visit learnfuturestoday.com to see what adding futures can do for you. good morning it is 11:00 a.m. in washington where we are expecting president trump landing after that north korean summit. "squawk alley" is live ♪

good tay morning welcome to "squawk alley." i'm carl quintanilla with morgan brennan and jon fortt at the new yorkck exchange. >> we are looking forward to the at&t/time warner decision. of course, all this news about the nuclear summit we'll deal with a lot of that. let's get straight to that historic meeting between president trump d noh korean leader kim jong-un, taking place overnight in singapore michelle caruso-cabrera is there and joins us with the latest developments michelle >> hey there, jon. the president said he will suspend the military exercises with the south korean military they happen every year as a

signal and deterrence to the north koreans. it's pretty clear. we went back and listened to everything that the president said about the decision to suspend those military exercises. it's not clear he thinks it's a concession he just doesn't like how much they cost. >> we will be stopping the war games, which will save a tremendous amount of money we've done exercises for a long period of time, working with south korea. and we call them war games and tremendously expensive the amount of money that we spend on that is incredible. we fly in bombers from guam. when i first started i said where do the bombers come from guam, nearby oh, great, nearby. where is nearby? 6 1/2 hours. 6 1/2 hours, that's a long time for these big, massive planes to be flying to south kor to practl over the place and then go back to guam. i know a lot about airplanes

it's very expensive. >> reporter: publicly, the president ofth korea is hailing today's announcement and the signed agreement of kim jong-un of north korea and president trump but we are hearing also that privately the military in south korea was taken by surprise by this announcement and may not be that happy about it, guys back to you. >> michelle, should we be looking at this summit as more a prolog of what's to come a number of people had said based on the on again/off again nature that they didn't see how a lot of was going to be accomplished but at least we seem to have the outlines of an agreement going forward. should we look at this as a beginning and the details will come in the coming months? >> reporter: like a statement of intent almost. already the administration had been walking back big expectations and reducing them and the statement we got today, it really depends, i think,

where you sit diplomatically a lot of the diplomats we've had on today have really been extremely positive about this, because they felt that you go back to august and the time period of fire and fury from the president maybe weould have been on war footing so this is better hard work comes now. verification are the nortkoreans going to tell us everything that they've got when it comes to nuclear and ballistic missiles program and are they going to let inspectors in to truly verify and ultimately dismantle all of that that's the big question. >> michelle, that is the big question and, you know, in terms of these major annual war games i know there's a number of smaller ones that take place throughout the year and in the region as well those war games for 2018 just ended. e to come again. months a lot could change within that timeframe, right >> reporter: that's a very good point. we should also say that the military has scaled them up and

scaled thedown to fit the current diplomatic moment. this year's were actually reduced in length and duration and strength, so to speak, compared to what happened a year ago. a year ago, they were firing miiles into the sea of japan as a signal to north korea this time they shortened the time period, made them quieter, purposely, to be less offensive to the north koreans, who hate these annual war games you'll recall, with the shortened war games, north koreans called off a meeting they were supposed to have with the south koreans protest from those military war games. >> michelle, lot to process this morning.than to you once again michelle caruso-cabrera. markets have been largely shrugging off the cautious optimism out of last night's meeting between the president and kim jong-un. another look at the two leaders and that historic sitdown.

[ inaudible >> joining us this morning, former u.s. ambassador to the russian federation and international affairs analyst michael mcfaul and also gabriella sant good to see you. >> good morning. >> good morning. >> mr. ambassador, there's the letter and then there's the language that the president used to describe kim. you thought that kind of language, at least, was unnecessar >> yes why is he using that language? this is a dictator with a goolog

that kills people abroad there's no reason to talk about him like he's your new best friend after a 45-minute stroll around the compound. i'm all for negotiations i think you need to meet with your enemies as well as your allies, but that kind of language does not advance the ball and let's talk about the ball for a minute, by the way this agreement is the weakest agreement ever signed with the north koreans. let's just be clear about that maybe it's the first move in a long, long process, but it's starting off at a much weaker place than any other agreement signed before. remember, all those other agreements signed before were never -- never led to a treaty or denuclearization. >> right but after all those prior efforts in which a summit was not given up front, that's different now. we're giving that up front. >> that's different, too. >> and we don't know if there will be a return on that, but it is possible. are you optimistic for that?

>> i want to judge president trump by the outcomes, not the rhetoric not the photo-ops. and the outcomes, so far, i am extremely unimpressed by let's be clear what they did they reaffirmed an agreement that the north koreans had already signed up to in april. so that's not progress, folks. that's not moving the ball forward. and even on the mechanics of it, they announced that secretary pompeo will be the chief negotiator on the american side. they couldn't even name the north korean negotiator, who i hopeor theest moving forward. i think this is a pretty -- it's a very weak start. >> ambassador in terms of those outcomesw quickly could that play out how quickly could north korea potentially denuclearize, get rid of its missile capabilities? what's the timeline? >> actually implementing an agreement would take years one of my colleagues here at

stanford estimates between 10 and 15 years but before you even ge that process of implementation, you have to have an agreement that everybody has sign ed up to and right now we don't have that agreement. we don't have the word verifiable locked in to an agreement. we don't have terms of inspections locked in. and the goal of denuclearization is very aspirational in a one sentence, in a very thin document so far. so they've got a long ways to go to get an agreement. and then it will take years to implement. >> turning to the markets, gabriella, and reaction or lack thereof to all of this, a lot of the talk seems to be at least we're not firing these weapons at each other, which some had feared months ago. what should we look for, as far as any market reaction, sectors that might benefit or not, based on this agreement? >> it does seem like the impact is very limited at the moment in the market it's been very difficult to

price in the change in this relationship in terms of the impact on the economy, earnings and markets. remember, the relationship was very acrimonious, we saw little impact in the global markets so we're having a hard time pricing that in as well this year now that the relationship is more positive i think investors are just a little bit more focused in some of the other events we have coming up later this week. especially the fed meeting, acb meeting. that's what everyone is watching. >> there's a comment out of data trek last night. it's rare to have a potentially market-moving event where literally no investor, no trader, no hedge fund anywhere has any information edge that'sng to remain true as we start working on definitions and scope of denuclearization and verification. >> if we listen to what the ambassador is saying, this could take quite a long time there's so many unknowns it's very difficult to focus on

that when there's so many other items on the list, let's say, and on the geopolitical list we also have all the tariff tensions with the potential list coming out of goods for china on friday there's a lot of items on the list that we have a little nfths, perhaps, nfth information, perhaps, on. >> we've been talking a lot about china in terms of what this north korean summit and this move forward dialogue means for that country russia has been the other key player in terms of supporting that country and its regime. what does this mean for russia if we move forward with peace, potentially? >> i think vladimir putin will be happy with this agreement, you know it doesn't cod ifify anything it will be a long process. he's not opposed to that they, of course, supported those denuclearization taln the past it doesn't look like a big breakthrough for the united

states yet he will be comfortable to wait and see if president trump can move this forward. it's a very thin document so far. that means there's a lot of negotiations come iing up in th future. >> gabriella, we didn't even talk about the g7. that seems like itappened months ago even though it was just days. it appears from reports that trade adviser peter navarro has walked back that special place in hell comment directed toward the canadian prime minister. are we at the point where largely we just have to iscoun these statements that are coming out of the trump administration, out of advisers when it comes to tariffs and wait and see what the actual policy implications are? even though we were saying weeks ago, let's see if there are going to be reactions to these tariffs. we're starting to see reactions. the market still isn't reacting. >> at the moment the tariffs we've imposed and the retaliatory tariffs have been limited in scope in terms of impact of growth and inflation

i do think that there is some sort of, shall we say, concern as to how this can escalate. certainly it's top of mind but hasn't changed the base case at the moment. >> how should investors be positioned right >> we still feel te the trade tensions, despite of these headlines we have, it's still a positive environment for growth in the united states and also abroad. so for us still a positive environment for risk, for equities, fixed income we've been focusing in the u.s. and believe there's still scope for later this year as well. >> mr. ambassador, fred cope was with us the last hour and made an interesting tie between the zte decision last week and the summit last night, saying it would be difficult to have gone into singapore knowing the chinese stance if you hadn't made that move on zte. i wonder if you can talk about your thoughts, how these geopolitical strategies are

tying in with our trade strategies. >> well, i'm glad you brought up the g7 i think that summit was the much more consequential summit than this one think about the level of acrimony we had with oursest, w trading partners, talking about the prime minister of canada stabbing us in the back and then 48 hours later keeping on praise to the north korean leader i hope it's a blip and we get back to normal long-term implications of that, blowing up the liberal international order that has served america so well for litey several decades, i'm much more concerned about what the trajectory of that is moving forward than i am about the agreement that we got with the north koreans because it's such a very preliminary stage so far. >> we'll see if navarro's apology in the last few minutes does anything to cool that fire. >> i'm glad he said something on

the record, yeah. >> michael mcfaul and gabriella santos, jp morgan, thank you soh anti-climatic >> we sign aed a very, very comprehensive document and i believe he will live up to that. in fact when he lands, which will be shortly, he will start that process right away. i k he wants to get it done. so no matter what you trade, or where you trade, you'll only pay $4.95. fidelity. open an account today.

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welcome back to "squawk alley. jones thinks thet will rally at the end of this year he spoke to cnbc saying he expects a quiet summer but after the midterms things could go, quote, crazy take a listen. >> if you go look at what has shut off the stock market historically, it's been on the front end of 200, 250 basis points we're negative right now so when you've got a lot of tech companies growing at 20% per year, who cares about 100 basis points who cares, right so i think you'll see rates go up and stocks go up in tandem at the end of the year. i could see things getting crazy, particularly at year end

after the mid term elections, i could see them getting crazy to the upside. >> meantime, fed survey results are out and in line with this n. steve liesman joins us now with more steve? >> maybe not crazy but the cnbc fed survey sees higher stock prices and higher yields in the months and years ahead let's take a look. what you see is when we look at the past surveys, we've been going down 38 respondents, fund managers, economists, have reduced their outlook for the s&p 500. finally for the first time they're becoming a bit more bullish. not crazy bullish. 2% more left this year, on the s&p 6% by the end of 2019. on the next screen an environment of rising yields right now we'll call it 298, 3% right now, rising to 3.23. call it 3.25%. good for stocks to defy that

rising rate of drag on stocks. now here is the outlook for today or tomorrow's meeting. 100% chance of a rate hike 81% chance in september. now it gets interesting. how many hike this is year in 3.5. half our responders are saying three, half are saying four. same disagreement over hikes in 2019 2.6 say some are looking for three, some are looking for two. will they raise rates above neutral? to the point to try to actually slow the economy and two-thirds of our respondents do expect that 62%. no, 32% and don't know, 5% that's an interesting idea, guys the terminal rate average for this group is 3.3% so that suggests that maybe an additional quarter or maybe half a point beyond neutral is the expectation of the market here. >> steve, an expectation of two to three rate hikes next year, that seems to imply that maybe

economic growth could slow down according to folks that responded to the survey. what's the take there? >> so the take is that they're seeing 3% growth that's not a crazy funds rate to be more s in line with the growth rate of the economy or the real growth rate of the economy. so, it's very much along the paul tudor jones idea, which is you're going to have higher yields to reflect better economic growth and better stock prices the danger for the market, morgan here, is if you get the rate hikes, have inflation but don't have the growth. if the growth offsets that, you get the earnings and so a quarter or half a point more on the funds rate doesn't matter all that much. >> steve, thank you. steve liesman at hq. keeping an eye on twitter today. the stock is up more than 6% today, the clear outperformer in the s&p. on pace for its best day since early february after touching a three-year high earlier this

morning. tracking for the best month going back to february of '15. stocks gained in 12 of the last 13 sessions. today jp morgan takes their target to 50 from 39, reiterates the overweight, raises the second half estimates by about 3% as they see more ads coming online. >> this is not twitter becoming facebook allf a sudden, though so many of the fundamentals haven't changed. ough video and video ads are doing well you wonder how much this is a valuation move and how long it lasts. jack do are. sey, not much question about whether he can run two companies. he's doing it. >> square is doing well and i know jim cramer hit on this on "mad money" last night. >> congrat layings to jack. historic meeting in singapore, one country is sure to play a critical role as talks continue that is china. what should we expect from beijing? we'll break that down when "squawk alley" comes back.

dow is down 14

markets about to close in the uk fed, ecb, bank of japan, european currencies pretty steady as sentiment did fall to some 2012 lows and uk wage growth did slow despite a drop in unemployment. france's biggest food retailering teaming up with google to boost its online shopping experience. keep an eye on that. >> definitely will. coming up, former deputy treasury secretary and ambassador, robert kimmitt joins us with his take on that summit in singapore and we'll talk some trade.

most importantly, i want to thank chairman kim for taking the first bold step toward a leight new future for his our unprecedented meet iing, leader of nortkorea proves that real change is, indeed, possible my meeting with chairman kim was honest, direct and productive.

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>> good morning once again, everybody. i'herera here is your cnbc news update at this hour. japanese prime minister abe praising kim jong-un's promise to rid the peninsula of nuclear w weapons, and hopes that they will release japanese prisoners. dozens of settlers protested. aid group is transferring some of the 629 migrants rescued

at sea to italian ships to continue their journey to spain where the prime minister has offered safe harbor. the ship has been stuck at sea since saturday when italy refused permission to dock. new study from the university of illinois said more than a third of americans are taking prescription medications that may cause depression. 8% of patients taking these medications and 15% of those taking three or more reported depression you are up-to-date that's nuts update this hour let's get back downtown to "squawk alley. jon, i will send it back to you. >> thank you, sue. president trump heading back to washington now after an historic summit with north korean leader kim jong-un. diplomatic talks have just begun. one country may prove critical to their ultimate success. eunice yoon joins us live from beijing with that story. eunice >> reporter: hi, jon

even before joint statement was released the foreign minister weighed in, saying that china wanted to see denuclearization, dialogue, as well as a stable peace mechanism out of the summit. beijing got all three. and also the summit reads like a that the timeframe forsuggests denuclearization is going to be much longet ththp administration had originally thought. that falls more in line with what the chinese had wanted, a more phased approach from beijing's perspective, they see that as much more stable for the region and also it allows beijing to continue to play a dominant role with engagement in north korea. now there are also interesting comments that came out of the foreign ministry today that suggested international sanctions could be lifted on north korea. the ministry said adjustment to the u.n. sanctions has to be made in accordance with the

situation on how north korea has implemented the agreement, including suspending or removing relevant sanctions measures. that contradicted what president trump had said at the press conference, when he said that sanctions would stay in place at least for now. but that disparity could become very important, because there are some here who ard that chinp on sanctions more quickly than washington would like. and that -- china is a major trading partner for north korea. so easing sanctions on north korea would take the pressure off and allow north korea to strengthen its position in negotiations and this is probably going to be a big topic for secretary of state mike pompeo when he comes now, this week, we'll also probably find out whether or not the summit is going to factor into the trade negotiations between the u.s. and china and that's because there has

been this widespread belief here that the -- that president trump has gone softer on china because he does want china to be on board with the summit. now that the summit is over, we're going to be seeing whether or not on friday when the u.s. releases a list of potential tariffs for several goods, potentially $50 billion worth, whether or not that's actually going to play into a tougher stance on china by the trump administration jon? >> i'll take it eunice so many moving parts thank you for bringing that to us, eunice yoon from beijing the dow down 1% today. on pace for its worst day for a few weeks as geo dlsolitical threat eases helping propel demand for missile defense systems. perhaps not surprising to see some of the biggest makers of those systems like raytheon and

lockheed martin leading to the downside today keep in mind this sector has had a big run still up 8% this year, despite a recent earnings season sell-off that said, from buckingham research, noting that the exports globally last year south korea and japan accounted for less than 10% of that total. factor in other bad actors, china, russia, iran, et cetera the asia-pacific region may not represent an area of growth, plenty of other potential drivers of military hardwaresalf other analysts i've spoken with don't see a lot of positive catalysts for defense stocks, richly valued, i note. he does say early plans for fiscal year 2020 defense budget will be key come later this summer he expects double-digit growth in defense spending outlets. i would also note that the national defense authorization act of 2019 is kicking around

congress, the senate specifically and going back to this discussion of china on the heels of a hack of a navy contractor just last week that we reported by china, with everything that's going on with north korea, that is a country that's building up its military might in the region i suspect we'll be hearing a lot more about that potential geopolitical risk as well. >> yep you can see the price action today, though, gets your attention. both leaders, of course, agreeing to a deal today, short on specifics open question is will any denuclearization deal be verified >> we'll have a lot of people there. we'll be working with them on a lot of other things. but this is complete denuclearization of north korea. it will be verified. >> will those people be americans or international >> combinations of both. >> agency? >> combinations of both. we have talked about it, yes. >> joining us this morning former undersecretary of state, former deputy treasury

secretary, ambassador robert kimmitt, gooyou back with us. >> thank you, carl. >> it's difficult to determine what of concrete nature occurred between trump and m. wants pompeo before the committee as soon as possible. i assume you're in the same boat we're trying to figure out what exactly was given. >> we have seen today historically is the launch of a diplomatic process given the nature of the regime in north korea, i think it could only have been done by the two leaders meeting first and now it will be up to secretary pompeo, his colleagues and our allies to start putting meat on the bones. >> you think in the past where the requirements for a summit, were they too onerous? should we haveried it this way early on >> it's hard to say. every diplomatic situation is different. if you take, for example, german

unification, there was a very detailed two plus four process the strategic direction had been set by chancellor cole, by president bush andorchev at that senior level then diplomats had to get to work we've had decades of trying to work the korea issue from the bottom up. the previous higher with madeline albright. now we have to move to the details. >> previous conventional wisdom was you don't sit down with the leader of north korea in you're an american president without other countries beside youyou gp and you lay out certain conditions ahead of time what happens changed over the past decade or so that may be has shifted the calculus on that as far as conventional wisdom goes or has it,eed, shifted >> i'm not sure it shifted that

much, jon, in the extent to which both the president and the secretary of state made efforts to meet with them. now secretary of state pompeo meeting with korea, japan and also to go to china. i think that maybe we don't have the people at the table, but i think the two people who had to meet to launch the process met today. we have to go forward on an interagency basis within our government, friends, allies and even competitors like china to take this process forward. >> ambassador, how does this play out with sanctions? there's been a lot of focus on cessation of these military exercises in the region, which the president talked about stopping last night. but sanctions, according to the documents we've seen, stay in

place. yet china is now making comments about how it would like to see some those eased how does that play out >> morgan, it's a very good point. this is a cox, important issue that has diplomatic, military and economic components one economic component is the set of u.n. sanctions in place any changes to the sanctions would have to go through united sanctions anally the unitedations security council. aair topic for discussion but relief should b carefully collaborated with process on the diplomatic and security side. if i may say one other point economic side there's not been a lot of talk today about economic reconstruction of north korea.

that's where friends, allies, international organizations, people like the chai meez and others will have to be very much involved with us, the global community, in helping to lay the governmental foundation that will then bring in private sector investment into what could be the largest infrastructu decade navarro now just apologizing to trudeau, saying there was a special place in hell. >> others can speak to their words. having been a veteran of the g5 and the g7 going back 35 years, we've had good times we've had tough times in the g7. we had the auto debates with the japanese in the '90s

we had debates with the europeans on security issues, both in the '80s, early 2000s. we've always found a way to work through it secretary pompeo said he was going to turn very much to that set of issues in the g7 when he returned from asia one of the reasons it matters, 6.5 million americans will get their paychecks from companies headquartered overseas vast majority of those in the g7 we have to get this right, lay a strong trade foundation for that investment to flow freely. >> mr. ambassador, so many issues, so little time we hope you'll come back soon. >> carl, if i may, today was an histo historic diplomatic day in singapore. it's also an historic sports day in washington. as we speak, the capitals are going down constitution avenue with their first stanley cup i would just like to say, let's go caps. >> very nice i'm sure they'll be happy to see

that mr. ambassador, thanks for you . >> thank you. >> we'll see you soon. robert kimmitt, former ambassador. make or break moment for media. at&t, time warner waiting word on their merger. we'll talk to top anti-trust lawy lawyers in a few moments rick santelli, flattish action market day what are you watching? >> yeah. no i was watching that data, cpi headline, year over year up 2.8 the biggest since 2012 japan had a big headline read at 2.7. central banks, this could be a big week e eal talk about a tt te llhaafr thbrk. see that's funny, i thought you traded options. i'm not really a wall street guy. what's the hesitation? eh, it just feels too complicated, you know? well sur at first, but jj can help you with that. jj, will you break it down for this gentleman? hey, ian. you know, at td ameritrade, we can walk you through your options trades step by step until you're comfortable. i could be up for that. that's taking options trading from wall st. to main st. hey guys, wanna play some pool?

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top of the hour, famed investor paul tudor jones that stocks could go crazy at the end of the year even if rates continue to move higher. plus, steve liesman's fed survey reveals surprise for stocks. we'll have the details. and a big bump for social media stock that's already surged it's our call of the day at noon eastern, carl less than 15 minutes away see you then. >> see you at the top of the hour, scott. meantime let's get to the santelli exchange with rick over at the cme. >> hi, carl. this morning's data was somewhat exciting, as was some of the japanese data sterday. carl was right, though the markets aren't very exciting but it all fits.

we have a couple of charts these charts are interesting on the first chart i want you to look at u.s. cpi year over year. this is headline, which was up 2.8. as you see on the chart, we haven't been at this level since february of 2012 but what's more interesting about this chart is look at the range. especially the downside. virtuallhis data stopped basically at zero. slightly negative. and the reason i bring it up is because i want to look and compare it to the ppi year over year data that we had out of japan. it was up 2.7. i would like to show that chart. this chart goes ba to 2000 you get the point. it's not about how far back it goes it's about how far down it goes, okay if you only went back a few years, the range is 4% to minus 4% you go back to 2010, it's basically 7.5% on top and minu 8.5% on the bottom i guess the point of this is every central bank seems to have picked this % target with regard

to inflation and they have different metrics that satisfy this 2% this isn't the bank of japan or the fed's favorite data points here. they have their own personal consumption expenditures they like to look at other things and, obviously, it's a coincidence that the metrics they like better show less inflation. maybe they should beooking for more so, central banks are doing a good job if they're trying to entice, if they're trying to pull out inflation. but what comes next? see, this is the point our downside, our notion of dealing in deflation is really absurd because we really haven't. not in my life we haven't dealt with it we had some disinflation other economies like japan, it isn't necessarily similar. yet it seems as though everybody is applying the same salve my point is that just because things have gotten out of whack with regard to price structure,

cozying up between banks and enn japan's rear view mirror that have cause this had condition they're in, they have low employment but they just don't have any zip to their economy. they really do think zip is g to come with higher prices i think they're going to end up with more problems than zip. i can't wait to see what mr. k r. da says friday regarding, a, negative gdp quarter and, b, they're getting the inflation they like. i want to see how he joins those together jon fortt, back to you. >> a lot of news we're looking for this week. rick santelli, thank you speaking of, future of blockbuster m & a deals, to block at&t's merger th twiime warner details when "squawk alley" returns.

keep your eye on social media stocks the squeeze continues. twitter closing in on 44 for its best quarter in its history, as a public company dow up 13. we'll be right back.

a federal judge is set to rule today on billion takeover of time warner. that's expected some time after 4:00 p.m. eastern. we'll be all over it here on cnbc, and joining us now, the former assistant chief of the justice department's antitrust division, ethan glass, now a partner with quinn emanuel, and combia law professor tim wu. ethan, this strikes me as a significant call by this judge, whether it goes for or against blocking, arly because of what might happen with

conditions what do you expect in terms of the range of conditions that might be imposed on this if it is indeed approved >> good morning. so i believe there are three ways the judge could go with this all threhave effects on how mergers will go in the future. the first is if the judge blocks this deal. blocking this deal will have a significan standing effect on whether or not the law means anything over 50 years ago, the supreme court said that law is not the justice department is always right. the law requires evidence to be built and then the judge will assess the evidence and decide whether or not a merger should go through here, the department of justice has really not produced any evidence so if the judge blocks it, there's serious concerns second is that the remedy the judge would need to address would have to be a remedy based

upon the evidence. and here, since there's very little evidence, the judge creating a remedy would merely be regulation. would merely be a judge sitting in a courtroom creating regulation over entities so i have some s concerns over what this judge is going to do at 4:00 today >> tim, i know you feel differently. >> i was surprised by some of what i just heard. for one thing, there's not no evidence you know, the expert economist for the government carl shapiro said here's a model that showshd by this situation. i guess i disagree with the characterization the government hasn't put on its case some observers think they have met their burden i think no one really knows what's going to happen and it will affect all of the mergers in the media industries. do we normally go into a ruling with this little consensus on an outcome. >> we haven't gone into a ruling in 40 years so we're in completely different territory

it's about how the judges credit the evidence both sides have presented evidence i disagree with my panelist here, and i think it depends on who he really things is credible, whether he blocks it or lets it go through. >> if the judge sides with the government on this one, what does it mean for the broader m&a landscape, not just media but some of the deals in health care as well. >> it depends on why the judge finds for the government if the judge finds for the government for the reasons that the professor outlined, which is that an economist from an academic institution has decided that he sees problems using economic models, then i think that's going to really put a paul on merger activity, as we have talked about for six months this is a vertical merger. a merger amongst entities that don't compete. normally we see those as good for the economy and good for consumers. and so if the judge finds that the evidence of a professor using economic models to predict

some price increases is enough evidence to block a merger like this, i think it's going to put a lot of questions about a lot of mergers out there, both in the media space and outside the media space about what really the government's burden is if it is so low. >> professor tim, you are a professor. i wonder if this indeed does go through, what are the conditions that you would, i guess, would be on your dream list. what are the issues that are most important when you see this kind of vertical merger where someo is strong in distribution then owns a big important chunk of content >> i think some of the most important conditions could actually be divestiture of some of the assets, the ones that are the most important, maybe the turnerssets, for example you know, maybe hbo, something like this. the assets are the ones that at&t seems to have the most capacity to use as a club to threaten other distributors. >> also things they want the most >> that's right.

they're the most dangerous in the sense of being able to threaten and raise prices. that's what the government has said the other things would be, at&t has already proposed a baseball arbitration price mechanism where people can say, all right, if we're trying to raise too high prices ayou do something. maybe we'll see net neutrality conditions >> we have to go thank you. we'll all be watching this tim, ethan, thanks >> let's get to the half welcome to "the halftime report." i'm scott wapner our top trade this hour, the truth about higher rates and why one very famous investor says even if they keep climbing, stocks will still be the place to be. here to debate that is joe terranova, stephanie link, the brothers najarian. let's begin with the call by paul tudor jones speaking exclusively to cnbc and saying the rall