especially on the comeback after trading briefly under 280. here we are. back in the 290s low 290s if we look a year to date of the ten minus two, knowing there's a little flattening today what should jump out at you is the ongoing flattening there have been moments of steepening if you look at what happened after year end but right now sit at 42 basis points, which would be the lowest, flattest this curve has been since the fall of 2007 if you look at the italian two year and the italian ten year, what you see on the two year there is we're currently at 77 quite a big difference from the

284 high yield tens were at 344 today they're at 256 and, finally, last couple of charts here i would like to look at the barclays investment spread sometimes we look at hyg for high yield sometimes we look at the etfs. it's fascinating to look at the securities side. whether investment greater high yield they have widened out as you see on the one year chart. they have opened up a bit. that's important to pay attention to especially considering the volatility we had in the equity markets. we're below the 94 mark. one week chart i keeper. we touched 95. if you blink you missed it the dollar is firm considering it closed slightly above 92. but the euro currency is fighting back it here as it reclaimed the 117 handle back to you. >> okay. thank you, rick santelli coming up microsoft ceo sate

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♪ welcome back to "squawk on the street." we're in chicago where we talk to mcdonald's ceo steve easterbrook not too long ago about their new store redesigns and the u.s. consumer and whether or not fears of a trade war or extended tariffs will have an impact on demand take a listen. >> in terms of trade otherwise in terms of tariffs and things like that, we're not largely exposed to it because the vast amount of our goods we buy in country. our food basket is typically

bought in country. at the moment we don't feel significantly exposed. >> key comment, jim and david, from a company that, obviously, is hugely exposed all over the world. interesting, too, his comments about the u.s. consumer and how at least in his view, gas prices are starting to maybe offset some of the enthusiasm they thought the consumer would have thanks to tax cuts at the end of last year. >> carl, what always surprises me is the tax cuts are so much bigger than the gasoline it's almost front and center for the gasoline but the cars use far less gasoline than they used to is it -- in the end, how big an impediment is it, really, to people's spending? >> fair point, as he said. all it takes is having five or ten fewer dollars in your pocket at the end of the week that impacts their marginal sales. but point well taken and, who

knows, maybe as your theory has been lately, jim, maybe the worst of the pressure is off for now. we'll have to wait until the back half of the year to see >> yeah. and, of course, multinational company. mcdonald's is -- it's american, but around the world, everywhere, as carl made clear >> fantastic reporting out there. thanks, carl see you in a little bit. up next, stop trading with jim. later, satya nadella will talk about that deal announced this morning billion in microsoft stock to acquire the software developing company, developing platform company it took a whole lot more. that's why i switched to the spark cash card from capital one. with it, i earn unlimited 2% cash back on everything i buy. everything. and that 2% cash back adds up to thousands of dollars each year...

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>> when you say surprisingly, you mean not surprisingly. >> not surprising at all what was surprising is he waited until monday we all could have used this piece friday. >> what's on "mad"onig >> stanley bergman the company is not doing well. people are worried about amazon. >> amazon moving in? >> yes, first quarter wasn't so good and geoff ballotti, wh why? because it's trading at a discount to the other hotel, your franchise companies >> they have 53 million people in an awards program i'm not one of them. that's got to change >> that's a lot of people. >> plus $17 million from la quinta >> never tired of saying that. >> la quinta >> makes you happy >> have a good show. have a good day. see you back here tomorrow

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♪ goodorning and wel back to "squawk on the street. i'm sara eisen with david fiber live at st 9 from the new york stock exchange carl joining us today from chicago. mcdonald's headquarters. let's look at the markets. a nice monday rally. the dow up about 200 points. s&p up 0.5%. brushing off some of those worries about trade tensions in a weekend dominated with news out of g7. let's head to the cme group in chicago. rick santelli with breaking economic data. rick >> yes, good morning, sara our april read on factory orders expecting down 0.5% to 1%. we were down 0.8%. last month revised up by 0.1% to 1.7. now we can tell that aircraft and transportation may have weighed on that number because extransportation factory orders

is up 0.4% let's look at our financial april read on durable goods. the midmonth read was minus 1.7. what did we end up with? minus 1.6. that's now in its place and the weakest number since january's minus 4.2. so the second weakest of the year let's strip out transportation and it also improves up to 0.9%. if we look at capital goods orders, nondefense aurcraft, a proxy for business spend, it's up 1%. if you look at shipments versus orders, they're up 0.9%. we are up a basis point at 292 in tens. dollar index down more than 0.3 cent >> still up 200. rick, thank you. our road map begins with microsoft m&a. the company announcing its plan to acquire github and microsoft's ceo satya nadella will join us first on cnbc

plus the mcdonald's revamp the iconic american company moved its headquarters to downtown chicago and is now working on elevating its menu. a lot more from ceo steve erbro. >> plus, trade tensions on the rise again ahead of the g7 meeting in canada. trade negotiators certainlt making much progress in china. just what are the market implications first up it is a big tech m&a story this morning microsoft announces plans to buy the software developer platform github the deal valued at $7.5 billion. all of it payable in microsoft stock. jon fortt is going to dig into the deeper meaning of this >> yes, you don't buy github to make a lot of money. what's remarkable to me about this, thoughs that microsoft stock is up and for those that follow technology, this is like a collision of worlds. this is like that moment when steve jobs was on stage at mac

world and big gates showed up saying it was bailing out apple. but it's happening in the open source context what is github it's the place where developers go to build code for all of the major projects they're working on and make sure it doesn't turn into a tangled mess. they can make sure the versions are right. microsoft is the biggest user of github but the platform itself has been in some trouble. they've been looking for a ceo in alittle bit of disarray what's interesting here is that git, the underlying concept and idea for collaborationderneath forth by linus torvoltz. used to be enemy number one when it came to linux they reported the desire to control the word of coding it's this open source bottoms

up, different kind of movement satya nadella has embraced open source, linux and nothing crystallizes that mo thais shoud i think perhaps not, if, a, micrcan maintain github and build up credibility even more credibility with the developer community, because that translates into good will microsoft has said they'll allow all open source projects, all the projects on github to flourish you don't have to build for microsoft. they're not changing all of that if they're seen as being a good steward of this, that can be hard to calculate. >> it's funny. so f ten yea ago, this would have almost been inconceivable. ten years ago this would have been totally inconceivable to quote the princess bride it really is like that moment when apple was in need of a bailout and bill giving apple this -- and apple

fans didn't know how to respond. satya nadella has moved microsoft in so much more of a open source silicon valley friendly direction we saw that with the linked in acquisition. but this is yet another major step in that direction >> i think cramer framed it as a vote of confidence in satya nadella's leadership the fact microsoft is higher he sort of his cart blanch he's won over investors to do this sort of thing >> he didn't wait. his first acquisition was mojang, the founders of minecraft. it wasn't about making money but about building a community a credibility. this is that on a much bigger scale with implications throughout not just the cloud strategy but this expanded windows 365 strategy >> a lot larger symbolically than the roughly 1% it equates to of their market cap they're

spending here. >> which is still above google that was the big story last week microsoft -- >> market moving above google. that's right >> they were seen as uncool for a while. not today? >> alphabet is having a good day up about 1.6%. >> many investors are happy about github being saved those google developers will still be able to build good stuff. >> you'll have that interview with nadella later on. >> absolutely. >> thank you trade tensions continue to simmer this morning. u.s. allies ramping up the rhetoric against president trump's steel and aluminum tariffs. and china, trade talks ending without a deal or any joint statement this week. eunice is live in beijing. >> the talks iended with warning from beijing that if the u.s. decided to impose tariffs then any trade deal which could include large purchases of american goods is off. secretary ross was here over the second following up on recent

trade talks in washington. according to the u.s./china business council w briefed on tiscussions here in beijing, the conversations here largely centered on technical issues that would help increase the purchases by the chinese of agriculture, as well as energy products also they said the conversations revolved around trachina's industrial policies. and secretary ross is expected to mt with president trump later today so no u.s. statement was issued however, the chinese did issue a statement and they said the tw made concrete progress but beijing also added any dea would be based on the premise of not fighting a trade war the statement says if the u.s. introduces trade sanctions, including tariffs, the economic and trade achievements negotiated by the two sides will not go into effect now the trump administration had

surprised many people here last week when it announced that it was going to move ahead with 25% tariffs on $50 billion worth of chinese-made goods by mid-june largely seen as a negotiating tactic beijing is, obviously, willing to use its leverage, its ability to address the trade gap as something that's very important to president trump guys >> eunice, thank you trade certainly on the president's mind this morning. a number of tweets, including this one the u.s. has made such bad trade deals over so many years that we can only win with us now, morgan stanley's head of u.s. public policy, michael, and ariel v.s head of investment group, charles. you think the market agrees with president trump's view and, there, doesn't see it as a big threat that seemingly the whole world is coming against us

on trade >> actually, i would say this is something that the market and most economists agree on and that is that trade wars are bad. it's hard to get economists to agree on anythin but on this one they're in agreement it's important to emphasize the people that really get hurt by tariffs and trade wars are the consumers who end up paying a higher price for things. there's a real argument that tariffs can help business. go back to alexander hamilton's report on manufacturing and he came out in favor of tariffs in order told ameri businesses but it is clearly bad for inflation because prices go up it's clearly bad for consumers but there are going to be business winners with these moves. >> yeah, although hamilton, that was back when we were, fair to say, developing economy. not one that's 70-plus percent led by the consumer. if you're raising prices in an economy dependenon consumer spending, that's not a good thing.

>> clearly the argument that things have changed but we're a net importer of manufactured goods, a net importer from all the countries we're talking about having these negotiations with so the good scenario is that trump is negotiating and tha going to end up with less tariffs. the chinese right now in order for us to do business there require us to give them our intelle intellectual property, form partnerships not in our best interest so there is an up side we could end up with a better deal >> i'm wondering if so my economists agree this is negative for economic growth and it does appear to only be eska laith from here and it's not just with it's with our biggestrading partners like canada and like the eurozone why does the investors -- why do investors seem to be brushing it off?some might be surprised to n and see a 200-point rally and such a good mood on wall street given what we saw over the weekend. >>h, well, we wouldn't argue that investors are brushing it off. equities have been volatile,

range bound for most of the year we expect it to stay that way. and i think it's easy when you look at some of these individual tradlicts and the section 301 tariffs we think maybe only shave 0.1 off of growth. the steel and aluminum tariffs, another 0.1. the higher gas prices. the probm is when you start adding it together, it adds up in a meaful way. fiscal policy has 0.5 growth you add up all these 1 on 1 situations the folks talking about them individuallythey don't make a dt add them up. now the point where we think u.s. public policy is not necessarily xertsi iexerting a influence and it's not going to mask some of the other issues we think kweeequity markets have to focus on for the balance of the year >> charles, do you agree with that and how do you position your portfolio in that kind of environment >>asi do these are not big impacts. that was the important part of

what got said. but certain industries are clearly going to feel this and you can see in the stocks of things like things that have steel in them as important ingredients like stanley black & decker stock is down because of this. ken metal. snap othe stock is down. so i don't think the market is poo-pooing this. i think the market doesn't t we'll end up with a global trade war and if we aren't, the effects are going to be small. >> i want to broaden it out. this may be more of a sort of big think idea, michael. and that is a quote from secretary mnuchin saying i don't think the u.s. is abandoning its leadership in the global economy. are there any investment implications if that is true as people are talking about it? you heard on our air a number of people talking about g6-plus 1 this idea of the u.s. leadership in a global economy. >> over the very long term if

the u.s. is truly abandoning its leadership role and we start talking about things like the dollar or reserve currency, that's absolutely material it's really hard to gauge where that's going over the long term. in the near term we think this is a temporary trade dispute most of these are going to end with goerknegotiated agreementst have modest impact on gdp. that doesn't mean this isn't a problem for investors. you started making the point made earlier start adding all this up very quickly get to where you negated all the boost from economic policy. if we price that in which our team thinks we did in the fourth quarter of last year, then everything that's happening now represents a headwind as opposed to a tail wind that's the only thing markets are going to continue to be choppy here. >> tougher to navigate we have to leave it there. thank you. >> just watch for inflation. these acts are inflationary. that makes interest rate goes up and makes certain stocks

underperform the bond substitute stocks should be avoided here. >> got it. guys, thanks michael and charles. let's get back to carl at the new mcdonald's headquarters in chicago he spoke earlier on the program with the company's ceo steve east easterbrook. >> we covered some of those trade tensions as well with steve earlier. mcdonald's, one of the most recognized global american brands all around the world. but at the same time, mcdonald's is in the middle of all these big, massive modernization pushes whether it's the new corporate headquarters here in chicago, redesigning their stores, addingiosks and table service all across the country of course, having to constantly calibrate and recognize where the consumer is in the united states in terms of confidence. here's what he said about that >> i think as we're entering the year, we thought there would be a bit of an uptick in consumer confidence generally with fuller employment is always a good thing. wage inflation is benefiting

people's pockets and -- but also -- probably the trickle through from tax reform we thought could help as well. on the flip side we're seeing interest rates and gas prices when they fill up their car, cost them a few more dollars at the moment, i think uncertain. it's not a negative feel but nor are they boisterously out there spending as well >> interesting comments from easterbrook on that. he did touch on some stresses in some parts of emerging markets italy is trend willing but they're seeing pressures in countries like russia and then on trade itself and the tensions, tariffs you were just talking about, mcdonald's gets a lot of their materials in local countries. it's food, not steel, which is crossing borders easterbrook argues they're immune from some of these tensions but you look at the stock year

to date, maybe there's been some sentiment weighing on it because they are so global and we are unsure exactly where these international relations regarding trade are going to wind up. sara >> i was going to ask you about e stock e, down 7% this year. it's been such a big winner over the last year and, really, since easterbrook has come on. the narrative was they had all-breakfast and that was driving new consumers and driving new energy into the franchises i'm just wondering what you think the narrative is now for those who are remaining bullish. is it on the tech side >> well, it's -- as easterbrook said, markets rewarded them nicely even some of the holds on the street on the sell side. the premium valuation makes it easier to put it on a buy. breakfast was seen as pillar one. and now they're doing fresh beef which is a big -- the biggest menu change since breakfast. and now you'll have every restaurant in the united states

with these kiosks and table service and the argument here is you put all those together like they are in some international markets and maybe you start get thing of the up side surprises on caomps in the u.s. that we've already been seeing in the uk, in canada and the case is they're on the beginning stages of a multiyear pull in market share in what is, obviously, a hypercompetitive industry where they arobably too many restaurants in general, at least in this country it's a dog fight >> yeah, absolutely. carl, a lot more from you. we'll see you in a bit thanks for now carl quintanilla in chicago. microsoft making a $7.5 billion acquisition this morning of github. the ceo satya nadella joining "squawk alley" at 11:00 a.m. eastern time plus, facebook is in hot water again. promises of user privacy falling flat as new concerns

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welcome back to sk"squawk on the street." a big supreme court ruling involving the colorado company small business and whether it was at issue here not making a cake for a gay couple. the issue here is whether, first of all, the ruling is the supreme court sided with the cakemaker in this case by a 7-2 vote with a narrow

interpretation the issue was whether or not colorado's public accommodations law made it possible for this person to contest making a cake for a gay couple on religious grounds. in this case here, in the 7-2 m the supreme court, in which only ruth bader ginsburg and justice sonia sotomayor dissented, they said they are allowed to, in this case, cite religious first amendment reasons for not making this particular cake we are going through the rest of this particular ruling right now but the headlines there are very interesting for sure in a broad ranging ruling that could have a lot of implications for businesses large and small across the country with that i'll send it back down to you guys. >> okay, dom it's interesting here. apparently at the time this occurred, colorado did not have a law in place protecting the civil rights of gay couples but now does >> that's the reason why this is an interesting ruling because now you have a situation where

the supreme court says that in a certain situation, you can cite first amendment reasons for this particular move. but this is something we'll go through. there's pages and pages worth of commentary and documentation, something david will be going through and trying to figure ot what thences, every part of this particular decision>> goodt thank you, dom now time for our etf spotlight. a look at growth stocks versus value stocks >> yes david, as you know, growth stocks have beaten value stocks by a wide margin seems to be a rough consensus coming into 2018 that maybe it was time for rotation given the broad economy looked like it was starting to hum a little bit which would help value stocks more to the exclusion of organic growth stocks. look at the performance split of the two largest growth strategy etfs u.s. large cap growth stocks versus value stocks. essentially you have 7% to 8%

year to date gains the etf on top and the vug is the vanguard growth stock etf. the other ones, russell 1 thousand, vanguard value flat to down year to date. what's going on he obviously goldman sachs weighing in today saying this could continue growth stock outperformance looklike it's here to stay because people aren't confident about the length of this earnings growth cycle. here you have the performance in more detail. the assets, interestingly move to, you'd think that everybody was chasing growth stock funds and throwing their money at them it's not entirely clear. here you see the top three biggest growth strategy etfs $106 blion togethethe value 116. it looks like an even split. seems like people are willing to bet on value if you included the qqq, which for all intents and purposes is the largest large cap growth etf, growth has more assets in it we'll see if this matters for a while. >> where do they draw the line

in these etfs between what's growth and -- >> some people think the value indexes are broken they're just split based on some valuation metric a lot of financials in the value etf. seems liket's morea sector issue than it is necessarily kind of a style issue. so a lot of confusion also in the journal. good piece of the existential threat to value managers saying some of them are finding reasons to buy facebook, google. >> interest rates started to rise and volatility came back to this market. we got back to a more normal period value investing would shine again. >> it has in very brief periods. neck and neck industrials leading. it's very difficult to say you have a genuine kind of title shift happening. >> you can make a case that alphabet's a value stock and a growth stock >> in fact, some of the indexes

split an individual stock into percentages in each index. it's noisy once you get into it. >> we've learned something with these. mike santoli more trouble for facebook. talking about growth stocks. coming under scrutiny for a series of partnerships allowing phone or other devicemakers to access user data julian boorstin has the details. explain this complicated story to us, julia >> "the new york times" reporting that facebook shared data with 60 devicemakers include i including sam zon asung and appe facebook saying the data was simply shared to give users access to their facebook accounts on these devices. facebook's vp of partnerships telling us contrary to the claims by "the new york times," friends' information like photos was only accessible on devices when people made a decision to

share that information by friends. this report and the question it raises about whether facebook violated its commitment to -- it made to the ftc to protect user information. and it comes amid potential election manipulation. "the new york times" highlighting political ads masquerading as news stories aiming to influence the california congressional primary election, ads that ran at the beginning of april facebook responding that since then, it's rolled out changes requirg issue and political ads to be labeled into advertisers be authorized. it didn't start enforcing those changes until late may sara, back to you. >> a lot to dig in here. i'm sure the folks on "squawk alley" will do it. two potentially bad news stories. coming up, marriott's ceo arne sorenson will be joining us and next hour, satya nadella joining us to discuss the new

acquisition of the day, github skwt sawquk on the street" will be right back with the dow up almost 200 points.

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good morning i'm sue herera here's your cnbc news update at this hour. "solo a star wars story" losing momentum at the box office the movie took in 29.3 millioints second weekend and that is down 65% from its debut. las vegas union workers reaching a tentative deal with mgm resorts international. that deal covers nearly half of the 50,000 employees who were threatening to strike in the city cesar's entertainment reached its own deal on friday afternoon. and some smaller casino operators could still face strikes. spacex successfully launched a falcon 9 rocket overnight blasting a satellite into orbit. takeoff delayed four days because of unspecified technical issues it's the company's 11th major launch this year separately, spacex is delaying plans to send a pair of space tourists on a trip around the moon that trip is postponed until the middle of next year. gm executive vice president

mark royce had a bad sunday at the indy car detroit grand prix. take a look at that. that is the pace car which royce crashed. a 2019 corvette zr1 and crashed it during the initial lap. royce and his passenger, a race official, were okay. royce has driven the pace car before and is certified to drive high-performan but thisne didn't go all that well it delayed the race. that's the news update this hour but everybody was okay that's the good news sara, back downtown to you >> all right sue, thank you on the agenda, the hospitality conference the rise of airbnb marriott now launching its own home-sharing pilot program for that and much more let's go to seema moody live with a special guest. >> good morning. we're joined by arne sorenson, head of marriott international >> great to be with you. >> let's talk about trade.

interestingly enough, that's the topic of discussion at today's hospitality conference talk to us about the wider implications of a potential trade war, not just on marriott but the broader hotel industry >> obviously our business depends on economic growth around the world demand is driven by economic growth people sometimes forget that our business is not only about taking vacations but boots business travelers and about companies having their meetings with us. all of those things are driven collectively by economic growth. our fear, of course is that a trade war, depending on how it develops could dampen economic growth that may be in the united states it might be globally you never know it's still early in this process. but we're watching these steps that are taken by the united states and other countries around the world in trying to figure out what it means to economic activity. >> what would your message to the u.s. president be if marriott's ability to expand in growth markets like china is challenged by these trade tensions china is the fastest growing

market and specifically for marriott, 12% growth >> there are bits of this which are about trade writ large and for a chinese visitors to comees to the u.s., it requires them to go to a u.s. embassy in china it's an intimidating thing we could make it easier for chinese to come and visit here they're not talking about coming to settle here or to stay here but by changing our policies and inviting those travelers, we actually will drive exports because they come, they stay here, they leave their money here, whether it's hotels or restaurants or retail or sites that they see. i think there's real opportunity for us >> that's important because we're seeing a decline in foreign travel to the united states, specifically from china. >> we are seeing concern about le leisure travelers around the

world. it's harder to get into the united states. it seems to feel less welcoming. we applaud a lot of the work under way around security. need to make sure we he right immigration policies in place. we're not talking about that we're talking about how to make sure we're driving the welcome and one of the policies that can encourage that travel. >> let's talk abouhomes. now yon book a marriott home in london in an effort -- this is a platform in an effort to compete with airbnb. it seems like an important move. a step in the right direction. why did it take marriott so long airbnb has been around for a decade now >> a number of thing s at play here airbnb, first generation of home sharing was about an extra bedroom or a sofa in somebody's house. that's not the kind of experience that we necessarily want to deliver. the business was illegal when it started. and it still is illegal in some markets so we couldn't have participated in a business that was violating law.

i think for an established company to do that, is quite risky. we have seen increasingly that people are looking for places w. think about a family group or think about a college reunion or bridesmaids weekend, whatever it is there are whole homes that we think we can put on our site which are quite different from a hotel room and we end up with something which is curated, service attributes to it, design function to it it has got key delivery. you end up with something more like a hotel platform. we think that's a space where our customer, we can deliver real value to our customer >> as you push into this new space, marriott has over 30 hotel brands one clr underperformer has been sheraton. what does marriott do with this brand? you spend money to revitalize it or sell it off >> sheraton was a major part of the starwood platform.

45% of all of their revenues came from sheraton portfolio it's a brand that's been around well known around the world. what we need to bring to it is blocking and tackling. he staards f the hotels how much time do our owners have to meet those standards? if they'll not meet those standards they'll leave the system our focus in new york is really the relaunch of sheraton we're making great progress. you look at the bottom 100 hotels in the united states, and about three quarters of them we have either exited the system or more likely got on a path towards property improvement plan which will get them on strategy >> lastly marriott adding more hotels to shopping malls why bring hotels in shopping malls which are seen a decline in foot traffic. >> not all shopping malls are created equal. you'll see some malls with a robust health. and, of course, they also want

to make sure they're investing in those destinations. so they can drive and maintain better health. and they think that by adding hotels to those campuses is something that can be done we're thrilled to have a partnership with simon they are great folks we've got five that we've already launched and are under way. it will help them and help us, too. >> we'll be watching for more developments on at arne, we'll leave the conversation there thank you for joining us arne sorenson, president of marriott international back to you. >> thank you, seema mody coming up, the mcdonald's revamp, the company is turning to mobile and other tech platforms in its effort to modernize. the ceo steve easterbrook explains why they're also shaking up the menu, next. plus an interview you'll not want to miss microsoft is set to acquire github ceo of microsoft satya nadella joins us in a first on cnbc coming up. we'll be right back.

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welcome back to "squawk on the street." i'm sara eisen here th david faber and carl quintanilla we're in rally mode. the dow up 0.75%, up 181 s&p 500 up continuing the rally we saw from places like japan and hong kong overnight. consumer staples materials, discretionary and technology are all in the lead. mcdonald's is also a winner in the dow today. let's get back out to carl in chicago at mcdonald's new headquarters with futures a long talked about feature at least among the company fans. >> it's absolutely true. for literally years, i'd say at least five years, long time watchers of mcdonald's have wondered what if you could have one mcdonald's in the united states where you could go and mple menu items from mcdonald's all over the world?

what if you could go and order something they've tailored especially for australia or uk or honda or hong kong. here at their new corporate headquarters there's a 6,000-square-foot restaurant on the ground floor where they're doing that we tried some of these dishes yesterday. these desserts out of brazil sads out of france the mighty angus burger from canada the mcspicy chicken sandwich from hong kong this is a bit of a supply chain feat because all of these foods are made using local sources in those countries so they've had to re-create a very individual supply chain here in the u.s. to have it just at this one restaurant this is not going to be done across the board we talked to steve easterbrook about a bunch of things but one of them was why they decided to do this? >> this is a one of a kind restaurant and we're on a very fashionable street for restaurants we wanted to demonstrate we

could have a little twist, little sense of humor and something which will pique people's interest. we brought the international menu in. i think you've had a chance to try some of it spicy chicken is my favorite also salads from france, desserts, loaded fries and they are selling pretty well. >> he's referring to the cheese and bacon loaded fries which are pretty amazing, i must admit wilfried frost this morning on twitter asked if they'll have the uk apple pie which he argues is much better in the uk than it is here in the united states my answer was, it's quite possible because they'll rotate these menu items every couple of months they'll switch it up so you'll get a big sampling it's a reminder of how global they are, how many varied supply chains and menu items they have. when you're in 120 countries, you'll shake it up a bit on your menu this is a nice reminder for

those in the u.s. who may not get to all of those countries. >> i love how wilfried frost is trying to take credit for apple pie which is the most american bubblegum squash mcflurry. apparently you can get them in new zeeld and australia. >> not yet most -- i think the desserts here are mostly from brazil. at least this month. but they're going to continue to ramp it up and it might be a nice tourism draw if people are in chicago we -- the big question, of course, is, is there any chance they could do this, even on a limis around the country, roll it out to some special restaurants in the u.s they've been pretty disciplined in saying no this is a one-time thing even getting the cheese sauce made here in the u.s. has been a challenge. they sold out early. the supplier was like i'm doing this as a favor essentially. they're an engineering company

and this is another reminder of how hard it is to get this done. >> i'm sure that will create a lot of instagram opportunities carl, thank you. another cool story out of the mcdonald's new headquarters. from mcdonald's to apple not apple pie, actually, just apple itself it's holding its worldwide developers conference in san jose, california josh lipton is there and live with us. what are we expecting? >> so david, there are several thousand developers from all over the world right behind me here at this conference today, all now getting ready to hear what tim cook has to show them tim cook is going to take the stage and convince these programmers to write apps for his products and services, not the competition. in terms that we're expecting here today, david, reports do suggest that for one, apple could introduce new tools to help users better monitor all the time they spend on their devices. that would be interesting since

you remember earlier this year we did have those big name investors, those shareholders, they wrote that open letter to apple urging the company to write now software to help parents limit phone use. also today, maybe some improvements to siri making it so the digital assistant can work with new kinds of apps and new kinds of categories like commerce and finally upgrade to arkit they're looking for control of the augmented reality market that tim cook is passionate about. it may not just be software. could see hardware refreshes as well you'll see refreshes to the macbook and maybe even a new iphone the se2. a phone being designed from a price conscious consumer as this conference does kick off you see apple stock moving higher since early may up about 13% now. touched a new 52-week high just this morning david, back to you

thank you, josh lipton later, current market volatility and political turmoil in the eu could take a toll on european banks wilfriedrost will be sitting down with the ceo of barclays, jes staley dow up 192 cisco, cat and ge the only losersig rht now "squawk on the street" will be right back welcome to holiday inn! thank you! ♪ ♪ wait, i have something for you! every stay is a special stay at holiday inn. save up to 15% when you book early at hollidayinn.com

stocks have been stuck in a range. that has one analyst calling this market a trader's paradise. find out why on tradingnation.cnbc.com more squawk on the street coming up

let's get to rick santelli now at the cme group in chicago. get that santelli exchange rick >> good morning. thank you, david like to welcome my first guest of the week. dr. john silvia, wells fargo thanks for joining me.

>> sure. >> well, listen, most economists, and i really underscore most, don't believe this administration's disruption of trade is going to end up a beneficial factor in the economy. 45 economists at business economics believe that in 2020 we may have a recession. although they've upgrade their thoughts about 2018 and 2019 post tax cuts, what do you think about the notion of a recession in 2020, john? >> quite possible. the next two years look solid. lot of consumer spending going out there, business investment i look at the next two years as really an opportunity. if you really expect a recession in 2020, you might want to be locking in some of these returns, especially in the bond market in a three to five-year horizon. >> how would you suggest doing that, john >> again, lengthening the

maturity of your portfolio, seeing beyond that recession i don't expect, rick, that the recession will be anything like 2007, 2008 short recession. typically, the fed does ease they'll probably buy more bonds. rates will fall. you want to be locking in those >> you know, when we look at to cut through the emotion and look at it for what it is. it's safe to say, john, that the majority of those, whether it's in media or economics, really don't believe that what mr. trump is doing, president trump is doing in trade is the right thing to do. does that mean, should he get it right, that there's a much bigger upside, or am i looking at things wrong? >> no, there's a much bigger upside here is the trick, rick. we're not in an equilibrium decision when he changes things we don't

really know how the change li impact the economy and people talk about are tariffs going to lead to inflation? no they lead to one-time price changes but not necessarily a systematic rise in prices over time. >> you brought up an interesting topic. inflation is another area besides questioncomes of trade policy on that score, you do believe that the labor markets will result in higher wages at some point. how long of a wait do you think we may have, john? >> wages have been rising since 2014 again, when you're looking at the productivity gains, in the united states they're pretty weak it's hard to pay people higher wages when the productivity gains are pretty weak. when you look at that ten-year expect expected inflation rate it really hasn't moved all that much. >> no, i agree the break even rates are definitely at lofty levels but certainly not proactive. or as we say on the floor, guns hot.

dr. john silvia, thank you for joining me. >> thank you, rick. >> time to send it over to jon fortt with a look at what's coming up on "squawk alley." i know one of your guest, i think, jon. >> that's right. we might have mentioned it once or twice microsoft ceo satya nadella will join us. purchasing gib hub for $7.5 billion. how oushld investors feel? we'll fill you in, coming up on we'll fill you in, coming up on "squawk alley. we're the hayles and we're usaa members for life.

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welcome back to "squawk on the street." i'm dominic chu. take a look at consumer staples and see what's happening there best performing sector so far has been underperforming the broader market much of this year, under 13%. it has seen some life the past week you have walmart, general mills and hershey up 1.5% or so. certainly a sector to watch. david back over to you guys. >> okay. what's happening on "power lunch" >> a very special "power lunch." i'll be heading over not far from here to three world trade center, brand new building, opening this week.

we'll talk to the developer behind all of those buildings, larry silverstein. just another major milestone, david, in the building of lower manhatt manhattan. >> it's taken some time. >> paused around the housing crisis of 2008 but they are going up and have big tenants, who we will talk to as well. it's an amazing transformation of lower manhattan there's some concerns as well. that's coming up on "power lunch. when we come back, satya nadella joins "squawk alley. that's up next with the dow up 127.

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