good morning it is 11:00 a.m. at pepsico headquarters in new york, 11:00 a.m. on wall street. "squawk alley" is live ♪ ♪ good mocnday morning i am carl quintanilla, jon fortt is back. and joining us, rico executive

editor kara swisher. good to have you with us. >> how are you doing good to hear from you. >> story on facebook working with big banks in the journal this morning as we talk about that, julia boorstin will set it up. >> good morning, carl. facebook is in talks with banks to develop participates to give consumers access to account information through facebook messenger app. facebook saying they talked to jpmorgan chase, wells fargo and others, these partnerships would be focused on messenger and not on the facebook app and data sharing would be to give consumers access to information, not for ad targeting or data mining purposes. facebook saying it has similar partnerships in place with american express and paypal. it makes sense that facebook would look to this kind of valuable information that consumers want frequent access to to make messenger more engaging and valuable in light of slowing user grope for twth.

it could be tough to overcome privacy and data security concerns, following the cambridge analytica scandal that gave access to 87 million facebook users' data without consent. guys, back to you. >> julia, thank you very much. kara, facebook is a topic you have been writing about in the last few days. >> yeah. >> i have to ask you how much reaction you got to the michiin column in the times. >> quite a lot i was voicing things a lot of people feel, the price we're paying for social networks and something i talked about here a lot as you know, carl, the idea of responsibility, of accountability, the idea of being more mature when you think of these things. then you look at apple looking at a decision on info wars clearly. i talk about the idea you can make value judgments at the companies without aggregating values you have around free speech and ability to communicate. >> kara, you made the argument

it seems to me in this column that facebook and other social networks like it are not on balance good for society mark zuckerberg says there are bad actors, but look at all we've done for you, we connected the world. you're arguing it is not unnecessarily on balance good. >> no, what i am arguing is it is not all good. that's the story we had far too long and this damage that's happened has a price for society and we're all learning, as the social networks, not just facebook, it is google, youtube, twitter, as they sort of struggle to figure this out, society is damaged and there's a price for it, and that's all i was saying i used a sharp term which is digital arms dealers, and i don't mean to say they did it on purpose, it is that it is not thought out enough, policies aren't thought out enough, and we're seeing the effects of it now as things become so central to our lives the same thing around the financial story in "the wall

street journal how much information do we want these giant private companies run by essentially single people to have. i think that's a good thing to debate as society and an important one. >> kara, just to dig into that point more, coming off the heels of your podcast, it was a fascinating conversation with mark zuckerberg, it seems to be one of the key factors coming out of that op-ed in "new york times" is this idea that maybe he's still somewhat naive, still sort of looking at glass half full in terms of how much power he has at the helm of facebook. >> right if you listen to that podcast, i tried several times to get him to talk about how he feels about that pressure and if he's thinking widely about it, and i do believe he is one of the things at the end, he has been having these dinners with, i don't know who they are, i am trying to figure out who they are, assuminge free speech

around false information, impact of using these things, loneliness, all kinds of things i'm sure he is talking about my goal was listen, people have to get educated because society is paying the price at this point. the question is the decisions they make have a great impact on a vast majority of the human race i want them to be more responsible and i don't think it is a big ask as far as i'm concerned. >> we know the damage done to the stock in the wake of the quarter. don't often talk about price action with you specifically, but do you think that's about the street reacting to raw metrics or do you think they're starting to wrap their arms around the puzzle the company has in front of them. >> i don't think wall street cares about anything but money user growth, i think it will impact their business as these places, not just facebook, i don't want to just focus on them, twitter, all the others, as they become cesspools of

humanity, people aren't going to use them as much at the same time, the tentacles are growing and growing. i don't mean to be alarming. but if they have this great responsibility and trust them with financial information and everything else, every piece of information, we have to think hard about what the responsibilities are when they get that awesome responsibility to have all of that information, and if the right people are in the right place and asking the right questions, putting the safeguards in place. and again, it is not that they shouldn't thrive as businesses but that they should be thinking hard because of the responsibility they have so i don't think it is the hardest thing in the world >> facebook, twitter, google, spotify. >> all of them. >> any company that's doing a good job in terms of how they're addressing and tackling this so far? >> well today apple had the announcement on info wars. took them off the platform took a long time, they actually just removed this information from the platform.

people can scream about free speech, believe me, i'm a first amendment backer to the highest, but the fact of the matter is freedom from, it is an old expression, freedom of speech does not mean freedom from consequence. if it is a government situation, it is very different, but a company, if there's something on their platform they think is not -- doesn't mean you can't be taken off the platform and apple is not the government or facebook is not the government what's interesting is what choices these platforms make and what responsibility they have. they have to think hard. apple today made a great decision >> didn't get to talk to you when apple hit a trillion dollar market cap, hit a record high today. >> yes. >> we talked about some of the lessons from that valuation. one was that hardware matters, despite software eating the world, you can get a valuation without catering to all price points by staying at the high end. the third was argued that

privacy gets a multiple. i wonder if you think some of that number is because of the stance coke has taken. >> it added in there, i don't think it is the number one thing, it is a great product and people like it that's pretty much the basics of it it is beautifully done, they make missteps, there are some issues like the battery or whatever, but fact of the matter is over a long time this group of executives, this company has hit it on all cylinders in their products and it paid off over time with this valuation, which is quite low if you think about the multiple, pe ratio and things which is fascinating if you think about that i think it is a really great product and the thing with facebook and anything else, the thing that's going to bring them down is a bad product or product people don't want to use i think that's what you have to be thinking of all the time. in apple's case they have a lot of taste, they have a lot of values they're bringing to it, trying to stick to and again, they don't always

succeed, but overall they succeed more than other people i guess. >> and they've got enough cash to sustain a lot of time without a huge hit a couple things struck me about apple hitting a trillion dollar market cap one was unlike other big companies with big valuations, they haven't done any huge revenue adding acquisitions. they did this organically and did it through distribution, the retail strategy which seemed crazy at the time but has paid huge dividends, and vertical integration which allowed them to extract maximum profit from their product line, on the chips end through tying the hardware and software together. a lot of people, me included when the iphone came out thought this can't work. microsoft and intel have shown you need to focus on one piece of it, letting an ecosystem have the rest apple said uh-uh

>> it is called taste. they're selling their taste to the human race essentially if you think about it this is what we want to offer and this is what we have to give and if you like it, you like it, if you don't, you don't. more often they've been right than wrong which is always a good thing in life in general, and in terms of the products, they work beautifully. i spent a lot of money on apple. the other day i was in the store. i'm thinking of my son, he recently was using spotify forever, but just switched to apple music. when it first started, i was thinking he will never leave spo spotify, but he did. that's what's interesting. the product gets good and people use it i don't think it is that difficult a thing to think about. it is very hard to execute and they're beautiful executers of these things. and deserve this valuation others are coming, google, amazon will probably get up in those numbers relatively soon,

in the trillion dollar club i guess. >> you took the question out of my mouth we had the point that she expected amazon to hit a trillion before apple. my question is is this the first of the u.s. companies to hit a trillion dollar market cap >> yeah, i think they're all going to do that, they're all going to get to those levels because they're integral to our lives which brings us back to the beginning. they have enormous responsibility with this much power and financial power. people that run these companies have to think harder about the products they make and the impact they have on society, whether it be all kinds of things whether it creates addiction, whether it is stealing your information, whether it is privacy. these companies with these trillion dollar valuations all have responsibilities well beyond just what wall street wants from them. i think society, especially millennials expect that going forward. >> we're going to hear more from

those people when they testify in front of congress in a few weeks. that's going to be interesting >> yep twitter will be there. >> congrats on the times gig as i said to you privately a few weeks ago, you certainly came out of the gate charging kara swisher, of course. >> this week, wait until this week this week is good. >> cliff hanger. >> see you later. president trump weighing in on tariffs and its impact on the economy saying they're working, quote, big time. senior economics reporter steve liesman joining us with fact checking on the president's tweets steve? >> thank you yes, some controversial comments he said tariffs are working big time well, the trade deficit is rising, could be up by as much as $100 billion. the dollar is strengthening, offsetting some tariff impact. only mexico looks to be close to a trade deal some noises from europe. china looks to be digging in he said every country on earth

wants to take wealth out of the u.s. always to our detriment. every country trades for its own benefits, countries don't trade as much as companies and individuals trade. trade is not seen as zero sum game, it is supposed to be good for exporter and importer. we send them dollars, they send us goods, not necessarily to our detriment. i say as they come, tax them, the president said actually it is u.s. consumers and companies that mostly pay the tariffs costs in higher prices it means he wanted to say it means jobs and great wealth. if you go to the next screen there in yellow. mos most economists say tariffs reduce jobs 5 to 1 every job saved there would be five lost. he said because of tariffs we can pay down large amounts of the debt tariff revenue is in billions, maybe tens of billions

the deficit is in trillions. .1% maybe. tariff revenue offset by slow u.s. growth, not to mention the $12 billion bailout of the farm business and last one we will make better trade deals for our country. that is possible unclear at this point. that could prove some of what the president is saying is correct. we asked for a statement they said trading partners such as china used state subsidies and other measures to give goods unfair advantage over others tariffs give foreign companies incentive to make and sell goods in the united states moreover, tariffs are intended to get others to change unfair behavior this will lead to better trade deals for american businesses and workers. additionally taxes on unfairly subsidized imports are also a sort of revenue. i guess all of that might be true in the future, but it is a little hard to see how it is true now, jon. back to you. >> steve, you talk to a lot of economists what's the reaction when the

president tweets something like this that gets such a nuanced analysis from you, sort of shrug and think that's the president >> almost nobody agrees with president trump or his single adviser, pat navarro's take on trade. i guess larry kudlow may have come around to endorsing the view on trade, but almost everybody believes the president is wrong on trade. i guess they do provide a certain concession that maybe he will be proven true in the future if these are actually negotiations, but the big problem i hear, john, it is unclear what the president's motives are. if it is the idea that he has become a free trader, the man has a potential positive most don't actually believe that they need he needs to erect trade barriers permanently and that's where the danger is for potential long term damage to the economy. >> we'll continue to watch it.

steve liesman, thanks. >> sure. when we return, still troubled by tech why one of our next guests says the sector is being overvalued more "squawk all" ilahd.eystl ea imagine traveling hassle-free with your golf clubs. now you can, with shipsticks.com! no more lugging your clubs through the airport or risk having your clubs lost or damaged by the airlines. sending your own clubs ahead with shipsticks.com makes it fast & easy to get to your golf destination. with just a few clicks or a phone call we'll pick up and deliver your clubs on-time, guaranteed, for as low as $39.99. shipsticks.com saves you time and money. make it simple. make it ship sticks. at fidelity, our online u.s. equity trades are just $4.95. so no matter what you trade, or where you trade, you'll only pay $4.95. fidelity. open an account today. you'll only pay $4.95. that's confident. but it's not kayak confident.

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but facebook and netflix have both had weak quarters that sparked significant selloffs, rbc capital warning the run is coming to an end you are a bear on tekch in a tie when apple hit a trillion dollar market cap fair to say you've been wrong on big tech so far but feel like things are turning your way. why? >> we actually went underweight in april, think the call was early but don't think we're wrong. we're very regimented with the process. we're seeing problems in merging streams and signs of deceleration earnings have been fantastic we're noticing that there's

deceleration in rate of revisions and sales beats and that's important that's one of the reasons people are dumping into this space for six or seven years was superior earnings growth story. that seems like it is starting to fade. >> faang stumbled, adds to your argument in terms of where you think valuations are less reasonable, more reasonable, services. >> if you look at pe multiple, you hit post tech bubble valuations at the mid point. we're starting to retreat. when you look industry by industry, the two that jump out as problems are it services, and also the software space. we think internet had a crowding problem, had deceleration in earnings momentum that was also a problem coming into this reporting season, but the big valuation problem isn't sitting in internet stocks. >> paul, too early to call a top here >> i think too early to call a top, particularly when you look

at different stocks that are out there. what we tend to see, and in our own portfolio, we see a barbelling of what we see happening in silicon valley. look at chegg and others, being repardoned for it in the marketplace. you look at other companies and stocks, some of those guys will get tired. the pace is pretty brutal and folks have to be able to keep up and keep innovating, keep the rates up. >> when you say that, when some big tech names say it is slowing, are you referring to netflix, the other underperformer in the past month? i know you're an investor there. >> we invested in netflix in 19 1999 and have been big fans.

i don't watch companies week to week or month to mock. we're early stage investors. when we invested, there were probably 30 people in the company. i don't know in terms of different aspects of the most current reporting and so forth however, when i look at a company like netflix or a chegg, sun run and others out there, they're disrupting trillion dollar industries with incumbents growing at 1 or 2% a year whether or not those companies have a stumble along the way, they're moving into the right and we still see a ton of up side in those type of companies. >> when you're looking at the areas in tech that are safest, hardware and equipment you say just from a valuation perspective look best. growth wise, are they really that safe? we get a downturn in the market, you think investors will rush there or stay there? >> we see on tech hardware and equipment space in particular is

it looks a little less crowded than other areas we worked through work on individual names earnings momentum is positive. it is the strongest group on the earnings momentum indicator. so we think we have a little safety angle from that perspective as well. flat out, valuations look better we have to sort of ask why do valuations matter. they didn't for a long time and i think when you have action theresa m - extreme valuations, they're priced on perfection when it doesn't come through, they're punished mightily and you don't have the same risk in the hardware and equipment space. >> paul, for a long time it was hard to separate the narrative of tech's long term growth from china and i wonder if you came out with less than optimal outcome with trade talks, how much is at stake, the possibility of china growth over 10, 20 years if not taken off

the table, cut significantly >> yeah. i have to believe that over a longer period of time these tariff kfrconversations and tra issues will get settled. in the near term it is turbulent, frustrating for us in silicon valley we run a massive trade surplus all over the world but also invite people from all over the world that are smart to come here and start companies that model seems to work really, really well. the notion of going around, selectively trying to disadvantage one company or one industry from another in a tariff situation is unpalatable generally, but if i look at that and move to what we see in the early stage, we're seeing tremendous amount of excitement. you look at the ai, ml space, there's tremendous amount of innovation happening up and down the software stack with companies. if looking at consumer market

places, we see a lot of activity in growth there, we're in a company called rover, peer space and others we see tremendous amount of innovation here. what we tend to see happening, lori is doing a good job of capturing this, occasionally what we see is a terrific long term path towards innovation and growth, then you'll see temporary -- stocks perhaps get ahead of themselves a bit. >> lori, paul, tech bears out of hibernation. see how long the season lasts. thanks, guys >> thank you. when we come back, speaking of tech today, intel is the laggard on the dow, got cut at barkleys firm sees little advantage for the chip maker's products over competitors. shares down a little more than 1% dow managed to reverse all declines on the day. four points from the flat line more "squawk alley" is nex t. you always pay your insurance on time.

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softbank out with earnings, boosted by a 49% jump in profit, thanks to walmart in a way, and gains in that massive investment fund josh lipton is in san francisco with more. >> jon, softbank is known as a telecom giant. but investment acumen is driving earnings the company said operating profit in the recent quarter surged nearly 50% to $6.4 billion that was boosted by gains in the $100 billion investigativision . the fund has invested $27 billion in 29 companies from arm to slack to nvidia he doubled down on singularity

>> big strategy wise in summary i would say ai is everything and strategy to be prepared for that we established softbank vision fund in the past one year we have made investment into these companies. just a year ago there was nothing. >> as cnbc's alex sherman reported, there's now a team of some 200 people to target potential investments but the driving force behind the investments is that he meets in person with every founder of every investment, sometimes several times, including last minute trips to tokyo for founders who get the call.

he wants to see you tomorrow, they are told. his other stakes, sprint and the $27 billion merger with t mobile he is saying they're working hard to move the merger forward as it builds 5g strategy. >> sprint is up 8% on a "new york post" story that they may shift sentiment to think they only need three carriers to be competitive. josh, thank you. let's get over to seema mody >> european markets closing mostly lower to start the week with the banking index leading the way to the down side currencies are a big part of the discussion uk pound hitting an 11 month load the international trade secretary saying in an interview sunday that risk of no deal

brexit has risen 50 to 60% in the past few weeks i want to draw your attention to turkish lire, hitting another record low after the trump administration said it was reviewing turkey's duty free access to the u.s. market, a move that could impact $1.5 million of imports. the currency lost a quarter of its value in 2018. meanwhile, the tech stock of the day, iwg plunging more than 20% after abandoning talks of private investors. the world's largest provider one of the biggest rivals in the united states was in buyout talks since the start of the year that stock seeing the worst day since october of 2017. carl, back to you. >> thank you very much let's get a news update from sue herera back at hq. >> hello, carl and everyone. overseas, a major explosion on a

highway in italy left two dead and 60 wounded a truck caught fire after a car accident, causing the explosion and blasting a crater into the road the italian news agency says the tanker was carrying liquefied petroleum gas. a u.s. delegation led by senator rand paul meeting with russian lawmakers in moscow. paul expressing hope for closer ties between the u.s. and russia >> we are in close proximity to russia in syria and other places and i think it would be a very big mistake not to have open lines of communication part of my trip and purpose to come to russia is to say we need to have dialogue lance bass thought he bought the home feature in opening and closing scenes of the brady bunch, but the singer posting the deal fell through. bass wrote he was heartbroken to learn a corporate buyer wanted

the house at any cost. it was listed for 1.9 million. it was purchased in 1973 for 61,000 you could say they weren't in synch. that's the news update this hour back downtown to you guys. morgan >> thank you, sue herera >> you got it. coming up, pepsico ceo stepping down after 12 years at the helm how long should ceo tenure be. stay with us

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after 12 years, indra nooyi is stepping down from pepsico october 3rd. she will remain chairman until early 2019 joining us, group chairman and cnbc contributor and bill george, also a cnbc contributor. good morning to you both fred, lots of questions about what's next for pepsico. do they spin off the bottlers, do they split up but at the same time with players like amazon and walmart asserting themselves in the market, there's an argument for scale. how soon before you think we see which way the new ceo goes

>> i think this is a very important question every time there's a transition because first of all, a ceo gets to make their big footprint over ten years. in this case, a little more than ten years. but the environment is changing very fast. in fact, rate of change in the environment is so fast, you're seeing a lot of ceo turnover because rate of change is so fast in this case, distribution channels are changing dramatically and people's tastes are changing and what used to be backward looking market research s has to be inductive market research. this is a delicate area and the new ceo should be forward looking and make some bold moves as early as possible in his tenure >> bill, how quickly can the new ceo act given that she was so visible, so well known in place so long. should he move quickly for

changes or perhaps wait awhile to get his feet under him? >> first of all, nice to see a ceo going out on top we've had so many going out under stress here's one that's done an extraordinary job. i anticipate that ramone will carry on the vision. they worked together for years in europe, he is a lifer for pepsico. i don't expect any radical change in terms of the question fred raises and distribution channels, i think that argues strongly for keeping the company together in the case of walmart, that's been a big help having a lot of clout with distributors, gets more attention to the brands i think they have 22 brands over a billion. in the interest of consumer taste, this is exceptionally important. she was ahead of her time. she saw this coming in 2006. i think ramone should continue to move faster with the change

in consumer taste of the millennials. you have to meet the baby boomers' taste, but i anticipate he will continue on this course. it is a very positive course the other thing, this is a true global team, probably the greatest global team so building that team out, having a global franchise that can penetrate the emerging markets would be high on my agenda and i think they've done that, but need to continue to get deeper there >> fred, just to that point usually when you see a successful ceo say they're going to step aside, you see the stock sell off pepsico is up 1.5% is that an investor vote of confidence in the new ceo? >> absolutely, as bill said, this guy was the ceo in waiting.

he will make the right transition he knows about the company, he knows the future my only advice would be that there is a lot of change in the environment and since his tenure is going to be measured five years out, seven years out, ten years out, the earlier he makes fundamental moves, the better, especially since he's already inside the company, so he needs things that need to be changed. >> bill, any reason to think he thinks differently than indra on whether drinks and snacks belong together >> no, that's got deeply embedded in pepsico. not just indra, that goes quite deep i think nelson is coming around to that. he is focusing on procter & gamble and ge. the investor sign of confidence is there aren't a lot of problems, and they're moving forward, and aren't going to make radical change. today is a global market, you

have to move aggressively. if i were talking to ramone, i would say move faster to get to new brands like naked juice and things that the millennials want that can become billion dollar brands and move aggressively in the emerging market. that's where the real future opportunities will lie. >> indra herself has said she would have perhaps moved faster if she had it to do again. whatever the new ceo does will probably look like change. >> you have to give her credit for being tenacious, with standing a lot of challenges she can be charming but she can be very strong and it takes that to run a global company and to go for 12 years these days >> absolutely. >> not so common i hope that we can -- i hope her voice will be strong in leadership circles and diversity circles. i hope we aren't going to see her playing golf in florida. nothing against florida, but

leading in the way fred has been, very involved. i think it is important that past ceos, being involved. i hope indra will be that kind of thought leader, influence leader in society, we need them, especially after her great record. >> we will see thanks again, guys >> thank you very much. how tariffs are impacting transport stocks but first, rick santelli, what are you watching today >> treasuries continue to back away or do very little activity, 3% or higher we're going to discuss one of the reasons why after the break. alerts -- wouldn't you like one from the market when it might be time to buy or sell? with fidelity's real-time analytics, you'll get clear, actionable alerts about potential investment opportunities in real time. fidelity. open an account today. that's a good thing, but it doesn't cover everything. only about 80% of your part b medical expenses.

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here's what's coming up on the halftime report. with earnings season almost behind us, what will it take for stocks to set a new record high? only 1% away now. and two of our traders own intel. what do they think of the downgrade? and wall street heavy weight jimmy dunn is with us exclusively, talking markets and the huge achievement he reached in the game of golf. all at noon on half time, carl see you in about 15. >> we were just talking about golf see you in a few minutes. let's get to the santelli exchange hey, rick. >> good morning, carl. 2018 is shaping up to be an unusual year you take away the month of january, the market has been in a confined range

the month of january saw yields open up and start to rise. as a matter of fact, you know what the lowest print of the year was the first print of the year, 241ish that was basically the first print and the market started to accelerate the point of it is this weekend whether reading "the wall street journal" weekend edition or any newspaper listening to any major news cast, a lot of stories focus on the administration approach to foreign policy and trade, specifically china. the news didn't read or sound good as a matter of fact, it sounded as though there's very few that believe that we're going to have a positive outcome as i look at the marketplace or compare our market to the chinese market to pick one or to some extent to some of the european markets, what i see is that the u.s. is overperforming. i think it is not a reach to say investors have given a wider amount of space to the

administration with the view that they believe positive outcomes can still rise. how else can we explain the fact that equities, most negative thing you can say about equity markets is they fail to take out highs in an aggressive fashion, the kind of aggressive fashion we saw in early 2017, or even halfway through or for most of the year and what i notice as we go to the charts on interest rates is that for 2018 so far if you take away that month of january, pretty much the whole year other than very little activity above 3%, by the way, including the last one we've had, we had 11 closes at 3% or higher, and several of those are within a half basis point i guess what i'm saying is big periods of consolidation really fit along with what's going on in equities. the point is how much higher can interest rates go if the

investor's notion of positive outcomes is correct. i talked many times, there's a lot of turnstiles of buying going on in the treasury complex many for global reasons. in terms of rates going up, the tunnel is getting more narrow. if you believe this administration can come up with good trade policy wins, i really do think that could be the missing ingredient to really doing a whole lot work above 3%. jon fortt, back to you >> all right, thank you, rick santelli as we head to break, take a look at shares of wynn announcing a settlement, announcing a new board chairman. and elaine wynn will not seek a takeover this goes back to 2015. and the trade war implications for transports. icbrk.tea wk alley" afr quk ea i woke up in memphis and told... (harmonica interrupts) ...and told people about geico... (harmonica interrupts)

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or just to know which way you're facing right now. however you use it, your wireless bill is about to cost a whole lot less. ask how you get xfinity mobile included with your xfinity internet. so you just pay for data -- by the gig or unlimited. saving you hundreds of dollars a year. plus, get $300 back when you buy a new smartphone. xfinity mobile. it's simple. easy. awesome. click, call or visit a store today. welcome back shifting our focus to trade, president trump tweeting about tariffs oaf the over the weekend saying they are quote working big time, but arguing tariffs are hurting some of the transports or have the potential to joining us for a closer look is david ross dave, good to see you. >> thanks, morgan. >> so tariffs are taxes and taxes are bad for freight demand that's the title of this report out. we've got earnings season for

transportation companies it's largely behind us now are e seeing signs of digging these companies? >> no signs to date. this is all the potential impact you know, if the tariffs, if they last for a while, what might happen we've only seen a small amount of tariffs earlier in the year as far as the trucking companies are concerned, railroads and others that are raeported, don't impact earnings. >> so in light of the potential risk for tariffs on this group, where would you, where do you lie? what stocks are you telling investors they should be taking a look at? >> so really one of the first things we do is tell investors to step outside even the transportation space because even a lot of these are going to impact companies in all parts of the economy. there are a lot of companies with supply chains around the world. that are global.

complex. big network effects that happen when you impact trade flows via tariffs. so it's going to impact transportation companies in what move, but it's going to impact the companies first even before it hits. >> so david, how do you factor in which way this is likely to head potentially, a big impact on the industry that you cover, but baseded on what the trump administration does, what are the sign posts on which way this is headed? >> it's very interest because we're dealing with a couple of signs here that aren't playing by normal rules. i would say. negotiation. china has a very long time horizon. they came out with a statement over the weekend saying their people are willing to take some pain in this trade war i doubt u.s. politician could ever come out and say our people are willing to suffer for a number of years to win trade war. they would not get re-elected anytime soon so i think it's a little bit of back and forth we saw how europe caved quickly

with the threat. china is a different animal, so as it goes on, it would impact china and impact the u.s. because when you look at tariffs, trade is two ways so if we look at impart tariffs, it hurt u.s. based company, consumers that are paying for those goods. the tariffs china's putting in hurts chinese importers. so it's something that's you know, broad reaching and you know in the further along this goes, the more serious an impakts it's going to have we're watching really in terms of sign posts, how much goes through and how closely is each side going to be sticking to its guns something we don't know right now. >> really quick. july rail carloads up 3.5. intermodal up 6.9. what would those be if none of this was happening >> they would be about the same. you know, the rail carload

volumes are indicative of a strong u.s. economy we have right now that's threaten ed by these tariffs. intermodals are stronger not only reflective of import, but the tight truck capacity we have in the u.s. where there's not enough truck drivers and you guys have had a lot of segments on this. that is driving cost of you know, transportation higher, trucking higher, but also because you can't find a truck to move your goods, you might have to go rail intermodal that's driving volumes even higher now >> and the railroad contributed to a profit jump over the weekend as well. david ross from steeple, thanks for joining us today >> thank you >> dow's green up 18. "squawk alley" is next

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that's the icing on the cake... i love cake. finding the right aarp medicare supplement plan for you could be just a quick call away. so...call. a lot of people watching facebook today on this report they are looking into potential partnerships with major banks. nearly 4% gain the best day going back to april 26th gives you sense of how rough their spring and summer has been >> turns them into a fin tech play overnight i think their question is what is facebook messenger really we understand what a browser is

but privacy wise and information getting stored, what is messenger? >> do you want that much more financial day the in the hands of facebook given the debate we're having >> amd up 4% on the downgrade over intel and with intel coming off the lows, dow's up 23. to the judge welcome to the halftime report i'm scott wapner top trade, the last 1% what it will take to lift stocks to the new highs now that earnings season is wrapping up m here josh, steve, stocks are coming off five weeks of gains jim, you say we're in no man's land what could propel us to these highs? >> the only thing is that retail earnings are going to come up and that could be an interesting tell as to whether the consumer is hanging in there despite these trade issues, but honestly, i mean i