>> 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

after two fatal crashes in five months, but the faa says no basis to ground the 737 max 8. >> plus, spotify versus apple. the music streaming service filing an eu antitrust complaint accusing the tech giant of app store favoritism. >> and aurora cannabis naming trian's nelson peltz a strategic adviser to help advance its market strategy. boeing shares moving higher after 11% drop over the past two days, losing almost $27 billion in market value. a number of u.s. senators calling for the faa to ground boeing 737 max 8 jets. the faa maintains the jet is airworthy. as for the most recent crash in ethiopia, the ceo of ethiopian airlines tells a journal that in recordings of pilot conversations with controllers, the pilot reported he was having flight control problems and did not indicate any other external problems with the jet or the flight, like birds, for example.

>> i think the problem again is that if it is the -- that someone didn't go by procedures, you ground the planes and study the procedures and make everyone take some sort of course, do something. i think that boeing's big problem is that boeing doesn't know anything that is wrong. faa doesn't know anything that is wrong not like someone saying, here's what's wrong so they're in a tough spot, they're going to call and say, look, we have no belief anything is wrong, but we're going to recall and shut down our planes. and what we're going to do is look at them and we're going to find out that nothing is wrong what is boeing supposed to do? you're boeing. do you say, look, you know, if we have anything wrong with our planes, this company has a 100 year reputation. if we have anything wrong with our planes, they would say, let's ground them. what good does it do to say let's just fly them anyway >> the new york times reporting i think yesterday while you and i were talking about boeing, the president on the phone with mr.

mullenberg, imploring not to have him the faa ground the planes that is the reporting of the times. >> he did also indicate about the kind of difficulty planes are hard >> yeah. trump did in a tweet yesterday about the technological advances of planes. >> the wright brothers. >> the wright brothers route. >> as phil lebeau pointed out yesterday, advance in technologies, nothing but make planes safer but the faa also, the times pointing out, a lot of it is in house. the review and the safety review to a certain extent of the systems done by -- >> self-review. >> yes >> like do you think there is a group of people at boeing that say, oh, man, we're almost discovered when they found out we hid -- no there is a problem, they change something. we all know that i still can't believe after the first crash that there was anybody who didn't say, listen, we got to change this, because

the crash, these guys, there is no one who is idle when it comes to eethiopian -- good airline if we hear everybody was trained to do the switch, we know the switch isn't working. >> what is different here is that the united states historically really since the advent of aviation sets the global standard for what is airworthy and what's not now you have the u.s. and canada standing alone and a jeffries analyst saying it is a rebellion against the faa. >> i think that you have been thinking about what david asked me yesterday, is in a gangup is there just a group who -- we had it with the u.s., we had it with boeing? >> does it play into the larger -- >> the national -- >> the hostility or lack of camaraderie there is between the u.s. and many allies >> i've been pondering that all night. and i just said, you know what, in some cases maybe. but i also know that there are a lot of people on air yesterday said i don't want to fly this

plane. i don't want to be in this plane. >> nightly news did a whole spot on how to tell if your equipment is going to be a max 8 >> people are not going to want to fly the plane fly in it. >> i'm flying to texas this weekend. >> okay. >> my arms are tired >> the flight attendant's union asked, southwest and some others it was alp has been pretty supportive. >> mullenberg, he can have people crawl all over them, but what do you think they have been doing since they put the plane out. put yourself in their shoes. what are you supposed to say i'm worried, but i'm not worried. >> what about the shoes of the faa at this point given every other government almost not to mention a lot of the senators, the president at least questioning the technological -- what do you do if you're the faa at this point. why not say, fine? why not just say fine?

>> let's take these all out of service? >> yeah. until we know the answer. >> okay, i would love to hear an answer >> then when we know the answer -- >> we'll talk to ray lahood in an hour. >> he said yesterday that they should take it out of service. we know where he stands. >> that was suboptimal for boeing i'm caught with this idea that there is a perception that boeing is dodging everybody. don't you feel that way? david? >> do i feel that boeing is dodging? >> that boeing knows something that we don't know >> no. i don't. >> what do you think, boeing is just clueless as everybody else? who knows something? other than the people who are afraid or -- >> the question is then why not err on the side of absolute caution? until we do know something -- >> we have two planes that have fallen out of the sky. >> almost a decade of pristine flight conditions around the world.

>> thank you >> we don't want any planes to go down. what i'm saying is if you work, is there -- are there a group of people like mi-5 or something, who is supposed to come on the plane and discover other things? unless it is a switch, ground people, and make everyone around the world stop and just be on this plane, on the ground, show them how to switch one by one by one. i don't know again, am i taking -- >> an investigation ongoing, going to take some time of the ethiopian airlines crash, once they determine what was the cause of the crash, assuming they will do that -- >> the u.s. was trying to get the black boxes to come here they're going to europe. >> i would love to hear something beyond what we heard about what went wrong in ethiopia so we can say, you know what, let's just ground them until we know more about ethiopia, okay, okay okay i get that >> i understand the rational response my sense would be at this point that the emotion of most people,

which is going to be, why would i get on a plane like -- it is going to win the day here don't you think? >> i agree do i want -- >> okay, so -- >> i would take a douglas, the dc-3, but i do think that -- i'm just putting myself in the shoes of boeing. i would love to hear more about eeth op ethiopia before i fly on one of those planes i would like to hear it was pilot air, the guy with 200 hours. i'm saying if boeing knew something was wrong, they would say it that's all i'm saying. i worry about your national thesis, got some gravitas. >> too complex >> yes >> you always say, people don't follow you when you talk about the plane in the plane you say all the time do they understand what he's talking about? >> i got hit by a lightning

bolt, the plane went down, fell 10,000 feet and the second plane kicked in, it was hushed up. we landed in new york. we bounded a couple of times i kept typing the whole way. stewardess said enough, turn off the typewriter i said, if we live, i got a file piece and if we die, who cares >> everything has a backup system >> we're supposed to hold hands. >> do you think if you hold hands it matters >> why not i think kumbaya is good, especially when the end is near. >> i don't know. i got the job done. >> we'll talk to the secretary of transportation at the top of the next hour. in other news, spotify has filed an antitrust complaint in the eu against apple. the music streaming service claims apple abused the dominance of its app store and used it to favor its own music service, apple music, over spotify. not the first time we have seen run-ins between these two. >> no. this is a very interesting -- spotify, we had spotify on i think that this is the kind of

thing that is timely you know that if somebody is not favored by -- you know how it works, this is -- money is saying basically this is like aol getting excluded from the operating system. >> of microsoft. they have similarities they control the platform. >> can you steer >> not a function of steer, can you make it more difficult for a competitor to get customers and/or service the customers. >> what is wrong with it >> potentially unfair use of -- we haven't heard from apple yet. has not responded to the complaint. >> the stock is too busy going up. >> i would be interested to hear what their defense is. i have not spoken to them. >> let's wait to hear. we could say, yeah, this is one of those cases where apple's blocked everybody. but i would like to hear more. >> yeah. their point is also on the payment system, you're charging additional 30% when you're using apple pay, which they want you to do, and that makes it more difficult for them in terms of how they price the service

they can't pass along certain updates that they want to. any number of other -- what spotify is saying, anti-competitive action on the part of apple as a result of it being the place people come to download the app >> by the way, this is coming as apple is about to, we think, announce some big streaming news on the 25th and we talked to danielle eke at spotify, i think at this desk, about competition. >> these are formidable companies. no doubt but what i look at is obviously how our business is doing and we had a phenomenal q4. the other part that i look at is we're really just focused on audio. that's how we should look at this there is a ton of things that are -- these other companies are doing, self-driving cars, whatever other businesses they're into and i believe in this day and age that you need to be very, very clear with your brand what you are for consumers in order

for them to take it up the best experience wins and now we're adding the best content to that as well that's now spotify >> if you're apple, you got a store, or kroger, have a store, or walmart and have a store, you make it easier, right? you go to -- you go to target, they have got their cat and jack right up front why can't the creator of this, all the intellectual property, why can't they put it up front, make it easy >> so who are you defending here >> apple >> apple should -- >> they have shelf space, they're obligated to give everybody front of the store >> why should they they have to put them on the end caps, make it easy >> they're the potentially dominant provider of the service in terms of how people access it. >> if you go to the app store, does the app store say -- is it all apps are created equal constitutional thing >> i think i would like a judge to make a decision on that

>> like shelf space in the grocery store, procter gets right in front of your eyes. >> hoping apple listens. they don't get up early enough to watch the show. >> pay to play >> i'm saying it is not pay to play >> it could be they're paying to play >> so did the people at yale and georgetown pay to play and then they didn't even have to play. >> unbelievable. that story is just amazing. >> all people really care about. i've been dying to know more about it. >> the college -- >> one person paid $500,000, the other person paid $15,000. talk about inequality. >> why not pay it directly to yale, that might have helped how bad a student was this kid >> how does that kid feel right now? >> the impact on those kids will be serious very serious. >> oh, my. >> they don't even know. >> when we come back, aurora cannabis appointing nelson peltz as a strategic adviser the fifth divergence of the year

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aurora cannabis up sharply in the premarket the company announcing nelson peltz as a strategic adviser he will explore potential partnerships he'll be granted options for almost 20 million shares that would vest over a four-year period and coming off of martha stewart canopy -- >> there is rationality to these. if you go over it and look, canopy, which has a huge investment, $4 billion from constellation, which is groan and nardello, i look at aurora, market cap $8 billion, fiscal sales of 232 little better than fiscal for 2019 which is better than the fiscal sales for canopy i know this is going to sound ridiculous, but it is a relative bargain versus canopy. certainly versus tilray and

kronus, so nelson, who is a consumer package goods aficionado, procter & gamble, heinz, he's getting good investment here. aurora is up 60% for the year. tilray almost flat kronus up 105. that's because of the altria investment and canopy up >> when do investors start differentiating in a real way between the winners and the -- deciding who the winners and losers will be >> right now i think everyone -- now we have solid investors in each one. we can't have as many companies of people that are -- there is a finite market in the sense that it is not growing yet of great scale. if you went to can us abonabis canopy is the winner in canada >> that market is nothing compared to -- >> aurora has grand ambitions worldwide. look at that last conference call, they're talking about not just north america, talking about going overseas the conference call is very

good it has all the appearances of being, you know, they talk about all different kinds of hemp. cbd, because of the farm bill, is legal so it is a very fractured market and everybody -- it is a land grab i think there is only going to be so many companies because we're getting down to the end of who has got real sales >> yeah. >> for his part, peltz says, quote, i believe aurora has a solid execution track record a strongly differentiated from its peers, has achieved integration through the value chain and is poised to go to the next level he believes the canadian license producers and aurora in particular are well positioned to lead in the development of the international cannabis industry as regulations evolve with a strong globally replicable operating model. >> we're looking at the models so far, if you use the canopy, that's the most organized and well funded, a huge percentage is medical and then a huge percentage is recreational, particularly in

their case drinks. bill mullens will run their -- all of their kind of drinks, the party drinks, party drinks, which tastes great, less filling, okay, david. >> right. >> and then canopy is taking care of medical. that's the bifurcation. >> who would you rather have, martha having you brand this stuff or nelson helping you meet the guys over at p&g >> you're not allowed to advertise. you're not allowed to. so her brand won't work. worldwide, i think what you want is some of the people who, you know, would be on tv you need tv exposure i know you're doing an excellent doc on tobacco and you need people who would be -- you need the marlboro man who is the equivalent these days >> i don't know. >> let me think. >> what's his name >> what's his name

that's perfect >> the rapper, the former rapper. >> chance? snoop? >> yeah. >> snoop's already with canopy bingo. you are so smart you, you, you, you you! i like what's his name too can we get what's his name he went to cleveland >> that happens to me more and more what's his name? who is this guy next to me. >> cramer's mad dash, count down to the opening bell. keep your eye on premarket as we look for the market to go up ghbaawk on the street" will be rit ck measure up? 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

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♪ all right, let's get right to a mad dash, counting down to the opening bell a little roku. >> they're breaking the spell. the sorcerer's apprentice. it looks like the ranks are thinning loop capital loop they go from hold to sell roku i love this line it is almost dekeynesian we recognize stocks can go from expensive to more expensive. but we can't justify a hold at this price excessive valuation. that's a tough call to make. excessive valuation. but they take it to a sell it is a double situation here. we have mccrary research, you follow that, a great christmas gift it was, they go from buy to hold so when you see that, after this -- >> what are we talking about,

jim, in there in terms of a multiple where is the stock trading >> multiple revenue is interesting, 7.5. >> time revenue? >> yeah. >> quite a growth multiple. >> don't you think >> yeah. >> roku, i say to people that this was up too high when it was here what kind of value subtracted am i producing, right i should be on your side i just think -- i can't even press this i just feel that this stock is overrun everybody because everybody wants to play for cord cut and they choose roku, right? >> yes. >> my kids have no -- they don't listen to cable. cable is roku. and they insult me -- my kids don't know i have a show >> i won't tell them. >> my wife doesn't watch you can talk anything you want about her. >> not our demographic, i know we see the kids in silicon valley, they're, like, who are you? opening bell coming up. >> didn't sales force know you >> they're on the older side. >> you poached

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"squawk on the street," live from the financial capital of the world. the opening bell in 90 seconds on this busy wednesday morning we haven't mentioned the macro stuff, eurozone industrial production improved, but still negative here in the u.s., ppi pretty much in line core up year on year 2.5. >> i think what could europe be doing if we didn't have this brexit overhang? i watch the excellent show, our international -- our show in the morning at 5:00 and brexit is dominant it is just what they talk about. i just think everyone is afraid. when you have people who say they're going to run out of food in britain, i'm -- >> are they talking about that running out of food? >> yes >> not getting across the border >> you got to understand, a little uncertainty how about if you're selling anything to britain and it is due three months from now. i think we would see -- can't trust these numbers anymore. i think they're just negative. >> which numbers >> anything out of europe is distorted negative will get worse and worse

we're going to have to talk about brexit more. i know that's horrible >> yeah. a series of additional votes about duelling out certain things the opening bell at the s&p, the cnbc real time exchange, at the big board, madison square garden company, celebrating the big east tournament today through saturday at the nasdaq, bravo's top chef and season 16's top three finalists, the finale airs tomorrow night, of course, on bravo. meantime, david's working his way through some deal news >> yeah. it is an interesting deal in the asset management business, carl and jim. oak tree selling 62% of itself to brookfield asset management our viewers may know oak tree, led by howard marks, who will continue as co-chairman.

bruce karsh, they'll run them separately, but it is an important transaction. we'll keep an eye on shares of oak tree this morning. they're halted now 62% acquired by brookfield, they're going to control oaktree capital with -- has about $120 billion in assets. and they do specialize in alternative investments, of course, what they call opportunistic value oriented and risk controlled approach, credit is a big part of their portfolio. brookfield is focused on real estate to a large extent, they expanded beyond that 350 billion in assets. it is $49 a share in cash, 1.770 class a shares of brookfield, a 50/50 consideration overall, depending on how people choose to go. and as carl, i was trying to look through here to see in fact

whether there is any sort of path to further purchase, buy brookfield in terms of taking their stake even higher. again, they're going to -- apparently run the companies separately they're talking about partnering to leverage their strengths. but a significant deal in the asset management business. together, they still don't even equate to, i don't know, compared to the blackrocks of the world or anything else but significant number here for oaktree, given $120 billion in assets, that 49 bucks for 62% on a $6.8 billion market cap today. >> trying to get from 10, 15, 20 billion and i think oaktree has not been as effective as blackrock. there is a lot of companies out there, we don't talk about them, they're not in the papers, they buy these little companies, with pe money, and these guys provide a lot of pe money. and i think that blackrock is

well ahead >> yeah, it is going to need a majority of the voting interest of oaktree approval. there is some provisions here, $225 million break fee and, in fact, they also say customer provisions relating to nonsolicitation and the like it was an independent group of directors at oaktree that unanimously recommends oaktree holders approve this deal. again, oaktree not open, it is halted, we'll see how the stock trades, 49 bucks a and/or 1.77 shares of brookfield for that 62% interest. >> in the meantime, i think that a lot of people are focused on the levitation of apple. spotify today. >> up 16% this year. >> it has been a horse we had negative comments from a couple of research firms, china stays really bad

so who is buying apple is it buffett? someone is just buying apple >> emarketer has some forecasts that their share in the united states on phones should inch up slightly in the coming years there is that. but aside from the march 25th announcement, you know, streaming announcement -- >> i keep hoping that they'll do something bold in health care where they say they buy diabetes or dex com they won't buy that, it is closer to google some stream of money that you're going to pay for and just don't see it i just -- no i just don't see it. >> hard to ignore oil today as we approach 58 got a number of production companies, jim, leading the s&p this morning. >> third day in a row. i keep thinking there will be a deal, excellent interview by brian sullivan this morning, ceo of occidental saying they don't need anymore they have 11 rigs going

constantly will there be a consolidation in the permian. the companies are well capitalized, bp, they seem to not want to do anything or don't -- the big guys don't feel the need to do anything. they just keep passing in the meantime, the oil drillers, stocks are horrendous. i don't know i keep wanting to know what larry culp will say about baker hughes, a ge company. >> it is a ge company. ge below ten bucks right now story today about the awesome deal and how much goodwill they actually took above the purchase price, which was rare in the wall street journal. vaguely if you -- i don't want to call it questioning, but shining light on some accounting decisions at the company >> did you think it was unbelievable they got away with it many times they say it is legal, legal, legal what is illegal? >> not first time we discussed accounting at ge, the way they go about -- they took an enormous write down now, remember, for the awesome deal.

>> right >> which was done under the previous management actually two ceos ago. >> no one has ever just come clean at ge, i think, and said, listen, we used bad accounting i do like the way that larry culp, the whole company on one page and didn't use any metrics that only ge had remember ge used to have metrics, you had to go back to the glossary, the -- the after tax income minus the depreciation plus the goodwill equals some bogus number that gets it to -- right? >> yes >> thank you i also remember when goodwill mattered in terms of deals, purchase accounting versus -- >> yeah. i would rather invest in goodwill company, which is excellent charity. >> very nice >> jim, i got to ask you what you think of reclaiming 2800, and ten-year 2.61. why is the bond market so unmoved by this -- the resumption of the rally? >> i think that when you get

draghi saying we're not going to let rates go up, if you have any fiduciary responsibility at all, you should, by this time, go to your charter people and say, listen, i got to invest in u.s i have to. have to. and that's keeping it -- people buying dollars, buying bonds now carlene garner, my favorite technician, she said the dollar is peaking now this is historically had it has peaked usually right now, right here, this week, david, organic dropoff in the dollar. over 15-year period, between the middle of march and the beginning of april, 15 years it has shown that this is the weakest part for the dollar. could get a reversal not up yet. >> interesting, because q1 s&p earnings estimates now are minus 3.4, with companies with 50% or more of earnings overseas, down 11.2

that's a huge dollar story. >> yes, that is. i still think that the aggregate stuff that we're getting doesn't jive with the companies that i deal with. that's always the problem. you go up and say, i'll ask michael dell today, how are you doing on the dollar? the technology companies are having such great numbers, even in latin america doing really well in europe. africa very good and japan very good. so i don't know. i can't -- i'm looking for the companies that say, yeah, it is real bad overseas. pepsi, no, coca-cola, no, procter, no. >> coca-cola had a weird quarter. >> not a great quarter >> juxtapose it -- juxtaposed with pepsi, what they were saying was a little different. >> are you saying they did ge? >> no, i'm not saying that at all. i'm saying it was hard to understand exactly the head winds that mr. quincy was talking about. >> it was hard to understand that because the head winds at coke seemed like tailwinds at pepsico. they did i think mondelez is doing well

that's international >> khc, some reporting about -- >> breakstone. >> cottage cheese, sour cream. >> it was also maxwell house, you know, cheese whiz, when is it going for sale so geno's can buy it they're rearranging the chairs >> the stock is down 52% over the last 12 months >> mondelez versus -- look at mondelez versus kraft. >> yeah. >> toblerone, fabulous. >> person walking around behind us with a -- >> i saw that. someone distracting. >> it is a bit distracting wanted to come back, i almost will every day between now and the 12th of april to celgene, bmy. a lot of vitriol going one way

here from many of the invent driven funds that own bmy and/or have it set up in terms of the spread for the deal to close in other words, for the vote on april 12th to be in favor and therefore bmy be allowed by shareholders to move ahead with the access to celgene. a lot offolks, starboard has led the proxy ad this morning, they only 4.4 million shares of bristol-myers, but a lot of folks saw them in terms of what their real motives are, some saying are they short any celgene? are they pure in motivation here >> wow. >> and i called up jeff smith, he declined to comment on whether they do. i will tell you that i am told that that's not the case that in fact you want to be pure in your motives if you're at starboard and that's most likely the case here in fact that they are not short on swap or any other way celgene shares, they are acting in what they believe is the best interest of

bristol-myers shareholders, the transaction, jim iss, the important proxy advisory firm, whether you like it or not, has a lot of influence, perhaps it shouldn't, a lot of people question their business model, they'll have their meetings next week br bristol-myers management will make their case and then a vote a less from a month from now on whether this very important deal will go forward. before yesterday, nobody came looking -- no offers at all. >> no. and very good piece today, cogent piece about baird they said, celgene, be careful what you wish for. that basically bristol needs this bristol-myers is a great company. but, remember, this is about keytruda being merck's unbelievable drug that keeps winning versus optivo i think bristol-myers would be the best evaluatorof what

celgene has than anybody they're in there, and they really believe that the other drugs like receptos, they believe that they overpaid, they believe they'll reapply and that will win it could happen. giovanni is -- giovanni's track record, dr. caforio, he is a very respected man and i find that this is really -- i'm not saying anyone is slagging him, but why don't they listen to him he's very smart. and i think he's got a real good handle what celgene has and i think that bob eugan built a great company. it is being under -- it was traded six times earnings, it made too much sense to buy i'm in the camp. david is saying earlier i'm in the pocket of veryone. >> boeing, apple, bristol-myers. >> who else could be in the pocket of? >> you'll find a new one tomorrow. >> tandem diabetes, that thing

is going to 100. >> you've been critical of kraft. >> cannabis. >> cannabis. i like canopy. >> all in for the cannabis corporations. >> i think canopy, i've not sampled the product, but when they have that drink, you got to -- are you stillgoing to drink coors light when that thing comes out? >> i don't drink coors light i did have a couple of sam adams last night. >> my friends call it -- >> i'll make you a big thing of cheerios, you can drink that the ipas are so horrible. >> really? >> i can't stand them. >> oaktree is open. >> open. it appears to be open up 12% trading -- i got it trading now above the $49 offer or deal that brooktree entered into with oaktree. a ratio of shares as well from brooktree for that but we did want to point out that both stocks are up -- brookfield is up also, sorry for taking a look there.

>> alphabet, amazon, they ought tocome up with facebook, they should come up with something that is -- that links those, you know an ankfa -- >> vix at a five-month low to bob pisani. >> market internals good this week, four to one advancing to declining stocks here we are, over 2800, that elusive 2800, keep failing there, we'll see only one day this year we have been over 2800, march 1st, i think we close at 2803 on march 1st. that's where we are right now. so this is big time resistance we'll see if we can get over it. i'll show you a few ideas here internals are good new highs are not terribly inspiring. we had low bond yields, low interest rates out there so generally interest rate sensitive stocks are doing very well a new high list littered with reits, avalon bay and equity residential, utilities like aes,

but not a lot more we need more breakout here on the new high list outside of the interest rate sensitive group. it is good to see some stabilization in the industrials. thank you. boeing is the only stock in the dow that is down so far this week down about 10% but caterpillar, utx, supplier to boeing, all up, 3m up this week the damage really in the dow at least is entirely boeing in terms of sectors, trend continuing with modest upside to semis, energy, health care, consumer discretionary, this has been the trend for the whole week so a lot of these sectors are up 1 to 2% on the win that's nice to continue the trend. if you're figuring out as i do how do we get over 2800, there is a few short-term catalysts going to happen. first thing we're going to get is very big china numbers, economic data overnight. they'll have industrial production and retail sales, yes, that does matter to our markets now for obvious reasons because of the slowdown in the

trade negotiation. bunch of earnings out, february earning companies, adobe, broadcom, oracle, that's all tomorrow they can move the markets. friday, we have the quarterly expiration of index options and futures and individual stock options and futures. and then next week on wednesday, we'll get the fomc decision. speaking of quadruple witching, there has been a tendency for it to be on the upside for the week of the quadruple witch, this is my old friend mr. hersh over at the stock traders almanac since 1983 these weeks where you four times a year have the quadruple witching, up 24, down 12 times, interestingly the following week tends to be slightly to the downside so you tend to be flip this around and you're generally down in the following week after that you put that up there, 26 times and only up 10 of the times. so there is good and bad associated with this

what is important is that we'll get a rebalancing in the s&p 500 on friday. there is a lot of companies heavily involved in buybacks a political issue now. we'll see share count reductions and big companies because they have been very actively reducing their share count, including broadcom and some of the banks, bank of america, wells fargo, citigroup, share count reduced pfizer is another big buyback monster, doing that for a long time and i'll give you some indications of how much share count will be reduced tomorrow when we take a closer look at that right now the dow just off the highs, up 90 points. carl, back to you. >> bob, thanks bob pisani busy morning in the bond pits. more data on the way rick santelli. >> indeed. you've been talking about i'll have more pieces on it today, but there is definitely some call it a disconnect between what is going on in treasuries and what is going on in other areas like equities. i think the answer lies in more of the global picture. to that end, bund yields, everything seems to be moving together look at the two day of 30s

long end leading the charge, led the rates up, leading rates down closed under 3%, that's first time in 13 sessions. last time we closed under 3% was 20th of february let's open the chart up to the 19th you see it there ten years, look at two day of 10s, you know, we settle at a level yesterday, right around 2.60, that was the second lowest yield close of the year. you see open the year to date chart, what makes that an interesting chart is not only is it second lowest yield close, see that first couple of days of trading, the lowest of 2.55. if we take that out, zoom, zoom, zoom, lowest close since january 2018 it is significant. that particular chart point dove tails and links several forms of technical analysis by the way, that turns more toward lower interest rates should we start to see yields slip below that level. finally, let's look at what's going on overseas. talked about bunds

yesterday, settled between 5 and 6 basis points that's a fresh low yield close going back to october of 2016. and finally, let's look at it nine-day chart of the dollar index. it has broken its streak of 4.97 what is more important is to show how it continually seems to run out of gas right around 97, that is not lost on the speculators. carl, jim, david, back to you. >> all right, thank you. rick santelli. still to come, the ceo of adidas on the challenges the company is facing in north america. and in taking on nike. dow hanging on to a 95-point gain at the early open back in a moment (baby crying) ♪

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reclaiming 2800 with pretty good breadth here. s&p up 23 and dow up 95 points vir vix at a five-month low.

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they are paying less and less and less and the mobile is shrinking. benefit managers doing terribly, but, buy, it's going to be the next unh i read it. this thing reads like a sell but bernstein is powerful and the price target is 76 there's been a lot of insider buying including your friend dave dorman, dave. >> my friend, yes. >> $500,000 worth, and it's just been a disaster, and this piece is moving the stock and i would tell you there better be a better reason to move than this piece. wow, they are saying cvs, nobody goes to cvs anymore. dave, jim. >> you there. >> i'm texting. >> talking about the college thing. everybody wants to text about the college scandal. >> for sure. >> but you'll talk to michael dell tonight. >> who did not pay to have his kids go to school.

>> yeah. michael dell, who knows, dave, because of the whole complex, you knew the dell/emc/icon thing. >> i was following that closely, and there's still some disappointed shareholders of dell in terms of where they thought the stock would trade based on the exchange and where it is today. >> i think dell stock will go much higher. that's neither here nor there. >> we'll see you tonight "mad money" at 6:00 p.m. eastern time when we come back, former transportation secretary ray are a lahood with his rscte pepeivon boeing and the 767 max 8 don't go away.

welcome back to "squawk on the street." the last of the breaking news. today it is our january read on construction spending. we're looking for up half of 1%, already three times that amount, up 1.3%, and that follows a downly revised september moving from minus .6to minus .8 and 1.2, solid numbers as a matter of fact, that's the best level going back to april of 2018. we see yields actually maybe moving up just about and let's remember we're 2.61 in 10s, that

takes you back to a january 28 comp carl, back to you. >> thank you very much welcome back to "squawk on the street." i'm carl quintanilla with sara eisen and david faber at the new york stock exchange. dow is up 140 and boeing with green arrows for the first time in a few days. as we said earlier, vix at the lowest level in five months. >> our road map starts with global groundings. pressure growing on boeing after two fatal crashes in five months, but u.s. is holding off on grounding the 737 max 8 a former u.s. transportation secretary and the former chairman of american airlines are both with us to discuss. plus, adidas shares are slumping is a the company issues a sales growth warning hear what the ceo had to say. >> and a scandal rocking the nation as dozens are indicted in what the government calls a massive case of admissions fraud. we'll give you the details >> we start with boeing. as carl mentioned, shares actually higher this morning, up 1.5% on pace to break a seven-day losing streak after shedding nearly $27 billion in

market cap just over the last two sessions yesterday the company ceo dennis mullenburg expressing confidence in his planes but our next guest thinks they should be fully grounded until a full inspection is conducted by the faa. former transportation secretary ray lahood joins us now. why do you think the faa is holding out despite the fact that the rest of the world is moving against us? >> i'm not quite sure. they obviously this stated the reasons were they don't feel that these planes need to be inspected and grounded until they are inspected, but if you look back during our time at d.o.t. when the dreamliner had fires in the hulls as a result of lithium batteries, we consulted with the faa, and we

consulted with boeing, and we made a decision to ground those planes, have them all inspected. figure out how to fix it and then, you know, they didn't like that decision at the time, but in the end it turned out fine, and i believe the number one priority for d.o.t. has to be safety and making sure there's 100% certainty that these planes are safe now, i know the ntsb is on the ground they are doing their investigation, but ntsb will take a year to figure out what happened. >> right. >> we don't have a year. what we need to do is ground the planes, inspect the planes and use faa safety inspectors and boeing safety inspectors collaborating together, figure out if there's something wrong and if there's not, tell the public these planes are safe >> well, i mean, the faa has basically done that. they said our review shows no systematic review issues and no basis to ground the aircraft

is there information that the faa knows that other regulatory agencies around the globe do not? >> well, i think this. i think they are in the process of inspecting the planes, and they are in the process of checking out the technology, and they are in the process of the fix that they have proposed, but in order to give the public the assurance that the planes are safe, and i think if you went out on the street and did a man or woman interview on the street, people don't feel self-assured there's not 100% certainty that these planes are safe, and there is one agency in the federal government that has this responsibility, and that's the department of transportation safety can never be compromised. safety has to be number one, and the flying public deserves that. >> secretary, you've made the analogy with the battery problem

in the dreamliner, but, you know, some say it's somewhat faulty because we kind of knew given the fires very quickly what the source of the problem was, and then you needed to understand why it was happening and fix it, whereas in this case we still aren't certain at all of what the source of the problem even is. >> well, that's the reason they should be inspected, and they should get the smartest safety inspectors from faa and boeing in a room together around these planes and looking at the technology, and particularly the new technology, and trying to figure it out, and that -- that really -- there's still some question about what caused these crashes, and until these planes are inspected by the smartest safety people from faa and boeing i think the american public is not self-assured about this >> although, mr. secretary, you're not suggesting that the grounding of planes should be the result of public polling on the street

i mean, randy babbitt who ran the faa as you know sets a bad precedent to ground planes based on what he's calling speculation. >> well, it's not speculation. talk to the familiar lifts peop -- families of the people who went down in the ethiopian crash. talk to those families and ask if they wish those planes had been inspected i'm suggesting the answer is yes. i'm not suggesting a public polling. i'm suggesting that the agency that has the responsibility for aviation safety step up and carry out their responsibility it's that simple >> do you think, secretary, i mean, people are just going to vote with their feet and what will happen? in other words, they will choose not to walk on to one of these planes, and if that's the case and many of these planes are not filled up and the airlines choose even to cancel flights, does that have an impact at all in how the faa is thinking about this >> what probably has had more of an impact is what europe has done and what other countries have done in grounding these planes that is going to -- you know,

that's going to cause some scheduling chaos. >> no. i guess my question though is will the faa choose to listen to what people are choosing not to fly and, therefore, do what you're asking them to do. >> yeah. i wish -- i wish the department of transportation and the faa would step up and with major responsibility they have to make sure that these planes are 100% safe and can assure the public of that. if that happens, there won't be any issues with people deciding what airline to choose >> well, i mean, the secretary actually was spotted yesterday, secretary ciao was spotted taking one of these planes so they don't seem to be moving in that direction has there ever been a decision for them to be making a move like that and the rest of our

allies like australia going the other way. >> doesn't seem that way. >> what are the implications of that >> the implications are that it's going to mess up a lot of schedules for airlines. >> what about the credibility of our institution? >> well, we'll see how all of that plays out i believe that d.o.t. has had a very strong reputation for safety, for standing up for safety, and -- and i -- i hope that will continue >> i think what sara is asking is for basically all generations of aviation travel the u.s. sets the standard for safety around the world, and to have the rest world basically buck us and canada, is that reflecting some sort of underlying antagonism between our regulatory agencies and those of the international community? >> well, look at how it plays out. this has only been going on for a couple of days these planes have been grounded around the world just in the last few days, and we'll see how

things develop. >> one last thing. people have tried to make -- kick up some dust around the fact that the acting secretary of defense is a 30-year boeing vet, you would think some of this is political? >> absolutely not. i don't think it's political at all. >> finally, mr. secretary. should i be concerned. should we be concerned about flying one of these planes if we have a flight booked on american or southwest >> i would be. >> until further information. >> no, until -- >> you would switch your flight? >> until you can be assured through an inspection by faa and by boeing that the planes are safe to fly. >> but -- you keep saying inspection you know, in the case of alan air, there's an indication that the pilots might not be trained

properly to operate with the new software. >> absolutely. they have these opportunities to not only look at the technology but to talk to the pilots, and if the pilots have not been properly trained, to put that kind of training into place if that's what's needed, and that may take a little more time than people really want, but if that's the answer, so be it. >> thank you for joining us. ray lahood, the former secretary of transportation for the u.s. >> thank you >> we're going to have much more on the fallout from the 737 max 8 crash. we'll talk to former american cev bob crandall meantime, get a check of where the major averages stand dow with a 138-point gain and back above 2800 with six points to spare back in a minute

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it was already established and created. >> you think the dollar is going to underperform this year? >> i think the dollar is peeking right around now a 97 handle will be the high so you should be looking to fade that as well. >> i assume you're expecting global weakness to start hitting our shores >> absolutely. >> when and how? construction spending this morning doesn't suggest that. >> we've already seen europe is slowing down clearly china is slowing down and we've got problems there our economy is slowing down. it's not going to stay at 3% growth so it will go to 2% and potentially a little lower in 2020 so you're going to have slowergrowth the question is to what degree >> the argument seems to be now whether q1 is a pothole that we quickly recover from or something more endem snik. >> to the point you were making. a lot of the data we're looking at now say some of the weakness will be transitory and we'll slow down in the beginning of the year and we'll pop right back up from that. saw a strong durables order,

strong construction spending and strong retail sales. all the data is coming back and the rest of the world is stabilizing so i'm not so sure about that. >> is the rest of the world stabilizing? >> i think it's early days but the leading economic indicators are pointing upward so we feel better about china europe is still up in the air. we have to wait and see. >> we've had a lot of monetary policy come as well. >> absolutely. >> liquidity has been pushed in the system and that's shorter term in nature and that's clearly helped out the market and economies. the question is what will it do a year from now versustoday? >> you really want to fight that wave of new liquidity from central banks and the new posture from the fed >> two things, there's the economy and the market the market doesn't have to rally if the economy is doing a little bit better from a lower base, but i look at it this way. we're going to be a slower growth economy on a global basis this year versus last year, and i certainly think 2020 will have some credit implications as people have toroll their corporate debt and that's a challenge. >> you're not in disagreement?

>> definitely a slower growth economy. the question is how much slower. is this slowing down to something that looks like potential growth, looking at recession, or is this still an economy that's growing above potential and even though i would agree that equities are probably gotten out a bit ahead of this, can the fundamental economic data come back and support that even if we slow down to 2% plus that's an okay scenario. >> does corporate debt remain a concern for you if rates look like they have topped? >> i still think it's a concern, so you have $2 trillion of corporate debt rolling in the next three years. >> worse than the alternate scenario in. >> is that ig or -- >> ig, yeah. >> but that's compared to 800 billion over the last three years so it's a significant amount of roll that has to occur. let's face it. all these companies that we're talking about, their earnings potential isn't as high as it used to be margin pressure is now being talked about by everyone as well so that's going to be a concern as well, so it doesn't have to affect the entire system it affects the bottom 10%, that

puts real pressure on the economy and what credit is going to look like going forward. >> so you think this is going to be the year of the fallen angel so to speak. we'll see high-profile -- >> i think next year. >> i think 2020. >> what do you make of that? >> yeah, i think a lot of these risks i would push out into 2020 as well. 2019 can still look pretty good in the sense we're getting relatively strong growth and low inflation and that means central banks can be very, very patient and wait and see, and that's also part of the risk assets. >> shaun, there's been no sign there hasn't been a demand for u.s. debt, government debt, corporate debt as the fed keeps kicking the can down the road on interest rate hikes this year. where do you see the turn happening? >> at the top of every cycle it feels great. top of the cycle leverage loans are easy to get. everything is proforma they are buying on an ebitda basis 14 times multiple versus 9 in the prior eight years there's real leverage being put

into the system that feels good now. the question what will it look like a year from now when earnings power is not as strong as it was? you could have potentially revenue issues we're still looking at growth in an earnings basis still being single digits this year, down substantially, so what's going to happen in 2020 will be the key? >> on the subject of sellers, oak spree is selling 62% to brookfield i mean, you just launched an al certaintive ass certaintive asset manager. howard marks. >> when hedge funds sell their believe it's a sign they believe that's a top in the earnings cycle, at least from their perspective. so whether there's still margin pressure from the hedge fund side as far and 2 and 20 and what that is going to look like going forward, but you'll have less return profile. howard marks is a little bit different because he's been looking to cash out and doing this a long time and has been

incredibly successful so i don't think it's a precursor to what's going on you always have to be a little skeptical when hedge fund guys sell their business. >> guys, a good talk we'll see you soon andrew and shawn >> when we come back, fears are spreading over boeing's most popular aircraft mold as the list of countries grounding the 737 max 8 grows. former american airlines chairman bob crandall will join us why he says he sees no reason to grown those planes next.

welcome back to "squawk on the street" and our etf spotlight today, we'll take a look at technology stocks which are among today's gainers. the slk up more than 16% year to date the faang names helping this rally. all up 10% for the year. facebook and netflix have gains that are above 30% so far this year >> there's some increasing pressure obviously and uncertainty about the future of boeing's most popular aircraft model, this as the list of airlines and countries grounding the 737 max 8 grows following two fatal crashes in the past five months.

here in the u.s. though the faa says it sees no basis to order grounding, and our next guest agrease. joining us tomorrow former american airlines ceo and cnbc contributor bob cran dampt always go always good to get your take and thanks for taking the time. >> my pleasure why do you agree with the faa? >> look, it isn't just the faa i agree with there are four groups of people in the united states that know all about this airplane. one is boeing. one is the faa one is the airlines that operate it, and the fourth group is the pilots, and all of those groups, and most persuasively from me, the pilot unions that fly this plane, have said that in their judgment there isn't anything wrong with the airplane and there's no reason, therefore, to ground it. so, for example, i listened to

your evidence and, of course, he's right, but all of those things, the things he described, getting all the smartest people about safety, doing all the -- all the tests that can be done physically are all done before the airplane is launched now obviously the al ian air crash and the ethiopian crash have concerned me. i don't think we ought to get into the habit of jumping to conclusions and grounding fleets of airplanes when there isn't any evidence that there's anything wrong with the airplane and the people who are most informed don't feel that it needs to be grounded >> the mechanics of how this generally works, the boxes were found on monday and there's

still not sent to a country that can download that data and look at it. is that unusual? >> i think that's very unusual, and i think it's also very unusual that those black boxes haven't been immediately sent to the faa in this country, so something is afoot here, and it isn't clear to me what's afoot, but clearly all of those countries that are grounding the airplane are expressing some level of disquiet with respect to the usfaa and that is very different in what has been universally the case in commercial aviation throughout all the years that i've been associated with it, so i'm not quite sure what that signifies, although i think it's a little disquieting for the united states. >> bob, do you think there's going to be an impact on the airlines that do currently book flights with these planes, southwest, american airlines and

business is going to go to a delta or a united that don't have them in their fleet >> well, look, i think there's going to be some very small minority of people who have some concern about flying on the airplane if i was going to fly today, i would get on the airplane without hesitation, and if my kids or grandkids were going to get on the airplane, i'd tell them to go i wouldn't have the slightest concern, but fact is there will be i think some people who would like to switch away from the airplane, and i assume the airlines will facilitate that. it doesn't make any sense not to accommodate the fears of particular people who may be extremely phobic about a particular perceived risk. i don't think there's going to be much of that, but we'll just have to wait and see. >> i think the reporting suggests, yeah, can you switch airplanes and change your flight, but the carriers are still going to charge you a fee. i guess from a marketing standpoint would you be offering

to change equipment for a consumer without a fee >> yeah, i would, but the fact is i'm not running the companies, and i don't have all the data but it just seems to me you want to -- you ought to make an effort to accommodate anybody that is concerned. >> yeah. how would you be communicating this you know, just in general if you are still running -- >> now you're down into how the run the place, run the store day to day i'm not there anymore, and i don't know the answer to that, but as a generality i don't think you want to heighten the concern of any -- of any customer who says, look, i'm worried. >> bob, there's a lot of politics around this right now the ceo of boeing dennis mullenberg had a call with president trump. boeing is one of the top ten lobbying companies in the usa. it has a lot of powerful politically connected board members. do you buy into any of that,

that that's what is keeping the faa away from all of the -- most of the foreign counterpart agencies, i think except for canada and a few others, in this position? >> sara, i suppose i'm as cynical as anybody else, but in this particular issue, does the faa pay attention, does the government pay attention to boeing of course. are they prepared to make a judgment about aircraft safety that violates their own instincts? i think not, and at least as far as i'm concerned the endorsement of the pilots, these are the guys that fly the airplanes, and they -- they put their own safety on the line, and they also put their integrity they know perfectly well that they are putting the safety of all of the passengers on the line so when those guys say i think the airplane is safe and i'm happy to fly, it i'm persuaded >> interesting you mentioned

alpa, the pilots union, bob, and they actually responded yesterday on twitter to the president's tweet about whether or not complexity is creating danger in commercial aviation. i wonder what you made of the president's thoughts and alpa said we think the most important safety features on any aircraft are two well-rest highly trained and fully qualified pilots. >> and i -- i fully agree with that alpa statement, and i think it's very important and indeed throughout the years that i was running the company and in those pilots that i know now will all say it's important to fly the airplane yourself, to have the feel of the airplane and be preparedto fly it in the event that the technology shows any sign of anration, a aberration. as you guys know, u.s. airlines that operate the airplane get an

immediate data dump after every flight, and i am told that they have seen absolutely no aberrations in any of that dataance and i'm sure that contributes as well to the pilots' conviction that the airplane is safe and that they are happy to fly it. >> bob, really good insight, really valuable for the viewers. we appreciate your time as always we'll talk to you soon. >> my pleasure look forward to it bye-bye. >> totally opposite of ray lahood dow is up 100. let send it to sue herera for a morning news update. >> a busy news day former trump campaign chairman paul manafort is back in court for a day of another sentencing. judge amy berman jackson will decide whether to add another ten years of prison time for tax fraud and other crimes to the 47 months that manafort was sentenced to last week california governor gavin newsom is ending the death penalty in that state. the executive order which will be announced today grants

reprieves to 737 inmates awaiting execution which equals a quarter of the country's death row population the fda is outlining new rules aimed at curbing team vaporing the proposed regulations would restrict future sales of flavored e-cigarettes and remove many that are currently on the shelves. and star nfl receiver odell beckham jr. is reportedly being traded by the new york giants to the cleveland browns for two draft picks and safety jabril peppers. the blockbuster deal is expected to be made official this afternoon when a league deadline lifts. so we'll keep you posted on that one. that's the news update this hour sara, i'll send it back downtown to you. >> jim cramer said that would be very bad for the bengals they are a big competitor, apparently that's happening. sue, thanks >> you got it. >> sue herera. when we come back, sales growth warning and add das is expecting supply chain issues to hit north america. here what the ceo had to say about that warning

his thoughts on the state of the overall consumer and famous actresses, college coaches and others arrested in a conspiracy to get their children into top colleges more on that scandal next. this is your invitation to be our guest.

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adidas out with earnings today. saw a record year for 2018, but the sales outlook weighing on the stock. i had a chance to catch up this morning with kas p-r rorsted and the surprise warning that came out of a supply chain bottleneck. >> we've doubled the price in the last few years and the price of volume has gone up. we've not been able to build enough capacity in asia to supply that market demand, so that is on one side a fortunate situation because of demand profile but, of course, for us

it's quite irritating we're not able to fulfill the consumer demand because of our lack of ability to find the appropriate capacity in asia. >> what are the competitive landscape in north america there's speculation that nike is resurge ent and back to taking share with its newest innovation >> the u.s. market is very, very resilient and a very strong sporting goods market. moving more to what's online, i can't cement on our competitors but we expect to grow shares. >> we've seen some mixed signals lately on that front. >> on the u.s. consumer we've not seen a great change in the consumer pattern of the u.s. consumer what we are seeing is we're seeing an increase move towards online, and that's why our own digital initiative is so important, but the spending pattern and desire to buy sporting goods products or related products in the u.s. remain very, very strong. >> you've been critical about

brexit from the early days at this point, it still looks like a complete disaster, another failed vote. what's your base case scenario in terms of how you're planning to do business and control the supply chain without too much disruption >> we actually built warehousing distribution capacity in the uk to counter any issues that would arise from a potential brexit, so we've changed the way we're doing business in the uk and in europe for the brexit so that's already done but, of course, it's not an ideal situation. it's not going to be an ideal situation for us or anybody else. >> so, talk to me a little bit about the democratization of yeezy. we've talked about yeezy for a long time. you seem like you're finally boosting volumes and expanding the product. what do you have planned for 2019 >> we've had a great relationship with kanye over many, many years, and it started out by being very much focused on few products on few releases with a lot of hype this year we'll have more than

20 different releases and some of these releases will be very slow in volume and some will have a different volume profile. >> how do you do that? >> isn't the scarcity of what makes it so cool and hot, fact that prices have already started to fall on the secondary market, doesn't it lose some of its cache? >> i think viscosity is always related to a given product and over time if you have a product in the market for a very long time like the 350, that viscosity default will be less so and that's what we're rolling out in volume. we and kanye are breaking for shoes to the market where viscosity will be very high and the demand on the product will be very high because of the quote, unquote very low volume. >> what were you thinking when you saw or heard about the ripped zion williamson nike shoe >> first, i was actually concerned about the athlete because all sporting goods companies, are is the athlete hurt by it and secondly it showed the enormous pressure that athletes

are putting in a project i had no joy or particular joy upon that and i looked in the eyes are we doing the right thing and are we as adidas building the right product that was my reflection. >> do you think it boosts your chances of signing a deal with him. this will be so major, some think on the level of lebron james. >> i think we'll continue to sign great athletes. i can't speak about one or the other athlete, but we'll continue to sign great athletes and we have james harden, mvp in the nba, played an outstanding season i don't think anybody in the u.s., you know, is doubting that adidas can build great basketball products >> you know, on that front, the basketball front, there was other news in the past month and that's one of the former executives of adidas was sentenced to nine months in jail because of the bribery scandal do you think it changes this whole process? i mean, what kind of warning shot was that to you and your industry >> it's clear that we're not very happy about what was going on, and that's why we also, you know, cooperated very openly and

from day one or minute one with the authorities, and we need to make certain that the industry is not getting itself into that situation and that's why we have an intense dialogue with williamson to make shower that that won't happen in our thanks. >> the ceo of adidas, guys we went way beyond earnings, a lot of other news items to hit and the bottom line story for the company right now it's underperformed and the valuation gap between nike and add das has actually expanded to multi-year highs, and the thought is nike has been resurge ent and has come up with a lot of new styles that have been winner and taking back share in north america and that's starting to show up in the adidas sales now there's the yeezy sales coming in because they are democratizing it and on the supply problem they are having, trying to bring the items to the market, apparel especially in the u.s., and, of course, western europe which has slowed down a lot.

>> interesting every time someone poses a challenge or a threat to nike, nike answers back, and that's what keeps the business interesting, right >> it's super competitive, and i would say adidas is doing well in north america, too, but on the basketball point, you know, it's important who gets zion, who gets him, because he mentioned harden, but harden doesn't sell basketball sneakers the way lebron james and kevin durant did and michael jordan and steph curry up there for under armour who is trying to turn that birks so it is a big deal, and obviously kasper can't talk about it, but we had to go there. >> watch the exploding sneaker got to see that one. >> did you see zion won an adidas track suit saying that was trolling nicky >> it's a scandal that's rocking the nation federal prosecutors indicted coaches and affluent parents, including some of hollywood's elite in a massive bribery

scheme to fast track their children in some of the country eats top universities. i a mongmong those charged, acte felicity huffman and lower lauflin and doug hodge, wilke farr partner, bill mclashin. a college prep expert ran the scandal which setting up a charitable organization that was then used to funnel the bribe money to coaches his organization allegedly helped students cheat on the s.a.t. and a.c.t. exam and helped parents bribe coaches to recruit their children even their child didn't have an athletic background. parents spent $25 million for admission into prominent schools like yale, usc, and as a junior

of a high school this hits home because we're in the midst of it. >> see if your kid can get in by him level. >> we're going the old-fashioned way, even timing his exam and it just shows the competition for the elite universities which have gotten more difficult to get into and the length parents will seemingly go into without even the knowledge children in this case who believed that they were taking an a.c.t. in texas because who knows, why but really did not understand what was being done at their behest. >> i don't think it's super surprising that something like this would happen. obviously, it's illegal, but the names of the people on the list are people, you know, some of them in our world in finance and lawyers. >> yes. >> who clearly should have known better >> without a doubt you have to have known that this was not legal. maybe you can justify it in some fashion. well, i'm just trying to sort of game the system to some extent but the idea, of course, is not just you gaining an advantage unfair will you, but you're

potentially preventing somebody who has met all of the requisite challenges to be admitted and not get admitted to one of these universities and it's wide-ranging and far ranging and amazing to read, of course, the complaint itself i think if you haven't and the money spent in some of these cases is staggering. >> i mean, that was the argument all day yesterday is that the structural advantages, class-based advantages aren't enough, right, to get into the some of these schools. >> no. >> and apparently $1.2 million at yale, could have tried to cornerstone a building, something like that, 400,000 went to the coach there. the soccer coach i believe it was, another 800,000 pocketed, it seems, by mr. singer who was the mastermind who pled guilty >> all right we'll get more obviously as some of the arrivals that we saw today on camera. when we come back, shares of aurora cannabis 8%, 9% up. who they are appointing an an

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tech stocks have been on a tear, and there's one group that traders are watching for a bigger breakout. find out those nesam on tradingnation.cnbc.com more "squawk on the street" coming up.

welcome back to "squawk on the street." rick santelli here live on the floor. cme group. i'd like to welcome my guest for today, head of international fixed income, national alliance securities andy brenner. andy, let's get right into it. you know, if you look up at treasury yield, they are down what, about 65 basis points from their high yield close around 3.25 here we sit. that's about what, 20% off the highs. i like at the dow, 25,6 so 25 handle the high is 2600 that's roughly 4 has, so we're 4% from the highs on the dow and 20% off from the high yields on

the sos. how do we reconcile those two? >> rick, you're got a lot of cross-currents going a lot has to do with central banks. some has to do with the theory of the mmt some has to do with the japanification of europe there's -- in central banks. it doesn't look like we'll ever be done with them. probably will be ten years between the time the european central bank raise rates to when they raise them again so you've got a lot of conflicting signals right now. meanwhile 10 crier treasuries still hover around 2.60 and 2.62. >> remember, a year ago when many investors were definitely complaining, pulling out their eyelashes, oh, my god, rates are going to kill stocks truly, rates going up in partnership with the equities moving up and the type of data points we're getting a year plus ago, that was the perfect blend. you could call this goldilocks, but how long can it last one of these markets needs to

blink, until the international sovereigns will really cave. >> rick, you know, one of the things the equity markets are looking at is continuing improvement in the tariff situation with china even though i seemed to see every other statement is a bad statement as well so there are a lot of people on the shrines, ricidelines, rick,s what equities people are worried about and in the bond area they are worried about the huge government deficits and the supply if you look at ten-year bunds versus treasuries, yeah, they still seem to move in the same direction, but the magnitude, ten-year bunds are lower than the yield. >> if you ignore the scale and the basis point, the patterns do look somewhat similar. >> that's right. >> real quick. 40 seconds let's get right into it. kelly has been talking about, you know, modern monetary theory policy it's the epicenter of the new political undercurrents in the democratic party, and you are now placing that firmly as an

economic fumt ndamental. >> rick, i think the mmt theory is ultimately wrong, that it will fail. nonetheless, a lot of people are talking about it right now, and i think with 22 trillion of outstanding debt right now i'm afraid it's goingnow, i'm afraid it's going to go higher before it goes lower and that's why we're struggling to get through 260 in the ten-year >> excellent, andy always interesting the world's not an easy place to cipher sometimes thank you for joining me we're going to go back to david faber. >> and i will take it. thank you, rick santelli now, i will send it over to jon fortt so we can get a look at what's coming up on "squawk alley" >> hey, david. a lot of pressure on big tech these days some local politicians want to kick them out. some national politicians want to break them up the mayor of austin, texas, steve adler doesn't feel that way. 'rgotoalk to him coming up on "squawk alley." ande my portfolio. since i added futures, i have access to the oil markets

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welcome back to "squawk on the street." i'm dominic chu. stocks are hitting their best levels of the day with every sector in the s&p in positive territory. let's drill down, though, on one of the relative underperformers. that's the utility group that group hitting a fresh record high, though, in today's trading. but as you can see, they're lagging the broader market among the names weighing that

sector, you have centerpoint, ppl, and cms energy. all stocks to beat back downtown to you, carl >> shares of aurora surging this morning as the cannabis company announces it's pay pointing longtime activist investor nelson peltz has a strategic adviser. commenting on the appointment, peltz says, quote, i believe aurora has a solid execution track record, is strongly differentiated from its peers, as achieved integration throughout the value chain and is poised to go to the next level across a range of industry verticals. i also believe the canadian license producers and aurora in particular are well positioned to lead in the development of the international cannabis industry, as regulations evolve with a strong globally replicable model >> but obviously, there's a trend here first of all, it just adds more legitimacy to see such a big prominent investor in one of

these companies and advising one of these companies but the food and beverage, sort of household products theme coming into the cannabis space, thinking irwin simon, who's now running afreea company, chairman and ceo of that company, it gives you a good sense of where cannabis is going, these derivative products like food and beverage, and the expertise that's coming into this industry to help get these companies there. >> and the capital that's coming in, too. amazing. sara, what have we got coming up now on the "closing bell"? i'm counting down the hours, the minutes, even the seconds. >> all right you've got a few hours to go, but it will be worth it. we have a few big guests we have hud secretary ben carson on the show. we're going to talk about the budget they're trying to slash more money from his department. it's been a while since we've heard from secretary carson. we'll ask him about the state of the market opportunity zones remember amazon coming to long island city. that was supposed to -- >> why'd have to ruin my day >> i wonder if secretary carson has details on that. and we have the head of kkr with

us, henry mcvey just back from europe, so clearly his thoughts on brexit, as well and to diversify the lineup for you, olympic champion usain bolt will be with us. he's getting into the e-scooter business, so i guess we'll ask him if he can run faster than a scooter. >> he can. he can run faster than a horse >> why he's getting into the scooter business and a lot more. sticking with p.u.m.a., another athletic story >> that's a good lineup. get a check on the major averages here as we continue to hang on to 143 points on the dow, 28.11, s&p, don't go away cal: we saved our money and now, we get to spend it - our way.

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♪ good wednesday morning welcome to "squawk alley." i'm carl quintanilla with morgan brennan and jon fortt. the market's having a pretty good day dow's up 128 we'll start with apple shares higher again today, up 5% this week along despite some regulatory headwinds this morning as elizabeth warren calls for the breakup of the company's app store, spotify filing a complaint with the eu today, saying that apple is engaging in anti-competitive business practices with its so-called app store tax. da davidson's jon fortt is here to talk about what the stock's done over ten weeks. 40 bucks in essentially that