thank you to joe and becky for some great interviews this morning. it is not even 6:00 in the morning there. >> thanks, andrew. >> 6:00. >> not yet >> you get to take a nap, joe, before you play golf >> i got to go right out take the makeup off and out. >> good luck, guys we'll see you next week. "squawk on the street" begins right now. ♪ good friday morning. welcome to "squawk on the street." i'm carl quintanilla with jim cramer and david faber stocks composed their first three-day loss of the years if we close at these levels the president and xi will not meet by march and jeff bezos in the news with his bombshell allegation against ami europe is soft ten-year yield at 2.64 road map begins with the bezos broadside hit on "the national

enquir enquirer," alleging the tabloid tried to blackmail him. >> with compromising information, in fact photos as well plus, we're on track for three straight losses as carl said stock futures pointing to another drop at the open on concerns about trade and global growth. >> and a tale of two toy stories, hasbro sinking a big earnings miss. mattel soaring boosted by strong sales for hot wheels and barbie brands the big story involving jeff bezos today, blasting the publisher of "the national enquirer," accusing it of blackmail. he says a lawyer for the enquirer threatened to post what he texted to his girlfriend. bezos's published e-mails he says are from the enquirer to his attorney, describing the graphic sexual photos that would be published if bezos did not

comply cnbc is has not independently reviewed the e-mails we reached out to amazon and ami. ami declined to comment. fair to say it is overshadowing any corporate news we might have today, guys. >> yeah. i'm struggling with stocks down. >> amazon is down. >> yeah. it is not -- there is a lot of ramifications. obviously people -- what are people saying about the stock? they're saying, you know what, this is just really bad. soon to be ex as we know will be a big seller that's what people are saying. what do we know? it is -- can i say it was brave he went against him? typically when you allegedly are blackmailed, you keep quiet. this was not one of those moments. >> i'm seeing a tweet from thomas friedman, well known columnist of the new york times who said he thinks mr. bezos should be nominated for the 2019

pulitzer prize for public service giving his willingness to take on and expose the national enquirer, enormously important act of civic journalism, what he's saying. >> okay. i'm not going to give him the nobel peace prize. >> no, he said pulitzer. >> levity. this is a hard story to talk about. i think everyone has to read this and make their judgment, but as someone who is a man, a dollar sign represented -- >> we should make the point as we do oftentimes, mr. bezos, he makes very clear in his post owns "the washington post" separately and completely apart from amazon. he said he knew he would potentially make himself a target by ownership, but he also said when he's hopefully as old as 90 years old, he'll look back as one of the most important and most significant things he ever did in his lifetime and so gave no indication that he was not fully aware of what conceivably

would come his way as a result of that ownership and didn't even part out to the attacks he's received from the president as well as a result of their coverage of the trump -- >> the post is a critical institution with a critical mission. my stewardship of the post and my support of its mission which will remain unswerving, he says, is something i will be most proud of when i'm 90 as david points out if i'm lucky enough to live that long, regardless of any complexities it creates for me. goes on in the post to say, i decided to publish what they sent me, despite the personal cost and embarrassment they threatened if in my position i can't stand up to this kind of extortion, how many people can. and underlying all of this is this suggestion that, i don't know, this will be flushed out in the days to come, were the texts on ta s obtained via a go agency >> that's what i felt. someone was leaked -- someone was able to get this there is no chain to --

mystified by how they got his text >> they have the long time private investigator, he had a relationship for 20 years, on the case, working on it, trying to understand where they came from but the key point i think is that he's obviously saying that this is not journalism that they do it is extortion. >> well, they thought -- i love this not in the way they like, any personal embarrassment it may cause me takes a back seat because there say much more important matter involved. i like it he says he can stand up to these guys it was about -- he uses the phrase, the godfather phrase if they made him an offer that they thought he couldn't refuse, and there is no horse in the bed here he just said, hey, no. >> says the same -- mr. pecker,

the ceo, has -- >> have you heard of that before >> we have been talking about this for a long time of course i heard about it, only because of this. >> the phrase. >> but -- >> it is still astonishing to me because they targeted this it is so obvious they targeted him. and it reminds me -- look, i will date myself here, but nixon had an enemies list, okay. i had a friend who was -- he was number four on the enemies list. he was so proud. he was so proud that he was targeted by nixon. i wonder whether jeff is going to say in the end, i am so proud i was targeted by a chain of people that led to someone else. and he is rich enough to get -- >> targeted by trump is that what you're -- >> i don't know. i don't know >> did tweet some things that -- >> called him jeff bozo. >> i would like to know why hasbro is down 50 cents. >> we're going to move on.

>> fortunately -- >> we have the bandwidth to cover both stocks on track to extend losses from the thursday sell-off on concerns about china trade talks. the president says there are no plans to meet with xi before the march 1 deadline as you know and heading into today's session, the dow and the nasdaq on pace for a seventh consecutive week of gains. if we have a weekly loss, it would be the first of the year >> look, there was a -- you have to read everything today today i was all over politico. i did everything other than -- other than read the wichita eagle beacon this morning. they rejected me in 1977 i can say whatever i want about them the political article basically says that they're -- that the president will sign an order next week that is going to make it so you can't use the huawei, not that anyone was doing it here. >> he wants to get this done before the mobile world congress. >> i think that is amazing i think if you're negotiating with the chinese, you don't then take on one of the company that has 100 -- one of the largest

companies. that's not -- maybe it is kind of the art of the deal, remember when he wrote that in the long hours of the night, he typed that >> tony swartz behind him. >> tony swartz was involved, that's right yeah it is just -- it is a tactic that i never really heard of, listen, i'm not going to stab you in the back, i'm going to stab you in the head how about a deal this is, again, the peter navarro wing, the white house -- which says it is not about soybeans it is not about them buying purell, it is not about head and shoulders, but creating a head and shoulders pattern. >> then the journal, arguing that the white house is under pressure to get the chinese to sign anything. they need it for the economy, for the markets. >> takeaway is a positive one if you want to believe there is going to -- for the market. >> i don't think he really cares about whether boeing is going to go to 500 or 300 >> but the question does become again back to the idea of

compliance and lighthizer seemed focused on it again, according to the journal's reporting on how you actually will get them to comply with whatever it is that he's agreed to which is key because of the past there had been agreements made in some fashion or other that have not been complied with the larger issue, you sometimes talk about the chinese people as like it is a monolith. >> people are different from the government. >> okay. >> i'll tell you, what i heard for years is the level of lawlessness in china is it is one of its most defining features and when xi came into power, there was a reason the first thing he did was crack down on corruption. >> you gave a case of johnny walker blue and you got the contract >> the idea that you're still going to be able to, even if you agree to it, crack down on all events and counterfeiting and everything else is a very difficult thing to do. it is an enormous country with still a lot of rule breaking. >> you know it better than i do.

i've never donned a surgical mask i need to know, how much is really run by the military >> i don't know. i try to -- >> if you -- i think you'll -- >> i happen to be there four or five times, doesn't mean i know what's going on. >> you're one of the -- if you can't take them on, i don't know who can. when you're 90 years old, you look back and say, i told jim that it wasn't the military. >> okay. >> hopefully i'll get there. >> please don't send me a selfie -- don't send me a selfie with -- how about we look into that what is the point of that selfie that -- >> we'll talk about "the washington post" and the good old days and reminisce about you. >> i like to talk much more about all the president's men, but instead i'm talking about all the president's selfies. the selfie -- can you answer me this, david, when you're 90, what is the fascination with taking certain pictures of certain parts of your body >> i'm sorry you want me to really say that >> sorry >> i'm reading a statement from

american media. >> reading about the knicks playing the sixers can we move on >> ami has a response to bezos' post i'll read it american media believes fervently it acted lawfully in the reporting and story of mr. bezos. at the time of the recent allegations made by mr. bezos, it was in good faith negotiations to resolve all matters with him nonetheless, in light of the nature of the allegations published by mr. bezos, the board convened and determined that it should promptly and thoroughly investigate the claims upon completion of that investigation, the board will take whatever appropriate action is necessary >> all right statesman-like i don't know confounding here how about -- what do we think about the s.e.c. getting involved are they trying to drive amazon stock down >> why do you say that >> well, i mean, has a negative impact on stock. >> who is trying to -- oh, american media >> i wonder if they're short the stock. >> i will defer to you on this

why would this have any sort of impact other than the distracting nature which, by the way, doesn't seem to -- that it would have on the executive. >> isn't the issue the dumping of the stock by his soon to be ex-wife? the stock is down huge on that >> we have asked that question ever since his original tweet about the divorce. >> stock has been looking bad ever since. >> no one said it is a legitimate liability for a shareholder. >> i said it >> you believe it? >> i think people are worried that she'll blow out of the stock and that there is more of a reason i think you should focus on the fundamentals it is not like it is all sorts of new stock that stock is in the stock now, the quarter -- >> she's got 8%. >> i'm more worried about india. >> i don't know what she would do with it all $90 billion worth of stock. >> maybe she likes -- >> you don't think there would be a short-term dip. >> she buys stock in the open market bingo. >> she'll sell -- >> 1800, here we come.

>> i struggle because we are about stocks and i'm trying to find -- i see amazon going down. so in the premarket -- it has been going down since the tweet. i feel like it is important to point -- more focused on that than the anatomy focus the selfie anatomy focus you want to talk about so badly but refuse to do so. >> i think it is a fascinating story. very rare you see something like this and it is worthy of discussion i know you agree as uncomfortable as it might make you -- >> i can talk about this for the next 50 hours. we probably have to move on and talk about mattel. >> since the original tweet about the divorce, down 4% i wonder how that compares to -- >> it is killing f.a.n.g >> when we come back, we'll try to get to stocks more directly >> he's going to be okay he's going to be okay. >> a tale of two toymakers. >> i'll send you a picture you won't believe. >> mattel is up, hasbro is down on holiday quarter earnings. details on both.

also ahead, shares of expedia off to a strong start for the year, better than expected earnings adding to the upward momentum we'll talk to the ceo. week to date, dow is up 105 points we'll try to hang on to that this friday. more "squawk on the street" in a minute at&t provides edge-to-edge intelligence, covering virtually every part of your healthcare business. so that if she has a heart problem & the staff needs to know, they will & they'll drop everything can you take a look at her vitals? & share the data with other specialists yeah, i'm looking at them now. & they'll drop everything hey. & take care of this baby yeah, that procedure seems right. & that one too. at&t provides edge to edge intelligence. it can do so much for your business, the list goes on and on. that's the power of &. & when your patient's tests come back... you should be mad they gave this guy a promotion. you should be mad at forced camaraderie. and you should be mad at tech that makes things worse.

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a pair of toymakers among the big movers mattel up after surprising the street by posting a quarterly profit, revenue beat estimates helped by strong sales of barbie products and hasbro moving lower after missing with its holiday results. the company cites a number of factors including the liquidation of toys "r" us, gaming down 22 choppy consumer in europe. jim? >> yeah, i mean, partner brands off 20%, that's very important declines in "star wars," franchise brands, which have been so strong, they did have some revenue gains in monopoly, really amazing franchise keeps coming back. but others were down and yet why is it not down more? bri brian goldiner has a vision of what can happen. this is one where there is a new innovative cycle out for nerf. it is huge and lots of breakthrough

innovation power rangers are going to hit people say it was next quarter they'll do it. more important story is mattel that's a comeback like i can't believe. a lot of people have written off mattel because of the balance sheet. wow. i don't know i like this very much. mr. christ did a good job, chairman and ceo of mattel, he's new. he knows the entertainment business hot wheels growth sales up 9%. barbie, look at this, increased 12%. people thought barbie was done for. i really like this $1.25 billion revenue versus 1.43 i cannot recall when mattel last had upside surprise. i can't recall. >> you go back a long way, of course, you can recall that mattel was once far larger than hasbro that has been reversed market cap, not far from pre-time of mattel shocking what has gone on at mattel over the last five or six many years and continued speculation that maybe the two would sometime try to get together again.

>> always. >> even though antitrust one would think would be an issue. one of them changed their reporting of earnings and that sparks new speculation people went out and bought call options on mattel only to find, of course, nothing to it rewarded if they held it because the stock is up so much on earnings >> i don't know. >> is it about partnerships? frozen 2 will impact this year and next. >> partnerships for hasbro than for mattel mattel had long term franchises that people felt were run into the ground i've seen this mattel team, this new team they're dealing with a lot of really, really bad legacy work i thought it would be at least another year i did feel that at one point they should do a convertible or actually raise capital here take that balance sheet issue off the table and people, they did -- if they did a 50 million

shares, price in at 13 and would be at 20, i don't know, not 20, but up at the end of the day, because you need to get the balance sheet risk off that's how poorly it was run beforehand and they got a team that clearly understands the balance sheet is the issue. so don't get too crazy with this stock. they'll hit you with something, i believe. >> overall, for consumer discretionary, i see q1 estimates are down 14 for q1 >> geez. i don't know look, we have -- for every tapestry, which was bad, we have got a ralph lauren it is hit or miss. remember that chain? i think you have to own burlington, tjx, the dollar stores this summer i'm going get him to my dollar tree for july 4th. >> you say this every year. >> he never does it. he's too busy going to, i don't know, ferragamo, hermes? >> i don't do a thing.

>> how did you get that gorgeous jacket >> i sit and -- >> how did you get that jacket i'm book ended by fabulous looking men. >> thank you. >> that's true every day, though >> why don't you take selfies, you know, and send them to me, you know >> anytime. >> i'll do it right now. >> will get cramer's mad dash in a minute and count down to the opening bell look at the premarket on this friday don't go away. ♪ ♪ let's go from plans... to full-blown production. ♪ ♪ let's go from being on-call... ♪ ♪ to being on-line. american express can help move your business forward with loans, vendor payments and buying power. chat with one of our 4000 specialists and let's make it happen. the powerful backing of american express. don't do business without it. when did sleep become something that requires effort? with tempur-pedic, it doesn't. enjoy our most advanced pressure-relieving material

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next week we'll -- >> we'll alternate. >> last mad dash of the week micron >> sometimes analysts have to spoil a parade like the parade that micron had when it went through 40. goldman won't play no, they have to rain on it. they're talking about they have done deep dives and big research of when this single d-ram company, also has flush, the move lasts long up, and the move lasts long down, and they're just saying be cautious. there is no -- pricing is not getting better we believe the memory and the stocks could give back some of the recent stock gains if memory fund metals are weak in other words, too much too soon, david. so this has -- this is one of the reasons i wanted to switch this has to -- this is going to go -- they're thinking this goes back down. maybe even retest this low

the horrible low that we got in -- >> do you agree with that? >> no. >> you don't >> no. i think this is a comeback based on if we do get china. david, if there is no china deal, then goldman will be right. that's why this is so important. now that jay powell decided he didn't want to destroy the economy anymore, it is up to china. and lighthizer lighthizer and peter navarro. >> i got to come over here to do the tease. you can stay if you want all i'm saying is the opening bell is coming up. stay with us

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♪ each day, brings new possibilities. that's why you need a partner dedicated to helping your company reach its goals. u.s. bank -- the power of possible. you're watching cnbc's "squawk on the street" live from the financial capital of the world. the opening bell just under two minutes. busy friday, we covered bezos ami, jim and david talked about the chip cycle tony saginaki at bernsteinappleo be down 19, implying a material pushout in upgrade rates. >> tony, i think, has been very, very good.

i don't think there is any real expectation that -- but i would say that would mean that when i interviewed tim cook, when he announced last quarter, did say january was looking better i don't know whether -- how tony is getting his information, tony is very good but it would mean that the -- that as january goes, nothing goes and i really question that because i think that why would jim cook say that to me. >> yep >> why would he say it to me, january was better, unless february is bad. i don't know what kind of information tony has, but, look, it is no secret that things are tough. i'm going to come back to the same thing china was off almost 30% we get no china deal, if the president whacks him next week, then, yeah, tony will be right china has to come back. >> two times you said an analyst will be right depending on how -- >> china. >> mnuchin does in eijing. is that where we are >> mnuchin is a figure head.

it is all lighthizer and navarro. and people must recognize it that's what this is about. they have the president's ear. they have. >> the opening bell, the s&p 500 at the cnbc real time exchange at the big board, acquisitioncorp. celebrating its new listing and covetrus, a space you like. >> humanization of pets. it is still holding up in that quarter that was so good, they're talking about how well that division is doing. mr. frazer should come on, because i would like to ask him directly, why not spin it off and get more value he might say roy hit on every cylinder we have the best product profile there is i think they might i think key trud keytruda may b biggest drug of our lives.

i believe it works against every kind of cancer. >> it is clearly superior to optivo. >> absolutely. absolutely 100%. >> a lot of talk about the rally we had since christmas eve the s&p's inability to pop through the 200 -- is that meaningful >> i watch, like you guys, i watch scott show and melissa show, and they represent a very sizable group of people and it comes up constantly. i think it is in people's minds. i think that we are -- i'm still stuck on the idea, next week we have cisco we had chuck robins on this morning. cisco, a good quarter, we can get some tech mojo it is day to day semis were our lead. i did think that the banks would react better to what happened yesterday with sun trust and bb&t, which i thought was monument monumental we're okay if we get some good quarters, yesterday was a really tough day. some of the quarters were terrible today we got -- we had good

quarters >> not bad yesterday was notable. >> notably bad. >> double digit declines on a lot of stocks. none of them are huge market cap names. but they were significant. >> did you notice two stocks yesterday that were mostly given to me, grubhub and yum yum down $3 when we interviewed mr. creed. and then it finished unchanged grubhub down $16 and then the conference call starts and suddenly it is flat. so there are people who really are just scared to death those people worry about the 200 day and the pullback there are other people who say, listen, i'll take this case by case there does seem that we had this flood of money at the beginning and that seems to have dried up. we're about to get a flood of ipos in that space. >> post mates, speaking of the delivery space, reports suggesting a valuation of 18 versus 12 last october. >> if you pay up, i'm deeply involved, i happen to like the

company, postmates a good company. but postmates, you know, uber ets, door dash, remember sarah fryer? >> yes. >> the fry lady? the cfo of square and liked so much i got to tell you, too many of those companies is where i'm going to i think the big issue is drivers. i was out at uber freight, i saw all the uber bikes they're making i don't want to go against uber. it is interesting, these companies all want to be public ahead of uber. i think uber will be monumental. i like the management at uber. >> as an ipo >> yes i think uber could be facebook if it is done badly by the brokers. it could be facebook but i think there is a lot of people want to be in on that the millennial's first stock,

right? i want to own a stock, that's what millennials do. i don't want to own amazon it is going down they want to own something going up we don't want to have -- the exchanges and the brokers, if you skrcrew up the uber deal, i will find you, okay, you know what kind of skill set i have. >> i do. >> what? >> unique. >> yes >> i'm telling you, i will be a nightmare for the brokers and exchanges that screw up the uber deal, a nightmare. >> not going to screw it up. >> good luck good luck. >> facebook was -- >> extremely horrible. >> yes we never outed anybody everybody was fine that's different this time -- >> poorly executed by the nasdaq. >> this time i'm going to print the names. i used to teach at goldman, used to teach between -- got to move on give me a second between 9:00 p.m. and 11:00 p.m., i came in three hours late, made everybody wait, no food, no nothing at 11:00 i gave them a quiz.

and i posted the names of the bottom five people because that's the way to do it. listen - >> you are not well liked. >> listen, get your assignment, do your assignment, do your job. that was my -- that's the way i handled it at goldman. bottom five, isn't that great? isn't that the way -- >> speaking of the bottom five, on the dow, dow dupont -- >> it is down every day. >> boeing. visa, chevron. >> china etf i want to put together, make a fortune on. dow dupont is in my travel trust. every day i want to -- i don't want to say. let's just say that dow dupont is a disaster. oil is up. it is only a matter of time oil is up, people say maybe something is going on, i'm a buyer. the president put president xi in a box he said i'm not going to do it march 1. now if he does it like february

28th, they capitulate. he's about making them capitulate he's got the kudlow team and he's got the navarro team. and one of these teams is going to go down the elevator and try to cab >> what happened at dupont >> what? >> it lost a quarter of its market value over the last year. dupont the whole plan -- >> because they missed the -- >> the dow is going to soon be -- >> want me to tell the story or just ameliorate it? almost every business -- >> trying to explain before you take over what's happened? >> >> they send selfies to everybody. every division is bad. missed the quarter i own this i humiliated myself. i'll humiliate myself further. i just screwed up on this like you wouldn't believe i was so excited about the breakup. this is one of the things that happened >> took two years. >> still not done because they had to merge the two and then break it up.

united technologies is not going to screw it up greg hayes, a nice note about united technologies at morgan stanley, greg hayes is not going to do what they did to us in dow dupont people are coming around to david's view, not mine, that the bristol-myers celgene combination is out of desperation. i don't agree with that. >> you don't believe that? >> no, i don't i think it is good get the cash flow, use it to buy more r&d, get a loxo, eli lilly did. dow due poiupont is me. i did all the homework i absolve mr. green. i am the one that if karen cramer were here, she would make me put the post-it on my head, dwdp and make me go get her a soft pretzel go get me a soft pretzel that's why i loved her still do my wife is on a train. i don't have to worry.

>> okay. >> amazon -- on a very thin tape here, jim, amazon is down about 2% along with other names that -- twitter and so forth, micron, good year, even after -- >> no divorce there. >> no -- >> trying to do divorce versus no divorce what stocks can be sent down by divorce. >> yeah. >> goodyear is sent down by the fundamentals the auto business, it is bad how about union pacific doing a big buyback right here i don't know that could be wrong headed i'm looking at tech making a turn right here, right now i think that -- i'll go out on the limb and say the golden micron call will be ignored. >> one name we haven't got to and i want to put this into an overall faber report if that's okay -- >> are you going to extort me? >> i would never do that >> arconic up this morning, arconic. >> two companies >> yeah. it seems as though they roped

this one up on the black board a couple of days ago and said, yes, that's what we're going with remember arconic, old friend turned down 22 and change bid, not very long ago, from apollo made mr. plant the ceo for one year, the last few days, and reports earnings this morning, earnings not really the story. >> not bad. >> i'll defer to jim >> what we also saw was this plan to separate the portfolio into two businesses and engineered products and forgings and global roll products and then this is my favorite part, then we'll spin off one of the businesses >> yeah. >> don't know which one. we're going to spin one off. and, by the way, when we do, it is going to be to determine which will be optimized for shareholder return >> the other one won't be. >> this has the feeling of having been rushed as a plan, i think.

i think -- >> bad term paper. >> a company that they were in hopes of that they would potentially reconsider the apollo deal. also hopes that elliott perhaps would reassert itself in some way by nominating directors, the window is still open to mount a proxy fight. what i will tell you is that seems highly unlikely. don't forget, elliott has one of the guys on the board, a few seats. highly unlikely that we will do that this is what you're dealing with this on a $500 million share repurchase effective through the year 2020. and you can see the stock has hung in there around the $18 level. >> it is inexpensive inexpensive. i will say this, i spent a lot of time with claus kline going over the split a lot of time. the yoeelliott people, i'm famir with them. claus kline the former alcoa ceo. the whole point of the split was to go to commodity versus high

value. so you want the commodity play, you got free port, it is better than free port want an extrusion play, developed play, you get this that's why this thing seems wrong to me. claus' plan was a good one claus himself, never got to the promised land. nothing -- nothing on the way for him to -- i would say the important thing is that this makes no sense whatsoever. the other thing was thought out. >> this doesn't feel particularly well thought out. i certainly -- speaking to a couple of investors, that's their sense. it may be the plan they follow and may get a spin of one of the businesses that is now being separated into essentially -- >> we should get mr. blankenship to talk about it. >> two portfolio companies >> want to continue and visit the overall world of leverage buyouts.

$11 billion deal in cloud. >> forgetting the name what was the name of that ier t. ultimate >> ulti, not the place i get my shampoo. >> it is a friday. arconic, important to note, by the way, elliott, not that great a year last year you think about athena, got the deal done, we talked about mxp, arconic has not been a win athena raised the money in debt financing for the go private which will close very soon and so important to note that. then another one lurking out there, worthy of mention, nielsen, pursuing a process it hasn't gotten that much attention. you can see the stock is moving higher this morning. there are two groups there.

>> they're fundamentals. fundamentals don't matter? >> it is a stable cash flow provider you got a ceo there who once worked with the blackstone guys. david kennedy also, so blackstone and hellmann and freon are one bidding group. due the end of january and here we are and goldman sachs private equity arm with advent as well is another i think a fairly large equity check here in a take-out deal assuming let's call it some people say 30, maybe even a little bit higher than that. talking about a $10 billion deal at least and an equity check of size this is moving along it is worth keeping an eye on. with athena having been successfully financed, arconic falling by the way side, and this very large lpo we talked about on monday that we got.

>> those are all high quality players. >> yeah. in terms of the potential buying -- >> i got to relook at it just in terms of bad quarters, i nominated electronic arts quarter as the worst of 2019, up on the news that the next game is doing well. that group has been beyond belie belief. >> you had a few worst quarters of the quarter as they have come along. >> i change them up. i change them up new worst quarter comes around >> we got all three major indices just below break even for the week let's get to bob pisani on the floor. bob? >> a continuation of yesterday, carl 4 to 1, declining to advancing stocks just let me show you the sectors. remember how far we have come this year. we had big advantages, semiconductors, great run, up 10% a couple of days ago still up 8% or 9% for the year emerging markets were up 10% the em, it has come down the last two days. industrials up 14, 15%

these are big starts to the year, reits straight up every single day of the year except for maybe yesterday and today. a little bit of topping out, not a surprise here. up part of the problem is what we saw yesterday, realizations that the u.s. is really the sole engine of global growth out there. we hope those comments from the eu and the bank of england, they were downright depressing. the numbers came down dramatically for eu, for europe, and, of course, we got the trade outcome uncertain. we saw what that was doing yesterday and then the whole earnings debate, are you on the earnings recession camp or in the camp that we're going to get four or five either way it is much lower than expectations five or six months ago. the first quarter, emphasizing this every day, watching this, essentially flat for the first quarter on earnings growth revenue growth still pretty good and part of the problem is we're facing u.s. companies are facing cost pressures that are out

there that are sort of impacting the bottom line a little bit here is a good poster child. mohawk, this is a big flooring company. very well known. they are classic u.s. company, 60% in the united states, 40% outside of the united states here is what they said today we're seeing significant inflation. that is their word they are trying to increase prices, but there has been pressure on the pricing, so the point here is we're increasing prices, but not enough to offset some of the margin erosion we are seeing slowing markets, they specifically referenced that and they mean overseas, that's what they're talking about. they also are to deal with the strong u.s. dollar here is a good example of the pressures these companies are facing take a look at mohawk. mohawk is up here. why is mohawk up inline quarter the stock got cut in half last year disastrous year for them overall. yes, guidance is a little bit weaker overall, again, given how the market cut this thing in half last year, the inline earnings were not that bad for the company.

finally want to note, we're getting the ipo market going today. we had a biotech unicorn gossamer, big price, 17.3 million shares, on the nasdaq, opening in the next hour or so and the point here is finally things are starting to move. in january, mostly biotech and health care ipos they'll the these will get out of the way quickly. in the next week, fairly significant names. a good sign we're starting to see things come through routinely. we'll get to an update on soon as that starts pricing in an hour bills down 165 points. >> oil reversed. >> is. >> now 25 k once again in question when we come back, the road ahead for tech, we'll talk about it with john chambers. morgan brennan in ohio at a general dynamics facility that produces tanks for militaries around the world >> i'm in lima, ohio, at the

last remaining tank factory here in america i got about 48 million dollars worth of equipment behind me we're about to take one of these tanks for a test drive out on the track. in the next hour, i'm going to tell you why billions of dollars are flowing into this facility we got more "squawk on the street" after this break

you've faang down across the board. amazon though leading it lerow, down 2.33% that will take you back to january 4th. we'll get jim and "stock trading" after a short break

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provide the most reliable service possible. my name is tanya, i work at the network operations center for comcast. we're working to make things simple, easy and awesome. time for the friday edition of "stock trading. >> i want to talk about a company that david used to talk about. they had a better than expected quarter, better than expected

free cash flow this stock has come down very much a good trading people are looking for a new name in cosmetics. i'm surprised. it was a good quarter for coty keep that in mind that the stock is very oversold if this continues. >> they have been on the list of leveraged bad boys for a while. >> they have paid down some debt which is what made me interested like mattel, if i were them, i'dous any lift to issue stock no one wants to dilute i like good balance sheets. >> i know. you've been telling ge to do that, too. >> no one listens to me. i'm going to send them some pictures this weekend that they won't be able to refuse. holy cow. >> no, no, no, no. what's on "mad" tonight? >> i like to have the industrial companies, cnh, the old case in new holland that you buy equipment, and star of the day, tim boyle, columbia. i love their clothes, and columbia is up huge because they had a better than expected quarter which tells me if you've

got the right fashion, if you've got the right clothes, they will spend the money. tim is remarkable. look at the chart. he's done a great job. i've got to tell you, i prefer his stock to faang right now. >> really? >> well, the "a" is troubled, both as are troubled. >> which one >> tony nagasaki coming down and bombing the darn thing >> jim, we'll see you tonight. "mad money" 6 p.m. >> everybody have a great weekend. may see you guys later i don't know. >> when we come back, more information on jeff bezos accusing the parent of "national enquirer" of blackmail

>> good friday morning to you. welcome back to "squawk on the street." i'm carl quintanilla with david faber and sara ice enat the new york sfoj. dow down and s&p down and more

on the bombshell story from jeff peaseos with ami what the amazon founder and richest man in the world is alleging about blackmail, extortion at one of america's biggest tabloids. >> then stocks in the red for the third straight day as trade concerns remain top of mind. will the negative sentiment continue >> and finally expedia is one of this morning's biggest earnings mover. the ceo will sit down with us exclusively in a few minutes. >> let's start with the sharking story involving amazon blackmail and potentially the white house. amazon founder jeff bezos posting a blog post accusing the "national enquirer" and its parent company american media inc. of attempted blackmail and extortion. our robert frank is back at headquarters with more on this story. ever seen anything like this, robert >> reporter: not in the 15 years i've been covering it. got a bit of everything in it. amazon shares under a bit of pressure this morning as jeff

bezos' personal life becomes a lot more complicated he mentioned posting a public on medium accusing the publish of the "national enquirer" trying to blackmail him as part of their coverage of his divorce. ami threatened to publish compromising photos unless he agreed to stop his own claim that ami coverage was politically motivated. quote, rather than exit late to extortion and blackmail i've decided to publish exactly what they sent me despite the personal cost and embarrassment they have threatened you know, bezos posted letters from ami executives that described revealing photos they would obtain and publish unless he agreed to end his own investigation into ami and its political connections. ami just put out a statement a few minutes ago saying while it negotiations with mr. bezos in, quote, good faith, the board has convened and determined that it should promptly and thoroughly investigate the claims and, quote, take whatever action is necessary. ami recently entered into a non-prosecution agreement with

the justice department over its involvement with hush payments aimed at helping then candidate donald trump, and under that agreement they are not allowed to violate any laws for three years. now, i should note here the ami board of directors is actually only four people you've got the chairman and ceo david pecker, two executives of chatham asset management, a company with a stake in ami, and a hospital executive david, you'll be interested to know that lee cooperman, a billionaire investor known to cnbc viewers, he has a stake in ami as well. he's not on the board. we're reaching out to him this morning to see if he has any comment on this. guys, back to you. >> i mean, ami also has, robert, right, other sort of shady details with a past. it has that arrangement over the trump campaign i mean, this is so complicated and layered in so many ways. >> reporter: it is, sara, but i would say, as you and i know

there's two sides to every story. what we haven't seen, even from ami this morning, is any communications prior to this from bezos to the ami side so they are saying, implying in their statement this morning that these were two-way negotiations, so if these letters were in fact in response to a proposal or an initial agreement with bezos, then it might look a little less like blackmail, more like something that was a two-way discussion that perhaps bezos initiated or certainly was involved in from the beginning, so i think it's easy to look at his side and say this is clearly blackmail. we just don't know what the other side communicated yet. >> i guess we'll wait to hear on that one >> reporter: a lot more. >> robert frank. let's bring in former l.a. bureau chief and a former senior editor for the "national enquirer" jerry george jerry, as someone who worked at ami for 28 years, what was your reaction to all of this? >> good morning. well, i mean, the whole story

has snowballed the bezos divorce ordinarily wouldn't have been registered on the "enquirer" richter scale other than he is the archenemy of president trump, so after -- after the mueller investigation and after ami became involved in the investigation, there was somewhat of a falling out. i think american media and david pecker tried to make amends and brought this -- this divorce story to the president as a means of kissing and making up >> so you totally buy the whole political motivation just for our viewers to catch everyone up to speed ami has admitted to playing a role in president trump's 2016 campaign, paying the former "playboy" model to kill her story, and then they struck a deal with ami in which the

company was granted immunity in exchange for cooperating with the department's investigation you see this all as linked, is that correct >> yes american media did everything in its power to get president trump elected. >> wow. >> was it your experience during your years there that essentially journalism would be used for purposes of lack of a better term extortion? >> not -- not necessarily extortion, but when david pecker came on as ceo, he brought with him a silent editor, and that editor was donald trump, so the agreement was that there would be no negative press on trump or his organization. >> so you think in this case it specifically is linked to the president's enmity for "the washington post" and its owner mr. bezos. >> certainly. >> how involved was david pecker in this story that you guys chose to publish or ignore

>> he had the final say. if a story on donald trump came in and it wasn't flattering, it was immediately killed >> i mean, how prevalent was this whole idea of, you know -- sort of the detail, like a catch and kill kind of investigation for the "national enquirer." how clevprevalent is that kind tactic >> it happens half a dozen times. unflattering stories were purchased by american media and then never run they were -- they were purchased for the purpose of taking them off the market. >> jerry, our eamon javers, one of our correspondents in washington, just caught up with the deputy white house spokesman devon giddily about this very topic. here's what he said. >> i'm not sure if he's aware of it, and we're not going to get into a conversation of something between jeff bezos and a tabloid

magazine. >> how much faith do you have in the board, the ami board, to, as they put it, properly and thoroughly investigate the claims essentially about themselves >> i think they were, you know, sighing a great sigh of relief after getting through the initial federal investigation. now the whole thing is back again, and they are right in the thick of it. i think they are freaking out. >> i think our robert frank is still there. >> >> reporter: thanks, sara i have a question about the financials, and i don't know if you know, jerry, much about what the financials of ami are, who owns it and who are the current shareholders, but there was an implication in the bezos post that the saudis had some relationship with a myoor that ami was trying to get them to be an investor, and also we have a board here made up of chatham asset management which owned i think at one point 80% of the

company. are they doing well financially? do they lose money, and what do you think their investors are thinking or doing right now? >> traditionally the company has lived from hand to mouth it's never had much -- much of a cash flow. david pecker isn't a journalist. he doesn't have ink in his veins. he's about acquisitions, you know, and buying the next -- the next big deal, so last spring he put out a special issue on saudi arabia and tightling it the new magic kingdom. shortly after that, say three months later, suddenly there was a windfall of money and american media was able to buy up its main competitor, bauer magazines. the timing is incredible it seems suspicious to many people >> jerry, we still don't know how the paper obtained the

private pictures of bezos. in your experience do they ever do this illegally, this sort of thing, illegally obtained pictures or documents in these investigations >> in my experience not, but there are a variety of sources who have access to material who are more than willing to turn them over, so usually that's the way salacious pictures are acquired >> mr. george, you're obviously a vocal critic of the company at this point or some of its tactics, you were there for a very long time can we ask the nature of your departure. did you have a dispute with mr. pecker, or can you give us any sense of why your employment there ended. >> yes the financial hardships of the company were taking its toll, and there were a series of furloughs and cutbacks, and i

was among the last to go. >> all right jerry, thank you for joining us. very valuable, someone there for almost 0 years. >> my pleasure. >> jerry george, former editor at the known kwirer. >> thank you for having me. >> you're welcome. we should point out as well that robert frank mentioned lee cooperman. lee sent an e-mail to our scott wapner that i think we can use i'm a negligible holder acquired in a company reorganization. i have zero involvement with the building this is ami, and i own amazon stock and think jeff bezos is a fabulous ceo and person. that was lee cooperman. >> doesn't want to get involved sounds like. >> yeah. >> all right hard left turn here. the major averages coming off their worst day in a couple of week as concerns over the china trade drag stocks into the red let's bring in our guests here happy friday, guys good to see you. >> thank you. >> all right so we've lost 25k.

we've love 2690. 30 years at a one-month low. how long does this go? >> we think january's rally was real an unwind of the extreme pessimism from december, so it was very, very much justified. the economy is slowing and not stalling slade tensions are slowly diminishing at the margins and the fed is on pause. now we know. we've unwound the extreme pessimism and now the bar is substantially higher and the market is very, very sensitive to any sort of confirmation of this case. i think this week honestly we didn't get too much new information. we got some rumblings around trade but not too much, frankly. i think the most important thing will be the continuation of the trade talks ongoing next week, and next week i'm also watching the inflation data for confirmation of that fed pause so i think it's a little bit harder, a higher bar now is this more about an elongation

of this as an overhang >> when you're starting to see the u.s. dollar priced in and tariffs going up, so every time we get this leg up in the dollar, we see volatility in the markets and a downturn in the markets so in essence what we need is -- the world now is saying, okay, the market is the staying it's a growth star world and last year was all about the u.s. decoupled from the rest of the world and the dollar rallied and that was disruptive for the markets. what we're dealing with now, concerns about european growth, concerns about european trade. we know the u.s. it is slowing, but it's going to be okay until you get another leg up in the dollar and more market volatility what do we need? we knee the slowdown in the u.s. to continue and we need china to stabilize growth and they are working hard to do that, and that should be supportive of european growth, and that should take some pressure off of the dollar until we get thereto markets may be volatile. >> what's going to be the biggest factor over the next few months for the market, the trade, the fed or earnings because they are all kind of pointing in different directions >> i would actually agree with

your point that it is as continuation of the safe case we laid out but the new important information is not here in the u.s. but overseas. for me the most important kind of variable here for u.s. markets, u.s. earnings and for global markets is actually the china question, right. we continue to see some signs of softening in chinese data, in the manufacturing pmis, services, pmis, we need to see a floor in chinese sales we do think they will get it they have been stepping on the accelerator here for the past few months, but that's the new information that we really need. that will be very, very powerful. >> what does that mean about downcontrast that with concerns about germany, for example i mean, they are tied to china. >> they are. it's an export-driven economy and as china stabilizes, we saw it in 2015 into 2016 china stabilizes and accelerates growth and the rest of the world does better. we're not going to see that type of stimulus out of china this time we'll see lower reserve rates, maybe some fixed investment.

no where near what we got in 2015, but you don't neat that because it's as a time when the u.s. is slowing. all you need is a stabilization back towards some reasonable level of growth. there we see a trend in china and that should be supportive for germany and the european exporters. >> do you see this as a moment where we could, i don't know, put a 10% tariff on european cars i mean, there's more reports about friction there today. >> i don't know if any of us have absolute clarity on where we're going on trade all policies die from a policy mistake an typically that will come from the federal reserve that seems to be off the table and i believe that is right. inflation is benign just about everywhere in the world. if we go down the path of making a policy mistake with regards to trade and the dollar appreciates significantly as a result of that, then, yeah, the -- the economy is going to be in some trouble and corporate earnings are going to be in trouble if we don't make a policy mistake, given where we are and the fundamentals are in the economy, this should go on for a

long time. >> small caps or large caps? we're in a period where small caps are performing up again after underperforming last year. >> we're somewhat agnostic between the two because you can do check marks and question marks for both sides for the small caps one question we have is around leverage those do tend to be the companies that buy market cap that have built up a little more leverage over the past few years, and that's starting to become a bigger concern for investors, the actual quality of companies. on the other hand, i mean, as we mentioned, the u.s. economy is slowing but not stalling, so it is still a positive environment for -- on the revenue front of small caps i would say we're agnostic between the sizes. >> over the net five years, if you were to do a building block approach to return expectation, you would see on a relative value perspective that small caps are about a percent cheap to small caps so you would add that as a premium so over the next five years small caps should properly outperform small caps, a lot will come down to trade they do source a lot of inputs from around the world and that

was a headwind last year as were rising rates i don't expect rates to go up this year if growth is slowing i expect some reasonable outcome on trade, and that should bode well for small caps given that they are relatively treep compared to larger ones. >> trade, trade, trade. >> that's an important issue. >> really what it has become. >> thank you so much. >> thank you >> when we return, expedia is up big this morning you can see it's up almost 5%. after a strong quarter that saw the travel site post a beat on both the top and bottom line the ceo will join us exclusively after the break. i'm a veteran

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my name is antonio and i'm a technician at comcast. we're working to make things simple, easy and awesome. shares up this morning after posting a strong fourth quarter and also increase its guidance for the current year with us now exclusively this morning is expedia's president and ceo. mark, always nice to have you with us. starting on a brought question, if i might, this morning, where at the beginning of your conference call, which often ceos will do, we've just begun to harness the true power and potential of our platform. big words, but what do they actually mean? >> well, the travel market is absolutely massive $1.7 trillion part of the economy is from -- one of the

largest pieces of global gdp one in ten jobs in the world are in travel and tourism. we're one of the largest travel companies in the world and this year after growing about 13% in top line basis we reached just about $100 billion of bookings, so if you think with the opportunity ahead of us, it's absolutely massive we continue to grow at rates of two to three times fast as the overall industry on a pretty big base we've got a good position in the u.s. and canada. we've got a good position in leisure travel, but in terms of corporate travel and in terms of some of the more nascent products to go online like cruise, like luxury and like activities as well as the international opportunity, we've got such a long runway of growth ahead of us. >> all right what should investors be looking for for signs that you are actually succeeding and harnessing that power and potential of the platform. >> well, i think investors should be looking for more of the same of what we delivered in

2018 at the end of the year we've got three priorities, being locally relevant on a local basis, being customer centric and speed of the pace and execution across our company. that showed up in the financial result again, gross bookings were up 13% and revenue up 12% adjusted ebitda up 15% and earnings per share up 35%. we did this all at the same time as delivering just over $1 billion back to shareholders in terms of buybacks and our dividends. we think this type of growth if we execute well is something that we can deliver for a very long time, and if we do really well, maybe we can even do a little bit better. >> one area potentially of concern was the home away results. still, 20% growth, 15% bookings growth is good, but it's a lot slower than it's been over the past year. >> yes. >> what's causing the slower growth there, and how does it look for the of the year >> yeah. again, home away in 2018 grew top line around 30% and bottom line around 43%, and up to just

shy of $12 billion in bookings they are in a huge space alternative accommodations i think us a all know, a space is probably worth north of $100 billion, $120 billion and growing very quickly home away very focused on the domestic market and very focused on its traditional resort, beach, ski destination type of offering, and over the course of 2019, 2020, 20201 they are going to start pushing into the more international opportunity which was a bit of a drag for them in the fourth quarter they are going to start pushing more into the urban opportunity which is not a place where they have been particularly focused, and then, of course, we're putting all of the homeaway vrbo inventory on our flagship brands of expedia, hotels.com and increasingly over the course of the next number of years it will be made available to our corporate travelers as well, so a little bit of a slowdown over the course of this year, but it's really just ahead of the next leg of what we think could be pretty incredible growth.

>> hey, mark, any trend that you're noticing in air travel. there's been some reports that suggest at least domestically low factors are getting a little bit more loose i'm wondering if that is something that you're confirming either on the business or the consumer side. >> yeah. so we've seen, and 2018 was a pretty strong year for travel globally i mean, passenger volume continues to grow. occupancy rates near all-time high average daily rates continue, but, of course, as we started out the year there were some spots of choppiness. you saw the big storms, the polar vortex that can have an impact on the metrix that you look at. in the uk concerns around brexit we think, anyways, has impacted consumers' decisions about whether to book now or wait, whether to go abroad or whether to stay at home. we saw uk air ticket volume slow down pretty significantly here in january

also some slowdown in terms of continental europeans traveling into the uk, so something to keep an eye on >> yeah. i just personally had to go to london this week the plane was maybe a third full i just thought that was really interesting, and maybe it is uk-related, i don't know. >> yeah. >> are you bracing for any slowdown in the u.s. this year, mark, economically >> i wish i had a crystal ball again, we ended 2018 with, you know, on a very strong footing, both in the overall economy and travel, but i think on your prior segment it was mentioned you've got slowdown in china europe is a real question, and -- and the u.s. is not isolated to this i think that a slowdown is very possible we're fortunate though the travel industry is incredibly resilient and our business specifically is very resilient. are we being prudent absolutely i think any leader of any global corporation right now should be prudent in terms of making sure

we're not going out on a limb with any mavis investments, but we think that 2019, at least from where we sit right now, will be a fine year, but we're braced for anything. >> mark, why is your cloud spending going up so much? i think for 141 million last year to around $250 million on the cloud this year. >> well, the cloud is the future let's -- let's put it that way historically we have run our own data centers, and we would have undreads -- hundreds of millio dollars and now we're essentially migrating the bulk of that infrastructure into the cloud environment. it allows us to operate much more resilient infrastructure. allows us to expand and compute capacity, you know, essentially with the snap of a finger so that we can do massive big data calculations, run rural network models to help us be more sophisticated in the way we're

delivering personalized experiences, the way we're delivering, you know, our marketing messages on a much more tailored business so we're aggressively moving our infrastructure into the cloud environment, and that's showing up in the financial results, but from a free cash flow basis because we're not spending the cap "x" on the big data centers, it's been a creative force and we think it's the right thing to do on a cash basis. >> right it's the trend we follow closely here just curious are you using one of the vendors out there, awso azure, or are you sort spreading it around >> yeah, our primary partner right now is aws they have been an absolutely phenomenal partner we do have other applications that are running with other providers and will continue to do that, but pour primary partner is aws, and, of course, they are just down the road from us so it's a very easy conversation. >> mark, always appreciate you having a conversation with us as well on earnings day. >> happy to do it. >> thanks for being with us. >> the ceo of expedia. >> as we head to break, take a look at the major averages all

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welcome back let's get over to sue herera and fet a news update this morning hi, sue. >> good morning, carl. good morning, everyone here's what is happening at this hour iran's ayatollah khamenei defending the death to america chants that are standard fare in iran but said the chanting was aimed at america's leaders, not its people he said the chanting will not stop as long as the u.s. acts maliciously towards tehran. a 16-year-old was buried under a rubble for 45 hours and then rescued 14 people died and 14 more why injured after the eight-story building collapsed on wednesday. subaru, tesla, bmw, volkswagen, daimler and mercedes and ferrari are all recalling about 1.7 million vehicles to replace the potentially deadly air bag inflaters made by takata the moves are parts of a largest

series of automotive recalls in u.s.history are. up to 70 million vehicles are said to be recalled by the end of next year. and former u.s. representative john dingle, the longest serving member of congress in american history, died on thursday he served in the house for 59 years before retiring in 2014. he was a fierce protector of detroit's auto industry. john dingle was 92 years old you are up to date that's the news update at this hour sara, i'll send it back to you. >> sue, thank you. it's time for our etf spotlight. today dom chu is taking a look at some of the surprise best performers in the s&p 500 this year dom. >> reporter: it's saer space and defense stocks entering today that was the best performing industry group in the s&p 500. it's up around now 15% or so year to date given today's price action early on that, industry group has now dropped to third place year to tate date, but for the most part

all stocks in that group, more granular than the broader specter, it up so far. that's translated into bigger market gains for some of the exchange-traded funds tied to aerospace and defense. one of the biggest one is the ishares u.s. aerospace defense fund, ticker ita, up 15%, 16% in 2019 there's also the smaller invesco aerospace defense fund, ticker appa, 15 million in assets and up 15% in that tame frame as well gains in the industry group year to date are being led by big gains in boeing, harris corp and l3 tech. each up between 17% and 25%. many of the stocks part of the broader industrial indices and etfs overall, so as we take a look at those stocks, defense contractors, certainly ones to watch. carl, back over to you. >> busy day. dom chu. when we come back. still a lot more on the surprise

block post by bezos last night we'll talk to cisco chairman erus a ceo john chambers about it next. dow is down 194 and s&p 2690 down go away ♪ ♪ our new, hot, fresh breakfast will get you the readiest. (buzzer sound) holiday inn express. be the readiest.

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welcome back to "squawk on the street." i'm sara eisen here with carl quintanilla and david faber live at the new york city post nine lower across the board s&p 500 is down a little more than half a percent and the dow down more, .1. all groups are in the red and energy getting hit the hardest consumer discretionaries and financials as well business leaders urging the u.s. and china to get a trade deal done as cabinet members admit that big differences remain. meanwhile, politico reporting this morning that the president is likely to sign an executive

order banning chinese telecom equipment next week. the latest development mudying the waters for ongoing negotiations so how can the two sides find some common ground, and what is it all going to mean for american business? here joining us at post nine in a cnbc exclusive we welcome back former ceo john chambers and runs now his own firm and advises countries like france and india on tech trade policies. >> great to be here. >> if the u.s. does go through with banning u.s. telecom equipment in the u.s., how big of a deal is that? >> it's a pretty big deal and it goes back to, i always start with the high-level important issue. the u.s. and china have to work out a fair trade agreement being very candid, i've been in china for 40 years, dating myself it was always a win-win mentality but very tough negotiations the last ten years, it's been more of a win-lose with the u.s. losing so you have to create a level playing field. then as a company or as a

country your currency is nothing more than your track record, your trust and your relationships, so i think we have to get those back on tilt i think a better example would be how prime minister mody and how india and the u.s. are developing a very strategic relationship i was there in gujarat with the prime minister a few weeks ago and he tends to think about how we both win together it doesn't mean there won't be bumps along the way and being a long-term fan of china, however, i think we'll work out the differences with china. >> but do you think this notion that the administration wants to move the needle on security as part of all of this, national security for technology is going to work, or does it set us up as a bigger adversary >> i think it has to work, and it shouldn't be an adversary have you to see how both sides win. the key is to say the way things are currently going is not acceptable you have to have a secure infrastructure the wars of the future or the terrorist attacks will be after the digital infrastructure, the architecture they have to be rock solid, and

if you watch what our prior company did very well for 20 years, we maintained the trust of a china, a russia and others because we never shared any of the information, so i think it goes back to as companies and countries you have to have that open win-win mentality we'll get it back with china, so i'm an optimist that it will work through there will probably be bumps along the way but i look more at world models like what india has done. >> i'm curious, 40 years and something changed in the last ten. >> yes. >> when was it that changed, a matter of them not needing us as much as they did before? >> no, i think it was a change in philosophy. i met with the prior president of china every time i was there, the fact that he was dr. wang's classmate helped i was out of wang laboratories and i developed a relationship, did the joint ventures and followed all their leaders, identified them ten years ahead of time before they would get into the politburo, et cetera and the chinese always kept their word to me and it was always a win-win attitude.

tough negotiators but win bush win and the last decade it's been win-lose and, that unfortunately has to be fixed and that's where i do think the focus of getting it back to a true level playing field you can't have a trade deficit of $470 billion with us getting 130 and china getting 570 and just ten years ago the delta between the two was 100. that's a symptom of the bigger issue. >> really? >> you agree with the president that that's the issue? isn't it just indicative we buy a lot more stuff of what they make cheaply >> i agree the people in the u.s. and the business leaders are the ones i listen to the most here that there's an unequal playing field. the rules that china plays here are different than the rules that american business plays there. you have to do joint ventures, et cetera. shame on us for not negotiating better over the last 20 years but i think you'll find what we'll work it through and really make a difference on it, but what we haven't really focused on and tend to focus on existing companies it is what i talk

about each time that we're here, the importance of startups for our economy, generating the jobs and how the u.s. is actually slowing in terms of the startups, the innovation versus countries like france which you would never have thought. >> i still don't believe it. >> every time you come on and say france is out-innovating us i find that hard to imagine. what statistics do you actually use, john, to make that point? >> you're setting me up perfect. the way you all know to deal with a tough question, if you emotional you do it with facts and if it's the facts you deal with emotional the emotional question with facts. the french high-tech community in terms of investments and startups did 140 average for a decade they have gone from 140 to 570 in four years. at the time the u.s. investments and startups hit a 20-year low three years ago, it's much, much slower, and i took 20 venture capitalists and a number of private equity companies to france during the middle of the yellow vest issues, and we were

the only public group that president mark ron met with and he outlined his view of france of the future, a startup community, a win-win between the u.s. and europe around then i pulled him in front of the president and i said how many of you believe in the future of france and believe his direction is right and are going to invest more the whole room raised their hand. >> what is it that they are doing, and i would argue that we have the best capital markets available in the world, most transparency, the deepest pools of capital, so what are the french doing conceivably and y isn't it helping his approval numbers? >> or the economy. >> well, first, it is helping the economy so i'll go in reverse order. the issue is we do not have a national policy on digitalization which india prime minister mody, his primary goal is digitalization, gdp growth, manufacture, startups, equality, healthcare environment and so is france with just a different sequence so it has to be owned at the very top. the second thing is you have to decide if we truly are going to

be a startup nation, and i think that's where the jobs will come, from the big companies that we discussed before 40% of them won't exist in a decade and secondly all job creation will come out of startups, big companies, digitalization, artificial intelligence will destroy 20% to 30% of the jobs that exist today. we need a policy and watch how quickly things occur mention something to prime minister on a thursday and by tuesday it's done. an angel tax investment was an example. he demontized his currency in a weekend. huge risk, but it made it so much easier to do business, so they start with what do they want to accomplish as a country and then what are the things that you have to do in unison to make it happen mody does his own vision and strategy and macron does the same, and i think they are two examples we can learn from and they can learn from us. >> in this country you would hear what the federal government should actually do is use the antitrust laws, and we've had this a little bit this, argument before. >> i wouldn't say argument, healthy give and take. >> alphabet, and some of the

other dominant providers with huge market power stifling innovation and antitrust laws should be used to unlock, that and that would bring the innovation you talk about. i know you don't necessarily agree with that. >> i'm somewhere between the two, david, and i'll remind everyone that i'm completely on my own and have been for over a year, and the fun part is now i can say whatever i want, and it's kind of like being a grandfather. i get to advise my start yurps and have fun and give them advise and say here's a tough situation, now here's what i suggest you do and then i go have a bourbon and ginger. >> if that's really true, there's atough situation we wanted to ask you about today. >> i want to finish david's question. >> again, the question. >> about monopolies and the whether or not antitrust laws should be used and conceivably would then result in more money going to startups that otherwise are not funded because they compete with these giants? so that's the symptom of what is occurring. the underlying issue is that technology companies have to get back to tech for good. as you saw, we were very strong at sysco acisco during the 90s d

early 2000s and we always said how do government and business work, how do we work with common goals when government lays issues on competitiontore data disclosure or not sharing your information of your operating systems with other countries, we work through it together i think these companies have to come together and realize that if they don't work with government closer, government will -- it will have bad consequences with regulation,ability monopolistic changes, and it's coming i would encourage the peers of the current leadership group to work together and also realize if they don't meet the government halfway on the legitimate needs of the citizen government will act and most citizens know they won't act properly. >> your question. >> we started the hour with bezos and ami. what do you think about that >> one of the things, first, i think jeff bezos is one of the greatest leaders we've had in business in the last two to

three decades. i thought i did well as cisco. he did better and he's a tremendously good person and good balance i'm not going to comment on the personal issue, but i am going to comment on what i advise my startups and others which is when you have an issue and every company and every leader does, if you're in power very long you're going to get knocked down so the first thing you do is don't hide the second thing you do is get all the story out. be candid about what is fair criticism and what is not and then you paint a picture of how you go forward jeff will navigate through this, and we love to build leaders up in america and we love to tear them down. this is also the fun part of advising 18 startups that have i have investments in and coaching them and say i know it's going to be hard on you, and exactly like you talk about the leaders of the prior era taught me jack welch, it's more how you handle your setbacks and your strengths and nobody likes to write about it that's absolutely true i was the looking around here at all of this technology, next time i'm on here, you'll get

improved by the exchange, i want to show you the startups, defensive drone recognition and it's what shut down newark and gatlin, et cetera and there are opportunities to protect, but they are also tying in very closely to electronic pulse guns, and so what i thought, david, you can fly the drone carl, i can teach you how to spot it. you're going to take this gun and shoot it down and be careful. if you get the long electronics bring it out of the exchange. >> all right we'll shoot some drones. >> thank you john chambers. >> thank you. >> thank you, carl. >> david, enjoy. god bless you all. >> still to come this morning we'll go to ohio and the one-tank factory left in this country, why this general dynamics plant is making a comeback, and before the break, two toy-makers going in opposite directions this morning. this hasbro and mattel dichotomy is pretty interesting on an earnings split more "squawk on the street" in a minute cme group can help you navigate risks

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the global investment management businesses of prudential. weeks. joint systems manufacturing center in ohio, the site of the only remaining tank factory in the united states. morgan brennan is there and joins us from there this morning. hey, morgan. >> reporter: hey, carl, that's right. there's only one, one place in the entire western hemisphere that makes tanks, here in lima, ohio this is government owned general dynamics operated. it is the place where the u.s. army's main battle tank has been manufactured since the 1980s five years ago the army was questioning whether it was still going to make tanks, whether it needed tanks, considered idling

operations, you could say the production line was near death today it's different you see the military looking to modernize, the geopolitical threats have shifted and with them america's defense strategy, and the project director for the army's tank system tells me things have changed. >> five years ago when this facility was at the lowest production levels, the majority was foreign military sales we relied on foreign military sales. in the last five years, we have done approximately $9.1 billion of foreign military sales to different countries. kingdom of saudi arabia, kuwait, more morocco egypt. that kept this facility alive and well until we could get back in it, and that's the problem we have with a 15 year war on clearance and this facility. they did an industrial based study, determined we needed to

be sure the facility was operational to do exactly what we're doing now with these tanks. from that study came funding out of washington. >> reporter: last year congressional oh indicated a billion and a half to modernizing tanks. they invested $100 million in upgrading the facility, adding robotics, for example. i want to put it all in perspective. recently as december, 2016, this facility was turning out one tank a month today, that's up to about six tanks a month, and by next year as operations continue to ramp up, given the orders that are already in place and essentially locked in for the u.s. and our international allies, general dynamics expects it to be 34 tanks per month. for those of you that maybe aren't as familiar with military operations, you may wonder, do we need to spend more on tanks, is this politics

i did speak with a high ranking army official involved with the project here here's what he had to say. >> abrams tank is the main platform in our formation and fights that we need to fight any peer on peer adversity and other tanks that match over those. >> reporter: increased production means increased jobs. we're going to get into all of that a little more in the next hour, but in the meantime, guys, to give you some details about the machinery behind me, it is about $48 million worth of hardware these are the abrams m 1 a tanks. they take 12 months. each costs $12 million we'll tell you more in detail next hour. back to you. >> they are incredible machines. anyone that's been lucky enough to ride in one knows, we can't wait for more. more from morgan brennan in the next hour on "squawk alley."

dow down 234 we're back in a minute

welcome back as we wrap things up on "squawk on the street." many of you are eagerly awaiting sara eisen's next appearance at

3:00 >> 3:00 eastern. remember the ceo of cleveland cliffs, he was the one that told his analysts on a call you're an embarrassment to your parents, we're going to screw these guys so badly they'll have to commit suicide. that guy is coming back on he came on after the call, doubled down, said i don't regret a thing got me on cnbc got him on cnbc, his stock up 80% in the last year, pretty controversial. he had support as well that's at 3:00 dow down 200 "squawk alley" is next

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