quick programming note later on "closing bell" two big interviews coming up former uk prime minister tony blair will be joining the program to talk about brexit and so much more and former u.s. treasury secretary jack lew also on the program. that starts at 3:00 p.m. eastern time this afternoon in the meantime, i want to thank the gang for hanging out this morning. >> my pleasure. >> we'll see you all tomorrow. in the meantime, "squawk on the street" begins now >> good wednesday morning. welcome to "squawk on the street." cramer has the morning off carl quintanilla here with david faber. boeing is down 3% on the charge. a big day for trade as the yield curve visits the white house gm cuts guidance on higher tariffs. europe is mixed.

10 year around 2.94. facebook's moment of truth social media giant set to report tonight after the bell capping off a big day of corporate earnings, including ups, and coke. >> speaking of coke, crow james quincey will be joining us. >> and stock futures, of course, in focus boeing is falling on weaker than expected guidance. gm cutting its full year profit forecast shares also sinking in the premarket. >> and president trump sets tense trade talks. we'll talk with the head of the world trade organization about that and more. it's an important day in the auto sector. two auto giants reporting earnings both cutting their outlooks and sad news out of fiat chrysler. a lot to get to with phil who has been busy working early this morning in chicago good morning, phil. >> good morning. we start with the news from general motors

the new guidance for a full year earnings coming in lower than previously expected. coming in at $6 a share. previously in the range of $6.30 to $6.60 they're expecting a $1 billion increase in costs this year. $1 billion about half that is due to higher raw material costs such as steel, aluminum, and the other half is foreign exchange you look at fiat chrysler, you have them lowering their full year earnings guidance the q 2 results were hurt in china by tariff impacts there. fiat chrysler earnings call started 45 minutes ago it's the first time we've heard from the new ceo mike manly since the passing of sergio marchionne, passing away this morning. it was, to a certain extent,

expected but this is a devastating day not only for fiat chrysler and ferrari and the auto industry overall. sergio was a giant here is what mike manly had to say about sergio's legacy on the conference call about 45 minutes ago. >> personally i spent the last nine years of my life seeing or talking to sergio on a daily basis. this morning's news is heartbreaking and it will be heartbreaking for many other people there's no doubt that sergio was a very special, unique man there's no doubt he's going to be sorely missed. >> after that, mike manley said they would have a minute of silence, which they did have at the beginning of the earnings call this is a tough day, carl, all around for fiat chrysler, ferrari, the passing of sergio. >> a giant in the business we're going to talk more about him later on today his legacy and the unique way he dealt with everybody from investors to reporters, as you

pointed out. we'll talk to former executive bob lutz in a little bit on the guidance today from fiat and gm, phil, what implications, if any, for ford tonight any reason to think they can esca escape what is going on? >> i would be surprised. particularly when you look at what general motors had to say regarding raw material costs it is a global market and while they were very careful, especially when we talked to chuck stevens earlier today on "squawkbox," he was careful not to say it's tariff related not to point a finger at the trump administration for good reason. given everything that is going on with auto tariffs and what needs to be decided when it comes to nafta when you talk with people in the auto industry, they pointed steel costs are up, aluminium costs are up specialty steels and metals, those costs are up and it's a global market so even though the cost when you

source it here in the united states, you know, you might say there's no tariff. we're getting it from here in the united states. the global prices are impacted by these tariffs that have been put in place and that's what we're seeing in the auto industry. i wouldn't be surprised if we see something mentioned about this during the ford call later today. we're talking with the cfo of ford on "the closing bell. >> phil, i think trl be interesting to hear how the executives talk about it because so far from the release, it looks like they're being careful not to -- >> yes. >> be political. not to call out the trade policy but the headline is the trade policy is wrecking the guidance. i guess they don't want to be the next harley-davidson. >> can you blame them? if you're general motors and you have huge facilities in canada and in mexico, you want to point a finger at the trump administration now not a chance in fact, that's what we're seeing with all the auto

executives they're not saying anything. they're letting their trade organizations do the lobbying, if you will, in washington and while the trade organizations have said there's an impact from all of these trade disputes, from the tariff issues going on, whether it's with china, europe, potentially with mexico, as well as canada, the trade organizations are viewed as, to a certain extent, lobbying groups. it's far different when you have a ceo or cfo say, hey, we're paying more. and you know why because of tariffs we haven't heard that yet from people in the auto industry. >> phil, we're going to see you a lot this morning get comfortable in the chair as we have to work through several stories. having gotten to boeing yet. that's coming up later on. another earnings story to point out, coca-cola the company reporting a beat on both top and bottom lines revenue fell 8% from the previous year. that was expected and it comes from the refranchising that coke is doing the spinning off of bottlers if you're looking for a clean

number here 5% organic revenue growth tells the story pretty much strong growth across the world except north america which was down 1%. the story there, guys, similarly, was cost input inflation. freight costs, for instance. a little bit of a timing shift but also, they're feeling the steel and aluminium tariffs. we'll talk about this with coca-cola ceo james quincy joining us at 10:00 a.m. eastern time as far as the drinks and the sort of break down coke is doing well coke zero is growing double digits diet coke had the best quarter in years because of flat growth continues to show improvement. it was the juice category that was weak a lot had to do with inflation i talked to quincy earlier and said we have to raise prices on consumers and juice because of the inflationary costs. >> due to the underlying commodities -- >> freight is a big deal they were hit by the brazilian

trucker strike and a little bit of a timing shift and steel and aluminium. >> famously remember commerce secretary ross with the various cans but -- >> may 18th, i think. >> do we know what the numbers may be, sara, in terms of aluminium? >> how much it impacted? >> they didn't break it down i think he would say it's relatively small. >> right. >> as far as the overall impact. and with tariffs, coca-cola is an international business. i made the point earlier they do a lot of production locally and so it's not as globally of a connected supply chain as, say, the auto industry. one place they feel it is the stronger u.s. dollar, which is something they warned about and expect it to be a currency head wind though positively for investors, they actually sort of raise their guidance or kept it the same and said it'll be at least 4% organic revenue growth versus about 4% organic revenue growth. i asked quincy and he said because operationally we're

doing better and it offsets the impact of the stronger dollar and the higher commodity costs. >> one-two-punch of tariff and the cost and the dollar making itself plain in the earnings season there's m & a to watch the president has a tweet criticizing the fcc over an m & a decision he tweets so sad and unfair that the fcc would not approve the sinclair merger. this would have been a conservative voice last week the fcc moved to block the $3.5 billion acquisition of tribune by sinclair. jessica rosen responds with a one word tweet "disagree." and no word yet. it's going to be interesting. >> listen, it's disturbing on any number of fronts this is a president who overturns the established way of doing things many times.

you could argue it's undermining the authority of a regulator many would say, listen, presidents, perhaps, don't advertise things publicly in terms of when they disagree but they have influence over the regulatory agencies, i suppose that's something we can debate but this is unlike anything i've ever seen. and, you know, it's interesting, of course, it's appointee of this administration running the fcc. i think somewhat unexpected when they said, you know, it doesn't appear to us that the divested stations of sinclair says its divesting it won't have power over them. that was why they decided to send it to an administrative law judge, which is likely where it will die but it does simply raises more questions about the regulatory structure. for example, what many massa

comes to the white house and promises something and you get a tweet from the president that says i think sprint and t-mobile together would be awesome. does that have an impact on the doj and the like >> it makes you think about at&t and time warner. >> yes. >> the fact that the government is now appealing the ruling after it failed to argue. >> if you want to make any other, you know, gain any other insight from this, he continues to come after our parent company comcast and nbc news, and so it does yet again layer on another concern that might have been there should comcast continued in the pursuit of fox. it undermines confidence in our institutions it does. >> i mean, this is, as you said, a trump-appointed fcc chairman it was a unanimous decision. an fcc that has been pro deregulation they rolled back net neutrality. >> most important things they've done, perhaps, and a significant

move yeah so i think unexpected to see something like this. but we know that sinclair is a strong conservative voice, as the president makes clear, and certainly he would have appreciated them having a nationwide footprint in the way they would have with the stations. >> some had seen the decision as a signal that murdoch was somehow getting his way when it came to m & a policy it sort of flies in the face of that. >> yeah. being murdoch has influence with the white house and therefore the white house influenced this. that would seem -- right i guess that's true, yes. >> remember boris epstein? you said undermines confidence and institutions but also feeds into the idea that a lot is determined at a federal level by how the president views his press coverage. >> uh-huh. >> right versus a cnn or nbc. >> yes and we know -- right, you bring up at&t/time warner and the

decision by the doj to oppose that and the head of the anti-trust enforcement makes it clear there's no influence whatsoever from the white house in the decision and they decided to appeal, as well then people look at the doj's approval of disney/fox in less than six months, which was somewhat extraordinary that said, i've gone into details there why it was the case when they decided to divest the rsn. it wasn't a question about if it didn't become that much an anti-trust question simply about the studios, really. that was fairly easily answered. you can't certainly answer the questions but you raise them so often now as to whether there is government interference. >> and it's on "washington post." not a merger but target of a tweet. >> we'll watch that. a busy day, of course, we'll get a closer look at how tariffs are impacting auto industry earnings a deep dive into the legacy left behind the passing of sergio

marchionne bob lutz will join us to talk about that a big reversal of the nasdaq yesterday and boeing hurting dow futures now. back in a minute what about him? let's do it. ♪

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news in the auto industry legend former fiat chrysler sergio marchionne has died the stock down 10% as the company cuts its guidance. tariffs at the center of that conversation and there's gm in the premarket after cutting the full year earnings outlook ford reports tonight after the bell as tariffs on steel and aluminium weigh on the industry. about half the content in automobile are the metals and others we'll bring in bob lutz to think about this. >> good morning. good to be here. >> start with sergio david and i have talked about there's a picture in the hall of the nyse of the day he brought ferrari public and there's been a lot said what he brought to the industry you knew him and have written about him over the years what should people know? >> well, i think he was a very

effective leader one of his hallmarks is he had a clear vision of where he wanted to go and what he wanted to do and whether it was popular or not or whether there was consensus in the company or not. he would pursue that and at times it made him unpopular within the company you know, people said he was difficult to work for that he didn't listen. he did what he wanted. but, you know, unfortunately, extremely nice people who try to be accommodating to everybody's wishes almost never get anything done especially not in a large corporation. so i knew him as a brilliant leader wasn't afraid to speak his mind. sometimes opened himself to ridicule like when he was courting gm and said, please, can't we merge everybody made fun of him. but, you know, his fundamental ideas were correct. >> yeah. he was a proponent of industry consolidation and i've asked our

reporter of all the things he got done, whether it was erasing fiat debt or saving chrysler or making race the best auto stock on the planet, what do you think he'll be remembered for the most >> i think he'll be remembered basically for saving two companies at the same time because fiat was on its way out, and chrysler was on the way out. by doing that negotiation where under the obama administration he basically got chrysler for nothing, he was able to -- it was extreme difficulty at the beginning but he was able to meld an organization that not all of it is profitable. some is still troubled but, you know, it's back to being a powerful global automobile company. that's what he'll be remembered for. >> on these input costs now and the guidance to date, bob, from gm and chrysler. looking at analysis out of

bloomberg that says the additional cost of these metals is outpacing q 1 benefits from tax cuts how far can this go? >> well, you know, that may be, but at that change in guidance was merely precautionary so they don't have to explain it later. and my judgment we are at the midst of a trade negotiation there's nothing finalized. nothing that is going to stay yet. we're in the middle of a war with tactical moves here tactical moves there offensives here. resistance lines built up over here we won't know anything for another couple of months but with what president trump is trying to do is eradicate decades of trade inequity for the u.s. and almost no tariffs on certain things and other countries have huge tariffs to where we have ongoing monumental

trade deficits president trump decided this is the time to put an end to it by george, i'm with him 100% is it going to cause some problems and dislocation and troubles in a system that has been based on cheap imports in just about everything? number one, whether we export anything or not. yeah, trade deficit doesn't matter that's not true. it does matter and it's time to get things in balance and they will be i will guarantee you, the u.s. will come out of this trade war as a winner for the other countries cutting their tariffs on key american commodities. i'll bet you europe eliminates the automotive tariff. it's too early to get upset about this. >> bob, even if you do have that optimism and some do, how much short term damage is there going

to be? a billion dollars worse of profits than originally expected for gm because of higher costs of steel and stronger u.s. dollar, i mean, that's already damaging and that's not even if whether the president is going to put the tariffs on auto imports. you know the u.s. auto industry has more and going to lose more money and cost u.s. jobs. >> any medicine that a doctor prescribes for a serious illness is going to cause some side effects. you get a prescription drug and you read the labelling it says may cause drowsiness, nausea, vomiting, et. cetera, et. cetera what about the short term impact i'm going to get sick. of course you're going to get sick the doctor has given you the medicine to cure the main illness. it always has short term effects. i can't understand why everybody is focussing on all of these short term effects when you wage any kind of -- you're in a legal battle about

something. let's not say divorce because that's an ugly subject but all the time you're paying thousands of dollars per week for attorney fees, and, you know, at the end of the day, it's worth it. so oh, my god. another thousand dollar check to my lawyer. well, you can't look at it like that we're overly focussed on the short term impact of this. >> how do you know it's worth it the whole world is mad at us now. >> i'm sorry >> how do you know it's going to be worth it? the whole world is mad at us. >> once it's in balance and we get rid of the massive trade deficits, the dollar strengthens to aboutwhere it should be i mean, a country cannot exist long-term by exporting almost nothing and importing everything that just doesn't work. >> it's a good point of view to get to our viewers thank you for the insight and we'll talk to you soon. >> okay. take a look at the futures

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only with td ameritrade. you're watching "squawk on the street." live from the financial capital of the world the opening bell in about four minutes. so much happening today. earnings from boeing, coke, and gm we'll get tonight facebook, ford, qualcomm, paypal the eu visiting the white house today. it sounds like the eu is prepping some additional tariffs, if, in fact, they don't reach some sort of harmony at this meeting or in the next few meetings. >> i think the question is what

does harmony look like is ukker, he hasn't been elected. there are 28 leaders that have been elected that he represents in the eu. beyond that, the question is what kind of terms can they agree to remember during the obama administration ttip was being negotiated there were 14 rounds of negotiations they stalled because of political concerns because europe and the u.s. just could not get there. so there's a lot of hard work. >> meanwhile, earnings still haven't gotten to include at&t. >> yeah. at&t of course, we heard from verizon yesterday. sort of not bad number from verizon. stock kind of bounced around a bit yesterday. at&t is looking lower this morning. generally met expectations, of course they did consolidate at&t for 16 days it did help the underlying numbers, as well and here is a few things we can share with you overall you know, yesterday i was talking a great deal about google's cap x and it exceeds

that of at&t that was not necessarily correct. it would be as much as $21 billion. at&t talking about capital investment expected to be in the $25 million range. they do say it will be $22 billion of cap x on the cap flow statement after you net out the first net reimbursements and the vendor opportunitying they pursued. a huge number for at&t it's not your old at&t it includes time warner. net debt is about 2.9 times. they see it going down to the 2.5 rage 2.5 range by the end of next year they expect the growth to meet the target and they also, as well, do say they have strong business that generates. this is a term a ton of cash and they're confident in their leveraging targets they have given out.

453,000 ads that includes 350,000 phone net ads. that was the ninth executive quarter of year over year improvement. so generally not seeing a lot of turn in the wireless industry overall. when it comes to plans for the entertainment assets, specifically direct to consumers. direct tv is losing subscribers a ton, to use that word again. quickly direct tv adding them now very quickly but they're running the entertainment assets said what he said is when we talk about direct to consumer, what we know about the space is it requires scale. and there are a number of underway [ applause ]

[ opening bell ] >> we have a loud crowd today. that's the openingbell [ cheers and applause >> we'll get to boeing they raised their four year revenue guy. 97 to 99 billion but this charge, again, on this tanker program $426 million created some weakness in the premarket. managed to recover some of that before the opening bell. it's the dow's heaviest weight and to a large degree, what happens to boeing happens to the dow. >> yeah. and it has been the dow's

biggest winner of 65%. priced for a lot of good news. the best performer in the opening is coca-cola coming off a better quarter in terms of profit andrevenues [ cheers and applause >> it's loud here today. >> they brought in some ringers, i think, right, david? >> they did. [ cheers and applause >> that was interesting. at&t is down, by the way, over 2%, guys to quickly finish up what i was talking about before the applause got very loud here. you know, they're talking about when they talk about direct to

consumer, really sort of a massing of much larger and much more powerful platform is what they're talking about. one experience that aggregates get scale far beyond what they have when he talked about hbo and the roughly $2 million they spend now on content versus the $8 billion that netflix spends, he says they want to open up constraints on very high or, excuse me, attempt to open up the constraints on high top quality projects we think will balance out the schedule so we can have a more engaging experience with hbo throughout the course of the year but didn't say specifically what the investment number would be stock is off and, of course, it's not been a good year for at&t that stock down 20%. given how widely held it is and how many people rely on the dividend that's a significant decline for a company. >> we were talking to craig moffit on closing bell yesterday, he is really negative. >>yes.

[ applause ] >> technology is one to watch today. it's higher here in the opening. second best performing group in the s&p to consumer staples. facebook reports after the closing bell this after a strong quarter at google helped lift facebook stock. bothtrading at record highs, guys the expectations is 40% revenue growth on the strong ads business the stock has really come back strong a 40% from the cambridge analytica low, despite the fact that facebook has faced a lot of questions when it comes to public relations and how its dealing with everything from interference in the election to

fake news. just gave that interview with mark zuckerberg. but the business appears to be doing fine we'll get another look at that after the bell. >> yeah. record high yesterday. 216.20 the reversal on the nasdaq got a lot of attention we gapped up 1% to a 52-week high and closed negative jonathan krinsky said the last time it happened was 2003. to have such a dramatic gap open to the upside with a record and close red is going to get some people's attention texas instruments, by the way, reported last night. there's been some weird cross currents in this earnings season. >> i mean, to the technical point, the breadth yesterdayover all despite the fact that the dow and s&p closed positive was negative there was poor action, he said 13-point rise in the s&p. >> you look at the two big

companies that raise their guidance today boeing and northrum down markets having -- it reminds me of the game theory we had in m & a where companies were not being valued on cash flow because there's too much happening that's happening with the industrials and tariffs and costs and trade. >> yeah. speaking of trade, guys, it is important, i think, to take a look at nxp. a deal we focus on every day but probably won't from here 11:59 tonight is the deal will expire as we reported, that will be it. they'll juundertake a large buy back aided by the $2 million reverse fee they will receive. what can i tell you? people close to qualcomm tell me

they have heard nothing from the chinese anti-trust authorities that there was no word it doesn't necessarily you still won't get that last-minute approval the tender expires at 5:00 today. if they were to get the approval, seemingly unlike, as some people might think it would be at this point, if they were, they could certainly extend that and figure out a way to get the deal to the finish line. the question is the approval itself there's no shortage of commentary, both from the chinese media and from analysis there and here but what i can tell you simply is that qualcomm has heard nothing, as of now and as we've said so many times, and i certainly made a point of saying yes given the deep involvement of secretary mnuchin and secretary ross trying to get the approval it would clearly ratchet up the attention between china and the u.s. in the

broader sense in terms of trade. it would also seem to chill significantly the ability of large technology deals to get done couple that, by the way, with the bill working through the way on the defense authorization and what that would allow them to do to wonder if it, in fact, does not get approval how hard it's going to be to get a technology dealthrough. what it will require but, again, on this as seemingly irrational, some people would say, for the chinese not to not allow the deal to occur, we're getting closer and closer to that being the case. >> i just wanted to point out lululemon. the company has a ceo. now the company has named calvin mcdonald ceo the stock actually has been up and the company has been performing even without a ceo over the last few months calvin was ceo of sephora.

he lead strong double digit results. the stock is up 1% so lululemon with a ceo and 100% gain in the stock price over the last 12 months. >> dow down 75 points. as we continue to watch the short end of the curve, at least, today two-year now briefly hits a high of 26.57 that's the highest since july 2018 whether it's part of their calculus or not. >> and what the banks are doing. financials, as you mentioned, they're down today they're on a little bit of a hot

streak we'll see what it looks like the anticipation is building for friday's gdp report. the way that i don't remember so much excitement about a gdp report part is the president and his team have been talking it up are we going to see more than 4.5% economic growth in the second quarter will we see close to 5% of economic growth. that would be something. i think what will be telling how the market reacts to it. is it going to revert to the behavior where strong growth equals more fed hikes and markets not ready to see that or do we embrace strong growth and have a debate about how sustainable it is given the impact of tariffs. tariffs in tact that will negate the confident impact. >> right others say if you're going to engage in a trade war, the best time to do it when your economy is strong and you take the pain you might not otherwise be able to.

>> we'll see. >> we'll see what the over outlooks like like. >> loud and crowded floor today. >> hey, bob. a lot of fun to hang out with this crowd a mixed open about even on the advanced decline line drifting a little lower. dow has a lot of problems but gm isn't the only one talking about high ore costs and stronger dollar the higher cost and stronger dollar is a bit of a theme now developing you heard from phil talking about gm in the last couple of days we heard from whirlpool, illinois toolworks, kimberly clark and coca-cola talked about higher material costs for them. so this is a persistent but it's impacting companies in different ways and some of them were whirlpool and illinois toolwork they were lowering their guidance.

it's impacting companies that some can raise prices. some can't it's not a uniform story but higher costs and stronger dollar, to some circumstances, is definitely a bit of a head wind but then other companies are raising guidance what is interesting today is we've got companies raising guidance but guidance is kind of underwhelming. a company that does heating and ventilation would talk about it but they haven't they didn't say a lot about cost impacts. boeing the guidance they missed on the operating but their full year revenue guidance was raised but not their earnings guidance. that's underwhelming guidance. you see the impact

high end of the 350 range. that's also raised but, again, the streets not terribly impressed generally raised guidance is a good thing you get a negative reaction. meantime, take a look at the sectors. you can see the industrials are under pressure that's because boeing, nordstrom, lockheed martin are under pressure now that's kind of keeping the industrial sector down banks haven't been doing anything for the last couple of days the tech sector okay juniper is up and micron also to the upside now i want to remind everybody how strong the market has been i know we have the argument that the stocks are the only ones that matter. that's completely wrong argument they are moving the market in terms of market capitalzation and impact the svp is -- s&p 1.8% from the

historic high. they're only 3% from a historic high i don't want to hear it only matters. mid cap only 2%. finally, all the people behind me they're boisterous and happy bloom energy is going public now. 18 million shares the high end of the range clean pour generation. this is a 3-time cnbc disrupter. >> thank you we'll check in on the bond pits. rick santelli at the cme in chicago. good morning, rick. >> good morning, carl. it seems to come back and haunt most trending markets. it's somewhat the same for the yield curve which has been flattening, flattening, flattening we did have a little bout of steepening as you can see and carl

mentioned, we're looking to extend to july of 2018 getting close to 266 and back a bit. you see the chart. and we're going to count to 2008 for awhile that contained 3% two year note yield. if we look at the other end of the curve, one week of tens, not only is there subtle flattening going on what is interesting here is after we broke our run of 22 sessions in 280 earlier in the week, obviously, you see what happens. we're coming back and testing 290. it's going to be very important. if there's any momentum when we move into the range. my guess you'll see a lot going on you might see some of that behavior early in the auctions today with five year and tomorrow with seven year when it comes to the currencies, everybody has beening watching the dollar yaun and it reversed a bit.

the dollar is actually coming down a bit dollar yen has been all about a strengthening yen. there's the dollar index but a wider view going back to mid 2017 you can see in the fall of 2017, we had a problem with the 95 area then. so this is a very important level we backed away from. carl, back to you. >> thank you when we come back, james quincey will join sara in about 15 minutes. and the wto is broken, that's what larry kudlow told jim cramer at the delivering alpha conference last week the director general for the wto will join us to respond. dow down 51. s&p is green "squawk on the strt"s ck aine.ee iba

big tech continuing to hit new highs here amid a sea of bigger earnings, facebook, microsoft, alphabet trading near record levels. alpha one capital founding partner dan niles now. i guess it's an expectations

game with facebook after the huge run up 35% in the last three months what do you expect >> yeah, i mean, i think facebook is in pretty good shape to look at it over the long-term. my big positive for them, they have a large number they're not monetizing very well they've got $1.5 billion users making no money off them they have 1.3 billion users. and they're barely starting to monetize that. and compare that against the core facebook app about $2.1 billion users and about 800 million. in terms of the quarter itself, you know, you're right the expectations has gone up a lot. google had a great quarter that raised the bar higher i think the one issue with facebook to be concerned about is the currency and the fact they guided 50 to 60% expense growth and it's only at 47

that's probably a little low i think the revenues are low for the year so hopefully those two things balance themselves out but, you know, we like to do better that's our favorite in the internet space now. >> you mentioned the expenses for facebook and that's disappointed the street faceboo disappointed the space in the past when these things go significantly higher is that what questiwe see from cambridge an l cambridge an -- cambridge analytics stan call. >> when they reported the march quarter, they took that low end, 45% expense up to 50, and now, i still, if you look back over their history, they have always come in at or below the low end

of expense guidance, each we'yer that they're divided we have zuckerberg being called up before capitol hill, so they're really under a lot of pressure to clean things up, especially when you got the midterm elections coming up, the last thing they want is something up again where it interferes with the election that's the biggest issue right now, the expenses, people might need to bump those up. that's why i think stocks probably have an equal chance of being up or down, the print, especially given how strong the third quarter is >> china, vis-a-vis tech, the times has a story right now, this innovation hub that facebook was trying to set up in china, is now not going to happen because of regulatory approvals essentially. how much of an overhang is that going to be? could it be more of an overhang than tech regulations could be a

few months ago >> i'm glad you brought this up. you have to remember, china has really locked out the u.s. internet companies so facebook, amazon, google, they don't really have any business in china. netflix. so they're not going to be affected the companies that will be affected are the semiconductor names where tariffs can affect you. if you're not doing business in china, it really doesn't matter. if you look at these companies like the facebook or google, they're trading at 25 times earnings and you've got safe places to be if you think the tariff situation is going to get worse. i do think it's going to get worse, i don't think anything is going to get solved on that front until you get to november. it would be really great if these companies were allowed back to china, that will force china to relax some of these restrictions so we'll have to see if that happens. to me, that's up side.

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this morning the president is set to meet with top eu chief jean-claude you yunker the eu commissioner said they were topping lists of $20 billion on u.s. products adding they hope it doesn't come to them, and it does not target specific american states, it's a comprehensive look at american goods. >> the eu has on average 3% tariffs on the united states and the united states has 2.4% on the eu. however the auto industry goes to 2% for europe so we know this is a sore point for president trump and that's the backdrop and no wonder europe is angry,

because they feel like they're not treating the u.s. unfairly >> we're going to be obviously putting our eyes on that when we come back, we'll talk to the ceo of coca-cola, james quincy, specifically on his e p u3.s earnings out today ths&isp hi, i'm joan lunden with a place for mom

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good wednesday morning welcome back to squawk s"squawke stree street". we're here at post 9 of the new york stock exchange. the dow is down about 48 as we look at also earnings from coke, gm, tonight ford >> our road map of the hour continues with coca-cola earnings, we're seeing estimates on profits on sales. the stock is up and james quincy, the ceo joins us in just a few. >> and the director general of the world trade organization will sit down with us. >> and shipping giant u.p.s. topping estimates boosted by

strong growth in online shopping ceo richard paris is with us to break down the court our june read on new home sales is definitely a miss 631,000 seasonably adjusted and annualized that is the weakest read of the year, as a matter of fact it's the weakest pace since october of last year and last month, we took the month over month gains, 689, became 666 never a good sign there. but for more detail on not only the miss, but also the revision, let's head to diana. >> we saw mortgage applications for newly built homes drop 9% in june and we have seen prices really high for the home buildebuilde builders as they face increased calls on land, labor and

materials. we saw the average price of a new home, $210,100 this number represents people out shopping in june that is signed contracts not closings the way we get on existing home sales. so these folks would also be reacting to higher mortgage rates that moved up in may, and that is of course weakening affordabili affordability, the builders need to raise prices. going forward, builders are selling me that they are concerned about passing on those increased costs for materials to buyers because again they're seeing weakness. remember, single family housing starts were down 9% in june and down year over year, and they're simply not building because they're not selling. >> thank you for the added color on that miss in new home sales earnings, we are watching shares of coca-cola moving up

today. the company out with second quarter results. strong beat on the top and bottom line. joining us now on a cnbc exclusive. james quincy from atlanta, thanks for joining us this morning. overall a pretty strong picture of the business, james how are you explaining that north america sales? >> we had a good quarter overall, we had strong top line growth, some eps growth. north america really, actually one has to look through the numbers, there's a couple of temporal factors in there that are affecting the second quarter, the business mix and some timing issues in the marketplace, the business continues to do well, volume's up, pricing is up, we're gaining share is shares, so these we have to lookthroulook through these factors and the underlying market success going

into the second half of the year more temporary than structural and part of a good overall story for the year to date >> i think you also blame rising freight costs which a number of other consumer companies saw can you tell us a little bit about the common didcommon -- c costs overall? how big of a problem is this >> yes, there's some pretty broad based cost increases out there. the freight one that i know other people have talked at. appears as a reduction to revenue, under the accounting for 2018 but there's broad based cost inflation out there. we had to take with our boiling partners, an increase on our beverage industry in the middle of the year, which is relatively uncommon that's the fray, the met taals,e

aluminums, the steels going up we're not perhaps the most affected sector, but it out there and we have had to take a price increase i think it's gone well, the customer conversations is not a comfortable conversation, but they can see what's happening. and i think we're all going to find a way to say how do we continue to grow our collective businesses in this environment that's how we focus the conversations with the customers and how do we keep consumers engaged and interested in the beverage categories, so far so good on what we can see in the marketplace. >> you're talking about actually raising the price of sodas for consumers because of this tariff inflation? >> yeah, i mean the general cost inports, the tariffs on the metals, it's one of many factors that forced us to go out in the middle of the year with ou partners to announce the price increase, which is pretty unusual, but it was the right thing to do for the business,

for the long-term, i'm sure the customers are passing those prices on through, so yeah, there's some pressure in the system we're passing it through, but of course, we're focused on how do we adapt, how do we do it in an intelligent way, so we have the right packaging price offers for different consumers. >> what i'm trying to figure out, james, is the consumers, diet coke, coke zero, the narrative on the industry for so many years, fewer americans are drinking carbonated beverages, has that changed or are you just taking more market share from your competitor pepsi >> i think what you're seeing is the consumer reengaging in the category globally it's happening because we have been driving a strategy that's very focused on allowing people to engage more simply in a modern way we have smaller packages, we have been doing reformulations

so there's less sugar. we have been innovating behind our no sugar brands, diet coke has been growing revenues. it's a great improvement over the past years coke zero sugars continue to grow volume and revenues in double digits. so we see our strategy of focusing on transactions, smaller packages, innovations and zero sugar as a way to bring people more engaged in this category and you can see it in our results in the u.s. and globally but at the end of the day, people want diversity of beverages, so this isn't just about reinvigorating the sparkling category, which we're doing, it's also about winning in these other categories. people want diversity and they want the brands they love. >> james when it comes to these input costs and the degree to which they're tied to tariffs, we have seen different companies be vocal to different degrees t

roll back policy or influence policy, companies like toyota and union pacific are very direct when speaking to the administration in public how does coke think you should address this in public >> you know, clearly metal import costs for us are a factor, but they're not as big of a factor as some of the companies you just mentioned our policy point of view is to say, look, we still believe in global trade, global trade can lift all boats it's better to mitigate the consequences than to unravel global trade so whilst none of these deals are perfect and they can all be made better, we advocate for moving forward to improve them so that's the position we take we're not a primary, direct impact from some of these tariffs, but of course it flows through supply chains in all sorts of different ways and

ultimately that will have to pass through >> i mean what would happen -- you've got a pretty robust business in china. what would happen if we saw all $500 billion worth of import from china to the u.s. get taxed, is there any impact on coke and do you worry about anti-american boycotts and sentiments on big american brands like coke ca-cola over e there? >> it will be bad and bad for everybody. virtually every drink that someone consumes is made in the country in which they are consuming it in. the cokes in china are made in china, the cokes in the u.s. are meat in the u. made in the u.s., the cokes mad

in europe a in europe are used in europe i think one of the best strengths on our business is that we are globally local >> as we're taking a trip around the world, james, go to the uk, your native country, in april saw that sugar tax take effect what sort of changes have you made to your beverages to keep the sugar content lower and what's been the consumer reaction >> the uk came in with a graduated taxation on sugared beverages. and what we did in the uk is a reflection on what we do everywhere with our strategy so we're trying to make the packages smaller, so those that do have the sugar, they can be repackaged, but virtually every product we sell has moved out of the tax bracket. and so this whole idea of smaller packages, reformulations

to bring down the sugar levels, innovations, has been our response in the uk, but it's actually part of our global strategy to adapt to what consumers want so when you look at the gb business because we have implemented that strategy, very pro actively, actually the business did really well in the second quarter, it was down, but down just a little bit, despite the implementation of this regime. >> what's driving the spark issiis iis -- sparkling water trend? is it all about health concerns? >> i think, look, at the end -- consumers love bubbles they have always loved bubbles and they will always love bubbles. sparkling water is a great alternative. desani sparkling with some of it's flavors, people are

everyoengage in these categories, they don't have the sugar in, oftentimes they're not sweetened, either. and that's a big part of where people are moving to but in the same vain we have introduced some of the diet coke options, they're sparkling, they're flavored so the but the big trend is ultimately people are buying more commercial beverages, they just want a greater diversity of drinks, and preferably want more natural, cleaner indiagredients, but they still want indulgent drinks whether it's coke original, or whether it's some of the coffee drink s. >> we're expecting this big gdp number on friday, and growth

could be as high as 4% . >> the u.s. economy continues to do well. i don't know what the number is going to end up being, but i think the u.s. economy is doing well, clearly there's some inflationary pressure building up from cost inputs. the global economy continues to do well. hopefully, you know, global policy making will continue on a good course, and won't create too many self-inflected problems >> james quincy, we appreciate your time. shedding some light on the quarter and the economy. the ceo of coca-cola, with shares up more than 2% now >> we do want to mention the passing of legendary auto executive after suffering complications from surgery he famously introduced the

merger he also led the successful ooip of ferrari in 2010 we'll talk to phil lebeau later on today about what he brought to the business, but almost uniquely a straight shooter with industry counterparts and the media. big proponent of consolidation and outspoken on trade among other things >> yeah, outspoken on a lot of things and it's always nice to have somebody who would answer every question, we really always enjoyed having him on as a guest. and very much focussed on autonomous as you would expect, with a very clear view and you heard bob lutz earlier talking about what a leader he was because he did have such a clear view of where the industry needed to go and where the companies he ran needed to go. >> we remember serge rio today d we have also got to talk about

auto earnings separately both gm and chrysler stocks are falling both cutting their full-year guidance we were just talking a little bit about it with james of coca-co coca-cola. it will hurt profits $1 billion beyond what's expected at the beginning of the year. steel is a much bigger input cost for these companies. >> and coming on two years of record net income of gm. it's been a nice run they have had in north america, especially and they have struggled with some other parts of the world as well s&p and gone red by about a point. when we come back, we'll look at shares of u.p.s., beating on top and bottom line. shares up more than 3% we'll go back to atlanta, talk to cfo richard peretz when

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shares of u.p.s. got a boost this morning the company seeing strong growth with increased demand obviously from es commerce, we're joined y richard peretz, a member of the cfo global council, always good to get the temperature of the economy. welcome back >> great to be with you.

>> shares had a bit of a stumble premarket but had recovered obviously. there was some discussion about u.s. domestic revenue missing consensus. is there something to explain there? >> there really isn't. we had good growth, i think one of the big things is quarter over quarter, there was some looks at first quarter versus second quarter, but, you know, when you remember that easter last year was in the second quarter, this year in the first quarter, that's why i think you saw the recovery after the call and we got that out there. >> so characterize sort of the tail winds you're seeing out of e commerce, with, i don't know, maybe some of the head winds we're hearing about some of these other big companies today. >> i think obviously the e commerce, the consumer is continuing to spend, you know, the tax reform, the regulations. the deregulations coming out of washington is helping people feel good. the industrial side of the economy is continuing to grow. obviously we're continuing to monitor what's happening around the international area, and the impact it could have

but so far, it really has been very muted so when we look at our international, we have record profits for the second quarter and it was led by both europe and asia >> to the degree that it's muted now, sort of these trade concerns, how does it compare to things like fuel, like drivers, like wages >> well, fortunately when you think about the u.p.s. model, so much of our employee base comes through and grows up in u.p.s., so we don't have the same issues around wage pressures on wages and things like that it however we continue to have to look at fuel, we have to look at cost pressures from outside contractors. you see fuel's up almost 50% cost per barrel, but that's a pass through a fuel surcharge, so we feel comfortable where we're at right now is a good place and we're going to continue to lean into all of that, we're expanding our network, opening up some very large facilities over the next

few months that are all going to help make the network run more efficiently because they're so technology enabled inside the operations >> doesn't look like you're particularly affected by the trump administration's trade policy and tariffs are you expecting that to change >> well, we don't think we'll necessarily be affected. obviously we're concerned about it because free trade does create jobs here in the u.s. in our network, for every 22 packages, we create another job, but we also know that customers are going to be making adjustments as trade flows change, and the great beauty of our network, it's flexible, if i need to move more capacity between europe and asia, i can move planes around in relativel we're continuing to monitor and listen to our customers to listen to the needs they have in this change of environment >> one of the criticisms has been u.p.s. is perhaps behind

fedex to a certain extent in automating many of its facilities tell us about some of the changes that are taking place in some of these facilities and how you can continue to roll out these kinds of changes you're talking about. >> just over 50% of our volume today in the u.s. goes through a technology facility. that being said, we were the first and have all of our air network facilities fully automated. now we're bringing the ground facilities in because the economics make sense in atlanta, for example, we'll be opening a business that's over 100,000 pieces an hour that will be sorted through automation now if you put perspective on that, last year we opened new buildings with a total of 50,000 pieces an hour, so that one building alone will be more than double the capacity we opened last year. and when we're done with this year, we'll have 7 to 8 times the capacity and what it comes down to is the building and the automation allows for the sorting, until it

gets to the final destination location in the building. >> any metrics in the quarter? i always love asking you whether there's something granular that tells us where pockets of strength or weakness is in the economy, whether that's by product category or package size, anything like that >> yeah, i think there's two things going on. obviously the consumer feels comfortable buying online and increasing the sales of the consumer side. and what we see on the industrial size, we see things like health care, the industrial side of retail, as well as industrial manufacturing also. overall we see both sides of the economy, the global economy and the u.s. economy growing in that 3% range and that maintains some of the strength that we really started to see at the beginning of this year, and so we're encouraged not only by the demand it creates, but also that it's kind of wide spread, you're seeing benefits in europe as well as things like what's happening with the central bank is helping to offset some of the concern around brexit and then asia

still continues to be very strong in it's volume levels as well >> finally are tax cuts and the fallout from tax cuts, hue woowd you describe the inning we're in until benefits are slowing down? >> the tax cuts are definitely helping not only the demand side of the equation, but for a company like u.p.s., it's also giving us the thoughts around the reinvestment dollars that we're putting in we do have a little higher cap ex the next few years, we're taking advantage of the tax cuts and at the same time we're seeing our customers making adjustments to their business based on having those funds available and it makes u.p.s. more competitive as we have competitors that are based outside the u.s. paying much lower tax rates. >> richard, thanks very much, appreciate you giving us some clarity on the quarter richard peretz of u.p.s. see you next time. >> big hop in that stock coming up, a new chief

executive at dunkin' brands, what changes are in store for the coffee brand don't miss our intvi wh erewit n nigel travis and david hoffman dow is down 92 points. at&t provides edge-to-edge intelligence, covering virtually every part of your retail business. so that if your customer needs shoes,

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get to our etf spotlight, dominic chu is back in the tech sector >> as you can see, they're trying to do its part to at least maintain some of that bullish momentum for the overall market as you take a look at some of the other places we're watching, facebook shares are something we have to pay attention to because there will be reports after the closing bell the expectations are already very high for the social media giant as you can see here. those shares have lost a little bit of that positive momentum. at some point traders are pointing out the statistical

rarity of those of those numbers we're seeing facebook is an outside weighting in a number of exchange traded funds, some of the more well known one, as well as the qqqasz you can see there. the ticker xlk is one of the weighter weighter -- weightier tech stocks facebook has a 22% weighting here, so as you can see, it could be one of those etfs that moves around a lot if you're here, it could be one of the ones to watch at the closing bell now over to sue herrera for a news update. >> here's what's happening at this hour, we begin today with the polls that have closed in pakistan's national elections. this follows a suicide bombing

outside a polling station in the southwest in which 31 people were killed. the bomber rammed his motorcycle into a line of people waiting to to vote. rescue workers searching through those homes and cars after the deadliest wildfires to hit greece in decades. the speed of those fires which began on the east side of athens contributed to the high death tolls. a man with a pick ax broke up trump's hollywood star on the walk of fame and somebody in california has become a multimillionaire. one person had the winning jackpot ticket in the $522 million drawing. it was sold at bernie's liquor in san jose, the winner not

immediately known, but congratulations. that's the news update this hour carl, i'll send it back to you, there were two million dollar tickets sold in new jersey >> we'maybe it's you >> i wish. >> we'll see if you're back here tomorrow the president is set to meet with jean-claude yunker later on t t th the -- later on today. >> this should have been done years ago, a, the world trading system is broken the world trade organization is broken

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percentage point, boeing is a lot of weight there. nasdaq is stronger, had facebook earnings up .2%. also consumer staples having a good quarter so far. ahead of the meeting with trump and yunker, the president tweeted. hope they do it, we are ready, but they won't national economics council director larry kudlow says yunker is coming amprmed with a prominent free trade offer joining us now in a cnbc exclusive from geneva this morning, wto director general roberto zavedo first tell us what's in the report today, as it relates to some of the trade friction we are seeing around the world?

>> well, it's a very mixed report, there are many things, it's a very broad report i would say that the headline of the report is that we're seeing more trade restrictive measures than before. that's clearly the situation we hope that we can stop this trend, the growth of the global economy is showing signs of recovery it -- our hope is that these new trade tensions will not affect that and will not take away the opportunities of this growth that is looking promising right now. >> the question is, what will the wto's role be in that objective? larry kudlow, the president's chief economic advisor telling us last week in a conference that the wto is broken how do you respond >> well, he will not lose his job for that that's for sure.

what i can say is the wto is not broken, the wto is actually functioning quite well were it not for the wto during the crisis in 2009, we would have seen many more protectionist measures in place, the global economy would have had a much harder time recovering can we do better can we improve can we respond faster? can we do better things? absolutely nobody has doubts about that and this is what we need to do, we need to keep reforming and up dating the system. but the system is functioning, and it's functioning quite well, actually >> what if the u.s. pulls out, there have been reports that the president is considering this prospect and what would the wto be without the u.s.? >> that's absolute speculation, i have no indication whatsoever on the part of any of the authorities of the u.s. that i have talked to that this will be the case so there is no point speculating in that direction. >> you know, the president has

criticized world trade as being unfair to the u.s. and china, which a lot of people agree with him, that china has practiced unfair trade practices, intellectual property theft, technology transfers, why hasn't the wto addressed this and gone after it? >> well, the first thing to note is that trade needs to be as balanced as possible and we have a constant task of removing barriers, of reducing distortions, and distortions do come in. that's the whole source of the disciplines we have in the wto is to avoid distortion, is to avoid unfair practices and things of the kind that's exactly what the system is there for if there are things that we are not capturing at thispoint in time, this is the kind of thing that we need to sit down and have a conversation about. i think a lot of people have ideas, we already have seen many concepts out there, in terms of

even a reform of the wto, let's see what that looks like i think we should be always and pe permanently striving to improve the rules and the business structures that we have today. they have been updated but only progressively. there are many area where we need a quantum leap. >> one common complaint from the administration, mr. director, is that china is misclassified given its strength in the global economy. is that something that you might change >> it's not us that will change it, i think the complaint is that china self-designates itself as a developing country in the wto therefore they have -- they are entitled to the special and differential treatment that developing countries receive in most situations, you will see

a situation of pragmatism. for example, the latest agreements that we negotiated, they do not necessarily differentiate very much, developed in a developing country. per se but it is the degree of commitments that they take in that arrangement that vary i think this conversation about who is a developing country, what kind of flexibilities can be afforded to them, are they all the same is china the same as kenya is china the same as honduras that's the kind of, i think conversation that we need to have i believe that the only way forward here is flexibility. we have to be realistic about the possibility of countries to contribute to the system and take actions accordingly >> sir, the u.s. -- the administration here has

implemented certain tariffs based on national security concerns and contemplates at least the possibility of tariffs on automobiles from the eu for the same reason, national security what is your response to the use of a national security overall umbrella as being the reason for certain tariffs? >> what is happening with the u.s. measures is that they are not orthodox in the sense that national security has been used before, it's not the first time, it has been used several times. at times when there is a trade embargo, or some kind of sanction on the basis of geopolitical pressures and tensi tensions, that is usually going to be justified by national security these are very much different because we are talking about specific trade areas that are more loosely defined, to put it

that way whether or not they are justified under wto rules, we don't know the reality is there are many disputes that have been brought to the wto, dispute settlement systems and that system is the only one that can pass judgment on the subsequeconsistency of te measures with the rules that we have >> don't you feel a little pressure given that you have to rule on those disputes if you rule against the united states, wouldn't that just inflame president trump's mistrust of the wto even more? >> the system is going to look at the facts, the system is going to look at the language of the agreement. and it's going to be impartial it is going to be unbiassed and it will do what it has to do i believe personally that this is something that needs to be figured out politically. this is not something that you outsource to experts, sitting at

the panel and that will arbitrate the disputes, that they are going to be deciding this kind of thing but given that, this is what they chose to do, so the u.s. is bringing cases, either bringing cases against the u.s. about this, the system will do what it has to do. the consequences of that will be for each party to decide whether they win, whether they lose, that's their decision. the system will do what it has to do. >> do you think we're heading into an environment where it is truly the age of the bilateral trade agreement, for example would you expect nafta to get refreshed or is your expectation at least more likely to see a u.s.-mexico deal, a u.s.-canada deal, for example? >> it's difficult to tell, because it's very specific to each particular situation. i have to tell you this. a while back, people began to

say that, you know, the mul multilateral, or the bigger deals were not doable any longer and the way out was to have a smaller, more limited agreements for example, cpp, or eu, u.s. and other arrangements of the type the reality is that those are not easy either. every time that you're negotiating trade relations, and economic relations on a global steal and scale and international scale, all those are extremely, extremely complex. so though small, doesn't necessarily fix it what i think is that you have to try earning. if bilaterals works for trade organizations for a win/win between two opponents, by all means let's do that. if we need a bigger agreement, for example subsidies, you don't agree on subsidies between two countries, that doesn't make any sense. it has to be a bigger deal that one requires more players

so let's do that on a bigger setting. we have to be pragmatic here >> we thank you for your input on all of these timely issues and for joining us today from geneva the wto director general robe o >> the ipo taking place on the floor here this time it's bloomberg energy. you can see a 25% pop, a renewable energy company opening for trade, we'll keep our eye on that, it's a loud day for ipos on the floor >> boisterous bunch. president trump getting a bit of trade criticism from his own party. here's jeff hensarling this morning. >> i think congress has too much power and last time i read the

constitution, it's congress that has the authority over tariffs and it's congress that has the authority over trade and we ought to take that back. >> ron paul sitting down with santelli the dow's down 3 points. ♪ come on. come on, squirt. (dog barking) whatever your financial goals are, a u.s. bank wealth management advisor can help make them a reality. talk to one today. u.s. bank - the power of possible.

facebook hitting an all-time high today more "squawk on the street" coming right up.

the smoother the skin, the more comfortable you are in it. and now there's a new way to smooth. introducing new venus platinum. a premium metal handle boosts control... to reveal up to 100% smooth skin. venus let's get over to rick santelli for the cme exchange. >> i would like to welcome a very special guest, dr. ron paul, former representative from texas and of course presidential candidate, dr. paul, thank you for joining me this morning. >> great to be with you, rick. >> all right, listen, we were

talking offcamera, about 13 years ago i remember being in the euro/dollar futures pit when you were asking mr. greenspan questions and they were giving you a standing ovation you have been a deficit hawk going way back and my question to you is simple, we're spending $52,000 a second, the federal government where have we gone off the rail on deficits and is it a tax issue? was tax reform the culprit >> obviously not the taxes are too high, the taxes should be lower. the regulations and all the philosophy of government that we need to run a welfare or warfare state. it's a spending problem and it's a very weak congress that cat p -- capitulates to all the demands. they capitulate and keep on spending to stay in office

it's a philosophy taught in our schools for a long time that deficits don't matter. it's astounding that they don't listen to it they're taught this. they think we don't know what we're talking about. and on a short run, you can borrow a lot of money, a can don an individual. and a country that palszs the reserve currency can do it for a long period of time. but this is an addiction >> hold on a minute, dr. ron you hit on something, we just had another texan on, and he was saying that the president has too much power i think many presidents lately have had too much power. but what he said really made me scratch my head. he said congress needs more of a say so who is stopping from having more say so, sir? but it is not rhetorical, yeah >> they reflect the people, too. so the congress has a responsibility, the people have

a responsibility, and everybody goes along to get along. they could change it tomorrow if they wanted to and all they would have to do is be able to read about third grade reading and read the constitution it is very clear what the congress should be doing >> all right now let's go back to the issue you know, also about ten years ago when you were getting the standing ovation, i was on this floor blowing a blood vessel screaming at the top of my lungs, stop spending, stop spending, stop spending. i really think spending is the issue, everything from subsidize, whether renewable energy, we just did a $12 billion on agriculture to help them out just writing checks, we don't fix anything your thoughts on how to get more religion in the form of less spending and get the people, the citizens, to understand a good economy will generate more money. you can spend it on social programs at will >> so, you know, that diminishes the power of the fad and is not very popular so your argument and mine

haven't gone far, but it ends in a catastrophe. because when debt gets this big and the amount is so distorted to tinker with and move back, it never happens. and that is what is said you should always work for it. you should figure out a program. and that is what i tried to do in the presidential campaign is, yes, cut here and there. and i always thought foreign expenditures were a good place to start and you don't have to start with child health care. but that isn't going to happen that is my conclusion from having been in washington. the lobbyists are so big, the structure is so strong, congress is so weak, and the fed is so powerful because nobody wants to do that. because if they had to cut like you might have had, it might have put dampers on the stock market and that wouldn't have been good so the stocks are watching very carefully by the fed and the protection team is alive and well and all they do from my estimation is they make the bubble bigger and bigger. >> they are not only alive and well, the bank of japan is proud

of being their country's plunge protection team! dr. ron paul, we're out of time. i could go on and on thank you for joining me promise to come back sara, back to you. rick, thank you. now to john forte with a look at what is coming up. good morning, john >> what is going on with tariffs and global trade we'll check in with the ceo of rockwell on a mission with unusual insight on what is really happeng bea tnienthhe surface. that's coming up on "squawk alley.

we have an interview with jack lew plus british prime minister, tony blair and facebook comments. and we'll talk to the cfo of ford ahead you don't want to miss blair's thoughts on the trump meeting today. and what deal could happen between the u.s. and europe. and "the washington post" has a story up citing three sources that the president's advisers believe he will plow ahead on $200 billion of tariffs

on auto imports despite objections from some of his advisers we have already heard some not contrary opinions but at least more shaded opinions from the likes of mulvaney and kudlow. >> and the question is, what is china going to do to retaliate these are the $200 billion in chinese. then they can go for all of the u.s. imports into china. and what, if anything else, could they do when it comes to regulatory, not approving deals, like we saw from facebook today. the other question is the market's resilience in the face of all this. not much of a move lower on that. >> the dow is rglaely lower. "squawk alley" is going to start in a few moments its show of strength... or its sign of intelligence? in crossing harsh terrain... or breaking new ground? this is the time to get an exceptional offer on the mercedes of your midsummer dreams at the mercedes-benz summer event, going on now.

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