next year. i think there's -- two months ago there was a feeling that the tax cut wouldn't work and people are more worried and i have a feeling it's somewhere in between i think if you get a capital spending cycle, which we're chatting about, that can greatly extend the business cycle. >> thank you so much we'll see you on monday. time for squawk on the street. good friday morning. welcome to "squawk on the street." carl quintanilla with jim cramer david faber is off today the futures are down as the white house confirms 25% tariffs on $50 billion in chinese goods. china said they'll respond in kind europe is red. no longer sustainable. president says china's trade practices are unfair slaps that tariff on hundreds of chinese goods and threatens

more that is spooking stocks. wall street poised to drop at the open at&t completes the deal with time warner but the feds weighing their options the white house announced a 25% tariff on $50 billion of goods on what it calls industrial technologies. trade between our nations has been unfair for a long time. the situation is no longer sustainable said the president he did an interviewwith fox news in the past few minutes. >> we'll do $50 billion on $50 billion of high technology equipment and other things coming into the country. we have the great brain power in silicon valley and china and others steal the secrets we'll protect those secrets. those are crown jewels for the country. >> $34 billion, jim.

customs can collect in early july it's about ip and industrial policy the trade imbalance doesn't get mentioned as much. >> no. peter navarro told us the 2025 plan which is world domination are you kidding me and the way to dominate the world is intellectual property and the way to get intellectual property if you're china, i think, to borrow it from us. the next stage is china will not buy companies in that country. the intellectual property debate is one where the chinese there's no bargaining in this. the chinese cannot come out and say listen we're not going to steal. because the fact is that the president thinks it's in the dna. this is very different from dumping. so you're absolutely right we have to define this but i would say this one thing if you didn't think this was

coming, it's crazy it's coming. >> the president making more comments on the north lawn. >> anything you say is correct they tried to pretend it didn't happen i would have gone out there and had the greatest news conference in history the exoneration was incorrect because there's no way they could have checked that number of e-mails in a few days if you remember before the election, he went out and exonerated her they didn't talk about it. that was the greatest political mistake. >> i won wisconsin, michigan, states that a republican hasn't won in many decades. years. she didn't do a good job and you never gave me credit for doing a great job.

>> there was a fox news report that the deputy attorney general ros rose dlb -- rosenstein >> i know they're getting documents. if you look what i've done with north korea and the state department, mike pompeo. it's running so well i have purposefully, because of this ridiculous witch hunt i've said i'm going to stay away from the justice department until it's completed i wanted to stay away. it doesn't mean i have to. i don't have to. i can get it but i don't want you to say i'm entiinterfering. that i'm doing anything. i think the report yesterday more importantly than anything, it exonerates me there was no collusion there was no obstruction if you read the the report, you'll see that. >> what you'll really see is bias against me and millions and

tens of millions of my followers. >> if you look at the fbi and call the fbi, the real fbi, those guys love me and i love them. >> are you thinking of us is spendsing mueller? >> i think the whole investigation is, look, the problem with the mueller investigation is everybody has massive conflicts. you have wiseman at hillary clinton, meaning her party that turned into a funeral. and they were screaming and crying how can you have people like this so you have the 13 angry democrats. you have tremendous animosity. i did nothing wrong. there was no collusion no obstruction the ig report went a long way to show that.

i think that the mueller investigation has been totally -- [ inaudible question ] >> so passionately about the circumstances that lead to otto warmbier's life. and then you defend kim jong-un. >> i don't want to see a nuclear weapon destroy you and your family excuse me, because i don't want to see a nuclear weapon destroy you and your family. i want to have a good relationship with north korea. i want to have a good relationship with many countries. what i've done, if you remember, if you're fair, most of you aren't but if you're fair, when i came in, people thought we were probably going to war with north korea. >> if we did, millions of people would have been killed seoul has 28 million people 30 miles off the border you would have had 30 or 40

million people that's what i inherited. that should have been solved long before i got there. i did a great job this weekend the fake news said you met the only thing say that saw i gave up. one broadcast said he gave up so much i met and we had great chemistry. he gave us a lot you haven't had a missile test in seven months. you haven't had a firing you haven't had a nuclear test in eight and a half months you haven't had missiles flying over japan he gave us the remains of a great hero i've had so many people begging me parents and fathers and mothers and daughters and sons wherever i went, could you please get the remains of my boy back they're giving them back nobody thought it was possible they're doing so much for us and now we're well on our way to get denuclearzation. and the agreement said there

will be total denuclearzation. nobody wants to report that. the only thing i did is met. i got along with them great. we have a great chemistry together that's a good thing. [ inaudible question ] i can only speak to the fact we signed an incredible agreement it's great it's going to be great north korea can develop and become a great country economically it can become whatever they want but there won't be nuclear weapons and they won't be aimed at you and your families >> reporter: why did you -- >> military, i call them war games. i hated them from the day i came in i said why aren't we being -- >> that's north korea's term. >> that's my term. >> they use it, too. >> they might use it we pay millions and millions of

dollars for planes and all of this it's my term i said i would like to halt it it's bad to be negotiating i saved a lot of money that's a good thing for us [ inaudible question ] >> you don't understand sarcasm? >> you're withcnn? [overlapping speakers] >> your former lawyer they're dealing with legal troubles. >> i feel badly. i think a lot is unfair. i look at some of them where they go back 12 years. manafort has nothing to do with our campaign i feel badly about it. they went back 12 years to get

things paul manafort worked for me for a short period of time he worked for john mccain, his firm did, he worked for many republicans. he worked for me for 49 days or something. a short period of time i feel badly for some people because they've gone back 12 years to find things about somebody and i don't think it's right i don't think it's right they burst into a lawyer's office on a weekend and early in the morning. i never heard of that before i mean, could you imagine if they burst into barack obama's lawyer's office? it would not be acceptable it would not be acceptable that's a terrible thing. now i feel badly for a lot of those people i feel badly for general flynn he lost his house. he lost his life and some people say he lied and some people say he didn't lie. i mean, really it turned out maybe he didn't lie.

who has lied more than comey comey lied a tremendous amount >> reporter: is there any consideration at any point of a pardon for anyone? >> i don't want to talk about that i don't want to talk about that. i want to see people treated fairly that's what it's about you saw what i did for the woman in jail for 23 years she was 63 years old >> reporter: what about the folks that don't have kim kardashian speaking for them [overlapping speakers] >> can i bring you back to the news, mr. president. >> i did nothing wrong you have to understand, this stuff would have come out a long time ago i did nothing wrong. >> is michael cohen still your friend >> i haven't spoken to mike until a long time. >> is he still your lawyer >> no, he's not my lawyer.

i always liked michael he's a good person >> reporter: are you -- >> do you mind if i talk you're asking me a question an i'm trying to answer >> reporter: i want to know if you're worried he's going cooperate with federal investigate ers? >> nothing wrong >> reporter: got it. >> reporter: on north korea. [overlapping speakers] >> reporter: did you dictate the statement about -- >> let's not talk about that it's irrelevant. the statement to the phoney, failing "new york times. it's not a high statement to a high tribunal. it's a statement to phoney "new york times". he shouldn't speak to the "new york times." they only write phoney stories anyway [overlapping speakers] >> we've said twice now they exonerated -- >> if you read the ig report, i've been totally exonerated. >> take a look at it

take a look at the investigation. take a look at how it started. take a look at the horrible statements that the chief investigator said. take a look at what he did with hillary clinton. >> reporter: should he be fired? >> i would -- i'll tell you what, you're asking me about peter strug. >> i'm amazed that peter strug is still at the fbi and so is everybody else that read that report i'm not talking about the report i'm talking about long before the report he should have been fired a long time ago >> reporter: if what james comey did is criminal, why isn't he being prosecuted >> scott has done a fantastic job at epa i'm not happy about certain things >> reporter: would you fire him? >> i'm not happy about certain things but he's done a fantastic job about running the epa which is overriding. i'm not happy about some --

>> i hate the children being taken away the democrats have to change their law. that's their law [overlapping speakers] >> that's the democrats law. bec we can change it tonight >> reporter: you're the president. you can change it now. >> you need their votes. >> reporter: you control both chambers of congress. >> you need 60 votes. >> we need a vote. we have one-vote edge. we need 60 we need ten votes. we can't get it from the democrats. [overlapping speakers] >> the children can be taken care of quickly, beautifully,

and immediately. the democrats forced that law upon our nation. i hate it. i hate to see separation of parents and children the democrats can come to us, as they actually are, in all fairness, we're talking to them, and they can change the whole border security. we need a wall we need border security. we have to get rid of catch and release. you catch a criminal, take his name, release him, and he never shows up again he goes into our society and we end up getting him in a different way. oftentimes after he's killed somebody we have to change our laws the democrats have control because we don't have the votes. the republicans -- we need more republicans, frankly i think that's why we're going to do so well in the midterms. because, wait, that and because we have the strongest economy in the history of our nation. we have the best jobs numbers in the last 44 years. best job numbers in 44 years. >> on north korea, sir

-- >> reporter: announce a zero tolerance policy -- >> he's following a law. he's following laws very simply that were given to us and forced upon us by the democrats. >> there's no law that says families have to be separated at the border that's not the way to go about it, mr. president. >> i want the laws to be beautiful, humane, but strong. i don't want drugs coming in we can solve that problem in one meeting. tell the democrats, your friends, to call me. >> reporter: you said you were going to spend father's day weekend doing work and you're going to have a call with north korea. >> i'm going to speak to north korea and my people in north korea and a lot of things are happening. i will tell you this, we now have a good relationship with north korea. when i came into this job, it looked like war. not because of me.

if you remember the sit down with barack obama and he'll admit this he said the biggest problem of the united states has and by far the most dangerous problem, and he said to me, that we've ever had because of nuclear is north korea. that was shortly before i entered office i have solved that problem that problem is largely solved part of the reason we signed the order. i have a good relationship with kim jong-un. we have an important thing. >> i can say we have a problem i told him, i gave him a direct number he can call me if he has any difficulty i can call him we have communication. it's a good thing. people are shocked they thought trump was going to get in and start throwing bombs all over the place it's the opposite.

we're building a military so strong $716 million next year $700 we're building a military so strong nobody is going to mess with us. >> what's the verification of it >> if you read the agreement, most of you didn't point after point he gave including getting back our -- the remains out of great heros make some people crying in streets so happy nobody thought we were going get that point after point all they said about me is it's terrible. it's good for the united states. it's good for them i spoke with china

doing with trade you probably heard that. i would assume it's been announced by now we're putting tariffs on $50 million of technology and other things because we have to we've been treated unfairly. china has been terrific. president moon everybody. -- how will you get kim jong-un to follow through on denuclearzation before you put the additional sanctions on. >> we're working denuclearzation as fast as we can. >> putin was called in the g 8 i think it's better to have russia in than out

just like north korea, it's better if we get along with them than if we don't >> i want to make it so the fake newsprints properly. president obama lost crimea. [overlapping speakers] >> president obama lost crimea because president putin didn't respect president obama. didn't respect our country and didn't respect ukraine barack obama not trump. when it's my fault, i'll tell you. but president obama gave away -- president obama by not going across the red line in the sand that he drew, i went across it with the 59 missile hits but president obama when he didn't go across the red line,

what he gave away, nobody noticed. [overlapping speakers] >> one more time president obama gave away crimea that should have never happened. >> this is a remarkable piece of life television. the president answers questions from reporters for almost 15 minutes on the mueller, the ig report, north korea, manafort/cohen, who he said is no longer his attorney on immigration, the fbi scum, as he put it earlier today. waited for a comment on china, m & a. there's too much else going on. >> the $50 billion that the tariffs are on and i think that is a huge story. only because last night nxpi we thought the deal was going to close. that's like a single wait a second. we're trying to play ball with

you, america the president is not about that. it's not about a stock it's about an actual fighting back after years of not. >> you think it was south china morning post they were proving qualcomm and nxpi in an attempt to stave off the tariffs >> it's a dictatorship i think they like to put forward things as viewed as being traditional let's say truce-making announcements but the president has a game plan here. and the president is not listening to what the idea that qualcomm can buy nxp it's a little bigger chinese may be thinking it's business as usual. we give them qualcomm and they're back away. they'll misinterpret the president. >> we just came off a nuclear

summit where we're relying heavily on china to make this work to keep a nuclear warhead from falling on that reporter's family, as he said. >> look, i think that there is a parallel track here. i think that the chinese president wants the chinese to do exactly what they're doing right now with north korea but the president also says, look, you're not changing the trade imbalance. you're not answering the call. you're not getting with the peter navarro crowd. you get with the program and then we'll thank you for qualcomm don't put out something against our country. i think they're playing two different games. >> earlier in his interview on fox, he was asked about the g7 and said "it ended well for the united states. the idea this is going to

somehow turn into kisses and hugs in the near future seems fanciful. >> no. this is about trying to reverse years and years of trade policy where the president believes that everyone was allowed to walk all over us and then in part because we're a rich country and it's time for others to get rich and the president, this president, is saying, look, a lot of things we did were because of the cold war. you know, south korea against communism. all that is gone he's starting with a fresh slate. this is different. and it's eye opening to the media. the media is used to the narrative that has been by both republican and democratic presidents that we want to sell. they take our jobs they take the low-industry jobs. the president is saying those are real jobs. whether you think they're low or high industry. they're real jobs. it's a different game plan and the american people aren't

caught with the people -- people who voted for him are caught up in it. i think it keeps astonishing people this man has been saying these tariffs are coming everyday. everybody you can talk with the administration. >> but yet he hires advisors, our friend larry kudlow, who is dead set against tariffs called navarro a straight up-and-down -- >> i remember once when we were trying to choose between -- i mean, there was needless nighting. >> you can't blame people for having hope it goes a different direction. >> i've been saying for you want the stock market to go up, you won't get that from what the president has done he did that with the tax cuts. now it's time to play hardball with our so-called allies. he doesn't regard these allies as allies. i thought it was interesting he said bad things about putin. i felt that in the end that he

thinks that you crane is a mess. not that ukraine is something we should defend. >> he said he may meet with putin later on in the summer one of the 500 pieces of news he made in 15 minutes. >> i think we all kind of are stunned. i mean, it's kind of whacky but it's a new, you know, it's a new normal and i'm saying, you know, they're asking him all sorts of stuff and the cnn person said i'm not speaking to you. this is different. i don't know how to explain. it we're not able to grasp it because it's nonlinear what he's saying is, look, this has to happen. get used to it this is not qualcomm buying nxp. >> he told reporters he gave kim of north korea a direct phone

number. >> he gave the cell phone. >> to reach him. that's kind of like remember when you were a kid you would go from the pool to the hot tub and the pool to the hot tub. >> yeah. i was waiting for him to say there's no fighting in the war room honestly it's just very different and we're all trying to get our arms around it and, you know, i'm listening to it it starts with steve i used to work at fox. steve is great the morning show was fun now it's like --i struggle but when it comes to foreign strad, what he's saying is that everyone is taking advantage of us that's over.

>> do they have ammo or not? >> i think that they're more of a -- i don't want to speak my politics here. but i think there are more pay for hire h they need us more than we need them that's what the president is banking on. >> i watch wilbur ross when i read him, that's what i get. now larry kudlow, i worked with larry for years. he's more of a free trader larry has drawn the line with china and said they're not free traders. i think he's saying listen we have to give europe a little more slack sir larry, i wish you the best get you back quickly because we need you now to try to put a little spin on it. >> he's a great communicator and worked for a great communicator.

>> and an optimist, which we need. >> so what do we do with cat, boeing, tesla today. all down in the premarket. >> look, yeah. these stocks -- these are the china stocks the china stocks go down domestic stocks go higher. midday we start buying the restaurants. buy some of the domestic utilities. that's been when half the banks go down. it's a playbook that happens over and over and over again every time the president talks tough on trade and, you know, we see caterpillar go down. we see cummings go down, boeing go down, apple go down then we don't see much else go down we can't relate it the way we used to. we don't have enough china stocks. >> cat and boeing down about 1%. let's get the opening bell here.

s&p at the bottom of your screen on the big board today -- [ opening bell remember this is canadian -- the chinese won't retaliate. they're opening stores in china. it's going to be amazing the consumer is up more than 40%. that's amazing you had a winner but it matters i wish these guys would be quiet. i know it's too much to ask. >> it's their day. and we have to work around it.

but up almost 28%. >> yeah. it's a great quarter and i was just saying that hogs get slaughtered. bulls make money bears make money it has the moment we've seen we've seen it in ralph lauren and tiffany. we saw it with restoration hardware these are revalued on the fly and lululemon. this is along with the rest of them it's going to go up even more. >> look at the retail names that had a huge pop on strength lulu, etsi and kohls until the -- >> when you have the reevaluation of retail, everyone is caught on the roadside. look at restoration hardware should it not be down big today? they source some, you know, they have some chinese exposure the answer is no because everyone shorted

everyone meaning the fast money guys are shorted how come the people in orange haven't screamed for this second it's like world cup. i need wolf. >> we'll watch faang today. >> yeah. >> faang comes back later in the day. >> really? >> when you get trade wars you get a slowing of world trade facebook, amazon, netflix. >> adobe is a story you had. down 3%. >> yeah. i mean, look people feel like there was degradation. in the end, a tremendous number of firms raised price targets. this is an e commerce tech monopoly it makes me feel like if

microsoft will come down, you have to buy microsoft. that's how strong they're coming on a lot of retailers don't want to work with amazon anymore they feel like they're aiding and abetting the enemy. i think it matters tremendously. and i think that the read through with adobe and it shouldn't be down this much but it will because there was some bad talk about it. but microsoft. it wasn't the prototypical revenue didn't blow out. >> and jpmorgan guy is a smart guy. people are freaking out. citi said something that was hearsay. that splunk, another e commerce, is plateauing and that was hearsay. >> he used the word plateau. i'm going to google plateau as

the guys are becoming bearish. >> you're right. you're right but let's, you know, give these stocks some room i worked at goldman during another u.s. open. if there are big sellers -- >> on a quad wednesday. >> if they're big sellers at 245 you'll have a bad down day if you're going to buy wait until then. >> s&p rebalance world cup. >> yeah. there are a lot of wild cards today. and that press conference, which was very different out of body press conference. >> yeah. we're getting asked why we aired it waiting for business news. >> i think who asks is a bag of hammers. you don't know whether he's going to say something you don't know he's going to say, look, i think that time warner and at&t. i want that appealed today you can't tell. >> speaking of which, at&t has closed the deal.

$85 million purchase of time warner following the judge's ruling earlier in the week government still has 60 days to appealed agreed not to ask for a stay while it considers the option. about an hour ago on squawk, randall stephenson talked about capitalizing on content. >> at&t has 170 million direct to consumer relationships. people with screens where they're going to be consuming this media and entertainment and content and bringing it together comprehensively, i think, is an exciting thing. >> said we got our day in court. system worked. debt load should return to normal within a year or so answering concerns of moodies and others. >> i think andrew ross sorkin made a great point does time warner have the time to make movies like netflix. i thought randall, who is a good friend to come on today, really did make some points and say that's not really the worry.

they're fine i am worried i'm worried about the cash flow. i'm worried about what happens with direct tv. >> dividend two? >> i think that yeah yeah i just -- i do worry about the dividend because i thought that -- the cash flow is falling off as badly. obviously, this is a great american company at&t. but they took down a lot of debt they don't really -- i think the cash flow is not as robust i don't want to recommend a stock on the dividend basis where i think the dividend can be a risk. >> interesting. >> yeah. if it were malone he wouldn't combine apples and oranges. >> yeah. that's pretty smart. >> randall talked about building

a train track from both ends of the country. >> look, if you go and you read the judge's opinion, a judge leon, what he's saying is look they have no choice. they've got to do this so anti-what the government is saying they have to do it because of faang. by the way, delrahim on the government side was mentioning faang. the judge is saying at&t has no choice they must do this. i thought it was a little extreme. i feel like when i look at the deal say versus, yes, comcast or disney, i think that's -- those are deals that are getting international exposure international is where you have to be. >> i don't know if you saw it. there was note on netflix he said it was time to call it euro

flix the impetus is heavy on ex-us. >> everyone is under penetrated. comcast, we don't talk enough about india. walmart made the huge stake in india. india 2025 the largest country india going more and more capitalist china getting close to the president. so anybody who can get india is someone who is ahead of the curve. if i'm going to do a big deal in the space, i want to get india i don't want to get more united states. >> yeah with all that, dow down 176. sort of expected given the premarket. ten year back to 29. we'll check in with rick santelli. >> yes good morning we're sitting at 2.9 by my calculation we're down on the five on the week

maybe most of the action in the yield curve spread i see 7 to 287 three basis points of separation a lot of eye balls watching that particular spread. maybe the canary in the coal mine we've discussed when the sevens to tens it burns the curve and burns. but it isn't that easy the time frame of how long from one to the next chapter that's the question mark. look at the spreads. tens minus twos trading around 35 you can see we've accelerated, obviously. the fed is doing what it does on the short end and the long end is influenced by a variety of factors. not the least of which is mario an droe gi not raising rates look at 30 minus five you see the same effect there. july 2007 since we were last down at the 24 level but i find fascinating, which

give yous a clue on my comment by the curve is flattening has a lot on the plate we have empire and pretty good data before that, as you look at the chart. 8:30 eastern yesterday the nice retail sales and the market goes down think about why and you'll see why the curve is flattening. if you look at a chart of june of ten year. it beats many investors to buy it doesn't seem to occur in the bigger picture and finally, if we look at the euro versus the dollar for two days. everybody is talking about you talk about a trade that gives you a glimpse into what is going on in the ecb and how it affects the markets. but don't give any tears out

i'm sure the ecb isn't that surprised or upset that the euro currency. >> see you in awhile. >> the consumer products are screaming. >> all that is holding it afloat here. >> yeah. clorox, j & j. so beware that's people saying listen it's coming down. get a little more defensive. it's happening now on the fly. it happened right now. >> proctor, pfizer. >> yeah. really stark. >> yeah. let's get to bob on that note. good morning, bob. >> good morning. 3 to 1 declining to advancing stocks a big volume at the open we had the quadruple this is the quarterly expiration

of stock and index options as well as futures. this is not the huge event it used to be because the options market is dramatically there are weekly options in stocks there are monthly options. take a look at the sectors it's a more defensive tone for the market telecom up after a down week overall. industrials have drifted lower throughout the week. banks have not done anything for a long time. that's the major sort of loss of leadership that we've got. it's a bit of a cause this week. we're basically flat on the s&p. it's mostly sideways i would say the leadership is still intact take a look. consumer discretionary, first, was dragged upward by the retailers. now the media stocks doing well. home builders were weaker in the sector consumer staples come up a little bit technology is maintaining its

leadership position there. health care has done well. that was helped by the merger stuff this week. and banks, of course, the big group given up its leadership position down 3.5 percent. that's just in one week. all the european banks, they're also to the downside, as well. what is mattering to the market now? on the china trade issues, the tensions are still, i think, small. the reason i think we're down today there's concern it could escalade there are various reports there are other tariffs being prepared and now you have a tit for tat thing. i think that's the concern for the market now the fed is modestly hawkish. i don't think the market views it as a dramatic threat yet. the economy is improving and the pace of change the market is saying that you can handle it now. the earnings is the key story for the market we're not peaking on big cap small cap, mid cap i put up

everything evenen twooichbt will see 11 or 12% growth retail sales were great. metrics and guidance are strong. it's one of the reasons the retailers are strong we have the merger thing this week that boosted health care as well as media stocks elsewhere a couple of ipos today. price talk 21 to 23. another chinese ipo. generally the education ipos haven't done that great this year we 17 to 22. at lot of people wanted access to the chinese consumer with the education stocks don't seem to be particularly exciting anybody here in the united states we essentially opened down 160 points, carl that's where we are now.

back to you. >> thank you very much, bob. monday on squawk on the street, tune in for an exclusive with snap's evan spiegel live with julia boarsten that's something you don't want to miss. the stocks had quite a squeeze the last couple of weeks. >> they're trying to make some changes. >> yeah. >> there's evidence. >> yeah. >> channel checks. >> they were using this. these are wall street speak. we're a little late. the evidence slab. it's like csi. >> dow down 158 on this friday a lot going on don't go away. if you are looking for a house,

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whole foods. i heard you gasp. >> this is a game-changer. amazon to buy whole foods. you know, yesterday was a day for kroger that was tough. today will be an even tougher day. this is a game-changer this is it this is what everybody thought would happen, they will now dominate food within the next two years. >> wow that was a year ago as of tomorrow amazon announcing whole foods happened right at the top of our 9:00 a.m. hour i remember that day. >> yeah. people loved that. and amazon keeps going higher. it's one of the reasons they go higher -- there's a big thing going on teaching us is that people go online everything starts online everything you're online. you check prices online then you go and what happened is that amazon will make it so that if you

check the prices online, you will go. now walmart, by the way, has gotten very competitive with amazon on this very issue. but brick and mortar has become a response i'll go back to canada goods they see huge orders and put pu. i mean, it is amazing and amazon uses this for artificial intelligence to see what people want it's kind of like they haven't done the blowout there was a plan to have 1200 stores that was the plan by john mackie before -- >> smaller there were a bunch of missteps that whole foods made. but i think amazon is just really using this as a way to be able to figure out what people want so they can lower prices even more than at kroger kroger never came back never came back. >> i'm reminded on that day back a year ago, it was followed quickly by walmart but now you have the gun going off on flipcart.

>> walmart has that family structure which allows them to lose a little more money than everyone else. during this amazing retail renaissance, walmart is the worst performer. it's jcpenney because walmart is spending a fortune to win and all people want are restoration hardware and they want etsy. but amazon stock is up incredibly amazon did what it needed to do which is have a brick and mortar figure out how to get food to you because food does not last they are doing that very well, and i think that they're still -- bezos is brilliant. it's just a laugh for him. it's like the book store that he has in georgetown. everything is a lab for him. he's got a 400-store chain lab >> it's almost less about food than it is about just last mile pipe >> by the way, when you look at all these freight costs, it's them it's them.

it's them getting the stuff to you. and in that sense, i interviewed nelson peltz recently, a corporate governance conference. he worked back and forth with the president about the last mile and amazon. so there is -- amazon is both deflationary in how much they charge and inflationary in how much they demand in terms of freight. >> which drives the price. >> grubhub, this is another one. have you seen that stock incredible >> we're coming off the initial lows we'll get stop trading with jim in just a moment y opinions out there, it's hard to make sense of it all. well, victor, do you have something for him? >>check this out. td ameritrade aggregates thousands of earnings estimates into a single data point. that way you can keep your eyes on the big picture. >>huh. feel better? >>much better. yeah, me too. wow, you really did a number on this thing. >>sorry about that. that's alright. i got a box of 'em. thousands of opinions. one estimate. the earnings tool from td ameritrade.

♪ time for cramer and stop trading. >> united technologies two different firms, morgan stanley talking about the breakup. i think he's going to break up the company when rockwall collins finished the merger. you saw that stock go down because, remember, that is otis. people worried about otis because that's china and yet then the buyers come in saying, listen, we want to use any to

get hold of the stock. >> you put more probability on a breakup here than at ge? >> much more good balance sheet, too. and i think greg is playing from strength rather than weakness. there's some agitating insurgents there he doesn't care. he's a tough guy he wants to bring out value. and that rockwall collins, when that's done you'll get otis and a climate control business and the best aerospace business in the world. >> candid about thinking about it candid about honeywell in the day. >> he's a delight. if we only had people like him >> what's tonight? >> manitowoc, a crane company. and centene. this has been the great health insurer ever since they bought fidelis in new york. up a quick 25. we have to focus on this amazing week >> how can i press conference be -- how does it happen, carl

>> it just happens now >> it just happens no planning. >> i love trying to get our arms around it. i'm a business guy so it's fascinating. but i'm trying to get my arms around it. >> i think a lot of our viewers. >> augmented reality >> jim, good weekend >> you, too. >> enjoy gardening see you tonight, "mad money" 6:00 p.m when we come back, marty a tre.ein will talk u.s. trade, chinad the dow down 140 hi, i'm joan lunden with a place for mom,

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welcome back to "squawk on the street." breaking news. the last of the week looking for our june preliminary read on university of michigan sentiment. expecting 98.5 we have more 99.3 a lofty number 99.3. if we look at one year, expected inflation based on the respondents answers. 2.9. 0.1 higher five to ten years, 2.6 a point higher let's remember our cpi and ppi reads. some of the comments in the statement now as far as 99.3 goes, you know, it isn't even the first or second.

it's the third highest number of the year main reason, march at 101.4 was the best going all the way back to 2004. of course, we want to be cognizant of the fact this preliminary read will disappear when we get the final june read. carl, back to you. >> rick, that's a big number, too. si rick santelli, thank you i'm carl quintanilla with sara eisen. david is off markets down on some of the tariff headlines the white house confirming 25% tariffs on $50 billion of chinese goods. that's pretty much the overarching story today. >> that's where our road map for the hour begins. an all-out trade war stocks are slumping on the new tariffs from the trump administration as china prepares to strike back and calls on all nations to oppose this, quote, outdated and regressive behavior >> plus, the at&t/time warner deal is done what's next and what randall stevens told us about his

post-merger win plans. >> and it's been one year since the announcement of amazon/whole foods. a look at how it's changed retail, consumer goods and amazon straight ahead. the white house unveiling the list of products from china that will face a 25% tariff. china will respond immediately on the same scale. kayla tausche is in washington with the latest. the white house has escalated this trade fight with china. >> and affirming our reporting that it's a list of about two-thirds of the products on the original list. so slightly truncated, representing about $34 billion in exports from china that the u.s. trade representative says will go into effect july 6th that essentially sets up a new set of trade deadlines in these talks between the u.s. and china. treasury department by june 30th may introduce new investment restrictions july 6th you have these new tariffs going into effect. on july 20th you have a year since the last time zte, china's

telecom giant made a false statement to u.s. regulators that's a key date because the language in congress right now would allow the president to offer reprieve to zte one year after that date. then this additional set of tariffs on $16 billion in exports. that has a hearing comment period that is going to go into effect that could expire around mid to late july. even so, even though it's going to be a few weeks before any of this goes into effect, china is responding the ministry of commerce says we'll immediately introduce taxation measures of the same scale and the same strength. all the economic and trade achievements reached by the two parties previously will no longer be valid at the same time china had said as soon as the u.s. tariffs go into effect, dollar for dollar, they're going to strike back what is the market impact? dan clifton says it's actually

pretty small so take 25% tariffs on $34 billion of goods you get about $8.4 billion on a $20 trillion economy, he says it's less than 0.1% of gdp. he says it's very small for the first round but it's the rhetoric and psychology that could be more problematic for the markets so we'll see what the white house and ustr does from here and if talks behind the scenes bear any fruit. guys >> a very, very long list of more than 800 products which are going to be taxed when coming into the united states looks like aircraft are exposed. i'm wondering which industries are going to be most sensitive in terms of the highlights there's a lot of stuff here in terms of parts and technical manufacturing items that i have no clue what they are. >> manufacturing is going to be key, sara. think about those large conglomerates like ge, like honeywell. the list sort of transformed in

the last couple of months. finished products essentially were excluded from the list but manufacturing parts and supplies were left on there we're combing through it and will get you more details on the economic impact of that list could be it seems the ustr has maid significant adjustments to remove finished products in favor of those manufacturing parts. >> a lot of technology in here, too. kayla tausche, thanks. >> joining us for a closer look at tariffs and their impact on the markets, john is chief investment strategist at oppenheim are and david rosenberg. morning, guys. >> morning >> coming off of what we had happen between trump and trudeau just days ooh given what kayla just said about the percentage this affects on total trade between these countries, when would you get worried, if at all? >> i would say that i already am

worried. this is starting off maybe as a skirmish and there's too many unknowns it's so uncertain. the assumption is the rest of the world was not going to respond and just roll over and accept these trade actions because the view among many is that there is just a wide gap between tariff schedules and this is all justified. so china retaliates. the question is then will the white house retaliate and it's not just china and the u.s that's the headline right now. it's also trade between the u.s. and the eu the eu has already slapped on retaliatory tariffs and japan. when people talk about how president obama had some protectionist policies and we go back to reagan and semiconductors with japan. they were targeted to countries and sectors. this is turning more global. what we don't know is if there's

a punch/counterpunch so you can see we're going to do the static bottom-up analysis that's under the assumption that we'll not have more rounds in the match between the u.s. and the rest of the world. >> you think we'll have more >> i think we'll have more, and it does continue on as a skirmish likely for a while but the unpracticality of it all in a world that is incredibly linked in terms of manufacturing service services, what we expect is that there will be some sort of resolution, progress made in talks as tariff related problems eleva elevate. what we do think is where we are now is inevitable. the result of the process of globalization. lowering barriers of entry to competition on a myriad of different types of businesses and industries globally for mom and pops to multinationals

and the confluence of bringing in the changes related to -- needed in negotiations and trade pacts as a result of technology and globalization. we think all the players realize that everybody has to give something here that it's just -- not quite a new order but maybe a new deal in the making. >> david, when does the market start to really pay attention? a skirmish maybe that's reflected and we're seeing stocks lower today but there's been this sort of calm from investors as it relates to the trade and tariffs and the reaction from g7 has that puzzled you at all or do you think that's the right call >> i guess yes and no to your comment about the markets because, you know, technology has been hitting new highs and that's a sector that i think people think of somehow impervious to all of this and not really included in a lot of these bilateral trade actions. you've got a situation where

what's been hitting new highs has been the small caps and they're viewed as being more service oriented, not goods oriented and domestic. why would they get hit by these cross-border transactions? you had seen some areas of the marketplace, you know, in unrelated auto manufacturing that have not caught up with the rest of the market but i think that's a real canary in the coal mine has been the home-building stocks because this trade skirmish really started months ago with the administration slapped on those lumber duties on canada. and look what lumber prices are doing. up 80% in the last year. they've totally crushed the home building stocks. everybody talks about the faang, the momentum and growth stocks i don't hear anybody talking about the home stocks down more than 20% from their highs. they're in a bear market there might be a small part of the market, of the economy, but the multiplier impacts are huge. so you saw the actual initial impact of these trade restriction actions already starting in the housing market

i think that's really one of the microcosms you want to look at to what could cascade to other parts of the market that are going to be affected by these tariff changes >> it's definitely been an uneven market in terms of what the preferences of investors have been. when you look at the trade issue, one way of looking at this, this is an unforced error. a lot of stuff going on in the economy. on the other hand we're no longer talking about an economy overheating. it was a break on some of the concerns but what does it mean for next year when we lose a lot of the stimulus >> we can't project what's happening at this moment into next year. there may be some stimulus that comes in in the third or fourth quarter that we can't see now that could be the result and progress and trade negotiations. could be the result of the market rebalancing and repositioning. we can't quite say yet it could be the effects of tax reform so we'd have to think if we look at it, this is a bit of a relief now look at the ten-year

treasury off the 3% last i looked around 2.9 that's not bad we've got the effects of liquidity being added via tax reform, even as the fed remains committed to normalization i don't think we're skating but i think we can negotiate this curve. >> guys, wish we had another block to continue this but we'll get you back soon. john and david, good weekend thank you. >> you, too. our other big story, it's a done deal. at&t closing its $85 billion acquisition of time warner julia boorstin joins us with more after we heard from at&t's ceo this morning >> that's right. ae at&t's ceo saying we got our day in court and the system works. stevenson coming on cnbc to talk about what the combined companies will look like as the telco giant. >> there are things to do where we create value together the advertising.

the making sure that we're beginning to think about creating content that is curated and formatted for the mobile environment as well. and actually the creative talent within time warner is excited about that so the managerial challenges to make sure we don't create a clash, that we create a melding of these cultures and preserve what is really strong about each culture. >> the justice department could still appeal the decision, even after the completion of the deal stephenson says he's not concerned about government opposition but he does warn other media companies that his win doesn't necessarily mean that other deals are in the clear >> when you get into this process, the facts and circumstances about a particular deal is what matters and on this particular case, at&t and time warner it was the facts of circumstances surrounding our deal that were evaluated and that were adjudicated. so i don't know how transferrable a lot of this is to the next deal

>> to address some antitrust concerns, at&t told doj officials thursday that it plans a firewall between turner and at&t communications to prevent the improper sharing of information or pricing now we're waiting to see how at&t renames historic time warner >> julia, thank you. what a day good to get randall's point of view on an historic day for that company. when we come back, it's been one year since amazon announced plans to acquire whole foods how the grocery and retail landcapes have changed as a result plus, this u.s./china trade rift we'll discuss the major impact on the u.s. economy with harvard's marty feldstein when "squawk on the street" continues. doisow16w dn 2.

one year since amazon announced it was buying whole foods for just under $14 billion, changing the way we look at the e-commerce giant and its ambitions for the future >> we are getting some breaking news on whole foods. >> i heard you gasp just now >> holy cow. such a game changer. it is get out of dodge time. >> we knew they were going to test some stores but suddenly they don't have a test anymore they have a real business. >> it's an enormous step for amazon to buy a public company at $13 plus billion. having never done a deal anywhere near this size. >> this is that momentous moment for our generation when it comes to offline retail that it's

going to change literally how the playbook is going to be run going forward. >> i think in the future this will be seen as the beginning of the end of traditional retail. >> clearly, this is a warning shot to the entire grocery industry >> for the world and retail which needs an exciting and encouraging news right now, this is absolutely monumental >> i've been in the business over 40 years and i think this is one of the most dramatic things that has happened in our industry >> jim niffin is back. also a cnbc contributor. jim, how much did it really disrupt retail and the grocery business >> it sure disrupted their attitudes. not so much has happened with whole foods but you've seen what's happened. everyone has moved into wanting to shift directly to the customer all sorts of things that happen as far as mergers. target what was shipped.

so it's changed the attitude of the grocers. they know they have to fight this battle. as far as things happen with whole foods it's been a year and not much has happened. you probably recall whole foods got a little worse a little more in stock outs. they were not quite asgood on fresh goods and they started getting better and now i would say they're pretty much like they were except they've got a little bit of amazon pricing in. they've got some prime discounts n you can buy amazon products inside the store but only a very limited kiosk full you haven't seen much happen with the amazon/whole foods thing. it's been everyone around them reacting we've seen walmart go out and say we'll have pick up in 2700 stores eventually. so you can order online, drive through, have them load it in your car and go home it's changed the atitude of competing but it hasn't changed inside of amazon or walmart. inside of amazon or whole foods much >> are those responses by the

rest of retail, rest of grocery effect sniff it's intere effective? amazon is up 75% along with the rest of huge tech but the broader retail sector has also bounced back up 20% or so since then >> you have to remember the biggest thing that happened when they bought whole foods is on the day they bought it they bought a failing grocery store and on the day they bought it, their stock went up enough to pay for it so the world liked the deal because it gave amazon a new entry. they like the rest retail because it's the best consumer environment you've seen in your investing lifetime >> yeah, i agree with you about the attitude change. covering a company like kroger we saw them buy a meal delivery kit. we saw them invest in ocado which make ros robotics for foo delivery what does it mean for the larger grocers in the u.s. with a footprint much larger than a whole foods. >> the biggest change in grocery

is when walmart opened its first super center in 1988 now the second phase of that big change and everyone has to react to what amazon might do. right now, grocery is only about 2.5% online. it's like no penetration at all. so we're going to see that big change happen going forward and everybody is getting ready for it but, yes, walmart and amazon are going to own grocery today walmart owns grocery what are they, 23% market share in the country they were nothing in 1988. they've taken over that business and they've driven the pricing down and they've put a lot of people out of business we're going to see one next phase here where now it moves online amazon is the big player amazon is going to need another 1500 boxes to be competitive but they can still do a big online business as they grow that box count so they need another acquisition. >>. >> the retail sales number

we couldn't get a decent number for several months is this one setting the tone for the rest of the year >> i thought may would be the best month we saw all year long. may looks like perhaps it was. the comparison was easy. but do i think the rest of the year is going to be great? yeah no unemployment. more jobs than there are people looking for them wages are rising inflation is no problem. it's a great consumer environme environment. we're going to see a great back half >> strong back half of the year, jan. what does it mean for the state of retail when times aren't as great? have we spent this period where things were relatively good shrinking enough, rationalizing the business models. how does the industry look to you longer term? >> i say every day we'll have record bankruptcies this year. record store closings and it's the best consumer environment in 25 years

we are not out of the woods. the retail apocalypse is not ov over right now the consumer is saving everybody. >> jan niffin, thank you for joining us getting news out of washington this morning. white house legislative affairs director mark short is planning to leave that job according to the white house official said to be considering leaving at the end of summer. quoted as saying nothing iminent. still a lot of work to do. follows reporting from cbs that perhaps sarah huckabee sanders is also looking to leave >> which she sort of addressed yesterday. >> without denying >> she said she hadn't been contacted for the story. short has been an effective communicator and spokesperson. eamon javers explaining some of the rationale behind the policy. >> with the election coming,

this congress is pretty much done >> diminishing returns was the thinking as to why he'd leave at this point when we return, president trump hitting china with new tariffs triggering promises of swift retaliation. former chairman of the council of economic advisers martin feldstein is with us to discuss that coming up on monday, "squawk on the street" has snap's 'ljoounder and ceo evan spiegel. hel in us. much more here don't go away. hi, i'm joan lunden with a place for mom

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both pfizer and merck among the leaders on the dow today pharma stocks have lagged the market looking at a couple of etfs. just above the flat line so far in 2018. so where there might be an opportunity in pharma now? joining us, jamie rubin, who is freshly back from the firm's global conference. good to see you. >> thank you >> what were some big themes at the conference relative to pharma and investors that really

came forward >> most important number one theme was m&a. m&a activity is likely to accelerate in the back half of the year we've only had a handful of deals announced so far the passage of corporate tax reform the expectation we'd see more. my sense is we'll see more number two, i think the other big theme is drug pricing. it's been the theme for my entire career and that's been a long time. we're still talking about it my sense is that there's a real sort of -- the industry really wants to work with the administration to figure this out and crack this nut once and for all. >> what character of m&a are we talking about? are we talking about any more big horizontal pharma mergers? >> i think what we're talking about here are bolt-on deals big companies like merck/pfizer acquiring small to midsize biotech companies. that's where all the science is and excitement is. and management teams and investors want top line growth

my sense, though, is that megamergers are probably inevitable because there's so much overcapacity in the industry but in the near term, i think we're likely to see smaller bolt-on deals. >> what about insurance deals. after the at&t/time warner deal was approved by judge leon this week, there was all sorts of speculation about what industry could be next and will the big insurers make a go for it. >> we've already seen a number of deals announced and those stocks all popped after the news on time warner i expect those deals will go through. we've had vertical integration on the health care services side but actually no real deal activity on the therapeutic side and our sense is as a customer base gets stronger and more powerful with these vertical integrations, that's going to put pressure on the therapeutics companies to jump into action with deals >> you talk about cracking the nut and drug pricing, how do you do that? and how do you do it without affecting innovation or r&d?

>> we're already seeing drug companies sort of get ahead of the debate by moderating their list pricing increasings and we've seen that over the last 12 months or so we'll see more of that we're also seeing new products that have been launched, for example, amgen has a new migraine drug. lily has a new arthritis drug and those priced at levels well below what people were expecting. and this is all about reducing the gross to net spread. rebates are going to go away and that ultimately will hurt the middleman or pharmacy benefit manager who relies on those rebates. >> we say it's the golden age for x, research. is that truest in cancer, alzheimer's, some of the things you mentioned? >> definitely not alzheimer's, sadly. we've had one failure after another. i think the failure rate is about 99%. i think we're in the golden age of oncology. we've had tremendous breakthroughs in oncology. you've heard everybody talk about it for years we're seeing tremendous breaks

through. the other areas of development of cell therapy and gene therapy. gene therapy is exciting if you can treat a patient and cure them of their disease, that's a major breakthrough. >> who are the targets of aq acquisitions doing this cool technology who are the target companies >> the target companies are the mid cap biotech names. the names we really like are blueberg bio cerepta, gene therapy companies. but i think those are likely where the targets are going to be it's sort of the sweet spot. >> will the market like the pharma companies that take these actions that do these acquisitions or are we wary of them at this point >> really depends how much you pay. the conundrum is the biotech companies, small biotech companies are very expensive and there are only a limited number of targets. the drug companies want to own them, want to buy them but they're too expense pitch it's a catch-22 you want to own them but they're too expensive and the valuations

aren't likely to diminish. it depends on what it is and how it's integrated. >> does it get dinged as we talk more and more about trading relations? >> right, the answer is probably, yes. pfizer tried to buy astrazeneca. that was dinged even before the trade relation talks i think that's highly unlikely. >> jami, thank you let's get to sue herera with a news update. >> good morning. here's what's happening at this hour president trump speaking to reporters outside the white house saying it is in our best interest to have good relations with north korea and kim jong-un. >> i don't want to see -- excuse me i don't want to see a nuclear weapon i want a happy relationship with north korea. i want to have a good relationship with many other countries. >> afghan's president welcoming a three-day cease-fire with the taliban marking the end of

ramadan. he appealed for a longer cease-fire this is afghan defense ministry officials say a u.s. drone strike killed pakistan taliban leader fazula. thousands of air travelers had their plans up ended by a computer glitch thursday night 400 were canceled last night and another 400 today. it stemmed from a glitch with its regional carrier psa airlines you never want to see that canceled word on the board that's the news update for this hour i will send it back downtown to you. sara, have a great weekend >> you, too. thank you, sue herera. look at the major averages at this hour losses are picking up steam here the dow down more than 200 points it's having a particularly rough week looking at our worst week there in months for the dow. nearly three months. s&p 500 has also gone negative for the week also the move lower in crowd oil down over 2% now on pace for its worst week since september

"squawk on the street" will be right back

welcome back to "squawk on the street" live from post 9 from the new york stock exchange dow down 250 points here president trump approving $50 billion in tariffs on imports from china this morning. tariffs which will start on july 6th. the president saying the current state of the u.s./china trade relationship is unfair and unsustainable. listen >> the trade war was started many years ago by them, and the united states lost >> you're saying we're on the losing end >> there is no trade war they've taken so much. last year $375 billion in trade deficit. we had a -- with china we had over $800 billion over a period of years. each year close to $800 billion in losses on trade

not going to happen anymore. it's not going to happen can't happen >> joining us now is martin feldstein. harvard university professor nice to see you. >> good to be back with you. >> so clearly we want to talk about your new op-ed on the fed and ai and jobs but first on trade. you advised president reagan in the '80s what would you tell president trump if you were inside the white house today? >> i would say that we have a big problem with china, but it's not the bilateral trade deficit. the big problem is that the chinese are taking american technology by forcing american companies to transfer technology to china in order to do business there. and that's unfair. it's against wto rules and that's what we ought to be focusing on. >> sorry it's very loud here at the new york stock exchange. we've got an ipo opening iminently. it sounds like you agree with

the administration on a lot of the accusations about china and stealing our technology and not treating us fairly on trade. what about the way they're going about it and posing a round of $50 billion worth of tariffs or $30 billion and more to come >> well, but they're not saying we keep imposing these kinds of things unless you change the unfair way in which you are treating our company so we have to make those tariffs conditional on the way they are taking our technology. if they'd stop doing that, we should turn off the tariffs. >> it sounds like they do want to negotiate we're hoping the tariffs lead to that i'm not sure china feels the same how do you feel about it in terms of the damage now that there are tariffs back and forth not just between the u.s. and china but europe, china, mexico and others >> they're basically very small. we're a $20 trillion economy

a tariff on $50 billion. doesn't amount to much so i think the key thing is to make it clear to the chinese that it's there to punish them for stealing u.s. technology if they would turn off that policy, taking our technology, we could back off the tariff >> marty, if we do get some relief or concessions on industrial policy or forced licensing and tech, can we continue to handle a trade imbalance because up until now that seems -- it's hard to know what is the priority on some of these talks? >> it is hard to know. the administration isn't putting the emphasis on the right thing which is the technology transfer and it's not licensing it's basically saying, if an american company wants to do business in china, they have to have a chinese partner have a chinese partner, they

have to share the technology with that partner. and that's just wrong. so the europeans and the u.s. have brought an action to the wto on that point saying that's unfair and it should stop. but i think we ought to make that a condition for dealing with these tariffs >> marty, turning to your op ed in "the wall street journal" about how the fed long term might have to deal with a different type of employment problem, here we are 3.8% -- >> whatever is happening there on the exchange, certainly must be very exciting >> that's capital markets at work, marty. it goes public >> i can't hear you. >> avlr ipo at the nyse.

a big pop at the open. hopefully the excitement will die down in a second some are very excited their stock is at 50% on the first trade. >> your op ed, your point about the fed and the long-term employment issue >> the point of my "wall street journal" article the other day is that we're seeing disruptive technology causing a job loss, but that's going to get much worse in the future. i pointed out that there are some 500,000 truck drivers in america, many of whom would be at risk if we have driverless trucks so we're going to see increases in unemployment from time to time that have nothing to do with the traditional business cycle. so they'll have a hard time --

they want to focus on the one thing we can deal with and that is inflation >> so are you, just to be clear, you are calling for the fed to slim down its mandate to just focus on inflation like the ecb? >> ecb, the bank of england, the canadians, the japanese. every other major central bank focuses on inflation of course, if there are radical changes in demand, business cycle, causing changes in employment, they'll take that into account, but the key goal ought to be the thing that they can measure and do something about, and that's inflation. >> yeah, speaking of, the fed raised interest rates again this week projected two more for the rest of the year. there's this big debate on wall street is the fed moving too slow, too fast or just right for where this economy and inflation sits today? >> well, i would say too late. they should have started raising rates several years ago. then we wouldn't have these

overpriced assets across the board. so what worries me about the economy is that we are looking at asset prices which are way out of line with history and with what is going to be plausible as interest rates normalize. when the ten year is not at 3 but at 4, 4 1/2. it's going to be hard to sustain equity prices at this level. >> so what you're saying is that the fed should also be targeting asset inflation, not just consumer inflation by consumer inflation, doesn't seem they're particularly behind the curve. >> i agree with what you just said they should have been looking at the impact of the super easy monetary policy on asset prices. and they should have, therefore, started to raise, not that the unemployment rate was already down so it's not that they would be

sacrificing anything on employment or sacrificing anything on inflation. but the thing that they weren't looking at is what they were doing to the prices of stocks and prices of commercial real estate and the like. and i think that's where the danger is going forward. >> the cheering is still going on here. marty, we appreciate your time thanks for your thoughts >> good being with you thanks for the invitation. >> former adviser to president reagan meanwhile, mcdonald's announcing it will start testing alternatives to plastic straws at some locations in the u.s. later this year. switching to paper straws at its more than 1300 restaurants in the uk and ireland because of the ban passed at least in the uk we talked to steve easterbrook earlier in the month about how the company is trying to step up recycling efforts. >> 60 million customers a day.

you need a lot of straws we'll continue to explore. we're trying to contribute back in any way we can to society whether it's through training of our people, through environmental standards. we are the only restaurant business that signed up to the paris climate accord around reducing gas emissions whatever we can do about waste and recycling is a very visible part of our business >> mcdonald's has been exploring different types of disposable straws in belgium and will try them in france and norway later this year. the world economic forum tweets there's enough plastic in the ocean to create basically the size of 500 jumbo jets, believe it or not. and if you put it all together in the ocean it would be the size of france >> someone needs to figure out who is the manufacturer of paper straws that's a long bet. >> it's like buying chicken ahead of the mcnugget. >> so many companies are doing this, not just mcdonald's. alaska airlines has done this. millions of people saw that

youtube video of the turtle getting hurt it feels like a movement mike, that sounds like a job for you. >> i'll figure it out. forest products sector >> international paper >> as we head to break here, an interview you'll not want to miss monday right here on "squawk on the street. snap's ceo evan spiegel will be with us. much more ahead on the show today. the dow down about 247 points.

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it's not theirs, it's mine. the new rx 350l with three rows for seven passengers. lease the 2018 rx 350l and rx 350l awd for these terms. experience amazing at your lexus dealer. the dow lower by a little over 240 points. almost a full percent. it's the names that are exposed to china trade that are getting hit the hardest.

caterpillar, boeing and 3m most dow stocks are lower. let's go out to the cme group in chicago. rick santelli with the santelli exchange happy friday >> happy friday. thank you. i'd like to welcome dr. william poole, former st. louis fed president and ceo. bill, thanks for joining me. first time >> great, rick i see you often on cnbc. thank you. i enjoy it you always have something good to say >> well, that's a great compliment coming from you i had everything outlined i thought we'd talk about and right before we went on you said you had a topic that would be very interesting to discuss. nonmonetary policy bill, tell me what your thinking on nonmonetary policy that our viewers should be aware of >> think about the ecb and the problems in europe can the ecb fix the crazy italian politics no think about the problems in

japan, an actual decline in the workforce and the inefficient regulations in japan can the bank of japan fix those things no and now we've got, in the news very much today the trade restrictions so can the federal reserve do anything about the trade restrictions just announced? for example, the restrictions will put a big tariff on imported diesel engines that are important in agricultural equipment. can the federal reserve do anything about that. et we might do a little preaching, but not much beyond that it's not monetary policy. so these regulatory restraints, stupidities, are very damaging to the economy and the central bank can't do anything about them >> it's such a wonderful point

sometimes we're so embedded in the forest we don't see the trees. mine next might be surprising. it that's the case, why have these monsters of the financial universe in the form of central banks taken us to such a far away place with balance sheets that represent such high percentages of the total output of the economies if it isn't going to really address the issues that it was implemented for. >> i agree with you. i think there were a lot of misunderstanding or desperation in what was done during and immediately after the financial crisis that's where these huge balance sheets came from the federal reserve is gradually working it down. that's going to disappear in time i think it was a spops that was not very useful, but that's history. so the federal reserve seems to

be on a good track, but they can't mix these tariffs. >> it's a tough one. on one hand i'm not a globalist. but. i like the idea of free trade and i don't like protectionism so the question is there a venn diagram subset to meet all the requirements i'm not sure but we'll certainly find out this administration seems to really look at the trade deficit in it a way no other economist does i really appreciate you joining us today please come back back to you. >> thank you very much we have a little breaking news comcast has been cleared by the european commission for its bid for sky uk our parent company says the ec has cleared that sky bid it looks as if giving

shareholders the chance to accept the offer that's been on the table right now for several weeks. >> meanwhile, we're going to have the ceo of that stock just began trading. it is up more than 50% compliance, taxes, that never goes out of style. 'lbeig bk. - i love my grandma. - anncr: as you grow older, your brain naturally begins to change which may cause trouble with recall. - learning from him is great... when i can keep up! - anncr: thankfully, prevagen helps your brain and improves memory. - dad's got all the answers. - anncr: prevagen is now the number-one-selling brain health supplement in drug stores nationwide.

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welcome back to "squawk on the street." a lot of attention this morning on industrial and technology stocks in the wake of the president's tariff announcement. let's hone in on another sector leading markets to the downside that is energy that group is down more than 1.5% in early trading after a sharp drop in crude oil prices the international benchmark is down more than 2% and on pace for its worst day in three weeks. those moves in oil weighing on a number of energy names including baker hughes and newfield exploration. back downtown to you ambiguiguys

>> coming up, we're all over the new tariffs announced by the white house. china already promising retaliation. we'll see if the selloff continues through the afternoon. industrials are one of the ha hardest hit groups on the china trade story. and try to figure out what the difference is between a squirmish and a trade war and whether the president is trying to use this as a negotiating strategy or will he follow through even further >> or why fst a surprise for those who have seen this coming. worst day for the dow of the month. when we come back a lot more on the selloff as the dow is down 234. later on, it's an interview that you don't want to miss evan spooeg the with us on monday dot ay.n'gawa

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 sure, 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? eh, i'm not really a pool guy. what's the hesitation? it's just complicated. step-by-step options trading support from td ameritrade good morning, it's 8:00 a.m. at twitter headquarters. and "squawk alley" is live