>> no. this is real fun just sitting here watching. >> the asian markets were mixed. >> what's pay pal? >> where's pay pal >> what's pay pal? >> we'll talk about pay pal after the break. >> happy birthday to andrew. >> thank you, everybody. >> "squawk on the street" is up next ♪ >> good tuesday morning. welcome to "squawk on the street." i'm carl quintanilla with david faber, sara eisen at the new york stock exchange. cramer is off today. futures sluggish as the attention turns not just to u.s./china trade but u.s./eu trade. walmart will help boost the dow. europe is red. crude and gold continue their breakout despite the dollar strength wti near 56 today. our road map begins with china trade talks return to washington stock futures point to a lower open as traders await new details. >> plus, shares of walmart rally

premarket. holiday sales crushing estimates boosted by strong e-commerce growth >> company putting new focus on services and putting multiple projects on hold >> stocks on track to open lower as we begin a holiday shortened trading week with the continuation of trade talks between the u.s. and china and washington this time optimism about the discussion s sparked a rally on friday, resulting in the dow and nasdaq extending their weekly win streaks to eight the nasdaq is coming off a six straight days up double digit gains for the indices for the year so far. we'll see if the trade talks in washington are any different from ones we had in beijing. >> the continuation of the china trade talks continue amid optimism there will be a deal. in the you see in the commodity markets as well, oil at the best level since november a key economic tell. question on the auto tariffs, which i think we're watching some of the german automakers,

european automakers get hit today. they bear the brunt of this. keep in mind, we import a lot of autos, but the key victims of any policy at the trump administration does go through with this. germany, japan, south korea, plus, you know, china, a lot of parts out of china what would that mean for the trade talks? that means the commerce department report recommendation for or against was delivered to washington and they'll wait to make a decision. >> 90 days to decide eu did say they would respond with swift and adequate manner they also estimated that if the auto tariffs did go to 25, could add as much as 10,000 euros to the cost of a car that is shipped and sold to the u.s. we'll see. the bigger story is retail and walmart. >> yeah. shares are surging walmart coming out with a strong quarter. putting aside some of the fears over december retail sales reporting earnings that topped analyst estimates.

thanks in part to e-commerce sales up 43% during the quarter. with us now to discuss the numbers, gerald store and bud bugati, the director of furnishings research welcome, gentlemen toys were a big bright spot in the walmart report are you surprised? >> i'm not surprised at all. they had the leading share going into the holidays. always had the lead share. this was a remarkable report their sales were up, comp sales were up 4.2% the traffic was up in the sales. the average ticket was autopup the e-commerce was up. the operating margin was up, despite the gross margin pressure they more than made up for it with expense savings, their operating margin was up. a fantastic quarter all around. >> bud, do you agree >> i do. it was a lovely quarter to see we had traffic up .9%. it did slow a little bit from the last quarter, but you see

that go back and forth a bit it was a good quarter. really impressive from walmart u.s., impressive international, impressive in sams club. overall a very impressive quarter. >> though it looks like on the u.s. comp numbers, pricing did offset foot traffic. is that a problem? >> foot traffic was still up that's remarkable if you think about what is going on in the world right now. traffic was up and pricing -- pricing was more important, but traffic was still up and consider that we live in this internet age and so they still were able to draw people to the stores they have kept up. they have invested a lot of the growth they said they came from grocery which has been a slower growth business. they have been investing in store pickup, order online and go to the store to pick it up that's been growing. they're forward facing and doing the right things forthe future >> pickup now in 2100 stores delivery in 800. >> they aren't going to stop they invested price in groceries. the gross margin isn't only due

to the internet effect it is also because they keep investing in price let me tell you, they're making a big impact on the other grocers in the market. they saw lido coming over to compete with aldi, they responded. that had a big effect on the entire grocery market and you see that in the grocery comps today. >> viewers might see a headline or to arguing the comp traffic was down 70 basis points is that being sliced a certain way? >> i think that's being maybe slicing it a little too fine you do have that -- that's waffled back and forth from as you looked at quarter by quarter for the entire year. you're right, it did slow from the third quarter by about that -- i still think that you're still seeing an overall good performance in the stores also i thought it was very notable net promoter score went up 10 percentage points or ten points which is already a very high performance for them for

grocery pickup and grocery delivery. >> do you think, budd, on ticket going up 230 basis points, are they raising -- they talked about raising prices of tariffs going a certain way or is this more about stealing share and just people buying more when they're in the store >> well, they're going to continue to invest in price. they said that on their call, just ended a few minutes ago so they're going to continue they still believe that they -- that is what they're all about save money so people can live better that's what the customer expects. that's what the competition should expect. so i would expect that as well they did say inflation was relatively mild and benign and they said, look, whatever it is, our buyers understand how to deal with it >> you know, on this comp traffic point, their comp traffic -- their traffic was up 90 basis points on a q 4 basis it was just a -- they say change, they're talking about q 4 of last year, up 160 basis points the fact that it is still

traffic -- still grew by 90 basis points shows that they are fighting against this internet onslaught. a tremendous job in this environment. >> 180 basis points was digital. which is up. it is accelerating, but can that continue to accelerate or does that mean -- >> 35% instead of 40%. this year on year. still growing very rapidly law of large numbers says they can't keep growing at the same pace and neither can amazon and neither is amazon. i think there has been a lot of nonsense out there about what happened in december of last year and the reality is it was very strong across the board. i think there was something a little askew of that one report that said something different and i bet it comes down to the internet and tracking those internet sales correctly and the marketplace sales and everything goes that report said the internet sales were down in december who could believe that but a government -- a government report that's ridiculous. keep in mind, sales were up,

even by their report, by almost 10%. it is just that they put in a seasonality factor to take in negative -- >> you're referring to the retail sales >> the report cannot stand it is not indicative of what really happened. the adviser index where i weight them by volume at retailers stands at 6% increase for the holiday season now, granted some people went bankrupt, toys "r" us, sears, take them out, it still won't make any difference. the big guys, costco, target group, 6%. walmart, 4%, that's most of the market already >> we'll revisit that and see if they change the methodology or something on that. budd, do they say anything on the call i know you got on to get on with us as well about flip cart and any head winds from the change of the laws in india as a result of their business there. >> they used the word disappointing and will work with the regulators to see if they can ameliorate that.

it did make a change in the flip cart outlook it didn't make a change enough for them to change guidance. they were disappointed in the change in the regulatory environment in india they did note that on the call that's about all they would say because they understand they're dealing with regulators and not a governmental agency. >> speaking of guidance, they did reiterate growth in u.s. comp store sales between 2.5 to 3% that is a slight slowdown from what they saw the previous fiscal year. are retailers in general, budd, just expecting weaker consumer spending this year >> well, i'm not going to go there because they simile ply reiterated guidance. if you were a naysayer, you could pick at that a bit you want to keep guidance in check. you don't want to get over your skis in guidance and you don't want to try to overperform i think it is very hard to read into that. your crystal balls are always a little cloudy when looking that

far in the future. you look at a full year out there. 2.5 to 3% for a company the size of walmart is quite impressive, quite frankly. >> how much can e-commerce grow in the 40s >> i think the market is growing. the market is growing almost 20%. so you have some players investing more walmart is taking share. amazon continues to grow with the market they're half of e-commerce now the marketplace at amazon grew at 38% last quarter. that's where the growth -- the small sellers. the market is growing very rapidly. some people are not growing who are losing share i think walmart will slow down but they'll still be growing, you know, 35%, just like they said and he's a good ceo. he's not going to take his sales guidance up when it is good enough let's see what happens before you start doing that. >> thank you very much walmart's gain helping mitigate

some of the dow's losses this morning. >> indeed. on to news involving apple, the company shaking up the executive ranks with moves involving ai, hardware and retail divisions cnbc reporting a microsoft exec joined the company separately top apple analyst out with a note over the weekend saying the company will likely unveil three new iphones that should have an improved face i.d. and a frosted glass casing that is not been seen before but the journal story probably making the most waves today in terms of as they frame it, getting the company set up for life after iphone. >> not sure if it was very positive or negative in terms of an investor takeaway, but it just contributing to the narrative around apple that it is transforming itself into a services business as it has been trying to communicate to investors.

a business that according to morgan stanley should top 50 billion in sales by fiscal 2020 and contribute over 60% of apple's total revenue growth in the next five years. question is, can that happen if iphone sales are slowing which is another point of chatter among -- as we hear -- >> the question is if the ecosystem is not growing, can you expect the underlying revenue stream to continue to increase at a significant rate it is a logical question, don't know the answer. i continue to be interested as you might expect on how much they're going to be spending on content and their plan to reference in this journal piece and i think other reporting that has been out there to potentially include some sort of a video service and package it with other services they have as well into some sort of pay one price kind of offering spending, what, a billion dollars, carl, potentially, as much as a billion dollars. >> also mentioned reese

witherspoon. >> yeah. >> huge producer netflix for news idea, they would bundle publishing content and take a big part of the revenue in the process. >> take a part of it i don't know how that -- maybe viewed positively, though, by those who produce news content, getting paid for it at all as opposed to being free on some of the platforms which has been a real issue. >> you want money there. >> people say, right, google and facebook made the money from the news business. yeah and taken all the profits. >> still to come on the show, a lot to talk about with the ceo of mondelez, the snack giant dirk van deput after his first year on the job. another look at futures this morning, under pressure, taking their cues from overseas dow futures down more "squawk on the street" live from post nine at the nyse when we return.

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china hawk and white house adviser peter navarro. the u.s. is pushing for permanent structural reforms that would be enforceable. china pledged to buy more soybeans and energy. the two countries agreed any deal on paper would be in the form of a memorandum of understanding. the contents are still to be finalized. president trump was briefed on saturday on the last round of talks in beijing, following which he tweeted about the progress being made on so many fronts he called it big progress that was being made but as the administration moves to de-escalate tariffs on china, it is considering new tariffs on autos and auto parts, a policy that would target u.s. allies. trump commissioned this study last summer as a way to gain more leverage over europe and canada since then, he suggested he wants a 25% rate it is unclear if the commerce research supports that or when we'll see the report itself or whether we'll even see these tariffs enacted. the president has several months to decide which policy he would pursue a senior administration official

telling me there is not much support among the trade team for these auto tariffs, but it really is only one person's opinion that matters >> so any guidance on when we're actually going get the decision on autos and what the europeans are going to do in the meantime. they already threatened to row t retaliate. >> there is no expectation that there is a deadline for doing so the president has three months to make his decision on whether he would do it but there is no near term round of talks with europe or with canada where he would need to use this tool that he's essentially just keeping up his sleeves, that he has 90 days to do so if and when he needs to do that the fact that there is no support essentially within his trade team except for peter navarro, one of the hardest line officials that he's getting advice from, and there is no support on capitol hill among prominent gop lawmakers and no support from the auto industry itself so the pushback is strong, but

the president wants to keep that policy in his back pocket if he ever decides that he needs it. >> i read a report over the weekend also, kayla, there was some concern at least from a member or two within the administration that it would also destroy this idea of the united front the u.s. is trying to build against china because it would just anger some of our closest allies and trading partners like europe and japan who we need in this confrontation with china. >> and it would seem to underscore, sara, this criticism that the president is willing to go soft on china or on russia or on u.s. adversaries on north korea at the same time he's drawing a harder line against traditional u.s. allies. but we'll see if he does in fact decide to implement these tariffs, go forward with any of the recommendations, what some of the recommendations, sara, actually are. >> about $200 billion worth of imported cars in the u.s. last year kayla, thank you up next, art cashin and what he's expecting from the markets

this week as we count you down to the opening bell. futures here, some pressure here in the early action. dow futures down 50. climbing back. we'll be right back. "squawk on the street" from the seny (indistinguishable muttering) that was awful. why are you so good at this? had a coach in high school. really helped me up my game. i had a coach. math. ooh. so, why don't traders have coaches? who says they don't? coach mcadoo! you know, at td ameritrade, we offer free access to coaches and a full education curriculum-

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thank you. you could say that. i love you. servicenow works for you. just about 7 1/2 minutes to the opening bell let's bring in art cashin, director of floor operations with ubs who joins us at post nine happy tuesday. so you got a bunch of names above the 50 day this breakout in crude and copper and gold you think we overshoot into 2800

or more? >> i think you're going to probably want to test the resistance between 2800 and 2820 that's held us up a little bit before we haven't been able to break out. going to be a strange week, a lot of school districts around the nation are off this week so there will be family holidays i would think the volume manight be a little lighter. so we'll keep an eye on that a lot of attention over in europe, the president starting to hint that automobile tariffs and that has europe in a little bit of a dither and the brexit talks keep going and we have seen a shift in the liberal party over there labor party. and that's cloausing a little anxiety in europe. a little bit of a mild bumpy ride this morning. >> honda announcing plans to basically close their own uk

plant, like 3500 workers, right? >> yeah. that's no small deal over there. and can be a problem but the -- some of the european leaders are already bristling at the fear that the president is going to move ahead with auto tariffs and not too happy with that walmart earnings were good any other day, i think they would have put the futures back on the plus side, not quite strong enough with all the concerns about trade still hanging out there. >> how would the market react br broadly if the president went forward with the auto tariffs? >> my guess is i think they would sell off the market as you've seen when it -- there is a hint of a settlement, the dow runs 400, 500 points so if there is a hint that more controversy and trouble i think they would sell -- >> to that point, art, just wondering how much of this eight

week rally, tremendous comeback from the market, has to do with optimism over a trade deal with china and just how far along we are to pricing it in >> i would say probably 70 to 80% on the trade talks and how much it is priced in, 50% i would say. >> quick, does it strike you that we'll get -- we'll trade a china dispute for an eu dispute or can we handle two disputes at once >> i think two at once i think they'll talk optimistically on china. from what i hear, on the dollar level, they're getting close to a deal on a rules and regulation level, nowhere near this concept if you're going to come into my country, china, you have to show me what your technology is, let me share in it i don't hear that we're very close at all on that deal. >> we'll see you later. >> okay. >> art cashin, opening bell a few minus ayteaw

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the opening bell in over a minute on this tuesday hope you had a good long weekend if you were lucky enough to have monday off pretty busy week on the way. fed minutes on wednesday fed policy forum later in the week flash pmis and some retail earnings will continue to trickle in, like walmart. >> fed minutes important because remember this was the discussion around when the fed actually took a pause they made it official they were going to be in patient mode and chairman jay powell stopped talking about more interest rate hikes to come. we'll see how unanimous that was and what the discussion, the pros and the cons and how much it was really dictated by the markets' behavior. the knock against powell, he got spooked by what the markets were doing at the end of last year and pivoted. so we'll see if they really think the fundamentals and the economy changed enough to cause that. >> david rosenberg points out journal story today, says 11 trillion in global bonds with a negative yield and given that,

maybe no surprise that markets found its legs again just fewer places. >> easy policy kuroda, the bank of japan, overnight, testified before parliament, he said more easing may be >> there is the opening bell on the s&p 500, cnbc real time exchange at the big board, madison square garden company, is celebrating the world heavyweight championship at the garden on june 1 over at the nasdaq, health research organization the children's heart foundation. david's been quiet over on that side of the desk. >> which means he's got reporting. >> i wish it was -- i wish i could fulfill that lead-in with something big. there are a few things going on we haven't hit on. i guess one that is worth hitting, not a large company, about 3 billion, this navient. student loan service, a portfolio as well. you may have seen this over the weekend. but there has been news as well this morning involving this company. shares are going to be up. they were rejected prior to

really actually publicly coming with their bid at $12.50 a share. that's canyon, the hedge fund that people may know oftentimes on the debt side of the equation offers $12.50, along with in partnership with platinum, private equity firm as well. immediately rejected and now there has been back and forth between the two companies to some extent where canyon has come out in a letter this morning saying, you know, this really is surprising and confusing to us as to why you did this to us and they were hostile in tone, you hurt our feelings, you appeared to walk away from confidential discussions we were having with you for a considerable time on at least what they seem to think were friendly talks and literally you came out when mr. defre and jack ramandi's telephone call was going on.

canyon took this position back last april with the 13 d it was in october that they signed an nda, and then the stand still they had in place expired on the 15th no surprise that they were potentially coming with this bid, they had previously indicated, though, that a bid might be as high as 14 to 15 that seems to be at least one area where the company and -- and canyon and platinum are in disagreement canyon says for its part, while it had indicated 14 to 15, their due diligence raised material questions as to whether that could be justified they did suggest, however, that a price that would constitute a 23% premium over the 60 day trailing volume weighted average price and the price was an initial indication of interest for its part, i think very important here as well to focus on in its rejection letter,

navient made a very important point of saying it is not just about the price, it is also about the fact that you know where indicated any serious discussion about providing substantive information on addressing a change in control provisions there it is. the company's outstanding unsecured debt, and the company's warehouse financing facilities they have about $9.8 billion in public debt at navient, all which of subject to a change in control provisions you want financing in place to take that, refinance that if you have to. that's where things stand on this wanted to hit it again we have not had a lot of to hostility in corporate m&a. >> that's a good one to watch. as for the leaders today, walmart far and away helping out the dow. number two is mcdonald's, which stevens today takes to

overweight everyone chuckles when someone takes mcdonald's to overweight the target goes from 180 to 200. they see the core u.s. business accelerating and, guys, a lot of the renovation mcdonald's has done over the last couple of years, we're starting to lap, that was a bit disruptive. breakfast. we'll see if mcdonald's can recapture some of the magic, they had trouble maintaining traffic. >> pricing, a huge theme we decided to step back and look at all of the consumer earnings that we have received for this season and see who is raising prices. if you look at the overall inflation numbers, you're not seeing a whole lot guess what, here is the picture. i pointed to mcdonald's as one of them on the call. menu prices increases were around 2% from the quarter you'll notice some other friendly household names like kimberly-clark, which makes your toilet paper and tissues, we expect higher net selling prices of at least 3% and then iff, international flavors and fragrances goes into

a lot of cosmetics and other consumer products. we're going to continue to work with our customers, taking additional price increases as we move through 2019 to ensure that we ultimately recover these cost increases over time. it is not just consumer products companies. it really spans across industries and the economy just here are some other sort of cyclical names that are raising prices, fastenal, price increases going into place, hanes brands, which makes underwear and stockings, we're implementing price increases, mohawk industries, the floor and tiling company, to improve margins we're increasing prices to recover inflation and higher freight costs. between raising cost pressures on commodities and freight costs, tariffs which increase on the cost side and foreign exchange, that strong dollar cutting into overseas earnings, it is a triple whammy for companies. not just consumer. and as a result, they're passing

it on to the consumer. so expect to pay more. even if that's not showing up necessarily in the overall fed inflation data anecdotally it was not hard to find these kind of comments. we have ten others from company earnings calls netflix, not having to do with the macro story. it is happening across so many parts of our economy now. >> that's fascinating. >> it is not being charged to china, we should point out those tariffs. they're being paid by the corporations who actually absorb some of it or pay -- >> i don't know why i keep saying that. >> they're questioning why -- >> money is coming into our coffers. it is not from china. >> it is being collected from treasury. >> coming from walmarts and everybody else that imports from china. >> being paid by the importers, not china itself on the governance frons,t, keep an eye on shares of century link company recently said it would cut its dividend dealing with balance sheet issues the dividend, the yield now 15

plus percent you can imagine why. everybody thought it would be cut. southeastern comes out, large shareholder says we're going from a g to a d. we expect to have more direct conversations with the company about adding directors to the board. they believe the company's fiber assets are extremely undervalued in the stock market. especially considering metrics, like infrastructure funds and cable companies have paid in recent transactions. they believe the best way to address the balance sheet concerns are not necessarily by cutting the dividend but as well by or actually by bringing fiber network expertise to the board of directors. and so in light of that, they are going after some board seats at this point at southeastern and you can see that does have shares of century link up about 1.6% allergan, that name as well, appaloosa after them, potentially to separate the chairman and ceo positions

well, allergan said they'll do it this morning they come out in an announcement which they actually add bob ugan, jim mentioned this, cramer mentioned this possibility of ugan going, it happened he's joined as a board member. corpor it will appear in the proxy statement in which they say there should be an independent board chair to be phased in during the next leadership transition none of which is helping that stock price and that's where brent saunders from ceo is trying to figure out a way to get things moving along, maybe make peace wit doesn't necessarily they'll make peace. >> interesting a couple of other calls today. nomura cuts lulu and ulta saying it is reflect in the shares. no major declines. they're not positive. >> interesting because two of

the most beloved names in retail and some of the best outperformers. the call is about the fact that a lot of the good news is priced in there, nomura says we expect the names to comp higher than the rest of the industry which they have. and it was not the most bearish of downgrades because they raised the price target on lululemon to 157, just to reflect some of the strength that they're seeing in terms of the numbers. >> finally some moderate declines in facebook today this uk report out of parliament in which they say, quote, facebook intentionally and knowingly violated both debt privacy and anti-competition laws of course facebook has been pretty realistic about the prospect of regulation not here in the u.s., but already in europe, where they have a head start. we'll see if this leads to more reports like this. but definitely calling out facebook by name on data privacy. >> i wonder how much this is going to filter through into the campaign cycle here in this country.

2020, so far klobuchar, amy klobuchar, senator running for president, threw her hat in the ring, the one that is mentioned this issue that we need to have privacy laws, we need to crack down on companies like facebook around privacy having seen it as much from now bernie sanders who we know officially is rung, elizabeth warren, they're focusing on the wealth issue, the inequality and getting at that through taxes or other sort of social policies that would help alleviate the gap. >> yeah. on friday, i know this because we were on closing bell, so i can remember, faang was weak the overall market was quite strong today a bit of a comeback other than facebook. netflix is up. but overall nasdaq comp was the worst performer on friday, certainly with what was a fairly broad and significant rally when we saw the s&p up 1%. >> the weakness was notable. so far for the year, a strong one for the markets. look at the leadership it

industrials, energy and technology those are cyclical if you're a bull rooting for the economy, and for the market, that's what you want to see shine. not necessarily just faang all the time so it has been pretty broad and i would note that all the groups within the s&p are higher for the year it is the defensives like utilities and staples which have underperformed, staples today are having a good day on walmart and the broader sell-off >> yeah. dow nair rogue trrowing the los >> slight reversal of the recent trends here. 2 to 1 declining to advancing stocks the sectors, we have seen cyclical stocks as the leadership group they're lagging a little bit today. banks, industrials, energy lagging and consumer staples downing a little better. overall, this has been a pretty remarkable trend in what has been going on today. internally we're in fantastic shape. the best we have been in a long, long time. look here, that's the advance decline line has been expanding. we're near historic highs on the line

new highs expanding. they're not dramatically -- they're steadily expanding the buying interest has been high the selling pressure, the amount of shares coming in every day seeking to sell has been fairly low for several weeks now, going on a month all of that is very good internals. if you look at the s&p, we're near a breakout. we were at 2790. we have been in a downtrend last few weeks. if we can break that december high, that's 2790. we're at 2775 now, we break above that, that's a real significant breakout now you're sort of breaking that downtrend we have been in for a while and technically that would be very positive and, yes, technicals are very closely followed in this market. so leadership, sarah mentioned this, has been cyclical stocks, so your industrials, your energy and technology stocks, this is -- the s&p is up 18% since that december 24th bottom. there is your leadership the stuff above that, all cyclicals. the laggards have been defense stocks, health care and utilities have all been the

laggards that we have seen this is not just in the u.s. though we're getting a modest global breakout that is largely based on cyclicals as well so the dow has been an eight week win streak. that's the best it has been in several years. shanghai and korea four month highs, japan is at a two month high oil sitting right near three month highs as well. it is a global phenomenon that we have been seeing in the last six weeks or so. here is where we are right now in terms of what is good and what is bad. the good news is we have got some trade talk momentum we know about that the fed is on hold or appears to be on hold those are the two best things the market has got going for it. there are cyclical leadership which indicates some belief that the global slowdown will not be as severe as people think. but we did get rather crummy news from the united states on economic numbers last week, on industrial production and particularly retail sales. that caused a lot of people to scratch their head earnings are near zero for the year let's not quibble about a couple

of percentage points and the market is kind of overbought right now you can take your pick overall, over on the weekend we saw more cautiousness because of how much the markets moved in the last couple of months. so i think it is good to be a bit cautious right now one final thing, this is rick's territory, but another thing that gives me pause is watching that ten year yield drifting lower once again today look at this, we're sitting -- not the december lows, but we're there near that, would love to know what rick thought about that, but a lot of people brought that up over the weekend as well. right now, dow is still down 19 points sara, back to you. >> we shall get an answer now. bob pisani, thank you. to the bond pits, rick santelli at the cme group in chicago. good morning, rick. >> good morning, sara. it is fascinating to see so many focused on lower interest rates. but it shouldn't be shocking all the news of late is how much is still around in negative dealing instruments around the globe, europe and japan.

they never really went away and their pressure in the marketplace is really never abated what has happened is that whole mass has met the mass of global slowing. and it met the european central bank that really hasn't thought about planning very well if normalization is even in the dictionary and all of this, of course, is taking its toll. and even though at the beginning of 2018 the talk was, oh, my god, how can we all compete and stock market appreciation when rates are going up, that's what we should pray for now we see the nervousness associated when they're not perky. especially when they're not perky in parts of the global that have been showing negative signs, whether it is germany's fourth quarter gdp we will continue to monitor that intraday of 10s, day off, we come back, we see the slide happening to some extent year to date shows you everything outside of the first day of trading days, the market just

consolidating and consolidating. you see in bunds, the problem is they're consolidating basically at ten basis points. and if you look at guilds, they have given up a lot of ground, down to 115 basis points jgbs, back in negative territory, minus 03. they're thinking they're shovel ready for more stimulus. and finally, how has the dollar fared through that 58% of the dollar is the euro currency you can kind of put it together how that's going to have an ongoing effect we're down about a tenth of a cent, not huge, as you look at the year to date chart, dollar index has been mostly firm especially you think of where it was at the beginning of first quarter of 2018. it is really rebounded rather nicely the problem now is 97 seems to bridge too far we spent some time there, but not very much. carl, back to you. >> rick, you know, we love anniversaries. and you have a good one today. this is a piece of sound from

ten years ago today. take a listen. >> how about this? president new administration, why don't you put up a website to have people vote on the internet as a referendum to see if we really want to subsidize the losers' mortgages or would we like to at least buy cars and buy houses and foreclosure and give them to people that might have a chance to actually prosper down the road and reward people that could carry the water instead of drink the water? >> rick, they're like putty in your hands did you hear them? >> no, they're not they're not like putty in our hands. this is america. how many of you people want to pay for your neighbor's mortgage that has an extra bathroom and can't pay their bills? raise their hands. president obama, are are you listening? >> rick, a big part of that is watching the wolf man's reaction to you, to your riot

what do you think about that a decade later >> a decade later, a lot of the issues that the country was going through back in february of 2009 are continuing to affect us, maybe even more so the move towards more collective, socialism, individual liberty, people are very tired that was the thursday february 19th you know what happened the day before that? that's when we were trying to tear up with homeowners. the friday before that, friday the 13th, when we passed the $787 stimulus package. all in the heat of, let's do something, we're in crisis mode, yes, you know what, sometimes enough is enough and i do think that ten years later we're continuing to grapple with these issues and it isn't just in the u.s. >> rick, i'm glad we took a moment to remember it. we'll see you in a bit rick santelli at the cme.

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welcome back to "squawk on the street." i'm carl quintanilla with david faber and sara eisen dow down about 8 points. s&p roughly flat busy morning as we look not just as walmart but new round of u.s./china trade talks in washington and maybe the prospect of another trade dispute between the u.s. and the eu. >> and a road map for the hour starts with working toward a deal u.s./china trade talks continue in washington. we'll break down just what's at stake here >> walmart up. the retailer has its best

holiday in at least a decade we'll talk to the former walmart ceo bill simon and mondelez's ceo dirk van de put joins us. i'm sure sara will ask him about inflation. >> how do you know >> because you talked about term -- it earlier why wouldn't you >> i am focused on the dueling trade talks. yes, the talks continue between the u.s. and china this week in washington after seemingly successful week in beijing last week though not much details to share. and this idea that the trump administration now has a clock ticking over whether it's going to impose tariffs on imported autos. and the reason this is such a big deal is because we import 8.27 million cars and trucks per year that's almost $200 billion the biggest victims of such a policy in term whofs would pay the tariffs, germany, japan, uk and italy. remember, our biggest actually importers are canada and mexico,

but they're exempt because of the u.s. mca, the new nafta. >> merkel already making comments about this pointing out bmw's largest plant, of course, not in bavaria but spartanburg >> and we use the words allies these days it's not clear given the foreign policy right now who is an ally and who is not certainly i think merkel would agree with that. >> we have a little more data crossing the tape. we'll get back to santelli for that >> yeah, we have the february read on national association of home builders market index and this is a nice surprise. 62 we were expecting a number below 60 this follows 58. at the end of last year we finished off with a 56 that was weakest since may of 2015 but in october we had 68 of last year and that's the last time a number was as strong as this so a nice february read with regard to housing. yields are creeping up a bit but all maturities are still down from friday. we were closed yesterday

many markets around the globe actually saw their equity markets firm so we'll continue to monitor david, back to you >> okay, thank you, rick santelli >> it was a strong earnings beat for walmart. u.s. same-store sales up 4.2%. that's a gain for 18 straight quarters but concerns remain on the impact, of course, of tariffs on goods coming from china, new e-commerce rules in india given the flip card acquisition. let's get deeper into all of this we've joined by former walmart u.s. ceo bill simon. always nice to have you and get your insights. just on really what's been the e-commerce digital transformation of this company, this is an enormous organization talk a bit if you will, about the work that needs to go into what they seem to have accomplished here given, of course, the significant contribution of same-store sales that have come from digital and whether it can be maintained and increased. >> yeah, they had a great quarter and a great year and

deserve all the credit for that. when doug took over the job several years ago, i think five years ago now, he said what he was going to do and they built a strategy that was about retooling the company to live in this new digital world and they have done exactly what they said they were going to do. it hasn't been cheap it's been very expensive for them you know, they've invested a lot of money in cap ex and in decline and operating income from its peak at $29 billion to what they reported today which was at just under $22 billion. they've done a good job doing it and to keep in mind that the bulk of their business and the bulk of their profit is still in the brick and mortar stores, and they've done as good a job there with particularly in the u.s. segment, running their brick and mortar stores very well and integrating their digital offerings through in-store grocery pickup and the towers they are putting in to deliver the consumer the digital

experience in a physical environment. and it's been very well executed >> yeah, i'm glad you mentioned the expense. how much this has actually cost. and it's interesting their shareholder base has been with them for the most part. they are helped by having the walton family fully buying into the strategy as well it's always been a frustration for walmart and its shareholder base how it gets treated so differently than amazon when it comes to those kinds of investments. >> yeah, it's true it's true. the shareholder base and having, you know, ownership with the family is helpful. but walmart's consistently delivered growth they've consistently delivered dividend growth, consistently delivered sales growth, and like -- unlike many companies have reinvented themselves several times from discount stores to supercenters to neighborhood markets, now this digital integration. and they've done a really great job. a great team there one of the best cfos in the country if not the world a great team running the u.s.

business today and an economy that's set up for them to continue to do well. >> bill, that's just where i was going. walmart was always the tell on the u.s. consumer. so should we take away from these numbers that if walmart is doing so well, the u.s. is doing so well? the u.s. consumer and the u.s. economy? or is it a different case now because it's taking share and it's engineered this big turn around >> no, i think the u.s. consumer is very strong very buoyant all the indicators would suggest that unemployment rate at, you know, at really generational lows. wage growth now. i've heard it talked about this morning again, one of the largest correlations to walmart growth is gas prices year over year gas prices. that's been favorable. so the economy and we are a consumer-driven economy is doing well because the consumer is doing well >> yeah, bill, to your point, on the conference call today, they disclosed the average associate wage, once you roll in benefits

per hour, $17.55 >> sure. >> i wonder if that's drawing a whole new class of employees who maybe would not have considered applying years ago >> it likely is. and it's market driven the jobs are plentiful today there's not enough workers to fill the jobs. and so walmart, like any good employer is providing opportunities for people to make sure they attract and retain talent and that's been good for the economy. it's been good for the associates, and i think that will continue as long as things stay healthy in the economy. >> and what about the future can they continue this rate of growth in terms -- and/or do they have to continue the rate of investment, therefore, will margins be pressured from here on should we expect a less profitable walmart than the one we saw back certainly in the '90s or early '00s

>> if you look at it and i was optimistic when i saw their report this morning. at their peak, about five years ago, they delivered $29 billion in operating income. last year it was $20 billion and so that's a pretty big chunk of your op income to drive this growth they had some operating income growth this year up to $22 billion. and that's encouraging to me so maybe we're sort of finding the bottom they are forecasting midsingle digit down operating income, driven by flipcart let's see if it stabilizes there and if they can begin to grow off that basis 20, $22 billion and grow their operating income i like where they're headed. if it stays flat or continues to decline, i would worry that's a number i'm going to be looking at >> and grocery, they seem to be doing fairly well. even foot traffic as well. i don't know if they're being drawn in, in part, by the digital efforts but there has been an increase as well year

over year and the people are visiting the stores. >> yeah, don't understate how important the grocery business is to walmart. they are the largest grocer in the country and they've had some tailwinds there as well. you know, dave dylan when running kroger did a masterful job. they've transitioned haven't done as well as they have in the past there's room in the grocery space right now. walmart has improved their offering in fresh and in organic and are moving in that direction. and now have brought some digital capablity to that which is what customers are looking for with their order online and pick up at store so they are doing a lot of things right in food and that's why i think they've built a moat around their business with their really strong grocery offering. >> i'm wondering how that is going to play out because they're experimenting with the pickup and kroger has been doing this and ramping up digital efforts. and then amazon which now owns

whole foods. who is winning this fight? >> i think walmart is winning. i think they've got the customers. they've got the store base they've got the ability to deliver, you know, a fresh offering into your neighborhood. and it's just a question of how they get to your home or have you pick it up and i don't think the u.s. consumer is where other markets are about home delivery of grocery. i think the winning play in grocery will be order online and pick up in store and i think walmart is probably best positioned to be able to deliver against that others will try, but i think walmart has the store base and the distribution capability to pull that off. >> well, bill, appreciate your sharing your insights with us this morning thank you. >> happy to do it. we'll see you. >> bill simon. markets relatively flat as trade concerns continue to linger but the dow and nasdaq coming off their eighth straight week of gains the dow's best week of the year. the president takes to twitter this morning to discuss the recent rally and says, had the opposition party, no, not the

media, won the election, the stock market would be down at least 10,000 points by now we're heading up, up, up joining us today, noah weisberger and tony dwyer. happy to see you guys. welcome. >> morning >> hey, carl >> certain things go right, what's the likelihood we cross into that territory? >> i think we're climbing the wall going back to the start of the year fourth quarter was an anomaly that we bounced quickly and the climb will be tough. a 2950 target. 6% to year end it's going to be a slog get something relief on trade would be a bit of a boost but we'll have to deal with some data slowing but not drastically. >> what's your view on -- i assume the trade resolution would have to make for a relatively modest picture in earnings growth. >> so we have modest earnings growth don't have an earnings recession which is a big worry for our clients and big topic of discussion we don't have it in our numbers. we can't put it in as a boost.

resolving that uncertainty would be helpful and we think earnings growth should be slowing but it should not yet be a negative >> what do you think markets are pricing in regarding china trade and now increasingly european trade? >> i think a lot of confusion, carl i think what most people are worried about is you have slowing growth slowing earnings growth. a president under investigation. you have potential tariffs with china and now on cars and you wonder, has there ever been a time we've done this before and the fed has shifted in short order after really raising rates aggressively and it turns to 1995 president clinton rnd investigation for the whitewater with the special prosecutor. we had the fed go from tightening on february 1st of '95 to easing by july. we had the data slowing aggressively to under 1% as reported in the first two quarters of gdp growth in 1995 and the market kept going. it was up over 10% to start the

year it ended the year up 34% and never pulled back, even though you went into these aggressively slowing growth and just on the tariff side, japan was the number two global economy back then. roughly the same percentage of global economies china is today. we threatened to put 100% tariff on the top 13 japanese cars, and i believe it was may of '95, and it eventually got resolved because we -- that had started in 1994. that rhetoric. and it ended and culminated in the early summer of 1995 it was all about fed policy, not necessarily trade, not necessarily the slowing data it was fed >> so does that mean you expect the fed not just to pause but to ease >> i do. i think the surprise here is really important point you are shifted from being fearful of inflation and growth too strong, you have this continued slowdown overseas,

although there are signs of green chutes it's inflecting especially on they y isequentil data you look at what interest rates did in '95, they were down a little bit over 20% on the ten-year note yield. we've done that because you're talking about smaller numbers. we've done that on the ten-year note yield from -- >> but we have an economy that's supposed to grow 2%, 2.5%. inflation is benign but we don't have deflation so financial conditions have stabilized remarkably just since the fed pivot. what's going to push the fed into easing mode >> i think it's going to be the slower data. by easing, you don't need this massive ease they overdid it on the up side a 20-point basis cut would allow the yield curve to steepen even with rate cuts coming down in 1995, december '94, the yield curve got to seven basis points. we got to nine and then what happened is going -- when the fed -- from

the beginning of 1995 into the middle of 1995, that went to about 40 to 50 basis points. i'm not talking about this massive easing that's going to save the economy and the world just giving it a little bit more ability to slightly steepen the curve for banks to continue lending. >> how can that co-exist with any trade resolution wouldn't that give europe a bit of a green light to grow again and put the fed in a bit more of a box? am i crazy >> it definitely -- >> to the green chutes point that tony mentioned, a lot of the global worries are in the market certainly on the china trade that's in the market and it's a boost to the up side and the easing in financial conditions we've seen already we think is actually really meaningful already so i don't know that we need to see the fed ease here or cut i think the pause is enough and to be honest, i worry a little that the market has taken too much comfort and it's going to rely on that too much going forward. that said if we look back at last month's payroll report and the up nick the participation, i

think that's going to indicate a lot of these problems get resolved with a labor supply that has room to grow to keep that from intensifying too much. i don't know that you need too much from the fed relative to what they've already delivered >> biggest risk to u.s. equities at this point, long-term yield something else >> if we looked up andsaid we have the yield, rates start to sell off and rates move higher, that would be a replay of the summer maybe not all the way through q4 that's a disappointment on trade for sure because people are starting to lean the other way on that. >> guys, thanks. >> if the fed shifts -- >> tony, go ahead. >> if the fed again pivots wrong and they look like they're going to tighten again because the stock market is up rather than looking at the inflation break evens or other inflation data that's pretty benign >> we'll see what the headlines say about fed credibility if we get there. guys, thanks see you soon it is a sad day in the world

of fashion prolific and greatly admired fashion designer karl lagerfield has died he was creator of chanel and also behind furs, ready to wear he was also an accomplished photographer lending ad campaigns for chanel and fendi and adidas. widely credited with making chanel -- remaking chanel accessible to younger consumers. and no matter where you go in asia, in the airports, in the stores, there is always a line at chanel and sort of ropes like a hard to get into club because the brand is at the top of its game >> definitely an advocate for haute couture.

some of the quotes about sweat pants. basically if you've lost faith in life, that's when you buy sweat pants. >> he was more tweed suits and mini skirts. he brought the mini skirt to chanel >> lagerfeld, dead at 85 jim stewart discussing all things amazon hq2. plus, one year into the job, the ceo of mondelez will join us on the state of the economy and the consumer some of the top performing names on the s&p don't go anywhere. the dow has gone green nology ing lies beyond the tech sector. it's about technology transforming every sector. ♪ at pgim, our bottom-up approach uses a technology lens to identify long-term winners. from energy... to real estate... to retail. finding such opportunities for alpha is the true value of active investing. and around the world, you have a partner in that pursuit.

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xfinity, the future of awesome. i want more from amazon, too, but the bottom line is this is an example of abuse of corporate power. they had an agreement with the people of new york city. amazon just took their ball and went home. and what they did was confirm people's worst fears about corporate america. here's the 1% dictating to everyone else, even though we gave them a fair deal. obviously, a group of very powerful people, the ultimate members of the 1% got together in a board room in seattle and made an arbitrary decision we couldn't have seen that coming >> that was new york city mayor bill deglade blasio. once a strong advocate for the amazon hq2 plan. our next guest says criticism and objections to the deal continue to make no sense. with us at post 9, columnist jim

stewart. the fallout continues. de blasio has changed his tune some say it was his failure in leadership in terms of trying to figure out a way to make this happen that accounts for the failure. but he seems to be blaming amazon now for not being a good corporate citizen. >> well, there's plenty of blame to go around here. i spent the last, nearly a week, really trying to understand where the opponent is coming from because i was so shocked after winning a prize everyone wanted that somehow new york thumbed its nose at it and drove amazon out so number one, the main issue seems to be like, why should we give amazon $3 billion i hear that everywhere i'm going. we weren't giving them $3 billion. they were tax incentives that's an investment you can't just look at the cost side of that equation. you also have to look at the benefits at least one estimate i read was that for every $1 in tax subsidy we were giving amazon, new york

was going to reap $9 in tax revenues now why is that? it's because new york has a very high tax rate. so you give a break to one person if that spurs new investment, new businesses, new companies and the economy grows around it, the revenue pool goes up very -- to a very great degree >> why was that lost on so many people people who are seemingly sophisticated. i got active on twitter on this because, like you, i was, frankly, just -- >> directly responding to aoc. >> i was a number of times asking who the beneficiaries are of rejecting this because it's not clear to me who benefits from saying no but also surprised at how many people don't seem to understand whatincentives are versus this idea of giving them a pot of money. >> it's not as if new york doesn't give other people incentives because of the new york high tax rates, they have to. people were saying, oh, well virginia and tennessee didn't give them $3 billion well, they don't need to give them anything because their tax structure is very low.

so that's one thing. that to me makes nosense people have to have embraced that because they somehow want it really. there's something else going on. then the union issue they said they wouldn't unionize if you are a union person you want amazon to unionize. what's better? get them to move to new york, hire all these workers and then organize and with all these other union people around them or have them do their headquarters in tennessee and virginia do you -- >> not to mention the construction jobs that would have gone to unions -- >> so do you think they'll unionize in tennessee? no this makes no sense from a union perspective. and the unions were, i thought, they weren't that against it once you got through the rhetoric >> we had the city councilman on "squawk box" had another important gentleman on going to be part of the state commission. and aoc. it's not even her district, by the way. what accounted for it? it was a vocal minority to be shore. vast majority of new yorkers were in favor of it.

you could argue there was a failure in political leadership in trying to figure this out does amazon have anything, any blame here >> oh, absolutely. i think amazon -- i think they were blipdsindsided by this and shouldn't have been. they should have been -- had their people in here, having identified the key opinionmakers and certainly the key political leaders, including the state senate people. and kissed their hand and, you know, get them on board. bring them into the thinking and offer something. make the benefits very tangible. i think amazon was caught by surprise after this beauty contest where every town in the country was like begging them to come and sending them life size cactuses and other ridiculous pranks like that they thought everybody loves this everybody wants this it was inconceivable they'd pick a winner and the winner would then kick them out >> what do you make of the argument that new york's decision is somehow a social good that somebody had to break the arms race that's become

incentives in american cities trying to bring employers to the city >> well, first of all, if there is an arms race, i doubt this will break it. do you think other cities aren't going to leap on this and continue to offer compet of it advantages to get their -- i mean, they'll be going after new york companies left and right or potential new york companies so i don't necessarily buy that. n secondly, what -- is it an arms race? i don't understand really like, aren't there a lot of other companies in new york who are getting incentives i think there are. i read at one point the amazon deal really was no different than from that which would be offered any other potential -- >> it was a larger number because it was a larger number of jobs, but the similar incentive programs are in place for that area of queens. >> i think one other underlying thing here is this hostility that has taken route towards the big tech companies and particularly amazon, google, facebook and this resentment that they've gotten too big.

a lot of people going around saying we should break up amazon well, that has nothing to do with whether they have a headquarters in new york but nevertheless, why -- why do you break them up? >> it fuels legitimate concerns about gentrification what happens in a city like seattle to house prices. a city like long island city you have projects, you have low to middle income communities that might not qualify for some of these jobs that are going to pay so well. what happens when they get squeezed out i think there are concerns that led to some of the outcry and to those hard-liners in the democratic party that were so vocal against this >> yes, i think it does reflect a lot of hostility towards so-called gentrification but i feel that's a completely different problem from amazon, per se affordable housing in large cities like new york and seattle, yes, that is an issue and that requires a lot of focus, a lot of political leadership, a lot of economic investment and some sensible plans for solving the problem. but that has nothing to do with,

per se, with amazon. gentrification in new york city is not going to go away or anywhere else because amazon moves its headquarters somewhere else >> people like to point to google which has created a lot of jobs in the city of new york over the last five years and has plans to do a lot more without receiving considerable incentives and compare it to amazon and say why couldn't they have just done that. it was a very different animal >> i do think amazon, to its credit, is going to continue investing in new york. it's still going to recruit talent here. hopefully it will grow maybe this can be revisited once the passions have died down a little bit but if somebody can give me coherent, rational explanation for their opposition i'm not against opposition i'm all for healthy debate, but i just want to see it be logical and fact based to the extent possible i realize these are emotional issues and emotions can't be taken out entirely so far i see no logical case against it >> i keep looking, too $92 billion budget

$63 billion comes from property taxes, income taxes and sales taxes, all of which will go up if you actually have more people where do they think the money comes to pay for all the programs that we rely on in new york >> absolutely. >> and new york is a classic example where relatively small number of people shoulder a huge share of the tax burden. >> jim, thank you. jim stewart. when we come back -- ranking member of the house financial services committee, jeb hensarling will join rick santelli and this afternoon, kev on hassett, the cea chair at 2:00 p.m. on cnbc. we've really climbed back. both s&p and the nasdaq in positive territory dow down 9 though walmart is also helping that index come back we'll be right bk,ooac t o"squawk on the street."

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and say hello to the new way... at carvana. we see eat emerson,mulating when issues become inspiration, creating a better world isn't just a result, it's a responsibility. emerson. consider it solved. welcome back i'm brian sullivan here's your cnbc news update vermont senator bernie sanders throwing his hat into the democratic primary ring. he released an official video this morning on his youtube page saying his ideas which were once considered extreme have now been

embraced by americans. >> we were told that all of these concepts were ideas that the american people would never accept well, three years have come and gone and as a result of millions of americans standing up and fighting back, all of these policies and more are now supported by a majority of americans. >> house speaker nancy pelosi meet with the european union's foreign chief in brussels where she reaffirmed the u.s.' commitment to nato and the eu. she headed a congressional delegation to belgium. still photos capturing the moment where more than a dozen were rescued from a seaworld gondola. it stopped working it took rescuers about four hours to get all 16 people back to dry land. and that's our cnbc news update for this hour.

sara, back to you. >> brian sullivan, thank you time for our etf spot light. today we're looking at oil on the rise again this morning after briefly touching its highest level since back in november november 20 ppt so far this year energy has been one of the top performing s&p sectors coming off its best week since early january. the oih posting gains today but the xle and xop under pressure names like exxon moeblg, chevron, conoco phillips off to a very strong start in 2019. when we return, we'll speak with the ceo of mondelez after finishing his first full year on the job. s&p managed to go green for a moment but back in the red don't go away.

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snackmaker mondelez will lay out its strategy going forward at a conference in boca raton, florida. that's where we find the mondelez chairman and ceo dirk von de put joining us first here on cnbc. welcome. >> good morning. thank you. >> so we keep saying this is your first year on the job going back over the last 12 months, consumer staples are down 2%. mondelez is up 8%, up almost 20% this year. what are you telling investors today as far as how you'll keep that outperformance going? >> well, we take them through the fact that we are a snacking company, and that snacking is different from food. it's a good category to be in. and within that snacking world we are the global leaders. we have presence in all the big markets around the world either number one or number two in a lot of the categories and we feel that we have

structural advantages to keep on growing. and on top, we have a new strategy which we started about a year ago and that is working out for us so we believe that we will outgrow the category in the years to come and that's going to be a mixture of entering into new wide spaces for us, gaining marketshare and extending our brands into other snacking categories >> you point to snacking as a way to outperform certainly the broader package food industry. what's working there what are the consumer habits pointing to the growth of snacking versus other packaged food that we see in the supermarkets >> well, millennials and consumers in general, about 75% of consumers snack on a daily basis, and that is growing and millennials will often snack up to four times a day they will skip complete meals just to have a little snack. and so it's probably a consequence also of our daily

lives where we are on the run, moving sit-down meals become less and less normal. and so that's what's really driving the category it's not only in the u.s it's happening all over the world. and particularly in emerging markets, as consumers there are also more on the go. snacking is showing particular growth in fact, in the next years, we expect that 80% of the growth in snacking will come from emerging markets. >> and that certainly would be good for a company that gets 80% of its revenues overseas, dirk walmart today, in the u.s., put up its best comps in about a decade you're a big supplier. in the conference call, executives talked a lot about their new strategies around digital, ordering online, picking up in store. what are you seeing when you work with a big customer or i guess their customer of walmart with some of this experimentation and what they're doing in grocery >> well, i think they're doing

it the right way they are clearly moving. it is the way the consumer is going. and i think they have gone through initial years of experimenting and now they're getting some traction there. it's not only walmart. it's every retailer that's in it now. and i think what we see in the u.s. is at the moment what we call the click and collect or the offline or the brick and mortar retailers sort of playing harder online. that's one of the big phenomenons in the u.s. these days >> you have also put in a strategy, since you're there talking to investors about your business, focussing on local brands what's doing well in russia and focussing on the snack category there which is a big distinction from your pred cessor who really looked at the power brands like oreos because they drove the growth are you going to continue to do that, and what do you hear from investors? it's still the big power brands responsible for the growth, isn't it >> no, no, we have growth now in

our -- what we call our big global brands and local brands, which is new for us. and that has to see with the fact we have started to reinvest in those local brands. the reason why it's important to do both is that not one brand can sort of cover all the snacking needs of consumers. and also there are brands that people around the world have grown up with, which they really love and like. they don't want to give up and we own a lot of those brands and so i think it's just normal that you need an assortment of brands to cover what consumers need we are clearly planning to keep going with that. what happened in russia, in the chocolate market, we have a brand called alpengold which is how russians say russian chocolate should taste and another brand called milka which is a more international chocolate brand. by doing innovation, the same innovation on both brands at the

same time, going into dark chocolate, for instance, or going into something we call choco bakery there is more movement in the market and it captures more attention of people. and it's led to quite a big market share gains and we become the number one packaged snack brands in russia we see it working and plan to keep doing it around the world >> wanted to ask you, speaking of around the world, about the coke guidance last week. really surprised people coming in very well below what analysts were looking for and the number one reason cited was macroeconomic weakness james quincy sees 2019 growing slower than 2018 as someone who operates around the world is that something you're seeing as well, and is that going to hurt a company like mondelez? >> no, we're not seeing it, and, obviously, i cannot talk for coke i don't know what they are seeing, but if i look around the world and look into the big markets, the u.s. really doing well our market, the snacking markets are up more than they were in

the previous years china. a lot of talk about china. we don't see it. the markets are up our market share is up just talked about russia europe is also going quite well. so we cannot detect in our world, in our snacking world, we don't see it at the moment and then again, it's kind of known that in recession or economic downturns, a category like snacking is usually not that much affected as other categories >> and then my other big picture theme was inflation. i did a run through of some of the earnings calls where higher pricing was mentioned, whether it was freight costs increasing or the strong dollar hurting or tariffs. just leading to an overall theme of rising consumer prices. from your vantage point, are we in an inflationary environment in terms of what we the consumer are paying for consumer products >> it's -- i would say a little bit. what is going on as it relates

to our input cost is that we always see inflation we've seen inflation over the last years this year, '19, it's a little more pronounced. it's a bit high are and so we have to increase our prices a little bit more than we normally should be. and so that's the effect you're going to see, would i call that a heavy inflationary environment? no but it's a little more than we've seen in the last years that's for sure. >> and finally, i know one question you'll get a lot from investors today is on m&a. you purchased tate's, the cookie company. haven't done a lot of other big acquisitions how do you feel about your portfolio in terms of looking to unload some of the brands or actually load up on more and how big? >> well, we said we feel very good about the snacking space. we want to keep on going at the moment, we're a biscuit, chocolate, gum and cand y company. we are not yet the leader in every category in every country around the world so there's

certainly opportunities around the world to reinforce ourselves in our categories. that's a focus and then we also want to evolve in certain areas of snacking where we think there's opportunity. those areas would be health and wellness clearly a big trend premium. there's really a movement happening in towards premium snacking, and that's why we bought the tate's brand, which is a premium cookie. and also digitally enabled snacking solutions is something that is abouting us. so, yes, m&a is a clear part of our strategy going forward in a very thought through and financially responsible way, but i think sometimes it's better to buy than to build. >> what's a digital-enabled snacking solution? >> it's a business model that goes straight to consumer that doesn't use normal retail. the shave club would be an example. not in snacking, but that would be a typical example of that but that exists also in

snacking >> snacking subscriptions. dirk van de put, thank you for joining us >> thank you for having me it was a pleasure. >> with an update on the strategy in the business millennials snack four to five times a day. >> that sounds low >> does it >> sounds high we only eat three miles a day. a lot of snacks in between or as he said, we skip them. when we come back, congressman jeb hensarling joins rick shares of hsbc down after posting weaker than expected profits for the full year warning that economic slowdowns uldaences like china and the uk cod mp results this year be right back. with signs o unity.

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industrials on track for the best quarter in a decade is there more room to run? find out on tradingnation.cnbc.com more "squawk on the streets" coming up. it's time for the ultimate sleep number event

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the street." rick santelli live on the floor of the cme welcoming my first guest of the week, former texas republican congressman from the state of texas, jeb hensarling thanks for joining me this morning. >> good morning. happy to be on the program >> well, i imagine you have a lot more free time now that you're not in congress or chairman of the house financial services committee but i'm sure you are keeping up. and today's big topic, trade talks with china and they seem to be making progress as deadlines loom, although maybe not set in stone for tariffs. my question to you is more generalized to trade that is with the new congress, especially the democratic house, how much of an issue is it going to be to get these trade agreements, whether it's the united states, mexico, canada agreement, known as usmca, or how we negotiate with china or europe to actually get them to go through congress without

dramatic changes or penalizing the president for completing trade talks. >> well, rick, it's a very good point. there's really two hurdles one you have to negotiate with the other party, be it china or the eu or canada and mexico and ultimately you'll have to negotiate with congress as well. and i -- when i left congress just about six, seven weeks ago, it was about as partisan of a place as i had seen it in the 16 years i had served and so, unfortunately, not withstanding the fact we're not in an election year, theoretically that doesn't happen until next year, i think it's going to be challenging because so many of the opposition party want to deny president trump any type of victory, even though potentially it could be a victory for the american people. and it is a little unsettling to have all of this protectionism kind of hang over the economy. hopefully progress is being made i led a congressional delegation

to china in the fall i met with vice premier liu he kept his cards close to his vest but it's obvious they are interested in making, i believe at least some purchases or as you well know, a lot of structural issues not the least of which is forced technology transfer but once that gets done, the question is simply because donald trump's name on on it. >> we have some examples to toy with, though they're not exact, if you look at new york and you look at what happened with their relationship with amazon it certainly seems as though we can debate gentrification, we can debate tax incentives, but at the end of the day i can't imagine that new york is better off without amazon, the jobs and tax revenues it would generate so it is not out of the realm of

possibility that this type of behavior could affect trade agreements as well. >> as an aside, if amazon is listening, we have great real estate in dallas, texas. we're business friendly and we love freedom and business in texas. put that to the side yeah, that is interesting. i'm just fascinated that somebody would want to turn down that amount of economic growth in jobs. the tax incentive package is left up to the people of new york some of that may be a little bit of cronyism. i don't know so many states do it but to have somebody declare victory out of the loss of so many six-figure jobs is a little strange to those of us in texas but, again, sometimes people cut off their nose to spite their face and one thing this administration has to

brag upon is most people in america is enjoying the greatest economy in their life times, when whether you look at gdp, increased wealth creation, take-home pay and the tax cuts and jobs act -- >> in as much as i agree with that, i just heard the same conversation with james stewart and our own anchors regarding how the amazon deal would improve that part of new york, bring more money in, it already has a small tax base the same could be said for all of these trade agreements. what i'm asking is, is the political arm of our country so into the poster child or children of these causes that they won't do what's generically right for the better of the overall economy your final thought. >> well, my concern is particularly those on the left want to turn trade agreements into something else besides

trade. they lard them up with all types of different kind of green new deal provisions and very leftist labor union provisions that have nothing to do with the essential free flow of trade and services. and so they -- you know, that's harmful to increased global trade and ultimately to have positive economic growth we need better global trade. >> we're out of time when these bills get completed and moved to congress, we'll have you back. thank you for joining me david faber, back to you. >> thank you, rick. time to send it over to jon fortt for a look at what's coming up on "squawk alley." jon? >> tech versus government. this story continues to development uk parliament with harsh assessments of facebook and we continue to follow this story of amazon and new york and the reverberations it s d haan all that is coming up on "squawk

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stocks lower but hovering near the flat line as investors wait about u.s./china trade talks as we talk about consumer

discretionary. one of the big performers today, the outperforming groups leading the names like carnival, royal caribbean but home building stocks like dr horton and lennar that's it for that consumer discretionary sector we'll have an interview with the cia of paypal talking facebook, e-commerce growth and amazon hq 2. and tomorrow afternoon on closing bell i'll sit down with kimberly mark, michael hsu that's a live exclusive from dallas tomorrow. squall is co "squawk alley" is next don't go away.

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