bail as r. kelly it's wednesday, march 13th, 2019 "squawk box" begins right now. >> becky quick off today take a look at u.s. equity futures at this hour we'll show you what's going on dow off about three points nasdaq, though, up about nine points the s&p 500 up just about two points.

dax off marginally finally, treasury yields trading at 2.62. so far $25 billion in market cap has been wiped away. premarket, the stock is down by 1.23%. closed down by just about 5% the faa weighing in again on the same at 2373 max 8 plane saying a review of the boeing 737 max has shown no basis to ground the aircraft following the second deadly crash in the past six months the acting administrator said if any issues affecting the continued airworthyness of the aircraft are identified, the faa will take immediateand appropriate action u.s. secretary of transportation elaine chow is also resisting -- chow even flew on a boeing 737 max 8 jet from

austin, texas to washington d.c. yesterday afternoon. boeing confirmed ceo dennis mullenburg, ceo of boeing, spoke to president trump by phone yesterday assuring him the max 8 is safe at of president tweeted that planes are becoming far too complex to fly boeing would not provide more details on their conversation. hong kong is just the latest to ban the 373 max airspace until further notice roughly two-thirds of the boeing aircraft in the world have now been pulled from use the three major u.s. carriers that fly the plane american, southwest, and united are sticking by the 737 max. >> the pilots union is -- it points out that you needed to know about all of the new changes to it, and there are definitely some differences. it's closer. once you're trained, it says it's completely safe i guess there is some new software that make it even safer. you needed to know what you were going. there were some differences.

then i saw some of the anonymous pilot complaints filed over the past six months that have been concerned about how, look, the idea that you had the jerryrig the system to make it -- >> so it's -- >> it's very -- >> and you have to do that in the middle of what is a complicated situation. you can't turn on the plane and do a little jerryrigging before you start. you have to do it in the midst in case something happens. >> one misstep at the beginning can sort of mushroom to a bigger problem, but, i mean, there have been thousands and thousands of flights, obviously >> the political pressure right now in terms of -- >> in boeing's -- the way it's being handled, people are criticizing the way -- not necessarily this response, but the original response in

indonesia. you can't wait for this -- >> we have to talk about this next >> it's the tip of the iceberg >> yes i think so >> let's explain what's happening. this is the story that so many people have been talking about the past 24 hours. federal prosecutors indicting coaches and affluent parents, including some of hole weed's elite and wall street elite in a massive bribery scheme to a fast track their children to some of the country's top universities among those charged in the case, the prosecutors have now named operation varsity blues, actress felicity huffman and lori loughlin and pimco ceo doug haj, a very senior lawyer at tpg and -- >> the co-chairman of the firm >> the list goes on and on prosecutors say a college prep expert ran this scandal by setting up a charitable organization used to funnel bribe monies the organization also allegedly helped students cheat on the s.a.t. and a.c.t. exams and helped parents bribe coaches to then recruit those children even

though many had no athletic background at ll they would photo shop the children into pictures of them appearing to be athletes that they weren't charging documents say parents spent about $25 million in bribes to facilitate admissions to universities with yale, stanford, wake forest university, and many more. we're going to talk a lot more about the business leaders that were charged in this scandal coming up at 6:40 a.m. eastern it has clearly rocked this -- not just academic world, but the world. >> you use the word "fast track. >> they called it -- >> it's just -- >> they cheated their way in >> they weren't getting any faster they got in at all >> illegal door. >> some of the -- what's also remarkable is the fellow in the middle of this ring is then paying individuals at yale and coaches $400,000 and $250,000.

the money is flying left and right. >> i know lori loughlin's husband. i used to golf with him. the growing -- if you are a rower, you just get in no matter you can have a d average, but if you are a rower. why is rowing so important to the school to where if you are a rower, you get -- you just immediately get in that's what they're doing. i don't think that his daughter had rowed before, so they were doing the photo shop thing, but that gets you in because you're -- >> my understanding is the coaches get one or two or three for every sport to actually say i need you to get this kit kid this kid is that important to whatever sport >> then we're back to how important sports are to the overall picture of financials in college. >> pick up the idea that they would set up these effectively not fake, but testing sites in the country where the kids would

fly to these testing sites they would be told -- by the way, it's unclear that the kids understood what was going on they take the test at these testing sites where the administrator of the test was being bribed when the test was over and the kid left, oftentimes, they would -- >> swapped out the answers >> the administrator would be told what the score was they needed they changed the answers, and then the question is what about the kids what about the kids? these kids are now in these universities do they get kicked out should they get kicked out it's all very complicated. >> what happens to the parents also some of these parents -- >> the parents may go to jail. this is a felony >> they should >> it's a million dollar bond that i think felicity huffman, one of them. it's the same as r. kelly. it just seems -- we, you in a different -- you're in new york, so nursery school, i mean, it's -- we do all we can to try to help our kids >> but there's always a line there's always a line. >> you remember because you were just in college, right,

basically? >> i appreciate that >> it's a really fresh experience and we have -- your kids are young, but you want -- >> you want your kids to -- all the tutoring programs. >> how long have elite children putting up buildings or getting grants or -- >> but that is different >> i know. i know i know >> it's to the benefit of all the students of the university rather than a donation to a guy that's going to get you in is illegal. >> but if the -- from the left you will hear that the elitists have always made payments for this to get their kids into the same schools -- >> what tv show were you watching last night? >> you don't think that -- for how long -- this is from your sector of the world. how long have people been able to perpetuate their privilege? >> there's no question >> what do you think i'm saying? i wasn't watching desperate housewives >> there's no question, people have used money, obviously, in many different ways. the question is how the money is used i'm not suggesting that how

money is used otherwise should be -- i don't want to say illegal, but it's just -- >> when you go to a college, some of the people, you know -- we looked at many colleges you do meet with people, some of the people, at the college that are more or less talking about business development or whatever it is. there is a back drop don't kid yourself this is totally different. there is always -- there is a certain amount of money involved >> we are just talking about the consequences to these people who were ensnared in this. >> manuel enriqes has stepped aside of hercules capital. we should also note that nick lashen of tpg is on administrative leave immediately. that happened yesterday. there are some consequences. if you're convicted of a crime like this, could you lose some of your licenses that is a real issue for some of these people who were operating

in financial firms or who were operating as chief executives or in a suite that companies can they continue to do so can you be a lawyer and be convicted of a crime like this that's an issue. >> and you're excited about the financial side of it i mean, it's -- >> the hollywood side. >> it's the overco of every paper. i mean, their influence to this case, they keep talking about the spouse did this and that >> you think of him as -- >> what should happen to the children is interesting. an ethical dilemma >> in the case of lori loughlin's kids, one of them is an instagram influencer. >> did she use her influence >> she's made -- probably gained more, wouldn't you think she had some alliances with severe or sephora. >> amazon prime.

i did everything with amazon also, she said usc, and she sai i'm not really big on school, but i'm here for game day and football and partying. then totally cringe-worthy comments she had to take back. >> would you do business with any of these parents anymore phil mclashen was at tpg it was a do-gooder fund. >> perfect >> all your do-good eer funds >> by the way, involved with bono and a whole group of other people the question is, no, if bill mclashen -- >> why is this okay? >> i'm not saying it's okay. >> if the question is whether or not you do business with these firms? >> the question is have they done for good forever? i'm asking >> wall street is a very short memory you have seen comeback stories all the time still. >> it's got more and more competitive to get into a good college, and, you know, you all try to prepare for the test. you don't -- i mean -- >> what if they spent $3500,000 instead of bribing their way on the child's education all along?

>> well, that would be good. >> exactly or a million dollars on the child's education all along. >> test preparation, you know, again and again and again you go to the tutor if you could just go to the procter, i mean, that would certainly cut out a lot of the steps if you didn't actually need the answers to come from your child >> it's kind of amading we talked about that for so long, but the u.k. is holding another major brexit vote today after a parliament overwhelmingly shot down theresa may's last ditch proposal for an exit plan. lawmakers are going to decide if they want to leave the european union 16 days from now without a deal steve sedgewick has more i don't know how you handicap it, steve. is a no deal brexit nor likely now or less likely >> the parliamentarians are saying it's so complicated nothing is simple.

parliamentarians will try and say we don't want a no deal brexit they think that's going to be their default position after the prime minister had said yesterday on her meaningful vote on her investigation of the brexit deal. for the moment that's off the table. today's vote is saying there's going to be no deal brexit according to the parliamentarian. tomorrow's vote is about having an extension to article 50, which is the process of us getting out of the e.u the whole process as well. we don't have brexit just yet. the problem is the european -- what is the point of us giving you more time? when the deal is on the table, that's as far as he goes you don't know what you want in parliament, and this is the key. you don't necessarily know how long you want to extend it as well although parliamentarians in britain this afternoon may categorically turn around and say we don't want a no deal brexit on march 29th, there is still a very high chance that it could be a no deal brexit on march 29th because parliamentarians in europe are

saying we've done this we're fed up with this, and this is what they're saying the european parliament today. unless this lot behind me, 650 mps can come up with a neutral version of brexit which they can get behind, which may or may not be a softer form of brexit, then the europeans will say, no, that's it. it will still be a no deal brexit on march 29th despite what they have to say. when i spoke today to a man kenneth clark, the former home secretary once called the greatest euro skeptic of them all. he has been a euro skeptic since the early 1990s, and there's a thorn in the side of mrs. thatcher, and a thorn in the side of mr. major, who is prime minister after her as well i spoke to him today he is one of the leaders of the hard right tory mp sz who want a hard brexit line he showed no sign of climbing down in any way, shape, or form. he said he had great empathy for mrs. may who was really struggling she's got a terrible cold. her throat, you can hardly hear

her speak. she has to speak it's question time she has to do the vote today then she's got to do the debate as well. i expect this very quickly, and i said is that your high water mark for high brexit will it be a soft brexit or no brexit not of the sort. we compare this to the american struggle for independence against george iii that's how important we see this as a principle back to you. >>. >> thanks. steve sedgwick, will we know in six months then? it's possible. that's the honest truth. we could have another dwo-year extension under certain scenarios. i don't think you'll necessarily know in six months >> i did see some interesting comments from what is the move about a no deal brexit saying that there's countries all over the world that are doing fine in trade and every other area the fear that things were just

coming to a grinding halt if you didn't have the e.u. i don't know you have other people that are petrified even about the contagion if it's a no deal brexit >> we've also got today the spring statement from the chance lore he has a bit of a windfall it's better than expected because we've had higher employment he wants to deploy that, but he won't deploy the cash until he knows what's going on brexit that's holding back. investment is holding back companies as well. investing in the u.k i also spoke this morning to a chap called roger. he is a free trader. he believes actually we can lead with a no deal, and he said over 15 years the u.k. could get 140 billion pound windfall from not being in the e.u he points to an kparm with the u.k. and u.s he with haven't got a trade deal with the u.s., but we still do enormous amounts of trade with the u.s. regardless, and also this morning one more point i should say we've had government indication that in the event of a no deal brexit they would cut tariff on a whole host of goods coming into the u.k., which, of course, would be a great

incentive for people to carry on trading with the u.k you are right. we see no meeting of minds on how to get through, as you say, what could be the next 16 days, six months, two years. it is a mess i have to say. >> steve sedgwick, thank you we will stay tuned we have some news crossing involving music streaming service spotify. the company is announcing that it is filing a complaint with the e.u. against apple for anti-competitive practices regarding its app store in terms of favoring its own streaming as opposed to -- service as opposed to apple music separately spotify announced an expansion with its partnership with samsung with its service preinstalled on mobile devices and offering six months of spotify premium for free interesting, they've been very -- >> they've been progressive about this this goes to very much what, for example, elizabeth warren was

getting at over the weekend. this idea of breaking up institutions, but in large part that some of the companies are effectively competing against others on their own platform what does that mean? coming up, america's crude oil renaissance has changed the game for u.s. diplomacy. that is according to secretary of state mike pompeo we'll show you his exclusive comments to cnbc from houston. that's next. take a look at the biggest premarket winners and losers in the dow. the latest innovation from xfinity

isn't just a store. it's a save more with a new kind of wireless network store. it's a look what your wifi can do now store.

a get your questions answered by awesome experts store. it's a now there's one store that connects your life like never before store. the xfinity store is here. and it's simple, easy, awesome. zbliefrmt executives and political leaders gather in houston for -- brian sullivan has the big interview. broin. >> hey, andrew thank you very much. good morning yeah, we had a rare and exclusive you opportunity last night to sit down with two cabinet level secretaries. secretary of energy rick perry and secretary of state michael pomp eo. he gave a talk about china and the u.s. forces trying to blunt china's growing energy ambitions, and we began our interview by asking secretary of state pompeo where the u.s. and where the worlds of energy and foreign policy and the direction they go in collide

>> the influence for good all around the world >> we are almost effectively energy independent we probably could be if we decided not to how does that change the way you approach your job and deegz with china with russia? >> it chapgz everything. every conversation i had i was in vietnam and travel from italy. every one of those conversations is fundamentally different we had capacity to take our technology, our products, our pipelines, deliver them around the world. safe, affordable energy. >> china has its own ambition. they have oil and gas off shore

in the south china sea disputed waters we talked about iran and secretary of state saying they want to continue the sanctions against iran's exports of oil. it's really propping up his regime wiefd-ranging interview on cnbc.com >> you know, if you throw venezuela into all of this, i was just impressed just hanging. you, rick perry, and secretary of state pompeo just sort of shooting the breeze with each other. you are a player it's just that simple. >> thank you >> you're welcome. thanks for brian sullivan. >> just following in your footsteps. >> thank you, brian sullivan stocks to watch, including a big

move in pharmacy rite aid after shaking up your list of the morning movers and shakers no matter where you are in life or what your dreams entail,

a cfp professional is trained, knowledgeable, and committed to financial planning in your best interest. find your certified financial planner™ professional at letsmakeaplan.org.

find your certified financial planner™ professional ♪ just hold on, i'm comin' ♪ hold on, i'm comin' ♪ hold on ♪ don't you worry, i'm comin' ♪ here i come shares of adidas falling today. the company says it expects supply chain issues to hit its sales growth, particularly in north america. adidas did manage to have a

profit in the quarter and it's up 3% to germany rite aid is shaking up its top management the pharmacy chain's ceo exiting is part of a revamp of its leadership also, its coo and cfo are meeting. it's also slashing about 400 corporate positions. keep an eye on shares of momo. shares rising 16% yesterday. quarterly results topped analyst estimates and posted a 50% jump in revenue.

>> norway is suing boeing, and that's a little bit, i think -- i think less of norway after that don't you? you don't even know that you're in the -- it hasn't even been investigated yet you don't know who is at fault you don't know it could be a variety of different things they're suing boeing you expect others countries to forle suit with the king of norwegian >> norwegian air has lost 10% this week. >> it's possible that that happens. the analysts that are looking at this -- >> they haven't gotten -- they're sending the black box out somewhere else to see what happens. i think for norway, i don't think -- >> we will -- i think the optics is bad for norway.

>> we will hold judgment coming up -- >> like impeachment for you. what he said yesterday. could you hand me those files? yeah, of course. what is going on guys? oh hey, servicenow frees us up to do the work we want to do. so we're digging out from all the work we don't want to do. ugh, getting rid of so much paperwork. oh, doug. i didn't know you still worked here. i called for help but no one came. [ laughing ] classic doug. okay, carry on. yup. can you call my wife? thanks. servicenow. works for you.

welcome back you're watching "squawk box" live from the nasdaq market site in times square. >> good morning. welcome back to "squawk box" here mungs the stories that are front and center, boeing shares are under pressure again this morning. stocks up for its worst two-day loss the faa saying it has no basis to ground the 737 max 8 airplane following its second deadly crash in underfive months. a lot more on that story many many just a couple of minutes, and literally moments ago

norwegian air asking boeing to pay the bill for all of the planes they have taken out of service. in the meantime, u.k. lawmakers have rejected theresa may's brexit divorce bill setting up another key vote that will that today. the parliament will decide whether the u.k. will leave the e.u. with no deal tomorrow they'll vote on whether to request a brexit delay >> the s.e.c. has the green light to respond to elan musk. the federal judge granting permission for the agency to consider musk's argument that a tweet last month was a restatement of publicly disclosed information. the s.e.c. has a month to respond in a new court filing. that may bode well for elan musk we'll see. let's take a look at the dow jones. it looks like it would open up a little over five points right now. the nasdaq would open up higher by ten points. >> boeing will close at 375. 365 that first day.

>> sometimes it's weird how the technicals still matter. it's the pressure of an asset. there's all the psychology around what's happening. the sentiment. sometimes even though you can't imagine that you can anticipate what's going toob the final resolution of what happened, and yet, the 365 still holds somehow because it's a 200 day moving average. it's bizarre >> that speaks volumes about the stock, and each day that it's opened much lower, it's closed off the lows of the session. that also speaks to what it's about. >> as can you imagine --

>> going into this, this was the stock market darling this is the non-cyclical cyclical somehow we would buck all trends because it's got such a deep backlog deep order book here i mean, it was up 446 at its highs from the lionair crash of 335. that was the le then.

blast week chooirn's government reduced the growth target at the pledge to a job growth as part of its national policy >> let's get back to the markets. joining us now michael tyler, chief investment officer at eastern bank wealth management here on set. lamar, portfolio manager of villery balance fund michael tyler, did you -- you have s&p targets that you change after december of 24th are we in the middle of a big bear market rally from the lows, or at the early stages of another recovery to new highs? what do you think? >> i think we're still going a little bit higher. if you smooth it out, and for whatever reason things got panicky in december, they've come back very quickly, and then

they pretty much hit the trend line if you go back to last year and you look kind of steadily as the market has progressed and smoothed it out, you can see right where we should be right now. a little bit of continued earnings growth, a little bit of continued valuations and support. i don't see any reason the market can't continue to progress a little bit higher through the year, but not the way that it was valued in january. that was really just -- you might call it a correction from the correction from last december >> we're at a period where it's not necessarily overvalued any forward movement -- forward advances are going to be tougher and tougher to get, but you don't necessarily expect us to revisit december that seems like an easy call to make that we're going to stay about where we are i wish i had --

>> there's a little upside for the year obviously, we had that snap back we had the little overheated in the third quarter. that's the fourth quarter. fantastic first quarter. that kind of gets us from right around where we would expect to be just a little bumpier of a ride >> you calculate right about 20 times earnings right now based on -- >> yeah, yeah. so generally speaking, just however you look at where we

are, it's about -- it's towards the high end s&p is towards the high end of the valuation. i don't think you're even getting a huge jump in terms of valuation. i don't think earnings are going to shock us on the up side to be blocking and tackling, but nothing too exciting i think you really have to look down the next level to which stocks there's obviously some opportunities in different stocks the s&p overall perspective. >> we talked about my love for donuts and benigns they don't travel well >> benign. >> this is -- and you didn't know this, but i was feeling a little bit heart-sick for new orleans because there's a big

m&a conference remember when i used to go to the showdown there >> wear the beads and all that >> you going back? >> it's actually happening tomorrow you're stuck with me here in new york you would like me to go? is that the face >> i want you to wear the beads and just the beads >> can't unsee things this time of day where is max >> thank you >> thank you, michael. >> you didn't have a chance to -- >> when we return, we're going to talk about operation varsity blues. that's what the feds are calling the largest college admissions scam ever prosecuted we're going to get all the details. looking at some hollywood stars that are involved, and some big wall street titans involved as well later, we're going to talk to crisis management expert eric dezenhall about how boeing needs to approach the next few weeks to reassure their customers and the public stay tuned

you're watching "squawk. sometimes, they just drop in. cme group can help you navigate risks and capture opportunities. we enable you to reach global markets and drive forward with broader possibilities. cme group - how the world advances. ♪

it's a revolution in sleep. the sleep number 360 smart bed, from $999... senses your movement and automatically adjusts on each side to keep you both comfortable. and snoring? how smart is that? smarter sleep. so you can come out swinging, maintain your inner focus, and wake up rested and ready for anything. only at a sleep number store, save $500 on select sleep number 360 smart beds. plus, free premium delivery and setup. ends march 17th.

♪ save like a hero with synchrony bank, and catch marvel studio's captain marvel now playing.

two hollywood actresses, business leaders, and coaches among those accused of using hundreds of thousands of dollars to get their kids into college

it's the story everybody is talking about. >> it's going to go on for days. we're seeing new fall-out this morning. more than 30 ceos, entrepreneurs and a top lawyer were charged with mail and wire fraud as part of that massive cheating scheme to get their kids into college federal prosecutors say wealthy parents used a california-based college counselling service to pay bribes, cheat on entrance exams and fake athletic achievements to get admitted to yale, stanford, georgetown, usc, and other top schools. more parents and coaches could be charged, but the fall-out from those already charged has begun this morning and late yesterday. bill mclashen. tpg said as a result of the charges of personal misconduct, we have placed mcglashan on administrative leave effective immediately. manuel henriquez, hercules capital. this morning the company announcing that henriquez will

be stepping down as ceo and chairman some other business names charged is doug hodge he is the co-chairman of the global law firm wilke-far. the head of dragon capital we tried reaching out to all of those charged, and their lawyers. we have not heard back >> what is the chance that you think we're going to hear -- i imagine not everybody here is just going to plead guilty and say that they did this how many of them, do you think, will say we didn't know this was illegal? it was presented to us as a tutoring service or some kind of assistant service, and there are companies that try to help you write your admissions letters. obviously, tutoring companies. dlr all -- there's a whole netherworld of people in this industry this one clearly crosses the

line >>. >> you are right we didn't know greg abbott, who was named in here, came out with the "wall street journal" yesterday and said this is insane. we had no idea this guy was crooked. we're flabbergasted. i went back and looked at the telephone transcripts of abbott's conversation with -- and he said, what would my kid have gotten if we didn't cheat on the test? the guy said on the s.a.t., around 600 >> combined? >>. >> i think the math. the math >> 203 >> yeah. >> that's a huge -- >> abbott's daughter got an 800.

>> do people say, i understand >> for my child i would try to do something too, if i could it's a very -- i mean, i don't want to say there's a fine line because clearly, it went way over the line, but i could see this being more complicated. >> it's part of the story. >> i think in the world of high net worth and high anxiety and those two things go together, just because you're rich doesn't mean you think you can get into any of these schools i think there will be a lot of sympathy there's an interesting moment in the details yesterday where one of the guys charged who was the head of a wine company in california goes to mcglashan, and says i heard you're kind of cheating with this other guy i want in. mcglashan says to the ringleader, don't let him know what's going on. there's a lot of efforts to even

with among friends in this high net worth world to not tell them what was happening coming up, boeing posting its worst performance in a decade is the stock tell us why he's sticking with his $500 at nt.e rg th'sex at&t provides edge-to-edge intelligence, covering virtually every part of your healthcare business. so that if she has a heart problem & the staff needs to know, they will & they'll drop everything can you take a look at her vitals? & share the data with other specialists yeah, i'm looking at them now. & they'll drop everything hey. & take care of this baby yeah, that procedure seems right. & that one too. at&t provides edge to edge intelligence. it can do so much for your business, the list goes on and on. that's the power of &. & when your patient's tests come back...

welcome back a new report out from "the wall

street journal" reporting the flight control problems. the voice recording of the pilot does not indicate that there was anything like bird interference or any other external problems this is important because it suggests at least in the very initial stages of what this inquiry is about that there may have been problems in the cockpit itself in terms of the way the system worked. we should also note that the ceo said the pilots had been in a simulator to deal with these >> they received the updates and training >> boeing shares have been punished, we should say, over the last couple of days. want to talk more about the effect on the stock. joining us now to discuss this is the president at milius research good morning to you. >> morning >> when you hear about a crash like this and try to do the permutations in terms of what the impact is going to be on boeing, telli inus how you even

begin to do the math >> you have to separate the short-term from long-term. when it comes from the longer term price ratings, set that aside and let that for when normalcy returns when you look at how to bound outcomes in the short-term, you could just be throwing stuff against the wall and guessing. what you really need to do is in our view go back, look in history to find similar examples see if you can put numbers around them. we've attempted to do that the example which i know you guys recall, we went through in gory detail six years ago. that plane was grounded for three months by the faa. the cost to fix those airplanes was $465,000 so you can begin to start putting numbers around, you know, various buckets of cost if you were to compensate customers of the 737 max for alternative lift over a period of time, you can look at lease rates and figure what that might cost. look at legal settlements and

begin to figure out what's the size of the legal settlement >> so carter, put some numbers on those for us. this morning we saw norwegian air sending a bill saying we had to take these out of service they did that voluntarily. but they're saying to boeing, we want you to pay for it. >> there's a question of who pays for what if you voluntarily decide to keep that aircraft on the ground but, yeah. let's say those buckets, $150 million is the biggest settlement ever. at mat lift for these customers including ones that would be delayed is probably another half billion dollars. so all in, you're talking billion dollars of unrecoverable costs. i mean, people go through lots of different permutations to say

what do we think is going to happen next. >> is there any possibility this is a transformational moment in that it allows another competitor to emerge obviously there's competitors in china that have never really been able to sell beyond china what this does for airbus elsewhere? >> i don't think so. honestly, anything that's bad for aviation safety is bad for every manufacturer of an airplane so sometimes one manufacturer is unlucky and is caught in the cross hairs, if you will but i guarantee you the guys at airbus don't like seeing the guys at boeing go through this >> thank you we got to run. appreciate it. >> yep coming up, what will jay powell and the fed do with rates in 2019? richard fisher joins us to discuss. ll the insurance company ll the insurance company it's them, calling us. it's going to be a week before they can get through on these roads shhh, sorry, i didn't catch that. i said ask how soon they can be here

not you. right now? what's now? he says they're surveying our property now they're probably at the wrong house i don't see any hovering his name is hovering? look up? by using machine learning and analytics to automate claims, cognizant is helping insurance companies advance how they serve even the hardest-to-reach customers. cool ♪ 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. pgim: the global investment management

businesses of prudential.

the boeing backlash is growing as countries and airlines around the world are grounding the 737 max 8 airplane boeing sticking to its statement that the plane is safe and for now the faa is agreeing. the latest on boeing's pr crisis straight ahead plus we talk all things tesla from elon's tweet battle with the s.e.c. to the

anticipation of tomorrow's reveal of the model y. is now the time to buy the stock? we'll find out plus a world of no deals from brexit to north korea to china. we'll hear from former federal reserve member richard fisher on the issues that matter to your money as the second hour of "squawk box" begins right now. live from the beating heart of business, new york, this is "squawk box. >> good morning and welcome back to "squawk box" here on cnbc i'm joe kernen along with andrew ross sorkin and melissa lee. equity futures now positive. up about 18 or so points first thing in the morning, they were down about 50 in terms of an implied open. they've turned around with the nasdaq now gaining as well and the s&p indicated up four and change and the dow is up in spite of five or six more points

indicated downward pressure from boeing which is 30, 40 points on the dow. you could read that as up as 40 or 50 if it wasn't for boeing on the dow. here's what's making headlines at this hour boeing indicated lower after an 11% drop over the past two days. a number are calling for the faa to ban the 737 max 8 jet but the faa maintains it is airworthy. the voice recorder from the crash in ethiopia does not indicate any external problem. we'll have much more on this coming up. spotify has filed a european union complaint against apple. they said apple has abused the dominance of its app store over spotify. another economic report is coming up in just about 90 minutes' time. durable goods at 8:30 eastern

time and looking for a drop of 0.6% the price index will be released at the same time another fed meeting is now less than a week away. but have many global central banks already hit the -- we're calling it the easy button >> easy button, exactly. you got a better word? >> i got to come up with a better word. >> you work on it. i'll do my report now. you let me know. just a few months ago central banks were in tightening mode. many now just before and after directly altering their rates or changing their guidance. let's take a look at the federal reserve. you'll see extended negative rates to the year end. the peoples bank of china -- by the way when i started doing this i never would have put

china in the top four. i don't know the fourth one i'd had. but each one of these have a rate that also have other policies non-standard measures. let's take a look on that. ecb announced a new lending facility in march that will happen in september. boj approved further asset purchases. and the people's bank of china is figuring out a way to lend further support. now, markets mostly have cheered these moves especially since it came in response to a global selloff and global economic weakening. but some remember just a few months ago the federal reserve had a policy of normalization. one of those who remembers is mccarthy at jeffriejeffries it raises the question, has the fed guinn up on both rate and balance sheet normalization? worries me they will not have the tools for the next crisis or situation. easier policy now to address the recent downturn in return for

what would be tighter policy if there's a more substantial shock to the economy i don't know that the markets have internalized that tradeoff. it might be one they've made >> all right let's talk -- bring in richard fisher you heard steve's report, richard. he's former dallas fed president, barclays senior adviser. septuagenarian >> thanks for pointing that out. >> wisdom. >> wisdom comes with age >> we're in a pretty good place domestically not such a great place globally. how's the fed in terms of pushing the right buttons whether it's easy. >> let me go to what steve was talking about. there's a big headline cash on this side of the balance

sheet is $1.7 trillion they're now at $1.7 trillion add those two together, $3.4 trillion so you -- if they finish up this year, they're right on target somewhere between 3.5, 3.75. yet no surprise and people have made a big deal out of this. i think steve hit on the main point. if we paint ourselves in a corner, how do you get out after administering an opioid of easy money for ten years? the market's hooked on cheap money. and in europe, look at the negative interest rate regime. what do they do next >> and we think we're okay because inflation is not -- >> if you're a short-term thinker you're a happy guy or

happy woman. what do we do when we go into a downturn what are the tools left? the fed funds rate, the key marker rate in the middle of the corridor is at 2.40 right now. that's not very much to give back and the balance sheet has to be reduced. you can add it to an extent. i was a little disappointed to hear the head of the new york fed talk about negative interest rates. >> the average response to a recession. if we did 500 we go negative 2.5. >> we're not going to go negative because we'll destroy the banking system this is what's really worrisome. >> you should do percentage, right? >> in other words, the prnl of -- >> when you talked about the button, reminded me of hillary clinton's reset button >> that was not my intent. i'm sorry if i ruined your morning. >> you're just going through the math in terms of how the balance

sheet is actually -- when you take into account the extra reserves on the balance sheet, it's basically back to normal. and so don't we have those bullets to use i mean, it's not -- >> it's not quite there. but it's getting there what the fomc has said at the end of this year, we should be done currency and circulation grows like clock work. it's already $1.7 trillion. >> from these low rates, anyone would say if you doubled 2.75% to 5.5 or something, they'd say it's doubling. you can't use the 500 basis point west need. >> i agree >> what about inflation? inflation is low now did you see what our deficit is going to be between now and -- where are we 23 now >> $1.3 trillion of new debt when one of the key buyers the fed is no longer adding to -- >> you haven't switched to this new monetary thing i thought that was your deal what's it called

>> it's the anti-texas monetary policy >> and it's combined with the new green deal we've been thinking about all these things wrong even capitalism. let's get rid of it. >> he's a darling of sort of the middle to left wing democratic party and he's against it. >> littmiddle in what world? >> in the joe kernen world, he's -- >> yeah. well, right. you're a democrat but you're from texas so you're further right than i am >> i'm right there where melissa is >> stuck in the middle. >> do you -- is -- i mean, we sort of -- we're laughing about the new monetary -- what's it called >> modern monetary theory. >> it's about 60 years old >> it's envogue now. but we are going to do some serious printing one of these days, aren't we? >> i've been worried about this for 40 years doesn't bother people.

when nixon started running up those deficits george hill said he was worried about it he called a guy named sam cohen. said is there any difference between democrats and republicans in congress when it comes to spending money? the answer was yes, there, is democrats enjoy it more. congress likes to spend money. now we have a president levering the government >> i want to get at something i think joe was getting at we have these big deficits if the fed raises rates, it's going to mean that what is already happening which is interest as a total percentage of debt ends up being a bigger part and ends up making it even harder to what extent does the fed need that >> we have more supply and we have less demand coming from the central bank the one thing we have going for us is we are relatively attracted to the rest of the world. if you look at the auction yesterday, pretty healthy.

2.61%. that's right so it's not just money coming in here it won't go out in a negative yield world. but i don't know how long that lasts. so you make a good point but i don't think it's the fed's job to respond to that the markets will respond and drive higher if, indeed, we don't have enough foreign demand for stuff. >> richard, thank you. >> thanks for having me always. >> are you still a cnbc contributor? >> yes, of course. >> all right i don't know if i introed you as that that would have been my first thing. >> it's an exciting moniker. >> yeah, it is you made it. you have made it >> i know. i've arrived thank you. want to be where you guys are. >> thanks, steve easy button. i get it i don't know pivot button >> pivot i thought was a boring word >> easy button coming up, tesla will be revealing the model y tomorrow evening. we'll discuss the potential in a bit. boeing in crisis mode. a number of airlines and

countries around the world have grounded the max 8 aviation and frequent fliers calling on the u.s. to do the same their review is oningog. stay tuned you're watching "squawk box" on cnbc

we see breakthrough medicines getting to patients in record time. at emerson, when issues become inspiration, creating a better world isn't just a result, it's a responsibility. emerson. consider it solved.

want more from your entejust say teach me more. into your xfinice remote to discover all sorts of tips and tricks in x1. can i find my wifi password? just ask. [ ding ] show me my wifi password. hey now! [ ding ] you can even troubleshoot, learn new voice commands and much more. clean my daughter's room. [ ding ] oh, it won't do that. welp, someone should. just say "teach me more" into your voice remote and see how you can have an even better x1 experience. simple. easy. awesome.

welcome back to "squawk box. aurora khan bis has a plan to appoint peltz as strategic adviser. he's been granted options for 20 million shares that would invest over a four-year period. we'll be joined by aurora's executive chairman at 8:15 eastern time interesting to see an activist involved in a cannabis company not in a typical activist capacity >> i think it speaks to a couple of things. figs of all, the institutionalization of cannabis, more hedge funds want to be in on this sector. and peltz brings with him the experience of being in a lot of consumer products companies. >> right >> and that's where this industry is going in terms of developing its own brands particularly with the farm bell in december. i wouldn't be surprised by the end of the year we see products in walgreens, cvs, because of

these partnerships being developed. >> really? wow. >> i wish for "fast money" you could do a bitcoin/cannabis sort of -- the intersection of those two things >> joe, we go where there is investment opportunity, joe. and right now, it's -- >> shorting bitcoin? >> we are more focused on -- >> no, on cannabis bitcoin has been in a long winter >> it is all right. coming up, we'll talk all things tesla. the stock is sitting close to its year to date low now a buying opportunity we will find out people know aflac... aflac! ...but not what they do.

so we're answering their questions. aflac is auto insurance, right? no. uh uh. is it homeowner's insurance? no... uhuhuhuh! is it duck insurance? nope. ahhh! do they pay me money directly when i get sick or injured? yeah. aflac! you got it. you know aflac! boom! get help with expenses health insurance doesn't cover. get to know us at... aflac dot com. you should be mad at airports. excuse me, where is gate 87? you should be mad at non-seasoned travelers. and they took my toothpaste away. and you should be mad at people who take unnecessary risks. how dare you, he's my emotional support snake. but you're not mad, because you have e*trade, whose tech helps you understand the risk and reward potential on an options trade it's a paste. it's not liquid or a gel. and even explore what-if scenarios. where's gate 87? don't get mad. get e*trade and start trading today.

each day our planet awakens but with opportunity comes risk. and to manage this risk, the world turns to cme group. we help farmers lock in future prices, banks manage interest rate changes and airlines hedge fuel costs. all so they can manage their risks and move forward. it's simply a matter of following the signs. they all lead here. cme group - how the world advances.

there's a continuing s.e.c. scuffle at tesla this week and tomorrow elon musk will unveil a new crossover the model y. joining us to discuss all things tesla is craig irwin you've got a hold rating, right, craig, on the stock? >> yes >> what are we expecting for the model y? it was not too long ago when if elon musk tweeted about a new model, it would be a catalyst. >> what matters now is unit sales, unit values it's been priced too high. sorry. the gen 3 has been priced too high the model y will most likely be priced too high to see the significant volumes people really want to see chest la chae in '19 because recently, elon musk, the goal had always been to bring the model 3 down to $35,000.

he's finally -- seems like he's done it. you can get a car for $35,000. you don't think so still >> if you want wheels and, you know, any color other than black and autonomous is $42,000. and the battery is a third smaller than the standard battery so your range is comparable to the 60 kilowatt model s years ago that didn't sell didn't have the range to be attractive to consumers. >> even though the model 3 price is brought down as the company had aimed to do for years and years, that it's -- that car is actually a car nobody will want to buy so ultimately it's still a luxury price point >> i won't say nobody, because that's absolute. i just think it will see lesser demand it is still a luxury price point. >> what would you rather see tesla do sell higher priced cars but

fewer of them? or more? >> they need to achieve unit growth >> so they need the volume. >> people will forgive them for not making as much money today when there's the idea they'll make lots of money tomorrow. so they really do need to have substantial volume growth. and that's what's been lacking that's where visibility is kind of falling apart a little bit. looks like they're going to be at the bottom end of their guidance range from here. >> your gripe with tesla in e terms of your hold rating is the cost of the battery. so does that really become something that comes to bear as a problem for the company now with the margins getting thinner and thinner. >> that is the essential question based on hard economic data out of japan, hold ononto -- not the whisper number that the company gives you of 100 to 150. they only say that in dark corners.

so if you look at a company like porsche which has a really amazing product coming on the market this year, their battery costs 250 a kilowatt hour. so there's not this big competitive mode it's a great company it just forced the growth of the category it's been a lot of innovation there. they deserve respect for that. but competition's real >> did you realize >> i've heard -- >> where does it come from people believe that tesla has an advantage. where does that come from? you're saying they don't this is factual. >> i'm saying they do not. i'm saying you can go to the hard economic data from the ministry of economy, trade, and industry out of japan and it shows they're down to $30 a kilowatt hour. >> they get their data produced

at the gig factory this is all automotive design. it's a high quality set. i've been in batteries for having 20 years. and many of the executives i've known for many years are all aware of this day fa i had one ceo in my office i hadn't seen for a number of years recently the people in industrial that have done batteries over the long-term, know the structure of the industry, knows that the data is indpebl they are also a splayer of the model 3 that's something i broke to wall street years ago they have confirmed that they believe the data is impeccable >> i've always said, what happens when porsche makes an

unbelievable or bmw or mercedes. and it's always a bb oh, no. tes tesla revolution -- there's a mote there's no mote? >> there's no mote the real thing for them that matters is how much does porsche really want to push volumes or how much does jaguar really want to push volumes this year? so the tacon is a beautiful -- >> therefore, the question is who do you think there is -- do you think there's an automaker five years from now. three years from now i don't know where there's going to be a competitive product at a competitive price to some of the lower end teslas, if you will. >> so the every man car is what you're referring to. i believe there will be an every man car over the next few years. >> but that's five years out in

terms of a true competitor to the model 3. right? right? >> then they've got runway >> they've got amazing runway. >> the model 3 i would not say is a -- it's a luxury car. if you're talking about a $45,000, $50,000 car, that's a luxury >> so you think the $35,000 is not a real price >> i think it's really a $45,000 price and i think that the range is unattractive to consumers i think range anxiety is real. you know, love what they've done with the supercharger network, but it doesn't get people there. i'm a skeptic. you know, i have a hard time being bullish, you know, while i have been super bullish in the past >> range anxiety i don't need any other anxiety you know what i mean >> a lot on your plate >> so the battery's going to --

then you can't -- yeah >> when you can't get home, that's the big deal. >> the whisper number tesla gives you, are you saying the company's lying? >> i'm saying they're being less than transparent. there's a history here everybody's aware -- >> diplomatic phrase for you to use, track record. >> yes >> who's the individual, kathy wood isn't it? >> she loves the company >> we should get you on with her. >> yeah. >> you have to sit there and she'd have to sit here >> that would be fun, sure >> all right but this could bring out the worst in both of you >> thank you and a programming note, legendary investor and tesla shareholder ron baron will join us on "squawk box" at 7:00 a.m. eastern time >> just cut some sound from this to play for ron tomorrow coming up, dozens of parents including famous actresses and

college coaches were charged in an alleged conspiracy to get students into top colleges the latest on what's being called the largest school scam in history is this it it's 25 million. it's not a half a billion, right? er not yet, but it might get the. >> as we head to break, here's a look at the u.s. equity futures. a cfa charterholder does. you've worked hard to grow your wealth. make sure you're working with a wealth manager who can grow with you. cfa charterholders have the investment expertise to unlock opportunities other advisors might not see. learn what a cfa charterholdr can do for you at therightquestion.org

want more from your entejust say teach me more. into your xfinice remote to discover all sorts of tips and tricks in x1. can i find my wifi password? just ask. [ ding ] show me my wifi password. hey now! [ ding ] you can even troubleshoot, learn new voice commands and much more. clean my daughter's room. [ ding ] oh, it won't do that. welp, someone should. just say "teach me more" into your voice remote and see how you can have an even better x1 experience. simple. easy. awesome.

welcome back to "squawk box. it is the story of the morning federal prosecutors indicted coaches and affluent parents including some hollywood elite and finance's elite in a massive bribery scheme to fast track their children into some of the country's top universities among those charged the prosecutors have named operation varsity blues, actresses felicity huffman and lori loughlin organization also helped students cheat on the a.c.t. and s.a.t. exams many of them had no athletic background they would even have pictures of them playing the sports even though they never played the sports >> that would work in the ivy

league you don't need to be in athletics -- i'm kidding harvard and penn are playing saturday i'm looking forward to it. maybe football is not great. but good hoops i was kidding about that i take it all back >> the parents, we should say, spent $25 million to bribe and facilitate the admissions to many universities including yale, wake forest, so many others early this morning, one of the business leaders charged in that scandal emanuel enrique stepped down as ceo of herk lease capital. that stock fell. this is going to have huge ramifications. the lead lawyer at wilke farr was charged as well. >> how can you be a lawyer and be convicted of a crime? can you hold brokerage licenses when you're convicted of a

crime? >> and i think this is going to be -- we'll see what the defense is -- if there is a defense. but this is wire fraud wire fraud is a very -- these are -- these aren't just slap on the wrist kind of things and then then did the kids know? sometimes it sounds like the kids might have known. >> don't you think eventually the -- are people going to do time from this >> i think it's possible >> it's possible, really >> i think it's possible >> we'll have to see >> they might want to make an example of this case >> do you follow harvard hoops at this point? you know, a couple years ago, they were in the tournament. >> i don't follow. >> they got through the first couple of rounds a few years ago in march madness which is coming up and i actually am watching on saturday to see the penn/harvard -- so i was, you know, with hoops i think it's easier to put together although stanford gets it done with football. >> what are you talking about?

>> just saying that for ivy league, that they are competitive in terms of basketball >> in terms of basketball. >> we still sort of -- no one's necessarily going to arrange a weekend around the harvard/yale game unless you went to harvard or yale. penn made it into the tournament the year before too. so that's the big game on saturday cornell? >> hockey. go big red yeah >> see that's my point. when we return -- you got your brackets? >> i don't >> they're not ready yet but you're going to do it again. you're not going to press the button this year >> i look at all the statisticians. >> you press that button >> the one where it picks it for you, no. i try to look at all the different -- >> yeah. that's the true easy button. when we return, stocks on the move plus bash lash against boeing.

growing concern for management that story and much more "squawk box" will be right back.

time now for a look at some

of this morning's market movers. you have preparations? how can we bring this home >> how many of them are even publicly traded anymore? how many for-profit colleges >> how do we bring this home how do you do this to do stock quotes on it i don't think we can >> i don't think we can. >> maybe metrics for prisons >> we do have some analyst calls this morning that are not related to college, you know, admissions or anything but we'll kick it off with tesla. the shares are flat. around 20,000 shares of premarket volume this is the team at goldman sachs. they're reiterating their sell rating on the electric car maker. they expect delivers for the first quarter as well as profits for the first quarter this year will disappoint investors. they're looking at other things such as profit margin pressures with the lower priced models coming in and the possibility of higher priced models as well those stocks up 0.2%

meanwhile, another group getting more positive on carnival cruise line they've upgraded the stock to a buy. they were prior neutral on it. they cited things like a compelling valuation, lower expectations, and overblown concerns about what's happening with europe. we'll watch those shares up by 2% then shares of credit suisse up half a percent on shares of premarket volume they're getting downgraded to a prior overweight they cited the things like the investment banking strategy there. those up by about 0.5% as well >> thank you for that. meantime, boeing now dealing with a full-blown crisis following the crashes of two 737 max 8 airplanes in less than five months. new report out from "the wall street journal" this morning saying the pilot of the crashed ethiopian jet reported flight

control problems said the voice recording of the pilot does not indicate that there was bird interference or any other external problem which is going to raise all sorts of new questions today. iranian regulators following china and other carriers grounding the aircraft this morning. norway announcing it's closing its air space to all boeing 737 max 8 airplanes. leaving the united states as the single holdout if you got a call from seattle this morning, eric, and they said what do we do, you would tell them what >> i would -- >> i'm sorry, chicago. >> i would tell them you have to begin with the audiences that you could have the most impact on and there are two of them. there are the airlines and then there are the governments. because if these audiences are with you, you survive. if these audiences are against you, you have a problem. and so far the result is mixed the good news is you have the

american airlines and the american government behind you so ultimately what you have to do is shore up these audiences because when you see a lot of these things are sceeen as pr problems but it's not your conventional pr solution. it is an inside game to keep these audiences with you >> so but here's the thing i'm sure there are people inside boeing right now who say, look, we think we can fix the software problem. we don't even know what really happened on this other aircraft. and yet you then have all these other governments saying we can't even take the chance and so that's the conundrum here which was, would you ever recommend, for example, for boeing to see you know what? the next week until we can figure this out and i don't know if a week is enough. that we would voluntarily just grind everything >> it is always an option, but there are things they know that we don't for example, they probably have some insight that we don't on

why this is happening abroad and not in the u.s they probably have a better sense of training abroad of air traffic control overseas. so there are variables they know about. >> but eric, if they thought that the training abroad was not up to snuff and wasn't as good as the training in the u.s., i would imagine you would say ground the planes internationally. i'm just thinking, like the tylenol scare. the whole idea is just take everything off the market until you can figure it out. and that was always considered sort of the blueprint for what to do in the consumer space. airline obviously very different. >> we're getting into two other things first of all, the tylenol legend is largely a myth. they did not recall everything it took them a week and they only recalled it when they absolutely had to when the tylenol was being pulled off the shelves. so the tylenol mythology i don't think applies here yes, i mean, as a precautionary measure, that is something they

could do taking the product off the market but if they fundamentally don't believe that the errors are what people are saying they are, there is something to be said in bolstering confidence by showing if the plane continues to fly safely in the u.s. and the airlines continue to stay behind them, slowly but surely other companies will come aboard because what has to happen here is it all comes down to confidence and when people see over time that a plane is flying safely without incident, slowly but surely, other people come back this is not a pr campaign in the sense that you can educate a mass audience about safety >> but how about the airlines? i mean, arguably they've got a lot to lose immediately. i mean, just in the three airlines that have the max 8 in their fleet, they're all down about 3% a piece and for southwest airlines, it's got the biggest fleet of max 8s.

i mean, max 8s only comprise 6% of flying hours. yet they're feeling the impact i mean, passengers are getting freaked out. they are looking for the first time in a long time at what sort of plane they're scheduled to be on and so if you're in the ceo seat of an airline here, that is exposed, would you say the rest of the world is doing this, maybe this is our opportunity to say we put passenger safety first and we should voluntarily ground these particular planes knowing that the impact at maximum for any of these airlines is 6% of flying hours >> well, my role would be to give them their options. okay and in crisis management, you have to choose the best of your bad options. one of those options would certainly be to ground the fleet. no question about it they are clearly making the calculation they have enough confidence in this plane that the less bad of their options is to keep it out there and to show

confidence that the apparatus works. it is not a perfect solution it is a less bad solution than what they have because they are confident in the product. >> eric, thank you for your perspective on all this. what do you say there, joe >> all my viewers are saying that elizabeth warren should head up this whole inquiry into the academic thing >> oh, because she was a professor at harvard law. >> i'm not sure why. they're all just sort of saying she should spearhead i don't understand it. i don't know i'm not sure why they're saying that coming up, the latest world wealth showing big bets in high end real estate. robert frank will join us with a breakdown of the numbers as well as a special guest let's look at futures at this hour boeing has paired its losses in the premarket session. it's now down 1.25%. we've got green ro aos e board here stay tuned the latest innovation from xfinity

isn't just a store. it's a save more with a new kind of wireless network store.

it's a look what your wifi can do now store. a get your questions answered by awesome experts store. it's a now there's one store that connects your life like never before store. the xfinity store is here. and it's simple, easy, awesome. results of the world wealth report picking winners and losers in global real estate robert frank joins us with much more >> new york is slipping in the global real estate rankings. and new taxes and new tax changes could add even more pressure to a market that already just had its worst year since the financial crisis now, new york ranked 82nd in the world last year. that was for price performance somewhere between stockholm and rio. that's where we are, guys.

that's according to the world wealth report. if you look at the ranking at the top of the list, now, manila philippines saw the biggest price jump that was up 11% followed by edinburgh and berlin new york is still among the most expensive in the world monaco ranked first in terms of price where a million dollars gets you only 172 square feet of luxury prime real estate hong kong is second where a million gets you 237 square feet in new york you get 334 square feet of luxury real estate so who wr should you put your money this year and next year? the wealth report says that madrid, berlin, paris, and cape town will see the strongest growth in twooi2019 it's said new york won't see any growth in 2019 but that sales volumes may pick up as sellers become more realistic. so we shall see. >> all right robert frank, thanks got you -- how many stories you covering today

>> a lot we have a wealth of coverage for you this morning >> you do. all right. let's bring in a real estate mogul who runs new york state's largest real estate brokerage firm president and ceo of the vector group. welcome, howard. good to see you. >> morning >> that was an interesting discussion we had yesterday. is there any way that you wouldn't see if you had some type of tax that's being proposed here? does real estate go down in your view >> i think it would be a disaster not just for real estate i think it'd be a disaster for the economy in new york. between construction jobs and other industries that will suffer from people not buying in new york >> i remember when during the financial crisis and bonuses went down. restaurants suffered because people were not ordering $200 and $300 bottle wine they were ordering something else do politicians not think about the unintended consequences at

times like this? >> i think they should have learned their lesson with the amazon disaster. >> i mentioned that. >> and this would be multiples worse than that. >> you think this is multiples worse? >> multiples worse >> and how far down the line will it trickle down the line, if you will. meaning properties below $5 million range or less. >> we should tell people what we're talking about. we're taubd the pied-a-terre tax. if you own a second home in new york city that's $5 million or more, you will pay a tax between 0.5% and 4%. >> but compared to the normal tax the way it's being compared, it will be an annual tax not like a mansion tax that's one-time that's the part that would be disastrous >> so is the real estate industry fighting this and do you think it's going to happen

>> i don't think it's going to happen the way it's laid out now. i think the governor is a smart man. i think they're going to come to their senses adds to what it would do to the economy of new york new york city especially so i think there'll be something. i don't think it'll be as severe and i don't think it'll be an annual payment. >> what do you think the something looks like >> i think it looks like an increased mansion tax. >> how bad is the real estate market in new york >> it's not so bad look last year according to the wealth report, down 2.5% you know, this is after years -- >> what about your business? >> we were down -- i look at commission so we were down maybe 12%. so part of that's elocity. part of it's pricing but on the other hand we were up 32% in south florida what does that tell you? that tells you is people have been preparing -- people have been leaving anyway. before salt. then as soon as the salt was talked about, i think it sped up and i think it'll continue

and if any tax is being talked about being passed in that fashion where it's annual, there will really be an exodus from new york city. >> when we talk about it and they pull at your heart. they talk about fixing the subways. we need the money to fix the subways. but what if enough people leave -- like, take illinois, for example. or you make it really hard on millionaires or hedge funds or whatever then you can watch revenue go down so do they not ever connect the dots are they well intentioned? is it punitive do you know you can end up with less for the subways before this tax. >> it's certainly punitive >> so it's not they don't really think they're going to bring in more revenue >> they may convince themselves. but it's just not going to happen >> and don't you think you lose more people -- >> you're going to lose jobs if you're going to do a tax like

this you didn't have their amazon mojo yesterday. >> a question for howard do we have a revenue problem in this city? is there not enough revenue to support what we need in terms of infrastructure, need in terms of subway >> you mean the $30 billion you're not getting now from the last screwup. >> there's been problems all over the place are we getting the right allocation from albany or are we creating enough revenue. what do we need to do to make this a livable city? the subways are a mess i'm not saying this is a right way to do it at all. but when something cares deeply about the city, what would you do to get to the over side of the -- to the promised land. >> it's a tough job. no question about it but you don't fix a budget by

chasing people out of the state and out of the city. you just don't that's impossible. >> start with that then figure out how to fix it. >> at a certain fact, you can't cut expenses enough. that's the problem but i'm sure there's fat as there is in any budget that has to be looked at probably closely and first before you start doing kra crazy things on the side >> what will happen if the tax goes through in terms of the cascade effect how far down the ladder does it go, do you think >> i think it affects everyone even someone under $5 million who's not paying it is still going to be concerned -- >> the prices come down. >> yeah. prices come down i think they're going to come down in general. it'd be nice to think, this is great. everything under $5 million will go up. but it doesn't go that wa i. it just doesn't work >> what part of the market is strong now what part of the market is weak

now? and what do you see going forward? >> look. last year the best parts of the market were under $3 million which is always pretty stable. and over, probably $20 million, $25 million. that's because the people in between -- you know, look. you buy an $8 million apartment, that's not a crazy price in new york city. but for the rest of the country and the state, it is a big number but these are people that still worry about their livelihood if their bank is worried about their performance. they're worried about how salt is going to affect it. they worry about they still want a discount because they know the market's down. they want a fair price they don't want to be stupid and overpay for something. they'll buy all day. >> all right howard, great to see you coming up, the boeing backlash is growing.

new this morning, voice recorder data does not point to any type of interference outside of t the -- michael singer joins us in a bit to discuss. quk x"ilbeig bk."sawbo wl rhtac -so much of our future is ahead of us.

♪ -it's all about the big picture. with miguel, our certified financial planner™ professional, we looked at business insurance, our mortgage, even our plans to adopt. -it's not about this fund or that fund -- it's about us. -welcome to our complete freedom plan. -it's all possible with a cfp professional. -find your certified financial planner™ professional at letsmakeaplan.org. -find your certified financial planner™ professional

will it feel like the wheend of a journey?p working, or the beginning of something even better? when you prepare for retirement with pacific life, you can create a lifelong income... so you have the freedom to keep doing whatever is most meaningful to you. a reliable income that lets you retire, without retiring from life. that's the power of pacific. ask your financial professional about pacific life today.

what went wrong? the black boxes from this weekend's boeing jet crash is heading abroad for analysis as boeing suffers its worst drop. a far reaching college admissions scandal we'll bring you the latest detail and brexit in the balance. uk lawmakers set to take a crucial vote after the plans are dealt another big set back the final hour of "squawk box" begins right now live from the most powerful city in the world, new york, this is "squawk box. >> good morning and welcome back to "squawk box" here on cnbc live from the nasdaq market site in times square. i'm joe kernen along with andrew ross sorkin and melissa lee. becky is off today

the futures have been gaining in the premarket session. the dow now indicated up 53.3 with s&p indicated up about 8.25 nasdaq up roughly 31.5 points this morning treasuries, $2.62. it has not been headed back to 3% >> been in a down. here are the stories investors are going to be talking about this morning britain's parliament set to vote on whether to leave the european union without a divorce deal this comes after the vote of no the second time. the fate of brexit is now more uncertain than ever. possible outcomes include the following. the uk leaving without a deal. we could also have a second public vote on whether to leave at all yet another vote on may's plan

or a delay to the official brexit date of march 29th. by the way, this is such an important story and i just worry we hear brexit and we're like, every day there's brexit but we are at an inflection point here it's worth keeping an eye on where we -- >> do you think the sun would come up with a no deal exit as many. >> i think the sun would come up >> but i think it would be -- as a globalist, you're -- it's painful for you. >> i -- >> but the promise -- >> think it'd be problematic >> the eu's got the weight of its own -- >> are you a globalist >> i'm a -- i've always thought, you know, that for the uk to complete completely seed its authority to bureaucrats in belgium was -- they -- are you sure the eu is going to be here intact five years from now the way it is

now? they've got some things to deal with right? >> we'll see talking about the eu, we have new news out of the eu this morning. you can think of this in the thoughts of globalist or not spotify filing an antitrust claim against apple there. apple has abused the dominance to favor its own service, apple music. see? spotify announcing the partnership with samsung we the service preinstalled on some mobile devices and offering six months of spotify premium for free then there is aurora cannabis. it's now trying to have nelson peltz as the strategic adviser peltz is going to be granted options for nearly 20 million shares that would invest over a four-year period an ethiopian airlines spokesperson says the pilot of

the max 8 that crashed over the weekend reported flight control problems before the plane went down contessa brewer joins us with the latest >> hi there. yeah there are some 8500 max 8 flights globally every week around the world that particular boeing model has been grounded around the world let's talk about who is still flying them. american, southwest, west jet, canada air, and canada's transport minister says there are no plans to ground them there. the faa released a statement late yesterday saying thus far our review shows no systemic performance issues and provides no basis to order the grounding of this aircraft if any issues affecting the airworthiness are identified, the faa will take immediate and appropriate action late last night the european union celebrating 15 sthurkz zblinchtss. >>

it expects boeing to pay for that norwegian air ceo posted a video on twitter >> they will not take the cost related to the new aircraft that we have to park temporarily. we will send this bill to those who produce this aircraft. >> boeing ceo dennis muilenburg spoke with president trump yesterday following his tweet. the president's, about airplanes being too technologically advanced the ceo reiterated to the president the safety of the max 8. we've also learned transportation secretary elaine chao flew on a southwest 737 max 8 to and from austin yesterday two more points, we have heard from the ethiopian airline ceo who says they are going to send those black boxes abroad to have the data analyzed. they don't have the capabilities to do it there we just don't know where they're going yet. still waiting on information

coming pr the black boxes. and you mentioned there that -- i mean, this happened right afterwards that the ceo said that the pilots had contacted air traffic control. that they were experiencing flight control problems. we spoke with a former faa acting administrator yesterday who said the planes ar constantly sending data and communications in realtime and so far in what they've received, there's been no indication that there was a problem with the plane itself guys >> okay, contessa. thank you. you've got your ear piece in this should be interesting joining us now an american airlines pilot and spokesperson for the allied pilots association. we were actually talking -- i was anyway -- about some of your comments earlier because it's -- they're not mutually exclusive, but you're certainly willing to consider the entire spectrum of concerns here in your view, you're pretty sure that this is a -- this airline is safe and you wouldn't have a problem flying it.

but you don't have -- at the same time you understand how the flight attendants might not want to fly in it right now so how do you square that circle that you understand what they're saying but you feel totally comfortable that you know what the issues are here. >> well, i would say we're confident in this aircraft more than we were after the lion air tragedy. and the ethiopian tragedy, we'll find the details out from that flying is a human event. we have the technology we have the training now we have the knowledge in the cockpit. but just like our pilots our passengers or 'er crew members don't feel comfortable, then we're empathetic to that. we want people on the aircraft who feel anxiety free and confident that they're going to get there safely that's our job we just met with a senior vp of flight operations. and after discussion, team decided it was time to make a strong statement about this aircraft and what is unique about

american airlines 737 max 8 aircrafts. >> ich'm sorry, dennis as a total layman in this, we have pointed out that the -- before the plane was modified to move bigger engines closer to the fuselage, there was not a stalling problem there was no -- it wasn't necessary to have this override system is that fair to say? >> that is correct >> was it worth it i mean, should we have messed with something that didn't have this problem that now seems to be an issue for maybe pilots that aren't totally trained or that haven't had a simulation? >> well, we are trained in that now. knowledge is the foundation of this we know the system existed prior to this at lion air. we did not know that and that was a violation of the trust. but we have that information now. and that information you spoke of, yes, the airplane is

different. but the airplane has many systems in it. if the aircraft goes into a stall, this is a system in that. we know what to do i fly a 737 max the other day. we briefed on exactly what we need to do with the switches to disarm this. it's a hot item for us >> do you think that pilots in the united states are better trabed to deal with this than pilots internationally >> well, i can assure you that the pilots in the u.s. are trained for this my brothers and sisters at united and southwest have made similar statements to their public so we are all together on this pardon they are trained. >> are the ethiopian pilots trained? is there a -- are some pilots around the world less familiar with what they need to do, perhaps? we're dancing around the issue but it hasn't happened here.

is that because our pilots are trained, are more up to speed on this new system than pilots elsewhere? is it less safe than other airlines >> i wouldn't say that i don't know what -- they obviously have a lack of confidence here in the u.s., our airlines and american airlines we're unique because we have additional indicators that other airlines don't have. that's just an added layer for us >> that's what i wanted to talk about, dennis. in your statement, you speak -- let's be clear the association represents the pilots of american airlines. but you say that the two dozen max aircraft in american's fleet are the only ones equipped with two angle of attack displays one for each pilot that's your point in terms of the equipment enables these flights to be safer on an american airlines plane snap the same across the board for any other max 8s flying in the united states? southwest, for instance? your brothers and sisters other

the -- over there, do they have the same advantage >> i believe they're getting that. >> so you believe they don't have that right now? >> they'll have to answer that i don't know how quick the modification occurs. but we have it and it's an added layer. it's an alert system as well that alient didn't have that we're not pounding at the door we're in there with the faa. our company, boeing. >> this sounds like, you know, it's great that you're in the room >> yeah. >> but it also sounds like there seems to have been significant problems if you had to be in the room and that these upgrades -- i don't think they should be called upgrades. they should be called fixes. are at play. right? it doesn't feel right to me. >> oh, it wasn't right we absolutely agree. we're going to do the forensic

on that. right now we focus on the fact it has been repaired but in total agreement with you that what happened prior was unacceptable and we corrected that. because we are independent your previous guest talked about having airlines and governments in the confidence circle well, you got to have pilots on there. we're on that aircraft and we are the advocates for our passengers >> two aoa displays, is that standard for boeing max ls at this point >> having the two displays, no we have that option at american airlines >> you think that's a safer configuration but it is not standard on boeing max 8s? >> that is correct >> all right thank you. great to have you. news out this morning that nelson peltz is becoming a strategic adviser to aurora cannabis straight ahead, we'll talk to aurora's executive chairman about regulating cannabis and budding competition in the space. stay tuned you're watching quk x"n bc"sawbo o

♪ ♪ dear tech, let's talk. we have a pretty good relationship. you've done a lot of good for the world. and when we work together, we get a lot done. dear tech, we're showing girls that stem isn't just a boy's club. we're using blockchain to help reduce poverty. we're developing new solutions with the help of quantum technology. let's do it all. together. let's expect more from technology. let's put smart to work. ♪ ♪ i am an independent financial advisor. it's our name on the door. we are accountable to our clients everyday. we have the freedom to build a plan. a porfolio based specifically on their needs. we're fiduciaries, stewards of our clients' money. entrusted to do what's right. it's a mission. a guiding principle our firm lives by. charles schwab is proud to support more independent

financial advisors and their clients than anyone else. visit findyourindependentadvisor.com does your wealth manager a cfa charterholder does. you've worked hard to grow your wealth. make sure you're working with a wealth manager who can grow with you. cfa charterholders have the investment expertise to unlock opportunities other advisors might not see. learn what a cfa charterholdr can do for you at therightquestion.org

welcome back to "squawk box" this morning

aurora announcing this morning it has appointed hedge fund billionaire -- we call him a lot of things. maybe consumer expert even nelson peltz has -- >> call him something other than that too >> he's a strategic adviser. take a look at shares of aurora cannabis right now they are up 11% in the premarket this morning joining us now is aurora cannabis executive michael singer thanks for joining us. tell us how all this came about with nelson peltz. >> well, you know, we're very excited about this announcement this morning you know, this is a great endorsement for our company. we got connected or introduced to nelson several months back and had a number of face-to-face meetings with nelson you know, and he may have a reputation as a hedge fund activist but i can tell you nelson is someone who proactively works with companies to maximize value for stake holders.

he does not have an antagonistic approach and collaborates closely with management and boards and we're so excited >> let me ask you this nelson has long talked about how some of the big cpg companies and it could be pepsi, p&g, coke, all these types of companies. is this a prelude, do you think, for some of the big cpg companies to ultimately buy a company like yours >> we don't see it that way, actually you know, we took a very differentiated approach to -- and wanted to proceed carefully, thoughtfully, and with a focused approach with thoughts of partnering that potentially includes multiplg partners. including the complexity of these. we felt it was important to leverage the expertise of nelson in this case which comes with an incredible tax record. >> well, michael, long-term when you look at the big cbc

companies out there today, all of whom are struggling to find growth do you think if we're having this conversation in three years from now that one or more of them will have acquired or somehow jumped into the business that you are in? >> i believe so, yes i think that's a fair assumption that a number of these disruptive industries are starting to, you know, make a little noise and soon a lot more noise about partnering with companies. >> in terms of the partnerships, michael, what's the low hanging fruit in your view at this point? is it going into, for instance, beauty or food via partnership and consumer products? because cbd is now legal what's the immediate growth areas for you? >> we see a number of potential growth areas certainly consumer packaged goods as you described the beverage industry. cosmetics, wellness. we see pharmaceuticals now starting to show interest.

there are a number of market segments we expect to operate in with one or many of these. >> when you sit around on a monday morning maybe with a white board and put a list of your competitors on that board, who dough you put on that list because it seems like every day there is a new company emerging. there are some big ones that are publicly traded. but there are a number that aren't yet but probably will be soon >> so that's a good question you know, we're a canadian company. so we do not operate as the multi-state operators do i would argue that our competition are more canadian based like canopy and tilray and others >> but those are your competition today. i imagine you have to look out into the next hopefully 12, 18,

24, 36 months. i imagine that competitive set is going to look very different. >> so absolutely and we have our eye on the u.s. market that is a significant market that we are participating in in the moment we did create a -- or spin out some of our non-core assets in a company which is a bit of a front man for us in the u.s. for looking at opportunities and we have when the environment is right, when we are permitted, we have a rate that allows us to take a more meaningful position in that company to operate in the u.s. at the same time partnering with nelson, we believe, you know, that that will open up some u.s. opportunities for us that we, you know, are exploring today and we hope to be able to -- >> what's top on your list in the u.s., michael? multi -- a big multi-state operator just earlier this week we were reporting on harvest's big purchase of verano

>> yes but again, you know, we cannot at this time operate or explore u.s. opportunities with the idea of potentially closing a transaction. we are focused, you know, obviously in canada. we also operate in five continents in 24 countries around the world so we are expanding our medical business across europe and obviously we will begin to start to pay a lot more attention if you watch the u.s. environment. >> okay. michael, thank you for dialing in congratulations on the news. having nelson join with you. we look forward to hearing and following your progress. coming up, privacy scandals in the world of big tech have soured some users on giving up personal information to get ak says to free services. with talk on tech companies or breaking them up, should investors be worried about a hit to their ptfioorols? stay tuned

you're watching "squawk box" on cnbc this is decision tech. it's screening technology that helps you find a stock based on what's trending or an investing goal. it's real-time insights and information, in your own customized view of the market. it's smarter trading technology, for smarter trading decisions. and it's only from fidelity. open an account with no minimums today.

welcome back to "squawk box. notable hollywood celebrities and big names in finance charged in a massive college admissions scam robert frank joins us with more of the details >> yeah. this is a very fast-moving corporate story. especially this morning. the fallout has begun among the more than 30 ceos,

entrepreneurs, and a top lawyer who were charged as part of that massive college cheating scandal. bill mcglashan, he was placed on indefinite administrative leave as a result of the charges of personal misconduct. now, emanuel enriguez, he was also charged the company announcing this morning he has voluntarily stepped down as the ceo and chairman the company naming an interim chairman that stock was down 9% yesterday. down another 1% this morning other business names charged, doug hodge of sway ventures. gordon kaplan the most surprising name. he's the co-chairman of wilkie farr also named was the ceo of dragon capital. that's a big real estate firm we tried reaching out to all of those charged and their attorneys and have not received any comment. and that is perhaps the most

surprising to me is that we have 30 major names in business, not a single person saying we deny these charges, we plan to fight them not a single word. >> so my question to you and we were talking about this during the commercial break what's the possibility that all -- that this is -- these 30 people and that's it and the prosecute es had waited until they could roundthe grou up or what's the prospect this is a web that grows exponentially that you have these 30 people that turn on each other and now we're talking about a hundred new people >> i don't know they're going to turn on each other but it was clear from the prosecutor yesterday that more are coming whether it's going to be parents, school officials, people involved in the testing program. it is clear that this is not the end. >> do you think the people that would say, all right so we need to make it seem like our kids are good rowers so let's photoshop some stuff

do you think they knew that was fraud? >> they maybe thought maybe i'm violating a screw procedure -- >> they're lying though. i mean, i would think that that alone would stop people from doing it >> you think felicity huffman thought she was going to be cuffed >> no. that's not the thing there was clear intent to do something deceptive. >> i know. but it's about getting your kid into college. >> we got to go. thank you, robert. >> thank you two economic reports just minutes away stay tuned after the break, durable goods and ppi. wall street guy. what's the hesitation? eh, it just feels too complicated, you know? well sure, at first, but jj can help you with that. jj, will you break it down for this gentleman? hey, ian. you know, at td ameritrade, we can walk you through your options trades step by step until you're comfortable. i could be up for that. that's taking options trading from wall st. to main st. hey guys, wanna play some pool? eh, i'm not really a pool guy. what's the hesitation? it's just complicated.

step-by-step options trading support from td ameritrade

welcome back to "squawk box. just some breaking news. february read on ppi january preliminary on durables. headline, ppi up 0.1%. strip out the all-important food and energy also up 0.1%. both are half the 0.2% expectations no revisions, but just to refresh everybody's memory, last headline was down 0.1% let's look at year over year final demand, 1.9% as expected 0.1% light ex-food and energy over year,

that's a little under expectations which were identical at 2.6% on year over year trade up 2.3% let's get to durables. this is preliminary. it's volatile and final. so the preliminary definitely has an asterisk. take a look in the mirror. reverse that up to 0.4%. and gain a tenth on our final last three now stands at up 1.3%. once you take out energy -- excuse me, transportation, it does drop negative it drops down to minus 0.1%. so skewed the data a bit excuse me. yeah and if we look at non-defense orders, ex-aircraft, that is pretty good. we've been looking at negative this is the capital spending that's been a big issue. last look was down 0.9%. if we switch from orders to

shipments, up 0.8% as well we're hovering in the low 2.60s in treasury yields basically levels we haven't seen since january of last year let's call it 14 months, shall we back to you. >> okay, rick. thank you for that stp steve liesman is on set with us pouring through the numbers himself. and making faces as he sometimes does what are you thinking? >> i'm thinking we still have a puzzle as to the reaction of corporate america and business to the tax cuts to the decline and then the rebound in oil prices all of that gets mixed in trying to understand what's happening with business spending which is key ere. we've had very, very -- what's the right word negative new orders of capital goods over the past several months it was down four or five months. this rebound is welcome. now, i've got another chart up here that i know it's a volatile looking chart. but it gets rid of the other

volatility looking at the gdp account. two things are happening one is you can see the down shift in equipment spending which oddly happens after the tax cuts but does follow a decline in oil prices what you do see there is a positive response on the intellectual property which is about 30% of all business spending that's software. that's artistic rights that's other things. now, barry knapp who i talk to on an almost daily basis on this, he says this is where you would expect the response. because he said the equipment numbers shouldn't be helped because we had already 50% expensing. the change in the tax cut for equipment wasn't big he says it was bigger in the software component and that's where you would expect to see it so guess what. we don't have monthly data on intellectual property. we've got quarterly. so you've got to wait. but i think this is in line.

we had a nice bounceback it's good to watch on the new orders shipments also pretty good but we're watching the intellectual property over time to get the totality of the response of business and tax cuts and so my verdict is the same. the jury is still out. you have to remain hopeful that there's going to be some response that's going to help gdp. >> in terms of the ppi, feeds into the narrative of no inflation and rising wages and that is a pickle that corporations find themselves in. >> okay. that is right except for one thing which is the softly rising or almost barely rising at all ppi is good for business in the light of the wages because the p rks i are the input costs. the trouble they have are the consumer prices. which they're having difficulty passing along these prices so we've talked a lot about this there are only three things that can happen one is that their profits have to fall. that's what you see when you look at the earnings coming down

two, they can raise prices and we don't see that in consumer prices three is they can enhance productivity and get rid of all of that. you can't make a blanket response every company is going to react differently. they're going to move to try to protect their profits. either through raising prices or boosting productivity. but the wage thing which people are talking about the tight labor markets and the stronger wage gains, they're definitely a reality right now. >> thank you, steve. after a bruising 2018 for big tech's reputation, 2019 is bringing us one of the most recognizable names running for president saying she would break up companies like google and facebook should investors be worried by the anti-tech rhoretic we'll break down what it could mean for your portfolio when "squawk box" returns

when you look at the critical issues facing our world, what do you see? we see a billion more people breathing free. we see access to fresh food being the global norm, not the exception. we see homes staying cooler, without the planet getting warmer. at emerson, when issues become inspiration, focusing core strengths to create a better world isn't just a result, it's a responsibility. emerson. consider it solved.

what do advisors look for don't just track an index, help me meet a client's need. is the fund built to sell or built to last? etfs are only part of a portfolio. so make it easy to explain. give me a quality fund that helps me get clients closer to their goals. flexshares etfs are designed and managed around investor objectives. so you can advise with confidence. before investing, consider the fund's investment objectives, risks, charges and expenses. go to flexshares.com for a prospectus containing this information. read it carefully.

welcome back to "squawk box" this morning take a quick look at futures under, well, let's show you what's going on right now. there it is. not under pressure anymore >> they were never >> no, this morning it was a little bit dicey for a second. the dow up by 75 points. nasdaq up about 30 points. the s&p up about eight points. >> boeing shares are basically flat now they were down about 2% in the premarket session. now down by about 0.2% the regulation debate surrounding big tech isn't likely to go away any time soon. how will talk of breaking up

companies or even break up investors. joining us now anthony diclemente a lot of people write the proposals to break up tech, they say it's not going to happen but still, could this be an overhang in as much as it could put a cap on the stocks? >> yeah. i think just from a pr and headline noise perspective, it's something that's been an overhang under the valuation of the stock. at times under perform china internet but, you know, if you take a step back and think about what's going on here, i think it's unlikely under existing ftc law that these companies are broken up because i don't think that there's enough evidence that they're doing things to harm the consumer sure, they're flexing their muscles in a competitive way, but in order for them to be broken up, the ftc as an independent agency and there's really a rethinking of anti-trust law as it stands

today. that doesn't mean fines aren't an overhang. it doesn't mean that privacy regulation isn't an verhang. actually, gdpr didn't have a huge impact on user growth or revenue for the digital advertising companies. but as far as what elizabeth warren is saying, you know, i think that we in the u.s. in terms of antitrust law we have to prove that it's harming the consumer and the fact is that amazon, facebook, google, consumers willingly go to these platforms which aggregate millions, billions of users. that's because they provide a service. they provide convenience they provide selection and i think until she can prove that there's real harm to the consumer, she's going to have a hard time breaking them up forward acquisitions are a different story. you know, i think from here there'll be a lot more scrutiny around m&a going forward but unwinding like a 7-year-old acquisition, seems unrealistic. >> short of breaking them up,

you could say, okay. within the context of these market places, you're not allowed to sell your own product against a competitor for example. right? because underneath what she is talking about is this idea that effectively many of these platform companies are also selling their own white label version. they wouldn't call it a white label version of a product. >> right she's talking about vertical integration. amazon has a marketplace amazon can basically take the idea that a small business has who's selling on their market place. and then in effect replicate that idea and create their own owned and operated private label brand that they used to sell that product that's not new walmart's deny doing that for decades. nor does amazon have an outsized percentage control of the market so elizabeth warren is very narrowly defining the market to digital e-commerce retail. but we know that consumers have a broader choice than that >> do you think that sort of

comparison to white label products, the generic version of something, whatever you want to call it, can be applied for instance this morning we had news that spotify is filing an antitrust complaint with the eu against apple over apple streaming services and the preference on apple to promote its own app versus other streaming services are we going to get entangled in these as well? >> yeah. so these are interesting and can be complicated what you're referring to is apple and the app store is really exerting itself power by charging a toll to developers scene i in-app purchases require us, apple, to accrue this 30% challenge. i do think that regulators could and may and may be justifiable in going after some of those contracts, some of those sort of most favored nation clauses. there's an amazon price parity example where a third party can't lower the price lower than what it is on amazon so these contracts are waying that the regulators can in more

sult ways rectify the problem. >> effectively in-app purchases came down to 15%, 10%. all of a sudden you'd have a real issue because so much of the growth and story around apple -- >> issue for apple i don't cover apple, but you're righ in services. i think that's interesting i think apple is really trying to add some rocket fuel to services by adding more services and more product so the one that i'm interested in is the video product. the announcement is march 25th that might be a way for them we know they're slowing growth in terms of units. they're slowing growth perhaps what you mentioned on the services side. maybe it means actually be more aggressive on video and actually competing on the apps themselves. >> but then we're back into the microsoft story from years ago can you bundle the browser with the operating system >> so look does any of this come close to the privacy issue? >> the privacy issue has a lot to do with, you know -- consumers need to understand how

their data is being used and what gdpr does in europe says you have to opt in and say it's okay. >> i think that's a much bigger threat to these guys if consumers get everything for free, basically, then it's not a competition thing with putting your -- every time you -- your broker is going to try to sell you a mutual fund from that company, not some outside -- i mean, i don't -- i can't imagine that's going to be as big a deal as private. >> what may 2018 proved is that consumers are willing -- most, most, most consumers are willing to trade their data and privacy. most of them are that's what the data says, in exchange for convenience. >> where do you land on this other issue. it's a freedom of speech issue, platform issue you have elizabeth warren with a fascinating experience of her own in the past 48 hours where she ran ads against facebook on

facebook facebook then took down the ads. she said, this is a great example of how powerful these platforms are and why they need to be regulated. they then put the ads back on facebook and said in the interest of transparency, we want to have this. you have republicans on the other end who think that these platforms have a anti-conservative bias >> they're ideological >> and therefore have too much power. so in a unique way you have a bipartisan view that at least from a speech perspective that there is too much power. >> yeah. they're not winning any friends on the democrat side so it's a bipartisan issue that being said -- >> but what's the result of that >> the result is the government is dysfunctional enough that we're not going to have new legislation until at least the new -- the presidential election, most likely, is resolved and we have a new

congress in 2020 in the meantime, the companies are going to bend over backwards to show and prove that they are fair and balanced. >> top picks >> i think facebook and google are getting hit by this. and i would buy them on it i think they already have lagged and they are pretty attractive on valuation relative to -- i mean, a lot of these issues are priced into the stocks so i really like facebook and google >> do you think these companies would be the same size four years from now will youtube still be owned by alpha bet in four years from now? will different parts -- will messenger, will what thesapp be part of it >> i don't think it's ever going to happen. i think what is going to happen is the growth is going to be organic and in their existing verticals. they know they can't -- google

and facebook -- buy anything in u.s. consumer internet and draw too much scrutiny. and it should. to answer your question, i think they'll look a lot like they are today, but the growth is not going to come from acquisition it's going to come from organic investment >> all right anthony, thank you >> all right cool thanks get down to the new york stock exchange jim cramer joins us now. boeing is now called up. at one point, it's 376 now after closing at 375 at one point it was at 367 but it was getting close again what do you think has turned that stock around and i mean, just the overall management of the situation by boeing and by regulators what do you make of it after we've had another 24 hours or so >> i think boeing's in a tough spot because they don't have any evidence that anything went wrong. and no one's producing any evidence that anything went wrong. meaning it's a boeing issue.

and i think that until somebody directly links it to boeing, i don't know what boeing is supposed to do i don't know what the faa is supposed to do if someone doesn't find something, don't we have to look at other options i think this is far enough away from the accident that people are going to start thinking there are other options. because boeing, if it felt that there was any issue at all, would issue a recall immediately. the stakes are way too high for boeing some people think that boeing is just putting their head in the stand. i think it's the opposite. i think that boeing is saying, listen we -- everything that we have at stake for years is on the table. and we can't find anything so i think the onus is starting to turn. >> after all the discussions we've had, they all resolve, jim, around that there was a change that for certain reasons for fuel efficiency and bigger engines, et cetera and that did cause a little bit

of a difference in how you handle the aircraft. and it seems to revolve around whether pilots fully know what's involved and know what the procedures are to deal with the changes. is that overstating what's going on do we even know -- >> no, i think that's right. i think that's right if it really is that issue, then let's have some. again, i come back to boeing is one of the most responsible companies on earth if they can't find anything, then someone's got to find something. if they knew something was wrong other than what you just said, they'd hide it it would destroy the whole company. company would go out of business i don't know why people don't realize someone's got to come up with something boeing, if they had something, we would be sitting here saying boeing just did a tylenol. i mean, it's too high risk for boeing so i wait for someone to come up

with something >> the price action in the shares, jim, very interesting in the past few days. i mean, you know, going down very sharply but then closing off the lows both days. and here we are seeing the reversal sort of in the premarket going higher i did want to higher i wanted to pivot to the cannabis deal, aurora cannabis adding nelson peltz on as strategic adviser. he brings a wealth of knowledge when it comes to consumer goods. what is your take on this? >> this is what we keep getting is a belief by some very smart people, whether it be in the beer industry or vice industries, so to speak, this is different. there is no vice industry that is connected with peltz. you're so right. it is consumer product i keep thinking that pepsi and coke have to look at this. they're not looking at it. they don't think this is disruptive i think nelson thinks it is very disruptive he's been on the board of a lot of consumer products companies those companies have to start taking a look at him i wa

i want to know what mondelez says they make snacks i think it is very important >> all right we talked about tesla today, jim. there is no mote around cheaper batteries for that company there are a lot of bears you think it is half and half now, bears and bulls >> yes, i think it is half and half, which is why it -- look at the chart. half and half produces that. there is no half and half when it comes to sales force or workday or service now i'm having michael dell on tonight. there is no pushback on dell, doing a lot of great things with the emc. this company is uniquely stuck because every time it goes up, we find something new that is bad. or, of course, musk does something that is bad. >> yeah. jim, you and melissa went to the same school,think, didn't you? >> yeah. i didn't even know that you could -- how about the georgetown guy he really cleaned up, huh?

>> who >> some of the guys made a lot of money, wow. my daughter got taken because of field hockey and i never thought about paying because she was good she was actually good. recruited athlete. and now i realize she didn't need to spend all those hours doing all that nonsense. what a waste. >> photo shop the picture, jim. >> i know. nightly practices i had to take her to, they made her drop swimming, if i had only known, god, we would have had a better time. >> i love field hockey my daughter played it. i liked watching but where is the payback that the college gets from recruiting the field hockey people and -- is it in the -- are the stands filled for the field hockey games? >> starting to make me feel like -- makes me feel like title 9, you know? if you photo shop -- >> it creates a school unity >> you were quite a field hockey

player in your day, were you not? you know >> i went out for track. got cut the first day. did you go out for anything? i got cut. i ran a 49, you're out you're out >> they're telling us to go. all right. field hockey, it is tough. >> i was the goalie in field hockey. >> were you? >> yes. >> my daughter was the goalie. she said she would be the only goalie that got to williams. there were five goalies. that was helpful williams was not implicatmplica. not implicated let's be sure about that. >> thank you, jim. we'll see you in a couple of minutes. did we leave anything out? >> no, we heard it all >> college. >> goalies >> make sure you watch "mad money. jim has an exclusive interewvi with michael dell. stay tuned "squawk box" is coming right back the future of technology investing

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. pgim: the global investment management businesses of prudential.

news breaking on ecigarette regulations. bertha coombs has more >> the fda previously held back on enforcement of ecigarettes giving them until 2022 to file papers for regulation. today, the agency outlining new proposals, particularly on

flavored ecigarettes which the commissioner has really railed against. let me give you the news here. under the new proposed rules just posting this morning on the federal register, the deadline for flavored ecigarette producers to submit premarket applications moved up to august 2021 in the meantime, sales of ecigarettes will be limited to online and brick and mortar retailers, which use age verifications to make sure that products are not being sold to minors just last week you'll recall the fda commissioner was here saying they sent warning letters to retailers like walgreens and walmart about the lack of enforcement on sales of tobacco products to minors the agency's rules would crack down on flavored ecigarettes which regulators say tend to appeal to minors these changes do not apply to menthol, mint and conventional cigarettes, but do apply to flavored cigars, which would not be grandfathered by tobacco

regulations. this is something they are really trying to crack down on, particularly because of the appeal to young people >> a big question since scott gottlieb left the fda, how you think the approach will be thus far or in the future, what is your take on what happens next >> the folks i've talked to said that a lot of these issues are things that people who are career people at the agency are pursuing as well and that there is momentum here. but he is sort of uniquely situated individual and that he really had bipartisan support on a lot of these initiatives. >> it would seem that the acting fda commissioner now who was just appointed yesterday from the national cancer institute, we actually saw shares of altria go down on the back of the news, the view he's from the national cancer institute, he'll take a hard-line against smoking. >> that's what one would think though he is from north carolina big tobacco producing state. however, if you are a cancer

doctor, it is hard to be in favor of cigarettes. so the regulation on ecigarettes and cigarettes is likely to continue to be tough but a lot of folks are just concerned about the momentum that they build up in terms of really approving drugs and record number of drugs they approved last year, particularly the record number of generic drugs that moved forward that is a priority for this administration >> i think just ban those things i hate them. that metal thing you see the video, you put the -- for people -- for people that don't smoke, just take that up, what is the point? >> people who are addicted to nicotine, it is a difficult thing to give up. >> that's first thing they do is stick that metal thing in their mouth and suck down the -- >> for someone who watched their father every morning first thing in the daylight up a cigarette, it is better. >> why a nicotine jones for no reason >> because it is very addictive. >> so why do it? you're getting nothing --

>> once you're addicted, you're there. >> ban it. >> i love government regulation. let's ban all those things just ban them. i am you're coming to me, i'm coming -- >> boeing is up a percent right now. >> amazing all right. melissa, thank you bertha, thank you. joseph, thank you. "squawk on the street" begins right now. ♪ cleveland rocks cleveland rocks cleveland rocks cleveland rocks ♪ good wednesday morning welcome to "squawk on the street." i'm carl quintanilla with jim cramer, david faber at the new york stock exchange. the dow and the s&p futures moving in the same direction watching brexit, china trade, a new player in the cannabis space. europe's trading well and industrial production improves a bit in january but the bond market here still skeptical, 2.62 is a near low. growing pressures on boeing