who's been here graciously bottom line, the u.s. economy is strong >> it's good it's slowing just following up on congressman brady there, i do think there will be some increase in potential growth coming out of the tax act but it's from 1.8 to 2.25 so it's at the low end. >> "squawk on the street" begins right now. ♪ good thursday morning. cross-cla the news flows heavy reports of progress in u.s./china trade talks, lyft is prepping for an ipo. europe is relatively mixed macro data has not been grade.

dispoin disappointments on durables. investors paying close attention to washington where trade talks between the u.s. and china are about to get underway. talks are also scheduled for tomorrow a lot of talk this morning about these so-called memorandums of understanding they are reportedly drawing up on force technology transfer, currency, ag, cyber threat, intellectual property rights and more. >> the market has largely priced in a trade deal. the market's been doing in the last two weeks how much is prices in. we think about 50% priced in i think the concern people have is there's significant downside risk if we don't get a deal. if something happens on march 1st and we do not have a deal and i'm going to 25% tariffs, the market is going to have a problem. >> pompeo on the tape this

morning saying real progress being made in these particular round of talks. >> compliance will be a key issue. it's one thing to have a memorandum of understanding. it's another thing to have a mechanism with which to force compliance over time when it comes to stopping what apparently is an increase once again in cyber espionage, when it comes to respecting intellectual property. i don't know that investors really care that much about the details as long as they get something that seems positive in terms of not going up in tariffs and we may be coming down. >> i think the problem is the bar has been set so high it's not about buying soybeans it's about really complicated issues the trump administration has made it about the technology transfer, about the intellectual property theft those are really thorny issues to work out.

it makes it much more difficult. >> reuters had one source saying there has been some discussion on enforcement of these things but we'll have to wait for more. we'll continue to watch the markets. cantor fitzgerald market strategyi strategist with us. >> at the end of the day, as bob said, it's very complicated in terms of the various issues that need to be resolved over time. i think we get the optics of the deal before the deadline on march 1st, i do. however, i do think we also get a push i think it's a balance and i think the president is well aware that trade does affect markets. that said, i think that positive outcome is largely priced in to markets right now. and i don't really see a trade

resolution in really any form, frankly, providing a positive catalyst to markets here with the s&p closing in on 2800 i think we're fairly valued given the absence of other tail winds into the end of the year. >> that's a pretty popular narrative right now, this notion that china trade talks have been exhausted as an upside catalyst and what would be more powerful right now would be some kind of formalization of defense posture in recent weeks. >> yeah. certainly having the fed kind of more or less say no hikes and no reduced balance sheet has a calming effect on the market i do think expectations for trade resolution is running very high suggest to a lot of disappointment, especially since you've got lighthizer and others looking to create multi-year policy this isn't just a tactic to try

to get a better deal on, you know, imported barbie dolls. >> what's going to get us over 3,000? we're at 2800 on the s&p i think we probably agree the central catalyst on the turn around has been central bank flexibility. powell announced he's flexible ecb announcing they're fairly flexible we've got this concern about an earnings recession out there a lot of people believed the market was down last year, signaling there would be some kind of earnings recession china isn't improving much at all. how do you get this stew together to get us to move the market forward it's kind of tough right now. >> again, i think the positive catalysts are in the rear-view mirror we have to keep in mind as well why did the market sell off the way it did at the end of last year it was a miscommunication by

chairman powell at the meeting that followed the ecb announcing it was going to end qe in mid december that led to this feeling that the fed put was gone it wasn't until early january where that flexibility began to creep into the communication and then a number of fed governors marched out over time communicating that said flexibility. at the same time, though, rest of world growth has really rolled over. europe is showing real signs of strain now we've got france, germany now deeper into contraction for the second month in a row. that's been part of our narrative for some time. by the way, as has the rally in the s&p 500 on this communication shift. i don't see really further catalysts. earnings are rolling over. revisions from q 2 from 7% now to about 2%, it just isn't setting up all that well from a fundamental perspective into the end of the year. >> what do you make of that

earnings recession if you're at 0% earnings for this year, the market is darn pricey can you make an argument to expand a multiple when we're getting global economic flatness like this? >> no, i don't our view is i think we can get low single digit earnings growth, certainly a far cry from the 20% growth we got last year. a silver lining in europe, i do think perhaps the by-product of having a weakening brussels and sort of the central command kind of pulling apart, we may start to see more fiscal spending far in excess of treaty levels and that could be good news for local businesses maybe not exports to china and germany, but in italy, spain, greece and other places where we're going to get possibly more

fiscal spending and brussels will let that happen. >> germany the flash pmi, 47.6 today, the biggest drop in about six years. are you unnerved fw ed by this curve? >> i think it's always been part of the conversation. i've been calling for a flattening curve for about two years, really after the election really the reason for that was very loose policy from other central banks globally which anchors the long end of our curve. and now it's really coming more from an economic slowdown in europe, in china, in the u.s. which is not putting pressure on the long end yields. in terms of that silver lining in europe, honestly, i don't see it in terms of fiscal stimulus in europe, it's very hard to accomplish brussels is going to have to do a complete about face from

fiscal austerity that's not a heck of a lot of stimulus that's the absence of austerity. that's very different. >> viewers are looking at a live picture of the executive office building in washington, d.c. where we're expecting maybe a comment or two about the round of trade talks going on in washington as that is happening, curious timing on this tweet from the president saying i want 5g and even 6g technology in the united states as soon as possible >> do we even have 6g technology >> no. 5g is really obviously yet to make its way into most people's lives but we talk about it a lot and it is going to be transformational in many ways but not probably for another year or two. there are certain cities being built out by some of our larger wireless carriers. it's about the internet of things, about connecting so many other devices, not just bringing

a broadband product into the home 6g, don't really hear too much about. >> no. >> that's another generation that's 10 or 20 years away that's when we have a chip in our head that allows us to communicate both wirelessly and through the terrestrial networks maybe we can show videos to ourselves in our own brains. i'm not really sure what 6g is. >> maybe we can get our own plane reservations by sitting here thinking about it. >> i'll probably not be on the planet for that. >> some are claiming they are 5g already but it doesn't look like 5g. >> 5g figures into these talks in terms of our competition with china, what is said to be this league they have when it comes to 5g which is going to be very important for their country. by the way, when you also want to keep tabs on every person in your country, 5g is very

effective. i've seen verizon at the lab there because of the lack of latency the cameras and what they can actually do using artificial intelligence. for a surveillance society like china, it's going to help them a great deal keep tabs on every single person. from a corporate perspective we are in a race with them. huawei is their largest provider of 5g at this point, helping others around the world. we will not allow huawei into this country we say they essentially spy for the chinese government some governments agree with us, others don't but it is a key area of competition. not in some ways unsurprising the president would reference 5g nobody really knows what he's talking about when it comes to 6g. >> the main thing, you'll be able to download a movie in 4 seconds.

>> that's the important part. >> you look at what it means for consumers. that's what always comes up. >> and the larger issue is if they can do it in the home it's going to cost many billions and there are still some questions will it really be able to compete effectively with our wired competitor, namely a cable company or a fios or anything like that right now. that will be a key consideration. really the internet of things and the ability of network all sorts of devices working on a 5g network, that will be perhaps even more important than being able to download a movie in 4 seconds. >> maybe we can get the weather right if we get better a.i. forecasts. >> yeah. >> that's what i want. i just want four second movies and weather forecasts. even 24 hours it's shocking how bad it is before. >> i see lighthizer appears to be waving the press out of the

room you saw larry kudlow looks like that's all we're going to get in terms of pictures. some reports out of reuters overnight suggested the talks in beijing were good, so good they wanted to carry them longer than they lasted and of course have landed in d.c. when we come back apple and goldman said to be teaming up in a credit card partnership. also samsung unveiling this foldable phone take a look at the premarket here we'll watch the china trade headlines. alpha seems more elusive today. is it because so many go after it the same way, chasing after short-term returns?

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this morning saying, quote, we see this as challenging for apple who could find themselves with no access to the critical flexible oled technology for which we believe samsung has at least a two-year lead. they do couch that by saying we'd like to see the actual product drop before we put too much promise in there. >> will they give access to the technology to apple? >> that's a high price pad. >> you can buy an ipad and at least an 8 for $2,000. >> obviously they don't have the foldable technology. they're going to have to hines it from samsung. that's going to be the issue. >> goldman's argument is that only samsung will have this foldable flexible technology they have phones with three cameras for various wide angle zoom effect at much lower price points it does get to the point that.

apple's got some other neighbors knocking on the door in the phone space. >> there's been kind of a question about innovation at apple to some extent they obviously dispute that vigorously and talk about their products, not to mention the watch and other things this goes to some point. and our earlier conversation about 5g, it's not as though apple is going to be out there with a 5g phone. you're not going to be able to download any of those movies. >> they don't have the lead in the smart watch. they don't have the lead in speaker technology their home grown speaker is certainly not out performing amazon or google's speaker >> some of the dramatic headlines, potentially dark days are on the horizon, talking about apple.

there are some skeptics out there. >> i don't know how many people are going to need a foldable phone at this point. goldman and apple teaming up for a credit card. you can't sell as many iphones you go into the services business you go in and take a cut of everybody's credit card transaction. i think that's very smart, although in the long run i personally think apple's greatest contribution will still be in health care but they've got to figure out a way to grow that services business here's a potential way to go out and do that. mobile payments, they're in streaming music. >> and they're moving much more aggressively into content overall, going to be spending there. i think it's a much more interesting story on the goldman side. >> goldman sachs is moving into credit cards so what does this tell you >> both giants are struggling for new ways to get revenues

that's what it tells you in two different fields, both giants are struggling for new revenues even the people at the top are getting squeezed a little bit. they need revenue growth and they're smart. partner with two of the best people out there together. that makes a lot of sense to me. >> it's unclear if it will alienate some of the people that use apple and the credit card companies partnered with it on t the apple wallet >> i did not buy an apple watch, though the health care aspects of the apple watch are very interesting. >> when we come back the ipo narcotic regulation. we're going to talk about both with richard breeden

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can help make them a reality. talk to one today. u.s. bank - the power of possible. we got four minutes before we get started trading here on a thursday at the new york stock exchange let's bring china, that does seem to be the heartbeat of the market right now. >> it's so important for so many things until you get clarity on that -- and we're getting closer -- i think that's going to continue to be the topic as we go through day to day to week to week. >> we've had a bit of a debate here how much is already in the market in terms of expectations that it's a positive outcome

how much downside would there be if this thing took an unexpected bad turn >> i'd say there's probably about 75% of it priced in the market that everybody is expecting this conclusion and the finality to it i think if it all of a sudden takes a turn, which it could, i think you'll see the market correct very swiftly that being said, i don't think that's going to happen i think we're going to go into this whether it's another week, another month, the fact is you could almost see the light at the end of the tunnel. >> most people agree we're not going to get a trade deal on march 1st. the bar is so high it's not about buying soybeans it's about very, very complicated issues the market's fine with that. >> i think the market was more concerned about march 1st being this drop dead unnegotiable

date they started wavering last week that he was going to be open to moving that date the market absolutely loved that the market really rallied on friday when that came out. i think that's the right thing to do, actually. >> we've got the fed basically behind the market. we've got perceptions that a deal is out there on the horizon. >> and 2800 on the s&p, which just psychologically is -- >> how do you deal with this lousy data one day can we have some decent european economic data, please >> maybe not right now the fact is this weak data actually only keeps the fed at bay, which the market also likes. bad news is good news. the fed made that clear when they talked about policy and

looking forward. although they still left a rate hike on the table, they're not really committed to it a week and a half ago the tide was turning around there were people talking about a rate cut being the next fed move, which i don't see at all we still think they're going to hike it at least once, whenever that is. >> how do you deal with the fact that the market is so pricey right now? if you have 5% you're at 16 times. how do you make an argument that the market should move forward when you get those historically pricey multiples on flat earnings >> i don't necessarily think that's what we're talking about. the market has had a nice pounce we're up 10% year today right

now. it may end up churning all year. nothing says it has to run another 10 or 20%. and it may not depending on second quarter earnings. as long as you find stability, i think people are going to be comfortable with that. >> there's the opening bell. s&p 500 at the big board just to put a cap on this, you think 2800 will be a dog fight >> i think it's going to be a dog fight the first time because it's a big round number. the futures early this morning were positive. they were at 2791. all of a sudden they've turned weaker i do think the first attempt at 2800 is going to be a dog fight. >> it is really remarkable how

much more stocks are advances than declining we're back to the near historic highs. the vix is below 15. the technicals of the market really look very strong. i keep waiting for this to weaken but it hasn't happened yet. >> it's happening methodically, slowly it's like the tortoise and the hare what happened in december last year was an all-out panic. people who could see the light and the bigger picture are benefitting as the market find stability and starts to make its way back gradually but solidly and methodically. >> just a couple notes on some mark stocks moving. avis budget 14%.

domino's is down fractionally right now. we had some very good numbers out of norwegian cruise lines. they raised their full year estimates here that's helping them. royal caribbean also is to the upside generically, we're still getting decent fourth quarter earnings numbers in i think the concern is what's going on in the first, second and third quarters. >> we've been talking about that the expectation is they're not going to grow at double digits like last year and they are going to start growing in the single digits. and i think the market is okay with that too. you can't keep growing at 25% quarter over quarter it's never going to sustain itself if we get back to a normal growth range, i think the market and investors are welcome that because it won't feel so skittish. >> how do you feel about this earnings recession debate?

there were people out in the middle of january saying, you see we were down last year and that's going to signal an earnings recession they acted like this is a self-fulfilling prophecy why does it automatically mean stocks are going to be down in 2019 >> i don't think it does it becomes self-fulfilling if they keep talking about it enough but just because you see the slowdown doesn't necessarily mean -- it all depends on where the fed is, what valuations are. look, if the fed gets more hawkish and then valuations are going to have to come in, then yeah, you'll see the market weaken and stocks will weaken. if the fed stays where they've said they're going to stay, i actually think there's a lot of support. >> jpm says after reading the fed minutes, they still believe the next move is a hike. >> i think it's going to be a hike versus a cut.

>> thanks. a few movers especially in restaurants. i don't know if you guys are watching domino's but they do miss revenues light, comps underwhelm >> with domino's their revenues were short of expectations you have this struggle with companies, particularly the food companies, essentially not able to raise their prices and also getting caught with higher commodity costs, food costs in some cases, other cases it's raw material costs, other cases it's labor costs overall. what margin compression is a major problem for the food industry but it's also a major problem for other industries out there. that's the thing i watch most carefully. the s&p at margins of about 11% for the last ten years those are historically very

high when you start seeing all of a sudden this quarter revenues up 6.5% expectations and that the to down earnings, that's wrong something is going on between the top line and the bottom line and what's happening in the middle there is higher cost overall. you've got to watch cost increases and margin erosion very carefully. >> wendy's margin goes to 15.8 from 16.8 the year prior they blame labor inflation, commodity inflation, higher insurance costs, comps at wendy's also missed 1.4 versus a 1.8 estimate they were able to offset some of that with pricing but not enough >> same with hormel. these are the guys at spam, my favorite food there of all time. i believe they bought muscle milk a short while ago and that may be factored in i want to go back to this

earnings decline story because it's such a dominant part of the trader talk these days the basic source of this earnings recession story is the fact we had this 23% earnings growth last year and now all of a sudden we're down .7% for the first quarter, flat. this is what gets everybody freaked out. we were at 23% last year, now we're negative for the first quarter and we're essentially flat most people think that number is going to come down there's a little bit higher for the fourth quarter but the bottom line is everybody says, oh my heavens, the market was down last year in anticipation of exactly this. happening. maybe. the problem i have now is people are extrapolating and saying because the earnings are flat, the market will of necessity be down this year and there is not necessarily a connection here. you can look all you want over the last 60 or 70 years but

there have been many years where you had flat earnings growth and the market has gone up even in the same year or even in the year before if you think of the market as a forward looking mechanism. everybody ought to focus on what would cause a real earnings recession. i'm talking where earnings are down 20% that would be a recession. the two things that historically have killed bull markets are, number one, sudden rate hikes by the federal reserve and, number two, a recession those are the bull market killers historically we're about to enter one of the longest bull markets of all time the fed's out of the rate hike business for the moment. if you believe there's going to be a recession in the fourth quarter or 2020, then okay, earnings recession, absolutely could the market be down 20%

yes. could the earnings be down 20% yes, absolutely. but if we miss a recession, this earnings drop that we've seen may make no difference at all in the stock market overall i'm trying to tell you where are you on the recession question. that will determine what your outlook is and stop worrying about whether the market is telegraphing an earnings recession. people get the cause and effect confused here. i personally think we could avoid it everybody says we're due for a recession, we have to have a recession. no, we don't we don't have to have anything we know what the fed is capable of doing all i'm saying is it's an open question. >> couple of movers to look at this morning, one in particular very small but it's not often you get to put up a chart of a company that's up 300%

that's a company called immune design it's getting bought by merck take a look at the increase in price. that's the premium, 585. this is a late stage immune therapy company focused on getting the body's own immune response to fighting cancer and other chronic diseases it had been higher than this in 2014 it was in the 30s but a lot of disappointments along the way. not this morning, though, if you wake up and you see this another situation was this canyon partners offer to acquire navient. they say they never really made an offer the news today with the stock down 4% is that canyon does

withdraw any interest in the company and is filing a minority slate for its board of directors, saying it wants to bring a fresh perspective and oversight to the company's strategic direction which it has significant concerns about as a shareholder of about 10% ownership. canyon said we never really made an offer to acquire the company. rather we just had engaged with them over the last several months to talk to them about making an officeer they were sort of beaten to the punch by navient earlier this week the stock is down about 4%. >> we've fbeen talking about nik and zion all morning long. shares are down a percent but higher than the premarket. >> was that an ugly fall that made me -- i mean your spine went oh. with the way his ankle -- just

look here. >> there it is >> a person of his size, strength, the power that he must be exerting on his feet, it must be difficult to construct a sneaker that can withstand that. apparently nike was not up to the task, at least in this case. >> they call it an isolated occurrence we're obviously concerned and want to wish zion a speedy recovery. >> a sprained knee, nothing more serious than that. >> we'll be covering lei and of course that data point might not be market moving but maybe existing sales will. global sovereign has firmed up a bit. it's not huge but it definitely turned the corner. they are hovering basically on change down a half a basis point

or so. 10-years zoomed pretty nice we're back higher on the year and we're getting a light amount of curve steepening. it's not much but we are hovering around 16 base points why do i say that's a good thing? i think opening up the distance there, the yield curve now its complexion is more of a read on not only what the fed is going to do on the short end but maybe more appropriately growth measures on the long end here's why you never use percentages in treasuries or yields bunds were 9 basis points, now they're over 14. the real point is you're going to get a lot of meaningless percentages because rates are so low in europe. look at a chart of the dollar

ind index. it retrenches into a well worn range not far below that level everybody was exciting, stable currencies was going to be a big issue. the dollar was deteriorating not so much anymore. carl, back to you. when we come back, richard breeden is with us to talk about markets as we are looking at reports that lyft is prepping an ipo on the nasdaq.

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welcome back lyft planning a nasdaq listing soon, joining a big ipo pipeline for the year renaissance capital pegging the number at 226 companies. total valuation of over $650 billion potentially this year. the sec now discussing ways to make the path easier for them to go public.

joining us now former sec chairman richard breeden jay clayton has made a supcenter piece of his commissionership efforts to make it easier for companies to go public, made some proposals yesterday they're modest but would you agree something needs to be done we had 8,000 companies 20 years ago. we've got less than 4,000 today, publicly traded companies. >> this has been a problem that's been brewing for several years as companies just found public markets less attractive it's a lose-lose when that happens to the markets, to the companies themselves and to ordinary investors who would ideally like to be able to invest in america's most exciting new and growing companies. >> so why is it less attractive to go public than 20 years ago we always say the big year was 1999, but that was the dotcom

revolution really there's been in effort to have big ipo pushes. why are we having this dearth of ipo? >> i think it's a mix of factors. certainly legislation has had a massive impact cz it made it more difficult for outside audits of internal controls they're very expensive that began to deter particularly foreign companies. dodd-frank added more things to the top. some of the activity of institutional investors in the esg, the social and environmental governance area, incessant proxy challenges, shareholder proxy votes. each of these things

individually can be very good, but when you add them all up, the donkey sometimes has trouble carrying the whole load. >> you're discussing the regulatory aspects of this isn't it just easier to stay private? it's easier now in the last 15 years or so to sell private placements to qualified individuals. the law changed a while ago so you can get these qualified individual into these deals in a private way. >> that's not piece of the puzzle, that there's more money that allowed the so-called unicorns to get far bigger than would have been true 20 years ago before they have to go public for capital reasons shareholder litigation is another deterrent. you add together all the things that disincentivize people from going public there's some big incentives too if you could raise a lot of capital. >> mergers and acquisitions seems like it would be a more

attractive offer if i were a giant company, wouldn't i look to have them buy me rather than going through all the effort of going public isn't that an easier route >> easy, i think your valuation will be much higher if you grow and maximize your technology and you may someday be the subject you may some day be the subject of an m & a transaction, but do it at a much higher number and a much bigger premium. >> yeah. >> so it's -- you know, the deck is not completely stacked against public companies, but i think jay and his colleagues are doing a wonderful thing an focusing on this and saying, hey, we don't want to hurt investors. we don't want to do anything that opens the door fraud and selling stock by tweets rather than by good information, but let's -- let's try and keep it in balance. >> okay. thank you, richard brandon weeden, always a pleasure. >> thanks, bob. >> keep your eye on the markets here the dow is down 100 points, really only a handful of stocks on the index in the green, namely mcdonald's, coke, intel and home depot we're back in a minute servicenow put our workflows in the cloud.

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this is moving day with the best in-home wifi experience and millions of wifi hotspots to help you stay connected. and this is moving day with reliable service appointments in a two-hour window so you're up and running in no time. show me decorating shows. this is staying connected with xfinity to make moving... simple. easy. awesome. stay connected while you move with the best wifi experience and two-hour appointment windows. click, call or visit a store today. the richest americans may be starting to feel heat over the various tax proposals being floated by democrats our robert frank has more on what they may be doing now to

prepare. good morning, robert. >> reporter: good morning, carl. the odds of a wealth tax or a 70% top tax rate but be small but high earners are already planning four-game what they fear could be a populist wave to tax the wealthy. accountants, tax advisers and estate lawyers to the wealthy telling me the client calls have increased dramatically with every new tax plan from democratic candidates, so here are some of the steps they are taking or planning to take first is gifting the new gift and estate tax exemption is 11 .2 million so parents are making big gifts to their families and kids in case that exemption comes down and are certainly taking a lot of capital gains. so far none of the candidates have called for a capital gains tax hike but advisers are saying when it makes sense they should sell their most appreciated assets before the 2020 election to get the current cap gains rate of 20%. now, executives who have the option of deferred compensation, they are also opting to take that comp now since the tax rate

is determined by when you take it out, not when you actually receive it now finally, they are considering moving if taxes gun, those in the high tax states would have yet another incentive to move so the wealth who are at or near retirement age are considering moving before their income taxes if they go up. guys, back for you. >> yeah. robert, it's david that's why we see a lot of hedge fund managers at the conclusion of their career move to florida. >> don't we. >> no estate tax, no income tax. >> better weather. >> when you do see that, weather is okay, too you know, has -- do we know from the state revenues of some of the states where, for example, s.a.l.t., the elimination for the said and local income taxes, do we know if their revenues are starting to fall at all and what they are seeing in terms of tax returns. >> reporter: yes, we're seeing a decline in revenues. i was digging into this a little bit because governor cuomo said

it's because people leaving from the s.a.l.t. changes that new york revenues have been so light. i'm finding two other reasons. the main one is wall street. the bonuses from last year, particularly the end of the year because of all the markets were down, not as strong as 2017, but also a lot of people shifted income because of the tax changes into 2017. they took a lot of income in 2017 particularly some big deductions that they wouldn't be able to take later on, so that has led to lower revenues in 2018. so we're hearing a lot of anecdotal evidence of people moving, but nothing real yet showing up in terms of revenues despite the fact that the governor is blaming that for the shortfall. >> robert frank, thank you. >> thank you, guys. >> you're on top of this beat. >> thanks. >> coming up, we'll stay on top of development surrounding the u.s./chan trade talks with the dow down 94 points amid some relatively week macro data this morning. don't gowa ay.

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good thursday morning. welcome back to "squawk on the street." i'm carl quintanilla with morgan brennan and david faber live at

the new york stock exchange at post nine. dow is down 130 points or so s&p down so. got some progress in reports of u.s./china trade but being offset but weak data, flash pmi, philly fed near a three-year low, and we're getting more data on the tape. let's get to rick selly in chicago. good morning, rick. >> good morning, carl. more data, our january read on leading economic indicators. we're expecting up .1 and let's look at january existing home sales. last month we had a read under 5 million for the first time since november of '15. they revise it had how the that's the good news the bad news is they replaced it with another one, 4.94 million is the current january read and 4.99 last look, gets shifted up to a million on the nose that's, of course, seasonally adjusted annualized pace that represents down a little bit over 1%, and once again it

still stands first number now under 5 million since november of 2015, and on leading economic indicators, do i apologize, for some reason i don't seem to be getting it when we do, we'll make sure we let everybody know on the bottom of your screen morgan, back to you. >> all right. >> hold on hold on. hold on. stop the train we have it down .1 of 1%, down .is 1 of 1%. i know heeding economic indicators doesn't make traders' hearts go up that means we have back-to- back minus .1 of 1%, the first time we've had back-to-back negative numbers in the lei series since the first month of 2016 so we want to pay attention like all the other data we seem to be slipping a bit, morgan now you can take it. >> and i will. rick santelli, thank you for bringing us those latest data points our road map today starts with at the table

leaders of the u.s. and chinese delegations meeting this morning in washington. will they be able to hammer out a deal we'll go live to the white house for the latest on those negotiations >> plus, the race to go public lyft will reportedly beat uper to an ipo and could file as early as next week. and a basketball blowout, shares of nike are down after last night's duke/unc game that has the company doing damage control. but we begin with the first possible signs of progress on moving towards some kind of trade deal kayla tausche is in washington with the latest on the negotiations kayla? >> reporter: thanks, morgan. we got a glimpse into those talks just about an hour ago in the indian treaty room in the eisenhower, the two sides flanked by robert lighthizer, peter navarro, the trait executive and the secretary of

commerce and their chiefs of staff were in there as well. across the table vice premier and newly special appointed envy for china's trip who has been tasked with negotiating on behalf of president xi jinping himself. that's an issue that's come to the fore with china wanting to know from the u.s. side who speaks on behalf of president trump. who here hold the view that he agrees with most because multiple times throughout the course of these negotiations, they have believed that they reached a deal to hold off on tariffs only to have things escalate when a different figurehead from the administration leads the talks here's what we know about where things stand right now first reported by reuters which cnbc has later confirmed, current lit sides are working on drafting memoranda of understanding in six categories ranging from cyber security to currency, intellectual property, agriculture, the list goes on. where exactly these two sides have found agreement on those issues, we're still waiting for clarity on that. we know that the u.s. proposed

an action list with ten items of things it wanted china to do in the interim before the presidents meet, things that china could deliver on in that short period of time, say removing some of the tariffs that it had in place before this skirmish broke out, and potentially offering to buy even more u.s. goods. where china has agreed to meet the u.s. on those action items, we're also looking for some clarity on, and then there's the question of how some of china's technological ambitions will play into these talks. we saw president trump tweeting earlier this morning about his own personal ambitions for the u.s. in 5g he wants even 6g networks to be built out. currently there's a question of whether chinese parts should be included in the u.s. buildout of 5g, but the president says that american companies must be behind that buildout we'll see if that issue itself figures into talks today which are expected to go into the night. guys >> kayla, when you talk about memoranda of understanding, it tends to be a very technical

term, essentially the beginnings of the possibility of deals in is that the way to think about that >> well, it's a little bit more of a looser understanding. it is on paper, so it represents something formal that is signed by the two sides, but critics will say that it is harder to enforce than a treaty that must be ratified by congress and could be held up at the world trade organization these memoranda are just between two parties and, of course, there are many witness nez that room that we just saw, but we'll see how the u.s. decides to add teeth to this agreement to get china to actually follow through on some of these issues. >> kayla, you brought up what i think is a very important point which is who speaks for the president? do we have any sense right now who is best representing his viewpoint? >> well, i think if you look at the layout of that table, david, it is ambassador robert lighthizer, and that's interesting because he has held the firmest line on china throughout the course of this negotiation. he's less beholden to the daily

whims of the stock market, and he was appointed and has told personal friends that he wants to change the tenor of the u.s./china relationship and china's position in the world order going forward. it's not a job for him it's a mission he has held firm toll that march 1st deadline he's sought to extraekt the strictest concessions from china, and fact this he's seated directly across from the special envoy from china tells you something today. >> and as you pointed out on twitter, kayla, no women at the table except for two female interpreters which add another dynamic to all of this kayla tausche at the white house, thanks. major averages taking a turn here session low down 121 we're down 858 or so let's bring in al abe luskin and jim paulson. good morning, guys good to see you both. >> good morning. >> good morning. >> jim, let me ask you about data today back-to-back declines in the lei, rick poinltd out first time in three years philly fed three-year low. jpm just cut their q1 number to

1.5 and q4 number to 1.4 is this getting a lot worse or not? >> well, i think last year, you know, carl, we had really great economic data and a louis stock market, so i think this year is kind of going to be the opposite of that, and one of the things we're going to have to deal with much worse economic growth, and we're starting to get more and more reports on that front the question as an investor that you'll have to ask over and over again, particularly in the first half, is this a start of the recession, or is this another slowdown like we had in '15 and '16 here earlier hand if it's just a slowdown, we've significantly revalued the stock market we're now bringing the cavalry to the party with greater fed ease and lower yields and more fiscal stimulus, and if -- if it's -- if we avoid a recession, this is still probably going to be a buy even though you're going to be worried in here maybe for the next few months.

it is concerning le i now has been flat since august or september. you know, and that's certainly a precursor to recession yield curve is nearly flat, and my bet is the still this is more of a pause than the end of this recovery >> yesterday, alan, s&p takes their recession risks from 20 to 25 it was 15 to 20 a few months ago, largely on the curve. how reasonable is that >> depends on timetable really so i think as soon as you start going out two or three years the probabilities of recession start to the spike, but if you said to me, you know, is that a reasonable probability over the next year or so, i would say it's on the high side. >> on the high side. >> there is a 2019 number in their case. >> a little bit on the high side would i say. >> interesting you think trn trachina trade an economic shutdown are acting as caps on growth and how easily can they be removed? >> the philly fed data is

partially distorted by the shutdown it's not the whole story i think what you have here is globally a have i clear slowing in manufacturing, but like we saw in europe today, we've seen other countries as well. services seem to be holding in and manufacturing is much weaker, so it's the trade angle, and that's where the u.s. and china feed into it i think they have been generally disruptive to global manufacturing. >> jim, i want to go back to the point that you just made before about strong economic data last year but a rough stock market and perhaps the reverse situation playing out this year. >> yeah. >> why why would we she it seems so counterintuitive >> yeah. you know, i think morgan that last year this, recovery, this bull market was endings, and it was ending because the unemployment rate was below 4%, and we were growing the economy too fast if that persisted without a productivity miracle, then the fed and bond vigilantes would kill off the entire recovery so

the only way to elongate the recovery is through a productivity inmiracle which we're not going to do or by slowing down the recovery that takes -- puts a pause on overheat, stops interest rates from going up, and if we don't recess allows both the recovery and this bull market to continue for maybe a couple more years. and i think we've got a shot at, that and we're in the process of doing that just like last year, we were frustrated why such good news didn't cause the stock market to keep going up. i think this year we're going to just be puzzled by how the market can continue to climb in the face of such bad news. i would point out, too, that, you know, so far the financial indicators look good credit spreads have been continuing to come in and tighten. commodity prices just went to another new high yesterday off their crash lows cyclical stocks are still doing fairly well, so the message of the financial markets is this is more of a slowdown, not a

recession. >> alan, where should investors be putting their money right now? think, if you think that recession risks at some of the other central artery gist and analysts are putting out are high here in the u.s., is it still the most attractive place to be putting money store somewhere else >> i think the u.s. isn't a bad place in the grand scheme of things we've come back quite strongly already. we've had almost a year's set of gains it feels like in january so that's made the market a little bit more difficult to invest in, particularly on the equity side, but i would say certainly from the db standpoint that as long as multiples hang in, earnings should be sufficient to keep the equity markets still at least relatively well buoyed so that's reasonable, and it's reasonable in the context of think of what's going on globally the u.s. economy still looks like it's going to outperform relative to most of the rest of the world. >> curious though, deutch does a lot of work pointing out downside risk to ism, even further than we have also, and also consumer credit worries

are those not top of mind for you? >> i wouldn't worry too much on the conum saoer credit side. in fact, really the household sector is one of the reasons i don't think you're going to have certainly a hard landing scenario developing in part because household sector balance sheets look remarkably good, and there's been remarkable de-leveraging that's occurred after the last slowdowns, so i think that's the encouraging part, and as long as demand hangs in, supply will be there supply doesn't drive demand, but demand drive supply. >> all right >> we'll keep our eye on it. guys, thanks good stuff alan and jim we'll see you soon. when we come back, amazon h q2 blow back what the reverse in new york signals to developers and big tech renowned new york real estate developer bill rudin will join us to talk about the billboard in times square, very point. going to break, a look at some top-performing names on the s&p which is back below 2770 don't go anywhere.

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billionaire-funded groups blog tons of cash on whack billboards joining us now is bill rudin who says new york will bounce back this is not the end of the road for big tech in the city yeah lifelong new yorker like me, of course you've seen the ups and the downs. you've seen the '70s, but you're an optimist, and i don't get because some people say what we did in new york was held out a closed for business sign if you're a large company in technology looking to either relocate here or create jobs here. >> well, i think all the fumt s fundamentals are still here, you know, strong job growth, smart, educational workforce and the educational institutions in this city, nyu, columbia, cornell tech, the community colleges, all these things are here. the media companies are here, the law firms, the accounting firms. everything that is important for companies to grow is still here

in new york city yes, we missed an opportunity, no question about it, but we've gotto pick up and dust ourselves off like we've done in the '70s and we eve done post-sandy and post- 9/11, and, you know, i've been on this show before with bob in the early '90s when there were 30 million feet of vacant space in lower manhattan, and we turned this area around to a 24/7 live/work community, and that was going to happen in long island city, and i think will still happen. >> you think it will still happen, you really do? listen, sustaining and expanding the tax base in new york is very important given the enormous budget we have financial services not going to do that anymore. we need technology, bill, and we just said no to one of the largest technology companies in the country. >> i understand, but i think are other opportunities. life science is growing, healthcare, other technology companies, facebook, google are all, you know, are all growing

here estee lauder brought their technology group from melbourne, long island into mel born city they have initially 100,000, they are taking more we are building a building not far from here across the river in brooklyn at the brooklyn navy yard it's all tech-oriented we working a the major tenant. we're in discussions with other companies, so i think we will still have the positive effect this article in the times this morning by a professor in berkeley comes about the conglomeration effect. we have that obviously, amazon would have accelerated that, but i think we have our mojo going, and we're going to continue to attract and retain small companies, large companies, people who want to be in new york city you seem a little pessimistic. >> i mean, you and i are both still sort of scratching our heads, i think it's fair, about how this opposition, small as though it was as as vocal as it was was able to force amazon are to reconsider.

was a failure of political leadership, too, bill? you've been around that part of the city for a long time. >> i think we can go back and replay and have monday morning quarterback and what went wrong, but i think we have to look at that and make that as a lesson learned and to try to make it -- us all work together the issues that the opposition were raising, they were legitimate issues-ins terms legitimate issues in terms of infrastructure and impact on schools, but those were addressed. amazon committed to putting in 130 public schools, a training program for ai and cloud computing. they were working with laguardia community college and cuny and suny to help train potential workers, and more importantly they were into queens bridge housing talking to april simpson, the leader of the -- of queens bridge housing to get them involved and create job opportunities for the city's largest public housing facility, so they were going to do a lot

of positive things, open space, creating schools unfortunately, that message didn't get out in the way it should have >> you have deep and intimate knowledge in terms of the developing of economics in new york city. it's pages and pages of tax incentives both on a state and city level, really across the board and across different industries to try to bring businesses here. what did you think of the actual deal with amazon >> the -- the 70% or 65% of the tax abatement were as of right, the reit benefit, the icap so that applied to anyone coming into the outer boroughs. the city for of the last 20, 25 years have been trying to diversify our economy and get away from wall street and bring it into the outer boroughs no problem those are on the books now again, we're a higher taxed city and state as we know and higher costs, so that's why these extra incentives were needed to try to get them here, and they were ready to -- to come here and,

unfortunately, it didn't happen. >> i wonder how different you think it would be if amazon hadn't turned it into a game showers, so to speak this, open 50-city competition. if they had come in quietly and said we have this idea, what do you guys think >> look, i can't comment on what amazon was thinking. new york put out the red carpet. we were -- everybody was, you know, a majority of people were for this initiative to get them to the city. to me it was like, you know, when rockefeller center was built or the trade center was built or lincoln center was built. this would have been a -- a game-changer for the city and for long island city people talked about gentrification this was all an industrial area, and they were going to benefit the people who lived in that neighborhood a block away or two blocks away in queens bridge housing so some of the arguments got twisted around and were not 100% accurate. >> doesn't make me feel any better about it.

>> i'm telling you, last year new york city commercial leases over 42 million square feet of leases that was a report. january, 44% over january of 2018 so we see the momentum over 4.5 million feet of leases have already been signed year to date, and i think we'll continue that momentum so that tells me something that people understand what happened and companies want to be here and want to grow here some won't, but i think a majority that are here in the city and want to come into the city like estee lauder moving their folks from long island here is a positive sign. >> have you heard any examples of companies who were thinking about it and now reconsidering because of amazon? >> i have not, and all i've heard, is you know, deals that we're working on are continuing it i know other developments have people, you know, companies working on deals, and i don't think we've missed a beat in terms of making those -- making those new deals. >> i can't help but think this gets at a sort of bigger longer term issue and that's over the

last couple of decades cities like new york, as attractive and as great, we all here at this table think it's a great city, as great as it is, you've seen populations and demographic shifts, people moving to other parts of the kun lay it are maybe more affordable. you've seen businesses do it as well s.new york city doing enough to attract business and to be as competitive against other states right now >> i think, you know, we can always do more our tax structure is high. you saw the governor go down to washing topt last week to meet with the president about putting back s.a.l.t whether that happens or not, we're hearing signs that there may be either a lifting of the cap or elimination of it because it's not just us there's other municipalities and states that are impacted, and we can always do more we need to spend money on infrastructure and the mta, pass congestion pricing, build more affordable housing and -- but i was -- i was talking to somebody before the ideals of the progressives

in terms of healthcare, education, affordable housing are not mutually exclusive with job development, and that's what you've been talking about. you need the economic base to pay for all these initiatives, and so i think our city will continue to grow, and we'll come back here a year from now and have another discussion about it. >> all right. >> maybe even sooner than, bill. maybe even sooner. >> i hope so. >> we do, too. >> bill, thank you. >> thank you >> when we come back, damage control. shares of nike falling this morning as duke's freshman superstar blows out of his shoe. plus, sports betting startup winning backup from big league team owners. the ceo of action network joining us after closing over $17 million in funding we've got more "squawk on the stre" teth baketafr isre

welcome back time now for our etf spotlight dom chu is taking a look at restaurant names with dominoes down sharply after reporting earnings dom? >> morgan, consumer-facing restaurant companies are getting a lot of attention in trading today thanks in large parts from

companies like cheesecake factory, jack in the box, dine brands which owns applebee's and ihope as well as domino's pizza. those stocks are on the move while many of these stocks do make up smaller positions and portions of many small and mid-cap atf's, they do call some more attention to what's happening with larger restaurant cops that are part of more larger liquidated funds. for example, you've got consumer discretionary-oriented funds like the spdr etf ticker xly and the vanguard consumer discretionary ticker vcr both of these etfs have larger cap restaurant stocks like a mcdonald's say or a starbucks, but there are also much smaller etfs that also have more exposure to she is smaller and mid-cap restaurant stocks like the ones we've mentioned you've got the invesco dynamic leisure and dynamic fund the ticker is pej. a huge word of caution here. this fund is only $39 million in size so much, much smaller than

some of the other consumer etfs, but it does have a lot of holdings like chili's parent company dininger, dunkin brands, wendy's and yum brands and shake shack and others investors in these etfs could see more volatility because of these smaller and mid-cap restaurant stocks. colonel, carl, etfs to watch in this kind of trading back over to you guys. >> a huge story, dom absolutely true. our dominic chu. the u.s. and chinese delegations are meeting over trade as a deadline for a deal inches closer. we'll talk to a member of the advisory committee for trade policy in trade negotiations when we come back.

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i'm scott wapner here's your cnbc news update

"empire" actor joelt turnussie t turned himself in. police superintendent eddie johnsson now commenting on that investigation. >> smollett attempted to gain attention by sending a false letter that relied on racial, homophobic and political language when that didn't work, smollett paid $3,500 to stage this attack and drag chicago's reputation through the mud. >> west virginia teachers are back to work two days after they went on strike the move came offer the state legislature adjourned without bring up an education bill which would have send large sums of money meant for public school into a voucher system and allow for charter schools. pope francis opening a sexual abuse summit by telling the catholic hierarchy that their own responsibility to deal effectively with the crimes by priests weighed heavily on the

day. stocks trading lower following disappointing u.s. economic data with the dow down 92 points right now. investors also keeping an eye on washington with trade negotiations, with china under way. china said a broad outline what have can make up a trade deal is beginning to emerge from the tides as the two sides push for an agreement by march 1st. joining us us now is chairman emeritus dan d'amico, a member of the trade advisory committee for policy and trade negotiations dan, thanks for joining us today. >> my pleasures, morgan. thanks for having me. >> we have the two sides continuing to talk we have reports now and signs that there may be signings of memoranda of understanding maybe some softening in terms of that march 1st deadline based on some of the comments that we've gotten in recent days. do you think we get a deal, and do you think we get a deal that's effective at this point >> well, listen, i'm not going preempt the announcement from

the administration they are still talking today they have worked very hard at getting something done we have to remember that the -- the commitment from the administration, the president and robert lighthizer and his team, have been to address the fundamental issues that are much more than just things like how much natural gas or soybeans or anything else the chinese purchase to help short term with the trade deficit. the fundamental issues must be dealt, and not only must they be dealt, think if there is an agreement there has to be clear language discussing the verifiablity of them adhering to the agreement and then strong repercussions for them not agreeing or not staying with the agreement as they agreed to, and i have full confidence that that will be the case you've got to remember you know, there were a lot of people running around saying the sky is falling the sky is falling

the tear rivers going to kill the economy. all this kind of stuff was going on and understandably skeptics before things were put in place, but now that they have been in put in place what do we have we have record-setting earnings in 2018 for everybody involved in our economy, very strong economy, and we're going to have another strong one in 2019 and, you know, those are the things that the people need to focus on the president promised and we worked on a four-point strategy for improving our global competitiveness. that consisted of tax reform, trade reform, regulatory reform and energy reform, and he's faring on all cylinders. >> dan i want to dig into some of those tariffs a little bit more because one of the burning questions for investors right now is if in terms of this u.s./china trade situation, if we do get some sort of deal or an extension of talks that includes tariffs not being raised to 25%, what ultimately

happens to some of these duties that we do have in place, whether it's the 10% on certain goods that are imported from china or the steel and aluminum tariffs, do you think they are here to stay >> well, listen, i don't see the 10% tariffs that are currently in place against china disappearing particularly when they still have only a memorandum ever understanding on the fundamentalish these have to be worked through perjury i wouldn't be surprised if they went up a little bit, but for sure they won't disappear, and neither will the other tariffs put in place through the 232 programs. >> i want to talk a little bit more about those tariffs through the 232 programs, the steel and aluminum tariffs i know you're a steel guy, but aluminum association last week came out and basically said that record aluminum overcapacity and exports from china continue despite the section 232 aluminum tavaras and that it's a fundamental challenge impacting

the u.s. aluminum industry today. it's not a question we ask very often, but i'm going to put it towards you. 10% tariffs on aluminum, 25% on steel. did they go far enough to actually help boost and accelerate u.s. production >> well, listen, i think the overall policy has been very effective. we've got the rest of the world joining in now we're putting up barriers to illegally traded steel from china and other countries, but for sure, you know, i would have thought that the aluminum tariffs would have been closer to 25%, and, you know, if -- if the 232 tariffs weren't working at the 25% for steel, that they would go up. but they are working, and -- and both for our customers and for the steel companies, and both groups are making strong profits, and i would just make one correction i'm a steel guy. no doubt about it. but first and foremost i'm a manufacturing guy and above that i'm an americans and these are

all good for america and for the manufacturing in this country. you've seen the jobs increase dramatically under trump because of this. >> yeah. i think -- i think few people, especially here in the u.s. and among our allies would argue that china hasn't, you know, essentially taken advantage of the situation and -- and engaged in some economic policies that have benefited that country, you know, over others. in terms of auto tariffs potentially on europe though which i know the president has talked about, and he just had that report that hit his desk over the weekend, is that a good idea >> well, listen, the auto tariffs are 232. they are not just against europe if they go no effect they will be similar to the steel and aluminum land affect everybody, and we have serious issues the trade issues that you alluded to where china cheats is still a big issue for all manufacturing, and if you

recall, secretary wilbur ross was very clear when he first came out and talked about the use of the 232, that it would be used for national security purposes to support national security and national defense-sensitive industries, not just steel and aluminum but all, aerospace, outer space, arterioofficial intelligence, semiconductors and so on, and this is part of a long-term strategy to get that level playing field and reciprocal trade to be in place with all of our trading partners, so i'm not going to jump the gun on this, but there's reasons why this is necessary. i'll give you one example if we have 30 seconds. the chinese are now shipping parts into canada that are supposedly being -- manufactured by canadian company for three-wheeled electrical vehicles to compete in the u.s. market, they are bringing them in through china through a canadian company when a canadian company itself is owned by the state of china

>> dan d'amico, always great to get your thoughts. thank you. >> thank you thanks for having me >> when we come back, a sports betting startup winning big backing. team owners from baseball, basketball and hockey all getting in on a massive funding round for the action network the ceo is going to join us. take a look at the major averages here as the dow continues to settle in 100 points lower, s&p 2772 ♪ tear up ticket. find the cat. [ meowing ] mittens! make it rain. [ cheering ] [ singing opera ] change the music. ♪ when i move, you move beep. beep. use the rocket. [ sputtering ] if only everything in life listened to you like your new a-class. hey mercedes. [mercedes-benz voice assistant] how can i help you? change color. make it cooler. play my music. the a-class... ♪

to a year in nearly three decades, but one wall street bull says the rally is getting a little stretched find out more on "tdinaonnbco more "squawk on the street" coming up.

let's get to the cme group in chicago rick santelli and the santelli exchange good morning again, rick. >> good morning, carl. like to welcome my guest from t.d. securities. michael hanson michael, thanks for joining me today. let's get right into it.

we had fomc minutes yesterday. no surprise. growth was a topic today we had mostly spongy data outside of claims, but yet yields are moving up and the yield curve is steepening a bit. your observations. >> yeah. i mean that the real news from the minutes was the idea that the fed is going to be ending its balance sheet runoff sooner, but you're right it's interesting that the market didn't have near lit reaction that you might have expected at least on the bond side. it looks like that may have been priced in to some extent stocks are happy that the fed won't be engaged in as much quantitative tightening as they feared. >> now, there's a story today that really captured my eye. s&p global today says that global sovereign debt will top 50 trillion with a "t" this year, and they predict that we're going to be a little over 3% over last year which equates to just under 8 trillion 70% of that is to refi maturing debt weigh in on the debt issue

>>ia i mean, it's clearly a longer run challenge for the global economy more generally, and obviously a number of industrialized economies starting with the u.s., right. there's a notable increase in debt and deficits coming down the road it's -- it's interesting that i don't think that that is the thing that's really gotten markets kind of nervous yet, but it obviously is something that over the medium and longer term is going to have to be dealt, and there's no obvious way that politicians right now have kind of figured out how to resolve that. >> no, and it brings up two things to mind first, you hit on, is that it's completely counterintuitive to the behavior in the treasury complex, and in many global sovereign markets, that's onish europe the other issue is that all debt isn't created eke watch. you know, we've had stuck luce plans that really didn't give us much stimulus. many countries do that we can argue the current plan that everybody is nervous about,

tax reform implemented last year definitely increased the deficit, but really we have a spending problem, and that type of fiscal stimulus isn't all bad. >> yeah. i mean, it's interesting because i agree you've certainly seen some positive impact on the u.s. economy from the changes in tax law, and there were spending components to that as well it doesn't look like at this point that there's an obvious longer term benefit from that. we'll have to see how it plays out. i mean, that's real el the key there's aspects of tax reform we probably could have done that would have made that even better, but to your broader point, it's a little unusual that in a time that we're now in the u.s. some eight or nine years into an expansion, historically we've used it as an opportunity to try to get the fiscal house in order, and if anything we're not really making progress on that and globally as you point out in the s&p report we're not alone. >> gotcha. you know, michael, it's an interesting topic, and i'm quite confident that the treasury complex will pay a lot more

attention to some of these debt and deficit issues over time thank you for joining me today carl, back to you. >> all right rick, thank you very much. eamon javers with breaking details on the president's trip to vietnam next week. >> senior administration officials here at the white house briefing reporters in a preview of what to expect in those negotiates next week in vietnam with kim jong-un of north korea on denuclearization of the korean peninsula. a couple of points here to highlight for you. one is that the official said that they don't know whether or not the north koreans have made the choice to denuclearize, but they believe that there's a possibility. so they are saying the administration and the negotiators don't know that the north koreans have sort of committed themselves to doing it, that despite the fact that the president has said he believes kim jong-un does want to denuclearize, so the aides saying something a little bit different from what the president is saying there. they are also saying that one of the areas that they are going to be focused on with the north koreans next week is a definition of what exactly

denuclearization means in terms of practical reality that. gives you a sense there's still a long way to go here in the negotiations next week and also administration officials responding to the president's comment earlier this week that he's in no rush to do a deal with kim jong-un on denuclearization officials today saying that just because the president says he's-ins no rush doesn't mean that this negotiation next week is not important, so all of that taken together, carl, gives you a sense of just how much work has to be done on the ground in hanoi, vietnam next week when the president arrives there for the face-to-face meetings with the north korean leader. back over to you. >> thank you, eamon. eamon javers let's sent it over to jon fortt to get a look at what's coming up on "skwaug alley. >> samsung has new phones out yesterday. new fingerprint sensor new technology and screens and wireless charging. we've got them here and that's coming up on "quack alley. ♪

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welcome back to "squawk on the street." i am dominic chu stocks are trading near lows of the day so far and communication services stocks among the worst performers as you can see so far today, dragged down by stocks in

general on the large cap side of things alphabet on reports the cloud computing business could face challenges catching up to rivals other big names in that sector lower, including facebook, twitter, netflix, down by a percent or so. communications trade is very much a focus back downtown to you at the new york stock exchange, carl. >> dom, thanks. nike shares under pressure, the company trying to do damage control after college basketball's biggest star was forced to leave the biggest game of his career after 36 seconds zion williamson blew out the shoe and nike says it is an isolated occurrence, working to identify the issue didn't take long for puma to pounce, wouldn't have happened in the pumas did this get take overnight and this morning. >> got a lot of talk puma is trading higher, adidas,

under armour was, now it is low. and nike under pressure because of this. book makers forced to reassess national championship odds one star promising to help, getting support of big name backers, action network announced new funding. joining us at post 9, the ceo, patrick king it is a pleasure to have you welcome, congratulations >> thank you thanks for having us. >> this does move the needle in the overall trend. >> to have the confidence of investors like you mention, and casey wasserman part of that group, manages some of the best talent in professional sports. we're excited to have the momentum behind the category and those kind of investors behind us. >> talk about the product itself, what are people going to pay and what are they going to get?

>> we are a subscription product, we want users to get the highest quality content possible to better inform them on decisions they make gambling. it is simple as that we want to entertain, inform, help people make the best decisions possible as more states become legal, we want to be the best partner for legal operators, for leagues and teams. >> how do you define the market, how large will it conceivably become as more states allow legal gambling >> the market is probably $200 billion of people betting today. there are probably 10 million active betters, betting a minimum of $50 a week. we think there's opportunity to create a massive market for people that are casual betters, may just bet in the super bowl or march madness. >> different tiers to access in terms of interest in these >> there is. we have what we call super high premium tier, you can spend $250 a month for high end products, 499 to 799 tier, people can

access on modest investment, but with one win, one bet, you can have a better informed and access to that content. >> we're talking about information and content creation, right? would you ever get into the business of the bets themselves? >> no. we do not want to endeavor to be an operator. we think week build a massive business in north america being the source of information. we think it is the modern future for betting, look at all these categories growing total addressable market is big enough for us as media company to do licensing, syndication, and build a subscription platform. >> what is leading >> professional football, we gear up for july which will happen quickly every year certain sports creep up pga tour golf is interesting the last several years, baseball has always been challenging to bet on, but basketball, professional basketball, the nba is a real leader

i think the nba when i think of the forward thinking leagues, you'll see in venue experiences, prop betting, keeping you in the venue, and building the best broadcast and otc experience that's why we're excited to have the teams involved investment. >> is the emphasis on daily like a couple of years ago? there was talk then you wanted high frequency, high game count to get users in every day. >> yeah, we're agnostic to how often you're going to bet. we want best informed. we think there's entertainment factor as well we want people to bet responsibly, to have great information. this is about fun, it is about entertainment. that's what we want to serve a user population around. >> real quickly, on the information side, you hired darren rovell, is it journalism? are you competing against other journalististic outfits to cover sports >> darren is a great hire, we cover gambling as much as any

category there's hard news around gambling with the passing last march, there's massive tail wind behind the market. we can cover from journalististic perspective and from a consumer and fan perspective and we're able to do both. >> brave new world ever core chairman roger altman when "squawk alley" starts in a moment

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good morning it is 1:00 a.m. at samsung headquarters in south korea, 11:00 a.m. on wall street. "squawk alley" is live ♪ ♪ good thursday