fairly dickinson wednesday, march 20th, 2019. "squawk box" begins right now. ♪ life from new york where business never sleeps. this is "squawk box." >> good morning. welcome to "squawk box" here on cnbc we are live from the nasdaq market site in times square. i'm becky quick along with joe kernan and melissa lee andrew is out this week. the markets are watching the fed today. central bank will be wrapping up its two-day meeting with chairman jay powell holding a news conference. all of which you can see right here on cnbc meantime take a look at the u.s. equity futures yesterday towards the end of the session you did see pressure on stocks as there were concerns about what would happen with the trade talks with china none of that has been cleared this morning, but you do see things, though, that are modestly higher. yesterday the dow was down by

about 26 points. s&p was down slightly, and then the nasdaq was up by just under ten points dow ended a four-day winning streak s&p was down for the first time in three sessions. nasdaq was up for the third time in a row, and this morning things are relatively flat overnight in asia, you'll see that the nikkei ended up by .2%. hang seng was off by half a percent, and then the shanghai composite was flat, and then in europe where the early trading hours are already taking place, a bit of a mixed picture there not too many declines across the board except in germany where stocks are down 1.1% take a look at the treasury market here in the united states again, that yield that we've been watching so closely on the ten-year is still below 2.6% 2.596% the u.s. and china are recordly heading back to the negotiating table in a final push for a trade deal. u.s. trade representative robert lightheiser and steven mnuchin plan to head to china next week. the vice premier will come to

washington a week later. this is in an effort to strike a deal by late april they're pushing back on u.s. concerns and it hit the markets midday yesterday right now, of course, you see the dow -- becky had mentioned ending a four-day losing streak. fedex, something to really watch today, and cramer doesn't think powell really pays that much attention to what's happening. he said maybe he does now, but maybe if he was just watching right now -- >> at this moment on "squawk box. >> right now i want you to know, mr. chairman, that fedex continues to see a big slowdown in the global economy. put that in your quiver. the company reporting weaker than expected earnings, and revenue in its third quarter, including the holiday season fedex also cutting its full-year outlook for the second time in three months fred smith spoke to jim cramer on "mad money" last night. he said the u.s. trade war with china and the brexit drama both continue to weigh on global

commerce we certainly are levered to it, but on the other side of the coin, some of the things that we have done, like our integration of tnt and some of the programs we have in asia should mitigate some of that, but no question about it, jim. if there's not some solution to brexit and some resolution of the china-u.s. trade dispute, it's unlikely to see much global growth >> we're going to talk obviously much more about the results from fedex later this hour with an analyst. you can see the shares down 6.5% that will affect the transportation people make excuse for transportation they say everything is -- >> it's not a leading indicator. >> it's all digital now. but you can't ship components over there >> when you are hearing fred smith talk about the reason it's happening is because of the global slowdown, because of the terrorists and all the other issues and slowdowns he is seeing in china and elsewhere. that gives you some cause for

concern. yesterday the dow transports were down 1.3% before this news even piles on to it. it's been a troubling trend to watch. the question, though, is sfed fedex at this point a leading indicator of global economic growth? i mean, yes, it's troubling they cut their outlook two times in the last few months. record high back in january of last year. the s&p went on to hit a record high later in the fall. then we're close to it right now. fedex is nowhere near that level. you got to wonder, you know -- you got to wonder what does that tell you >> it's a minidow theory right there. when have you a non-confirmation >> the high and the record high in january was telling >> with all these non-conference -- >> for the s&p 50000 and hit a record high eight months later >> i think if you were a dow theoryist, you would say that portends problems for the dow. >> even when you see strength in railroads? >> we look at all the transports then you would say, look, they don't -- it's not -- you know, there's a lot of things that

aren't shipped the way -- >> they're still semiconductors. >> they're not taking their cues it might be a fedex specific story at this point. take a look at the futures last night when the news hit, we were all thinking, wow, this is going to be horrendous you see the futures here this morning. at least nearly going. jaime diment did an interview and said, look, i wasn't in favor of it, but it may be a good negotiating tactic, and it may be working then you think about president trump today going to ohio and being in the midst much this battle with gm and then uaw and what's going to happen with that plant and lord's town. back and forth on a bringinger broader negotiation. it may work out. don't think it's not going to cause some bumps along the wear.

>> a lot of different things that can affect a miss on the bottom line. expenses were better this time they raised prices they were able to. >> the other issue is the margins for the e-commerce business are a lot thinner than people anticipated it's a lot thinner than the other commercial business. you have to deliver the last mile all the way there it's been a big business for them, but it's not a big margin business >> i feel like -- >> i know about four of them my fedex guy does watch our show >> he is listening to us talk about fedex right now.

>> i play them off the guys in the brown outfit >> that's so you >> what do you say, oh, the ups guy brought my package faster. >> if i put it -- you didn't put it over here i got to walk out and get it lot of people don't like to come close to the front door. >> you also have to -- >> the dog jumping all the way up to the top of the german shepherd >> all right new this morning, we are learning more about what happened to the final moments before a boeing lion air plane went down in indonesia back in october. reuters citing people with knowledge of the plane's cockpit recording said that the lion air pilot's quickly flipped through the plane's manual to figure out why the jet was lurching down wards moments after takeoff. all 189 people on board that plane were killed when it crashed into the java sea. there's a report on bloomberg that says there was an additional pilot who happened to be hitching a ride in the cockp cockpit. >> the previous day on that flight who had been hitching a ride, and they flipped through and figured out what to do

>> just said turn it off where. >> turn off the engine >> then pushing it down. >> people are saying for pilots that the point flying the plane, not to know the fix, i mean, that's a training thing there. >> what had happened the day before they have no idea why it's happening and they can't fly the plane. >> that was one of the questions with the new airplane. it's a new airplane, but it's not a new airplane it required less training. it wasn't classified as a new airplane it was just a max version of the same old airplane. that's one of the questions. >> it did require some -- we'll find out month are where, when is the black box done? >> it's going to be a while. we don't have control of it, and that's in the control of the ethiopian authorities at this point. >> i'm going to add to the dow sell-off 373. it's okay today. >> the investigation into that crash has taken on new relevance following last week's deadly

boeing accident in ethiopia. boeing is revamping its executive ranks in the aftermath of those two 737 max crashes john hamilton has been named chief engineer he had been in charge of the company's commercial airplanes division, and lynn hopper, who had head of the test of the valuation unit has now been named vice president of engineering. boeing shares this morning, you'll see, are up slightly. up by just over $1 to $3474.57 shares of bayer are under pressure this morning. a california jury says the company's popular weed killer roundup caused a man's cancer. this is the second roundup case to go to trial remember back in august a jury handed down a $290 million verdict in a similar cancer case the jury will now decide if bayer's monsanto's unit should be held liable in a statement bayer says it is disapunted with the jury's initial decision, but we continued to believe firmly that our herbicides do not cause cancer shares are trading in germany this morning, and they are sharply lower as expected. down 12.5% >> direct tv's $24 million

customers may soon lose viacom channels such as mtv and nickelodeon. how would you know they haven't been able to reach a new agreement. shares of viacom right now take a quick look. or not all right. they're not working right now. we'll bring you a chart of viacom and at&t a little later >> alphabet's google unit is taking steps to try and address european anti-trust concerns and try to avoid some new fines and sanctions as well. google will prompt users of android-based devices to choose the preferred browsers and search apps rather than defaulting to its own chrome browser and google search app. google had been fined a record $had.9 billion last year for what the european commission said was an abuse of its market dominance. coming up, time to make those picks.

not stock picks, but ncaa tournament picks keep going back. hate when i do that. >>. >> second guess yourself, and you'll kick yourself because at some point you will have picked the right line-up. >> i'm always torn between -- i know what everybody is doing, and if i do that, then i can't -- you got into -- you have to take some chances. then it never pans out >> do you follow your heart or just your head on this >> that question can apply to a lot of things. >> i follow my heart i'm taking cincinnati a little ways where were they were peaking. >> do you go with the places that you like? >> squaron, 34 points in the last -- in the championship. anyway, we have march madness for dummies next, and we already had some excitement last night as new jersey's own fairly dickinson wins its first ever ncaa tournament game as we head to break, here's a look at the biggest premarket winners. they beat a team from prairie what >> prairie view. >> prairie view?

oh market winners and losers in the dow. we'll be right back. the game doesn't end after a walk-off,

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drama already playing out. fairleigh dickinson had a come from behind victory over prairie view a&m at one point the nec champs from new jersey were down by 19-6 it's only been to the dance once, and it lost by 31 points or something >> i was confused last night you were down by -- >> you were down by a lot. i thought it was n.i.t it wasn't an n.i.t. game

>> n.i.t. game >> xavier is in. there's a lot of good teams in the n.i.t. >> georgetown. >> i know. alabama. >> is it hard to get in the n.i.t. >> ivy league is a good n.i.t. conference >> yale is in. you are beside yourself, aren't you? >> yale, harvard for the -- i watched the -- i actually watched the pen-harvard game >> i actually went to an -- back in february. >> you don't watch all these >> went to the campus and watched it at fdu in february. >> pac-12. i grew up in l.a ucla fan ivy league basketball and things that don't matter. >> years ago harvard was good. last year -- pen -- >> it matters for the program. >> growing up in l.a they have all the wins they're ever going to have in history because of the wooden era,

but -- that's a -- believe me. i am watching all the other games, and you don't -- you say -- you are going to -- you have an expert you're going to talk about this, but don't watch the games? why don't i talk about them if you don't watch them we are now going to talk bracket strategy bellma bellmaw bellmaw bellmawr,? >> if you can't pronounce it, skip it. >> bellmawr. >> belmont should i take them against maryland >> well, let's talk about it >> bracket strategy. that's what i was thinking about changing then i didn't. millions of americans get ready for the start of the ncaa tournament wagering bills yonz of dollars in the process. did you take liberty >> yeah. they beat ucla this year that's what got steve alford fired. >> i took -- i'm not going to say anymore. people will copy me. >> how about i give you the basic strategy this is march madness for dummies. we have 18 million people. they're going to bet about $9 billion. 40 million people are going to make 150 million brackets.

winning a bracket is not about basketball it's about focussing on game strategy you need to be good, but you need to be slightly different from everybody else just like joe was talking about in the commercial the question is to ask in your bracket, how many people are making brackets? are you in a group of 20 or 50 or 100 how are points awarded is every game worth the same amount of points he how many winners are getting paid is it every one of the top 50% those questions mattered everyone is betting on them. if you picked them, you've got nothing to distinguish themselves >> you don't want to be embarrassed. >> welling, then that's dwrur strategy if you don't want to be embarrassed. >> if duke wins. >> if duke wibz, you can't win unless you have duke >> everyone else is -- then it's all about -- you have seen how

dominant they are. >> when i take duke, i got to deal with harwood. i mean, i got a million reasons not to pick duke because he is going to be gloating and -- >> it would be a win, win situation. you would actually win and win money even in the -- then if duke lost. >> not on the same side. >> you have other issues if they lost, you should revel in the fact that i took john harwood. >> i have to change the value. >> let's say they are chance of winning is 25%, but 50% of people are picking, so they're overvalued >> i've done this before villanova, i didn't take them last year because i didn't win i don't like them. i like xavier. i didn't take them i got 30th place >> think in the long run, though, right? >> what's the long run next year? >> if you win one time, it doesn't matter that you got the

30th place the other time. you don't want to be tenth place every year every year you've pretty good, but you don't win any money. >> besides duke -- >> it's good to never be last place. >> besides duke, you -- remember yukon won. >> here's the interesting thing. >> who do you -- give me three that could win virginia lost to a 16 seed last year, right? >> virginia. that was an embarrassment. i don't like gonzaga or virginia >> gonzaga's year maybe. >> it's always their year. unc i think is where i would put my money everyone is going for duke, so there are not as many people picking unc. what's interesting is 72% of the higher seeds win their games going back 15 years. people put too many up sets in the first round. you really should only have one or two upsets per region in the first round. i think people go overboard with upsets >> they remember last year why did i -- there's always, like, five, at least, but you can't pick them. you pick the wrong one i listened to those idiots

>> pick one or two upsets. >> i listen to those guys on tv that -- you should never >> it's like cnbc. >> never listento people on tv about stocks or -- no. i'm kidding. i watch them on the selection show, and they were, like -- they picked all of them had eight upsets >> that guy is just trying to make a name for himself picking autopsy the upsets >> what's interesting is if you are in a pool of ten people, without doing any -- >> i'm going back in right now >> 38% chance you are going to win where. >> if you mess me up -- >> if are you in the pool -- >> you limit the size of your pool that's the number one. >> the more people in your pool, the more it becomes a lottery and random chance. you can go all favorites and have a good chance of winning if the pool is small. >> tell me this, you are the expert in this do you win the bracket every year in your pool? have you back tested your strategy >> i do pretty well. >> i'm usually the top five guy. the last couple of steps is -- >> this is like your new line. you can teach the seminar on how to do better in your bracket you will be teaching that as a side business?

>> now that gambling is legal, there's a lot of avenues >> i did have north carolina three years ago. >> villanova and then -- if you don't know anything else, the one thing to look at is how many three-pointers they attempt. not how good they are. that introduces volatility if you are looking for upsets, the underdog schools that shoot a lot of threes, they may get hot and may beat a virginia. the good schools that rely on threes, they may get weak. think about the houston rockets. they missed 27 straight threes they kept shooting him they missed him. then they lost >> did you see, like, everything else has 200 million in bets >> this is the number one thing. >> ten billion 3% of it legal, too. >> how much are your bets legal. 10%? >> i don't -- that's all i need.

>> that guy in staten island it's still very -- we're not sure what the details are, but there's still a lot of money being made in illegal gambling 97%. >> starts tomorrow for real at noon >> besides north carolina give me one more. not houston. cincinnati just -- >> michigan. michigan has been tough. >> i just changed three things already. >> wait and see what everybody else is doing, though. wait and see what everybody else is doing and do something different. >> all right >> thank you good to see you. >> when we come back, we've got some of today's stocks to watch. as we head to a break, check out the price of crude oil this morning. down about 20 cents. 58.83 a barrel "squawk box" will be back in just a moment.

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let's take a look at some stocks to watch in today's trading session. ten sent e cent music beats estimates on the top and bottom liends in its first report as a public company the chinese music streaming service is seeing its stock fall premarket trade on concerns about surging costs for licensing and content production those shares down 4.5% office furniture maker steel case beating estimates by 2 cents with quarterly profit of 29 cents a share revenue also beat estimates helped by higher prices.

that stock up 7% shares of sage therapeutics are jumping this morning sage receiving fda approval for a new drug called zolreso. it's zined to treat women with post part emdepression stocks up 5.5% the ceo of sage therapeutics jeff jonas will join jim cramer on "mad money" at 6:00 p.m. eastern time coming up, the market expectations for today's fed meeting. that discussion straight ahead plus, fedex taking a big hit this morning is this an opportunity for investors to jump in we'll talk to an analyst in the next half hour we head to break, and take a look at yesterday's s&p 50000 winners and losers ♪

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with being bah being you're watching "squawk box"

live from the nasdaq market site in times square. welcome back to "squawk box. fed policy makers are set to conclude their two-day meeting with an interest rate decision and policy statement that will happen at 2:00 p.m. eastern. we're expected to leave rates unchanged this time around a half hour later fed chairman jerome powell will hold a news conference johnson & johnson and sientra have received warning letters from the fda they are said to have failed to meet post- -- they could revoke approval if the issue isn't resolved the japanese government is downgrading the i assessment of its economy is and is blaming the u.s.-china trade dispute exports as well as industrial output are showing signs of weakness however, it also says the economy is nonetheless in a

gradual recovery zoo very gradual >> 2 2 years >> and u.s. equity futures at this hour are now turning negative on the dow. just a little bit down four points. down fractionally on the s&p the nasdaq continues to trade a little bit higher. >> markets are really waiting to hear what happens with the fed which is wrapping up a two-day policy meeting thoong this afternoon. investors will be watching closely for any changes to the central bank's language. especially that word "patience." whether it stays here to talk about the fed's impact on the markets and the economy is simeon hyman, head of investment strategy at pro shares, and alan detmeister, head of economist at ubs let's start out by talking about the economy. what we heard from fedex yesterday concerned an awful lot of people. what they're seeing is overseas, but what should we be thinking about the u.s. economy right now? >> we're definitely seeing a slowdown in the u.s. economy over the last few months we think that slow dourn is temporary. we should over the next six to

ten weeks see things starting to move back. slowdown probably largely caused by trade, and the government -- temporary government shutdown that we have >> why do you think we move back unless there are new tariffs added on the effect we've had has taken through to the economy, and at this point unless there's some new dwomtd, we should see new manufacturing firms start to come back and jobs start to come back and a little more confidence >> you think about the impact the tariffs have had on some companies. boeing can point to some of the issues you have manufacturers who are using aluminum the car companies will say that it's costing them about $1 billion. you are not concerned about that as long as there's not additional tariffs that come on. >> starting in july of ras year, we put in a slowdown in the economy in the fourth quarter, and the first quarter of this year that's kind of hit like -- >> it's a hit. >> it's a one-off hit.

it shouldn't be a long-term holding down growth in the economy. >> simeon, we're going to hear from the fed today how much of what you are doing is going to be based what the fed may say today and how much of it is not an issue for you because they cleared up kind of a lot of what he were this going to -- we kind of know what the fed is thinking now versus what he this thought. >> i think the issue now is the fed really needs to ignite some increase if inflation expectations if you look at the balance sheet, they may announce that they're going to be wrapping up the balance sheet unwind and leaving it triple the size that it was before the financial crisis as kind of a new normal balance sheet, but an acknowledgment that, hey, it might not be that balance sheet that's suppressing the long end of the curve it might well be low inflation expectations the dovish stance as much as anything is going to try to get that yield curve to steamen again. it's not a bad bet i mean, 2.5% is really unusually low on a ten-year. >> looking at the low 2.6% is kind of confounding people.

i think people are complacent about the risk these days. >> what are you expecting to hear from the fed and what could be a surprise? maybe a low probability thing that we might end up hearing from them. >> yes we're expecting them to move down to one rate hike this year, and that's down from two in december in the minutes of the last fomc meeting, nearly everybody had lowered their growth expectations we're expecting that to move down probably into the two range for this year. a surprise could be if they move all the way down to zero that would be a big acknowledgment and a big move away from the talking about how the economy has been strong, but

cross-currents if you are moving all the way down to zero, you're moving away from that idea that the economy is really -- >> that would be bearish for the market, i would imagine. i would imagine that would be a huge spook, right? if he gets too dovish, that's an acknowledgment >> kwon if that would be such a bearish thing. multiples only mean something in the context of interest rates. i think it would be possibly enough of a catalyst to maybe even steepen the yield curve and maybe even support equity prices if there's a little bit of a surprise on the dovish side. >> what are your best ideas right now? >> you know, one of the things that we've been looking at is the waning economic expansion and its impact on corporate profitabili profitability. we're starting to look at companies that have very good returns on assets, but perhaps not such rich gross margin such that they can with stand a little bit of reduction in peak margins. the other thing is how companies are returning cash to

shareholders. there's been some made of that, the boston fed president indicated that would be important. the mix of the average duration is now six years the composition may occur in this meeting, but more likely the composition stuff will be pushed off until the june meeting. one point is inflation

expectations right now the course preferred inflation gauge, core pc inflation is running at 1.9. over the says next couple of months given the data we've seen from the cpi and ppi's, that's likely to move down to 1.8 and then down to 1.7 when the february data is released. >> are you seeing wage growth decent, and that compression will continue. that's basically what the forecast indicates >> yeah. wage growth has been moving up pretty strongly in recent years. it's now, what, 3-4. the best it's been since 2008, 2009 we've seen good movements on the wage front.

>> do you agree with that? >> it's really difficult i worked on the inflation desk at the fed for 15 years, and how to move those expectations was the most difficult things that we really did not understand and is not understood in economics at this point. >> let's just ask you broadly about the markets right now. we are looking at much higher markets than we were looking at just two months ago. three months ago what do you think? does it feel like it's getting back to a proper level for you does it feel like it's getting to the point where it's tippy? >> over a roughly similar time

period, about 6% there's enough support given these level of interest rates for current levels of valuations, but assuredly, profits are slowing down we had 12% earnings growth in q4 it will be a stretch to get even that much in -- >> profit growth is slowing down absolutely >> want to thank you both for coming in. >> also, a reminder for you, cnbc will have full coverage of today's fed events and chairman jay powell's news conference starting at 2:00 p.m. eastern time coming up, ut fall-out in a video game industry after a big announcement from google plus, fedex shares tumbling after the delivery service reported weaker than expected earnings as well as revenue took down its full-year forecast. we'll talk to an analyst about the stock performance in just a ayunminutes. st ted you've watching "squawk box" on cnbc

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welcome back to "squawk box. let's take a look at how we're setting up for this wednesday session. we are looking aat loy lower open ever so slightly lower -- everybody. s&p 500. dow jones looking to lose 12 at the open nasdaq holding on to a two-point

gain here. e-cigarette maker jule is based in san francisco, and lawmakers there are not thrilled about it they don't like that fact. they kind of like to chase them out. shares of altrea dipped on the news and are down slightly in the premarket. >> currently jule does occupy city-owned property. they would be grabbed fathered in >> they don't like what they're doing. >> the reason -- >> yeah. >> they don't like what jewel is doing. they've seen the fda crackdown and the whied that there's more teens vaping and teens sploeking cigarettes >> 100%. >> that's kind of what's spurred the entire thing >> there's a report that altrea, that scott gottlieb, the head of the fda, had a difficult meeting according to sources cited by bloomberg and jule executives.

to san francisco >> all down hill the nanny state, obviously that's -- i don't like e-cigarettes i don't. i mean, to help people quit is one thing, but is you have a whole new generation -- >> it's proven that it does help cessation. >> san francisco has some other things >>ist also proven that teens like the things that come through it, and it's marketed towards teens. google is shaking up the tech giant launch it stadia. it will be a netflix type service for video games. one of the biggest winners, amd, that will power the platform this is on top of a gain in jed's session more than 6% check outle few-out in the gaming sector. you talk about comparisons to

net flex and you are worried about displacement within an industry in terms of distribution and content take to an activision, plifrd. we saw a lot of the reaction this is something to continue to watch because if this paradigm of netflix applies to this industry, that's a lot of shake-up that's a lot of displacement in terms of the current players zbriefrmgts a big miss for fedex. shares of the delivery giant taking a pretty big hit. we're going to break down the results next as we head to break, here's a quick check on what's happening with the european markets. you can see you don't even have to look at the numbers it's red really only germany is at a big move we'll be right back. at&t provides edge-to-edge intelligence, covering virtually every part of your retail business. so that if your customer needs shoes, & he's got wide feet. & with edge-to-edge intelligence you've got

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fedex reporting disappointing quarterly results missing on both the top and bottom lines the company also cut its full-year guidance slowing global trade in an exclusive interrue on "mad money," fred smith said he's optimistic about a trade deal with china. >> we are optimistic that there will be an agreement between china and the united states because we know both countries' economies extremely well among the best, i think, of any company in the world and there's a lot of pressure on the chinese economy. don't forget that. >> joining us now to talk about what's ahead for fedex, a senior research analyst at deutsche bank i mean, how long is this china issue been out there

did you miss on your estimates is the company using this to -- as an excuse because there's some shortfalls elsewhere? what do you think? >> yeah. the quarter wasn't great for sure >> why didn't the analysts -- the analysts -- they wouldn't have missed if the -- or fedex -- they don't give a lot of guidance, right >> here's why they missed. they made an acquisition several years ago. a year after closing that acquisition, they were hit with an unprecedented cyberattack tnt express brought down every single computer globally for tnt. so they were on path to grow profits by $1.2 billion over three years. that's going to be more like $150 million as a result of the cyberattack. fred smith is the godfather of

transportation logistics >> in a good way. >> exactly i think there's a lot of questions around z their ability. and i think that's fair. the signal, the noise, what you find is a lot of the misses are explainable and hopefully they can right this ship again. >> is it -- i've got viewers going crazy that it's purely amazon taking business away. melissa pointed out they're frenemies. but is amazon starting to do what fedex does? >> that would be great, by the way. first of all, i think it's important to separate fact from fiction. with that being said, the last mile which is the most expensive thing they can do is park in front of your house.

if amazon still wants to do that, more power to them that's great for fedex >> how much is it for u.p.s. so the largest customer u.p.s. is 7% of their sales it's probably safe to assume that amazon's in that neighborhood >> all right so -- go ahead >> for fedex though, we were just talking about management and you're saying fred smith is the godfather. at this point, when you take down your items two times in three months, is it a problem with the company's visibility? things are sho shaky right now, so changing the slowdown is much greater than we thought, we don't have good visibility >> yeah. when you're delivering 14.5 million packages per day, it's difficult to keep track of all the moving parts on aday die bases. i'm not making excuses -- >> two times in three months is a lot. >> you won't find an analyst more disappointed with the results over the last six months however, when you look at what's going on with the tnt

acquisition, and the ground investments they're making to make it more profitable, these are investments that are acquired albeit for the long-term benefit. >> at the same time, is there something wrong with the stock in that its record high was in january of 2018 with hitting the record high later that fall. and now with the s&p 500 almost 4% away. >> fred made a statement on the call saying earnings per share compounded at 17% over the last several years. the problem is cash flow has been negative. we think they're going to have more capex discipline over the next couple years. first time this year we think that's going to be increasing and free cash flow turns positive on an increasing basis, it's hard to basically say -- >> do you still view it as a pure transportation stock? i mean, like, can you call it a bellwether or is it not? >> too company specific right now.

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will spring bring profits to

your portfolio we'll discuss as warmer days approach the sunshine state versus the big apple. businesses and millionaires flocking to florida because of the salt tax rick scott joins us to discuss and the $430 million man is the biggest sports contract in sports history really a home run for baseball we'll talk about that and mike trout's record-setting deal 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, everybody welcome back to "squawk box" here on cnbc i'm becky quick will joe kernen and melissa lee. our guest host today is lee shepardson

are we going to hear any big surprises from the fed today >> probably not. >> good thing you're here for two hours to talk about it then. you're going to see now that things are quite a bit weaker than when we started an hour ago. and the nasdaq down by less than a point. >> you were sincere, right that you're glad -- >> i was kidding >> you were being sarcastic. i liked it >> i actually am glad he's here. because i have a lot to talk about with him >> the way the conversation went was great. you fill out a bracket hopefully you have something -- >> to talk about >> yeah. we will have other things to talk about but -- >> what happened to fedex, we can talk about that -- >> we can talk about that. >> there's so much to talk about. two hours' worth at least. >> yeah. hopefully. here's what else is making he headlines at this hour the fed meeting today. no surprises apparently

expected that will be followed by jerome powell's news conference more on the impact in a moment bmw says it expects profit to fall by more than 10% this year bmw says its technology costs have jumped and that currency issues are also hitting the bottom line. it is announcing a 13.6 billion dollar program this is why the dax is seeing a decline of more than a percent this morning ubs says the first quarter environment was one of the worst in recent history. that is from ubs chief executive sergio armatti speaking in zurich the bank is cutting an additional $300 million from 2019 costs all right. day two of the fed meeting and there has been some discussion about the fed cutting rates in the future so what happens to the markets after the first cut of a rate hike cycle mike santoli joins us with more on this. what does happen >> well, what happens after and

is typically a wide variation in this, there's a reason you say don't fight it what happens before the first rate hike of a cycle in other words what are the cycles they would be responding to in the first of a cycle that is a little bit of a tough sled for the markets right? on average if you look back on typical fed cycles, davis research says the market is -- the dow is typically down about 8% in the six months before the has eased for the first time again, wide variation. the last couple of times which would have been 2007 and 2001, you were in or close to a recession at that point. but there are these other examples where there was a soft

landing. 1 1995 is the magical year everyone wants to point to then backed away quickly in 1995 and took its foot off the brake. gdp actually skrabed near zero at least on first report back then and you had a little bit of a scare. before the fed does anything >> the fed is usually after the fact >> it's responding to something. right? and i think that is pretty much the lesson right here. and that's why i think -- really, i don't think anyone is actively hoping we get to the moment when the fed is easing. >> like, let's not cross our fingers. >> but if you believe in the average moves, we should be declining at this point in the stock market anticipating that cut later this year. >> if you think it's going to happen later this year again, by the way, in september 2007, the market hadn't really struggled that much to that

point. after the first cut went up to make a new all-time high in the next month or so >> stick around, mike. let's bring in a couple more voices joining us for that is kathy jones at schwab center and our guest host this morning ian sheppard you don't expect surprises kathy, do you? >> no. i think we're with the consensus here but i think the dot plot will be interesting to see what the dispersion of the dots is going forward. i think it'll be interesting to see if we see the long-run expectations come down and of course a summary of economic projections will be interesting as well and the press conference could be interesting. i hope powell doesn't say patient 25 times, but he might >> if there was a surprise, even if it's low probability, what should we be on the lookout for? >> if they looked for cross

currents and head winds. he's been fixated on the brexit risk, china's slowdown, the risk back in january, the government shutdown it would be interesting to me if he were to pull back and say behind this stuff, things are going pretty well. markets aren't expecting that. they're expecting to focus on the currents again. >> that would match up to what we're seeing in short-term of the data >> manufacturing is definitely struggling no question about that and the consumer i don't think is struggling but transitioning. so we're seeing a bit of a slow down as well i don't think those things are very bad i'd be surprised if powell were to emphasize that. but we've still got to worry about cross currents. >> we talked to another economist in the last hour who said the slow down's real. he thinks we're coming out of that it's the government shutdown for starters and then the tariffs. do tariffs create a -- are they a continuing problem or if we don't see higher tariffs is this

a one-off effect >> what we don't want to see is the trade talks going down or tariffs going up that would be horrible that's not what i'm expecting. but the fed of course can't get into the business of predicting political events at least not in public anyway. that's a game they don't want to be in. >> interesting to consider here, one year ago what was the conversation around the fed. are they going to be around the curve? are they going to overheat you have to be careful about projecting and say here's where the fed's going to be at that moment can't things change quickly? >> of course they can, but i think the big head wind for the fed is a slowdown globally and particularly after the european central bank announced they're going to issue more loans, that means they're in easing mode again. and we've already got a record widespread between u.s. short-term rates and those in europe how can they -- it'd be unreasonable for them to think about or talk about tightening

further when you've got the other major central banks trying to go in the other drerks. so it doesn't make any sense for me to think we're reversing course here any time soon. >> bank of america merrill lynch fund survey yesterday, one-third of investors saw the china slowdown as the top concern. their biggest concern when it comes to investing and that replaced trade concerns which had been the leading concern for the past nine months how concerning is the importing of additional slowdown from overseas to you? >> sure. i mean, what's happening, the china slowdown in the trade talks are sort of intertwined. you can't separate one from the other. but as china slows down, that hurts europe and the rest of the world. so again, another reason for the fed to sit tight at least for the time being to see how this whole picture plays out. >> are there any scenarios for a fed stopping, raising rates,

doing nothing for awhile and then picking back up and hiking again? >> there are i think that the very long kind of status quo sections was the mid-2000s if you think about it. when did the fed stop hiking before it would ease it was more than a year. in 2006 you stopped. >> i'd probably be in that camp of wage increases. if you stay tight and everything else, why couldn't they? i can't believe the next is going to be down >> that makes a lot of sense. >> a lot of people would like that so you have richard fisher still saying we have no ammo if the average easing cycle is like three points, you can't go -- >> no. the averages are out the window at this point. although to your point, 2015, right? fed hikes in december 2015 the market didn't love it. it was a little bit controversial. it was a close call. didn't do anything for a year. >> don't we all really hope the next move is eventually up >> yeah. >> then it resumed up,

obviously. >> i mean, if we're -- if you could tell me right now the next move is definitely down, if i had stocks i'd sell them, i think. >> what's your forecast now for the next hike? >> they're going to wait until the fall and then i think they're going to hike. as joe says, wages are accelerating that's what's going on in the background we've got this focus on china and the rest of it china's stimulating like crazy i think there will be a trade deal i don't think there'll be a brexit crash out we'll be focusing on the fundamentals which will be driven by the labor market so they're going to leave a dot in the dot plot. and the reason is worry about that later in the year >> speaking of dot plots, how much do you think the fed could plabt the seed they're going to move away from dot plots do you address the compensation of the balance sheet in terms of the duration there >> actually the balance sheet

could be interesting i think they want to move away from the dot plot. i think they've made that pretty clear. they just don't know how to do it or haven't communicated how to do it or communicate their expectations of the dot plot now. although the balance sheet could be interesting the fixed income, are they going to shorten it, how fast is it going to be, how slow is it going to be? where are they going to end up we think they'll end up around 3 trillion or so on the balance sheet. and a trillion or so on reserves i think that's what the market is expecting >> the market doesn't know how to chart all this. we just don't know how much effect it has. >> there've been, you know, a million ph.d. studies on this and there probably will be for hundreds of years to come. but we figure -- the fed figures they increase the balance sheet probably subtracted 1% so if you undo that gradually,

it should lift rates but calculating that with all the other factors that go into it, it's almost impossible plus you still have a negative term premium none of that had any effect. >> on that note, we're going to leave it there great to see you ian shepherdson is sticking around with us up next, could a home run contract for mike trout be a black eye for baseball his record-setting $430 million deal is the biggest in sports history but it actually could have been bigger it does come with some controversy. compared to ceo compensation, this guy is doing pretty well. we'll discuss this in just a bit. and later, purdue university president mitch daniels joins us to discuss a bill proposed by congress with the college scandal. a lot of people like purdue in the march madness. stay tuned you're watching "squawk box" on cnbc - i think the best company's succeed as a team

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food company reported quarterly profit of 83 cents a share consensus estimate was just 69 cents. up almost 6% company also projecting full-year earnings to be flat up 1% previously it had forecast full year profit to be flat to down 3%. i said who would notice. i would miss -- >> nickelodeon >> spongebob and patrick and all those people >> krabby? >> yeah. >> mr. krabkrabs but yeah mtv, does people still -- >> it's had a resurgence because it's bringing back a lot of the big shows that -- >> real world thing?

>> yeah. they brought back "jersey shore" and things like that those have seen some big ratings. >> okay. new cast, i guess, right >> no. they brought back -- >> the same people are back? whoa well, i'm going to have to check that out or not when we come back, how does $430 million over 12 years sound to you it is the contract heard round the world. we're going to talk the angels signing mike trout to the biggest deal in sports history and what it means after this break. and a programming note, jamie dimon sitting down with kayla tausche this afternoon following the greater washington partnership luncheon in washington, d.c., today. that interview is at 1:30 p.m. eastern time meantime, check out the futures at this hour the nasdaq off by six and the s&p off by 3.5 "squawk box" will be right back.

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news just in from europe, the eu has imposed a nearly $1.7 billion fine on google for abusing the dominance of its search engine. that fine comes from the last of three sets of formal charges against the alphabet unit. google will not have to take any specific actions because it's already changed the practices in these charges. they changed them about three years ago just after the lawsuit was filed by the eu. google had been fined a total of about $7.5 billion from the previous two cases this is the third and final of these situations this wraps up an investigation

that's taken place over about a decade >> you know what i don't blame the eu if you can't beat 'em, you fine 'em. what is the -- we have faang over here? what is the acronym for the five fastest growing start-ups in europe >> wa-wa-wa. >> my producer none. no-n-e >> just out of spite you have fast growing companies so we'll fine you. we don't >> yes i mean, you think it sits well with them? what's the most recent -- i mean, what happened with bmw today? we have tesla here you know is there an apple? is there a netflix give me one. sieme sieme siemens? what is it >> i thought you were going down the route that the eu has a nanny state regulatory -- >> their whole antitrust mentality is about preserving jobs which doesn't allow for

creative destruction >> i agree with you. >> you like to just argue with me and push back and be a devil's advocate, right? >> no. i agree with it. i don't think it's motivated by spite. i think it's motivated by protectionism. >> exactly >> of their labor force. >> so what about what elizabeth warren is kind of suggesting here now with breaking up -- >> she'd be perfect in europe, right? she should run over there. she should what was that? so roger daltry. you don't know who that is okay he was in -- >> tell us, grandpa. >> i just read his autobiography. >> anyway, they ask him what's it going to do to the rock industry he said brexit what are you talking about we were playing music long before there was a eu. so i should miss the eu? it's like missing the mafia, he said it's like being run by fifa. >> oh. >> nice comparison >> i know. i loved it though. i tweeted that i don't want to bash the eu.

but i saw someone yesterday talking about how the uk really could drive if it happens. because they've got long standing relationships they used to be -- every country in the world used to be a colonial property of great britain. it's going to be hard to do trade deals after they leave the eu >> but the question becomes what do you do with ireland >> right i know that's what they're talking about. >> a complicated issue if they can't do trade deals because of not having a hard border with ireland, then that happens. >> you know who's thriving the manufacturers of yellow vest $430 million that's how much the los angeles angels are set to pay star outfielder mike trout over the next 12 years with that deal four of the largest sports karats ever have been signed this off-season and have gone to baseball players how big can these contracts get and what does it mean for the future of major league baseball? patrick risch, director of the

sports business program at washington university is in st. louis. it's good to see you again, patrick. i'm happy for baseball i look at -- you know, i don't know what i'm looking at that makes me think it's in decline, but it is in decline in terms of revenues and everything else things are going great >> things are booming. and i remember roger daltry, by the way, joe don't feel bad they are setting records last year they had roughly $10 billion in revenue the 16th consecutive year that the revenues have grown. and the angels, by the way, aren't hurting either. their revenues last year were roughly $340 million so oddly enough this $36 million per year contract for trout is only roughly about 10% of their payroll. they need to step up and make sure their farm system is strong but baseball is not going to be hurting because of this contract >> i learned a lot this morning getting ready for you about

winter available replacements. >> wins above replacements >> yes >> and is it voodoo or is it real because this guy is off the charts >> no, it's not voodoo bill james who speex at the m.i.t. sports analytics every year, the conference every year in march, this is a true statistic. a very accurate statistic. just to put it in perspective, this means how many wins is a player generating above a average replacement player mike trout through his first seven years -- >> nine. >> but seven full seasons. he's got 65 wins above replacement. that is more than ty cobb. that is more than mickey mantlme getting a deal recently of $330 million. trout is arguably get ahold of

this, underpaid. >> i know. they said it could be $10 million a year per win and it's gone to as high as 15 or something. people are using the "b" word in the not too distant future for someone to sign a contract if it's long enough it could be a billion dollars. or half a billion dollars. some people are saying this was a disappointing number but it's hard to manl. >> let me add this this is an outlier the last two seasons during the baseball free agencies and during the winter, there's been a suppression of salaries because the analytics people are taking over the gm roles and executive roles of baseball. and they would much rather have younger players that are not -- have less than six years of service. they're young, cheap, and durable. you're seeing a lot of these veteran free agents the last two years, guys that are over 30 in this era where the sport is cleaner, are not getting very long contracts and not very

large contracts. so the harpers, the trouts, they are outliers >> but they also seem to be less comfort in being a free agent. a burden at hand with your team. i've always liked that kill me when rose became a philly you know so it's nice to see a guy play his whole career it doesn't make sense a lot of times. but they're doing that more now, why? >> they are. the one thing i'd point out with the three big signings that took place, obviously harper, trout, and machado in san diego with all three teams, their farm systems are really strong. so that means that these teams especially the padres and the phillies that went out and got these new players and brought them in, they're willing to make that investment because they know they have a lot of young, cheap players coming through the farm system they can hopefully match up with the star >> so where's the future for the

mlb? is it streaming? is it regional networks? or where's it going to be generated? i mean, ticket sales are down, right? then you've got these fancy boxes where people pay a lot more and it's a great night out even if it's 1-0 >> that's right. attendance is a little bit down, but ticket prices are higher and there's more luxury seats and premium seats. ticket revenues have been relatively flat. but you hit it on the head it's a combination of -- baseball is mostly a local regional sport where most of the teams, their regional tv deals are the highest rated program in their markets. but they just signed a deal. a $300 million deal with the zone and that's a streaming service. the millennials, the gen-zers, that's how they get it fox, turner, they pay $1.5 billion for baseball annually. they're going to reup those

deals in 2022. i bet they'll go higher because they have to worry about twitter, youtube, and the like >> we had mitch perdue on. i didn't see no problems with washington university with the -- not at this point anyway. one last question. i just -- that was just a throwaway. that's the way you do it with pitchers the win replacement. pitchers is totally a different set of metrics, i guess. it's all defense it has nothing to do with whether they get any hits or anything is it a comparable number? it seems to me there's a lot of squishiness in these things. >> that's your homework assignment go check out how they calculate these numbers. >> i did that this morning and then they take out the ballpark they put that in >> you have to >> it's all kinds of stuff that go in. it's very complicated. >> oh, it's very complicated

the one thing i'll say with pitchers, they are very risky because of injury. pitchers are much more likely to get injured with tommy john and other things that can screw up the mechanics of the top look at clayton kershaw. he's out this year with injury it's just one example. you don't see as big an investment in pitchers for that reason >> it's weird. a pitcher can really -- so this guy wins six or seven or eight, a pitcher can win 20 and it's all him. it's not all him, but it seems like a pitcher can make a bigger difference in one of eight other guys i don't know anyway, i think it's pris interesting. it's good having you on again today, patrick >> thank you. >> did you do that as a joke >> i did not >> so we have the chicken guy coming on? >> when we come back, perdue president mitch daniels will talk to us about the college cheating scandal on the nation's top schools.

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still to come on "squawk box," the college admissions scandal. we will speak to the perdue president mitch dams and the wealth tax debate. we'll speak to rick scott. and the first day of spring happens to be on this fed decision day will theed s ftay the course we'll debate that. "squawk box" will be right back. but which ones target your goals? it's not about quantity. it's about quality. no trendy stuff. i want etfs backed by research. is it built for the long-term? my reputation depends on it. 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.

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welcome back, everybody. house lawmakers are trying to ease the cost of higher education in the wake of the college admissions scandal let's welcome purdue university president mitch daniels. he is currently cochair of the committee for responsible federal budget and governor president daniels, good to have you here today. >> morning >> let's start off talking about the college admissions scandal did it catch you by surprise >> complete surprise we're all floor with some

schools admitting athletes who are phony students but we haven't seen phony athletes admitted trying to become students before yes, it was something i certainly didn't see coming. >> you know, this is something that has really touched a nerve with parents around the country. i hear it talked about just about everywhere and there's a new poll from usa today out that is saying that by more than 3-1 the people they have surveyed are against not only the extreme sort of cheating that we've heard about in this scandal, but just about ways that they think the wealthy and the well connected have advantages when it comes to college admissions what do you think about that >> i think it's justified. of course there are all kinds of preferences going on in college admissions we -- it's pretty obvious that asian students have been excluded at some schools by some sort of covert quota arrangements so -- but i do think in this

case that the reaction is warranted. i think a lot of us share it >> you know, there have been questions that have been raised about legacies, about people whose parents are able to donate money. where do you come down on any of that because a lot of these are things a lot of us knew were happening for a long time. it's a pretty opaque process it's hard for the people on the outside to understand what's happening. how big of a problem do you think it is? >> oh, it depends on the case. i think what's maybe being missed here is this particular incident which is very juicy with celebrities and so forth involved is really more about the parents than the students. the irony is these parents -- i think whether they recognize it or not, they're seeking status for themselves more than success for their children we did some research with the gallup organization here a few years ago. showed pretty conclusively that as one author put it, where you go is not who you'll be.

it's much more about whether a student applies herself or himself at school, how rigorous that school is which is something we really aspire to at purdue and what i think i see increasingly is families seeking out value finally in higher ed not believing that a big sticker price connotes quality not just looking for a name plate that may reflect past -- record numbers in our case a lot of them coming from families that in a different time might have sought out one of these now very high priced private schools. >> i know this is something you've written about yourself in your annual letters. just the idea that state schools in the last decade or so have taken on a lot more students, a lot more out of state -- they were getting from state budgets

that were shut down during the great recession. how big of an issue is that? what do you do with it is it okay if a state school has 25% of their students coming in from either out of state or internationally when they're getting funds from out of state? >> i think it's okay it has to be kept in balance like all things. we've dialed down somewhat the number of international students at our school. although we're still a pretty diverse place. i think it enriches the experience for the domestic students who are here in addition to -- by the way, this is a $40 billion export industry for the country. because so much of students come in it's also an opportunity to capture talent one in six of the international students, about the same percentage of the out of state students who come to purdue take their first job in indiana it's a brain gain opportunity that i think serves our state.

and i assume other states pretty well so in some reasonable proportion, i think it's an appropriate goal you know, it's certainly not out of whack with the amount of money we are receiving from the state which is 20% or so of our budget >> just to follow up on this quickly, you are one of the few people in this who have taken this on. there are schools that have a lot higher numbers of international students coming in than purdue does it's not to say i'm protectionist or we don't want people coming in, but when i look at state schools versus when i was trying to get into them, how much harder it is to get in thinking my kids could go to my same school i went to. but it's a lot tougher today than it used to be >> i don't know what an ideal percentage will be we brought ours down to a single

digit. i'm pretty comfortable with that it's a lot easier to get in. i should put it the other way. it's hard tore get in to purdue from outside of the state than inside our state hoosier young people still make up a majority of our students. i think it's an proiappropriate. we've held tuition steady for six years. less expensive to go to our school in unadjusted dollars than it was in 2012. and the fact that we do have a healthy amount of students here helps keep those tuitions down >> governor, it's that time. we could meet really early we could meet really early here. cincinnati and -- >> is this another cincinnati thing? >> yeah. we could meet. the only thing is you're a number three seed. and cincy is a number seven. so i need, like, twice as much

of a payoff. now, last time did you -- it was montgomery and ribs or was it skyline chili? do you have anything worth sending me from where you are if i win? >> oh, yeah. >> you sure? okay >> oh. yeah i'll send you one of america's finest tenderloins of course i don't expect to have to pay off. >> purdue's been hot they're peaking. let >> we are rivals but in all honesty i root for them except for two times a year. >> he has to he's former governor >> you're number three plus you have the greatest sports movie called "hoosiers. so you should have to pay more for that but let's watch, okay. because it could happen? cincinnati does have a couple of tough -- you know, they'd have to beat tennessee. you might have to beat villanova which is doable, i think

but we could meet really early so we'll have you back on. it's a deal? >> if we do, i'll resist the urge to gloat. >> okay. all right. how about if i win, any of my relatives get to come into purdue no questions asked. will that work for you >> well, we said it's -- you know, we have to so-called holistic review. >> i like what you said. crappy students used to use athletics to get in. i never even rowed and i was going in that was a good line >> quickly, there is a new bill being introduced -- bipartisan bill who are talking about income share agreements with the universities where students would be allowed to repay tuition with a percentage of their future earnings. is that a good idea? >> it's a great idea we have the largest program right now in the country at purdue it allows our students to leave with no debt or much less debt

than they would have the risk is on the investor, not the student. and so yes, a bill that clarifies some of the rules that have made some other schools cautious would be great. we've got 20 or 30 schools coming here in about a month who are curious about this and would like to open up their own programs and yes, congress could help just by making sure that the boundaries are well understood >> governor daniels, thank you for your time. we appreciate it >> any time. all right. coming up, florida -- we'll talk anyway, florida has been taking a deeper bite out of the big apple when it comes to luring businesses we're even trying to do more here in new york with new taxes. anyway, we're going to speak to former governor now florida senator rick scott who says come on down. the water's fine i'll bet he does the futures right now indicated down about 20 points we'll be right back. people know aflac... aflac! ...but not what they do. so we're answering their questions. aflac is auto insurance, right? no.

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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. now there are growing signs that high earners and companies may be headed to florida along with their tax revenues. robert gravrng joins us with the story. >> this is a tale of two tax regimes. in new york with a revenue shortfall. and low tax florida which is considering a tax cut. after bigger than expected win falls. florida expected to finish the fiscal year with $200 million in

extra funds. the governor there talking about cutting property and sales taxes. then you have new york which has a $2.3 billion shortfall andrew cuomo responding with talk about a new pied-a-terre tax and of course that would fix the budget new york suffered a lot from last year's stock market fall in december but the new federal tax law that limits those state and local deductions could accelerate high tax to low tax states. growing at 2.8% in the latest period florida growing a point faster at 3.8%. new york's population was flat new york collected an average $9,000 per person in 2017. twice as muched as florida the tax foundation announced for

each state, that's how long you have to work to pay all your federal state and local taxes. florida's tax freedom day actually before tax day ranked last in the country. tough work until may 14th until you paid all your taxes. >> i'm surprised it's only a month difference seriously. >> well, at the top rate that's the average at the top rate, you're talking about july or august. >> god almighty. let's bring in -- chortling, laughing let's bring in a lawmaker with us on set. florida senator rick scott you were governor. >> it didn't just happen yesterday. >> as far as i can tell, senators do absolutely nothing it had to be when you were a governor when something positive was going on, right? >> so in eight years, we cut taxes almost a hundred times i just finished in january paid off a third of the state debt about 400,000 people are moving to florida a year.

and we cut taxes every year. i was so appreciative of cuomo and malloy and wolf. just raise your taxes. the best is raise your taxes on the expensive homes. that's the best. i hope new york hurries up and does that so we get another 5,000 people to move to florida. >> we had one of the gentlemen on, robert one of the state senators. he wants to fix the subways with the extra money they get from the taxes. with the pied-a-terre. what if you have less revenue and less than what you started with because of the taxes? and his eyes just glaze over like, they have no -- they don't connect dots right? >> it's good for us. it's good for florida. >> but new york is a big donor state. they give a lot more to the federal government than they receive. florida actually receives more from the federal government than it puts in so there is that national imambulani imbalance. >> we pay 30% more in

transportation fees and get 30% less we get half as much money per capita for medicaid recipients as new york gets there's a program for low income pool for our hospitals florida gets less than $300 million a year we have more people living in florida. more people on medicaid in florida. and new york gets $1.7 billion >> i have heard what robert said repeatedly is that an accurate statistic or not. >> i can tell you the things i looked at. medicaid as an example it doesn't matter whether you expand it or not we get paid about half of what new york gets per person for medicaid half and puerto rico gets even less >> but does florida take even more than it pays overall? >> i've never seen those numbers. i can tell you in transportation fees, we get paid less than -- way less than what we put up i'm fighting right now just to get money back to the fed portion as governor. they wouldn't put up for their ports. >> i saw a calculation

you put in 315 per year and you get back 350 from the federal government again, it intends how you count medicaid >> probably the difference would be medicare. that would probably be the -- medicare would be the big difference >> you described a test tube experiment for high taxes versus lower taxes. you laid out what the results are. seems clear to me. why did the governor -- why did de san toes almost lose? why did ted cruz almost lose to basically a guy who's so far left what i'm getting at is there is a -- some type of move in certain sectors of our population towards ignoring exactly what you just said with the test tube experiment ignoring venezuela and a move towards socialism. is it going to take hold and are we going to see some of these people eventually elected and are we going to move that way as a country in. >> look, florida is a 50/50

state. tough go sell it socialism scares the daylights out of me. i grew up in a poor family i got to go build businesses and do all these things in business because you can do it in america. but we're watching in venezuela right now, look at these poor kids starving to death but you've got to sell your ideas. free sounds really good. free everything sounds good. free health care for everybody you just won't get any right? so i was with some doctors yesterday. they were talking about people coming to see them from other countries because they had free health care there. they just couldn't get in to see a doctor these are hard >> but what you say didn't work everywhere else. canada tried the same thing. massive deregulation and massive tax cuts it was a total disaster. it's a zero sum game if we're eventually all down to zero. so it's not something that everybody can do i appreciate it's worked for florida. but it's not really a national policy prescription. >> i mean, you can't just -- it's not just tax policy you've got to do other things.

so what i did is looked at florida like a business. all right? when i walked in, the four years we lost 832,000 jobs home prices dropped 50%. so play to your strengths. investing in your ports. we have 15 sea ports the panama canal was being finished invested $2 million a year in ports. number two, invest in tourism. a place like that, place to your strengths. >> we've got to run. >> thank you "squawk box" will be right back. this is loma linda, a place with one of the highest life expectancies

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the fed gets set to weigh in investors watching today's central bank meeting as trade tensions and fears of a global slowdown spook the markets big tech crackdown the sector taking fire from all sides. is a breakup inevitable? and president trump versus general motors he's heading to ohio today after ripping the automaker for closing a factory in lordstown 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 squawk square i'm joe kernen along with becky quick and melissa lee. andrew is off today. that's why i can say squawk square and not get flack from anyone >> except from me. >> you don't like squawk square? >> "fast money" is also broadcast from here. and we were here longer than you. >> okay. "fast money" square. >> thank you >> it's not times square is all i care about >> okay. >> "wall street journal" editorial board square ian shepherdson at pantheon is here as well we're talking about the fed. i've had this discussion with our producer i always thought that the fed was totally more important than the trade in china situation six months ago now i think maybe the fed, we feel like they're not as much

part of what dictates the day-to-day now it is china. more calling the tune. >> right now because we got two big things happening with china. china's having a nasty slowdown. and we got the trade war on top which has made it all much worse. so the two things together are like sucking all the oxygen out of the room. >> then we go back to china, china, china it's not permanent, but it's a big deal right now >> and we also decided that we should all hope that the next move is up in interest rates but it's like that old saying, make me chased just not yet >> it'd be like three or four years from now >> september it's not so long >> let's take a look at the futures. they're up 15 points now on the dow. you know what i watch? i always check to see if boeing's doing anything. that's been dictating what's happening in the dow recently. can't tell right now but the s&p.

boeing now is up it's up at least accounting for that 15-point gain it's up about a dollar and a half premarket the nasdaq up four s&p is actually down a little bit it's more or less unchanged. and there's the 10-year which is back at exactly 2.600% it might change. let's just wait. >> crickets? >> maybe now now. meantime, here are the stories investors will be talking about today. the eu imposing a nearly $1.7 billion fine on google for abusing the dominance of its search engine. google won't have to take any specific actions because it's already changed the practices in the charges. they had already been fined about $7.5 billion in two previous cases this is the third and final in a decade-long investigation.

u.s. trade representative robert lighthizer and treasury secretary steven mnuchin plan to head to china next week. then vice premier lu will come in april after starting the morning higher, both the dow and s&p ended a little bit lorer yesterday with the dow down about 26 points. as the investigation into last weekend's boeing jet liner crash ramps up, we are learning more about what happened in the final moments before a boeing lion airplane went down in indonesia. the lion air pilots quickly flipped through the plane's manual to try to figure out why the jet was lurching downwards all 189 people on board that plane were killed. the fed wrapping up a two-day meeting and markets bracing for the releases of

2019 steve liesman joins us now with a look at what the policy of patience might look like hi, steve. >> hey, melissa. to the average investor, the policy of patience means no rate hikes. fed watchers are going to be listening today for something more detailed. how is the fed's reaction function changed here? that is, what is the new economic outlook how do fed officials think about resuming their hikes based on the data are they more tolerant of inflation, more tolerant of growth they're going to signal an extended hold on rates at least for several months announce the end of the balance sheet. maybe q3, maybe q4 tell us about what's going to be in the mix will it go to more shorter data registries they're at 2.3 and the average forecasts will decline to one or no hikes this year, perhaps. that's pretty much what the market knows already what we don't know under the new patient policy is what scenarios

bring the fed back into play if the data continue to come in as we expect, we see the fed raising rates in 2019. possibly as soon as the june meeting. goldman says our own forecast is for a hike in december comments like that a 35% to 50% chance to say the fed's next move is a rate cut. what happens today that's easy. gaming where the fed goes from here and more important, why it goes there that's the work we're going to try to do today. >> for more on the fed and whether it can stay patient, we are joined by art laffer he's now laffer associates founder and chairman and the coauthor of "trumponomics. and also nathan sheets ian bremmer is with us as well

look, we're going to see the fed changing the dot plot looking to raise rates once this year you're going to see other people anticipating the next move is going to be a cut. then the third camp is they do nothing for awhile and just leave things steady. which is right which do you think is the most accurate view of what happens next >> the fed is going to be patient. the fed is going to define what patience means largely through its dot plot my expectation is that the probabilities are weighting slightly towards no rate hikes this year. but in their last forecast, the fed indicated two. are they comfortable moving from two rate hikes down to zero? but i think that's what we'll learn. i lean toward them just saying we're going to wait through 2019 but maybe it's one but the key point, it's a lot less than in december. the fed is going to undercore

it's got to see an economic improvement. it's got to see the global economy in china looking better. and importantly it's got to see some exuberance in inflation the incoming inflation data have moved in the opposite direction. this is going to be a very patient fed. >> art, what do you think the fed will do and what do you think they should do >> i think what he just said was perfectly correct. i mean, the fed's going to be more patient sther not the only policy maker in america there are fiscal policies, regulatory policy, trade policy. as part of a team of policy makers, i think it makes perfect sense for them to be patient and to slow down the process you know, they're going to raise rates at some time but you know, there's no rush. i think powell is doing a great job on responding to the data. >> so you think any talk of a potential rate cut coming next is really premature?

>> i think it's premature today. i think the economy, if anything, is going to be stronger if the fed believes it would be that would not indicate a rate cut at all if anything, we'll have a rate increase maybe in 2020 small ones just letting it come up to normal market rates. and i think raising rates back up is what should be done. but you could be done slowly and gradually and with patience. >> yesterday we heard from fedex. thigh ci they cited a lot of reasons. but much was blamed on weakness around the globe how much of it is washing up on our shores right now >> the global economy is soft right now. when i look at the global data, trade and other indicators, they give me pause. they give me concern now, we know that the chinese are stimulating. and putting credit into their

economy. moving toward fiscal stimulus. we haven't seen that in their data we've got to see china start to pick up. it's rebalanced. and the global economy will be off and running again. but all of that hasn't happened. and i think the fed is likely, you know, if we have to define how long will they be patient? they're going to be patient until they see some strengthening in the global economy. and i don't think we're likely to have definitive evidence of that until the second half of the year >> ian very quickly, you are in the camp that thinks we will still see a hike patient, but not the same amount of patience we're hearing from art especially >> it is about the china turnaround when we see the china numbers bottoming out, they'll get really excited and then the fed will say hold

on a minute. we need to focus >> we're at where things are looking better and then the fed re-evaluates its stance again >> exactly this time the difference is by the time that happens, wage will be near 3% or businesses try to pass it on. either way, it's tricky for the stock market the summer could be hot for the market and quite difficult >> these two guys on set, nathan's nodding of what ethan is saying. the fed is held hostage at this point to the markets the market is a driving force behind the fed's moves and communications do you agree >> yeah. i think the fed really is holding off until that i think joe was completely correct at the beginning of the conversation china is the play in town. that's what we're all warking. the vice chairman coming back here i think if we get a china deal,

all bets will be off i think we'll have a very good stock market and also a good economy. i'm thinking the economy's going to be growing quite a bit faster than 2.3% over this year and if that starts happening, then the fed will once again get back into the fray >> thanks for joining us good to see both of you. coming up, does big tech have any left? coming in the left and right, unchecked power, political bias, and unpoliced extremist content. can the tech giant survive as is we're going discuss whathe t recent backlash means for investors. stay tuned you're watching "squawk box" on cnbc call 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

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welcome back to facebook, "squawk box," wherever we are. "squawk box. facebook making changes on the users. julia boorstin joins us with more on that story >> good morning to you that's right facebook is making a major change to the targeting that's central to its business model to prevent illegal discrimination facebook will prevent advertisers in housing, credit, and employment to target people

based on gender, race, or zip code like people in african-american or asian-american groups for these types of ads this ad targeting overhaul is part of facebook's settlement with the aclu and other civil rights groups. there is still a pending complaint in urban development now, this settlement and moving forward comes as facebook draws from a range of attack asked facebook along with twitter and alphabet and microsoft to brief lawmakers on how the new zealand mosque shooting was live streamed and shared on other platforms. called on the ftc to investigate facebook president trump criticizing facebook for bias after his social media director was temporarily banned from the platform

>> things are happening, names are taken off, people aren't getting through. you've heard the same complaints it seems to be if they're conservative, if they're republicans, if they're in a certain group, there's discrimination so something's happening with those groups of folks that are running facebook and google and twitter. and i do think we have to get to the bottom of it >> this is hardly the first time we've heard acquisitions of bias and of course there are also calls to break up facebook >> it's a never ending list of criticism. thank you. let's talk more about what this all means. joining us gene munster of loup jentures and ed lee, cnbc contributors ed, i'll kick it over to you we didn't mention the states

attorney suie ining all of them. is this the moment in time where we say we don't know what will be done, but something here in the united states will be done >> so there's a lot of political will on the left and right for different reasons. you know, facebook, google, these guys are kind of screwing up, right? so it's the perfect time if you want to find ways for regulation or new policies. now is the time to do it i think the difficulty in this political calculus is with 2020 coming up, everyone watches everyone huff and puff around it they are hard to get through i think it's going to be a talking point when elizabeth warren talks about -- but it has forced the 2020 field closer to her side in erm it is of at least the discussion, around the debate around it in terms of what ends up happening, let mem fight it out. >> there seems to be a disparity going on in terms of what the political will might be on both sides of the aisle and what the public actually wants.

you would think they're perfectly aligned, but they're not. the political will is to do something. but in terms of what people want, if they voted with their feet, you're not seeing it when it comes to facebook in terms of losing advertising revenue because of these issues. >> that's been the thing that's been particularly surprising to me over the past year is that the engagement numbers for facebook continue to be resilient. i suspect over the next couple of years that facebook in particular will wane but that has been surprising you haven't seen users i think this gets back to an important point about what's going on and i want to separate some of the problems with social media versus the theater and politics. i think there are two very different things that get co-mingled here. there are problems with social media whether it be what's happened recently, whether it's hate speech. our self-esteem tends to be lower. all of those things can have

regulation in erm it is of how data shares, even time spent on the platform but as far as the political theater on this and this opportunity that is talked about potentially breaking up these companies, this simply is not going to happen. and the reason is if the start is not above political -- that came out in 1890 and so i suspect -- around big tech i think it will be subtle at best >> i'm glad you broke that down. most people in terms of the effort or the campaign to break big tech up, that's the league likely of where politicians would be successful. in terms of the areas where they could be the most successful, what should investors care about? something about the algorithm

which pushes more extreme videos who are searching out those videos is it the ad targeting that facebook has the settlement in terms of credit and housing, et cetera in terms of what is the most likely and impactful to the businesses >> there's two basic factors that can be at play here one is in terms of letting users know, basically forcing these companies to let users know how their data is being used to your point, the risk is people step back and say i don't want this. that would be very bad for social media but that's probably the primary risk we probably will see some more mandated awareness about how the platform's used. and the second is around targeting. if they are more selective, the government weighs in of how data can be used. news today from facebook is a big deal what advertisers love about facebook is two things reach is still unprecedented

and separately has the ability to target that reach and if that gets somehow diluted, that potentially could weigh on the profitability of these companies. >> the ftc is considering a multi-billion-dollar fine for consumer data. and the way it could have violated its commitment to the ftc. as we've seen in the eu, more out of the regulations, there is pressure to knock some more privacy rules here especially ahead of 2020 a strict privacy rule. the real question is do consumers care about privacy and also how much does this cost of being sensitive to the data privacy issues >> ed, we talk about how there's people on the right and the left that doesn't mean anything is going to get passed. because they have different

reasons they're mad. >> they have different reasons there's concern about censorship and they don't like a lot of these voices so they start trying to tamp them down these guys are too big, too powerful all this talk about regulations and what's going to happen if you look at facebook in particular, they've moved in this direction of sort of semiprivacy where they're trying to link up messaging services. i think what they're seeing is they're seeing how the internet has changed. my 14-year-old daughter spends most of her time on the internet dm'ing people. she's communicating on private messages i think apple imessage is a huge threat to facebook i think zuckerberg has seen that for a long time. i think that's what it's moving towards. there's going to be less data, less advertising happening as a result of that so he's a little bit of a step ahead. but it's not necessarily for privacy reasons. >> the analyst on the other day

that was negative on facebook was talking about the value of that business isn't nearly what it used to be for the prior business isn't that something for facebook >> it is something for facebook. i think that's going to be the challenge going forward. the structure of their business changes in the next 18 to 24 months what am i buying into? what can i anticipate? >> that can be a question for all investors across all of these platforms. we've got to leave it there. thank you, all coming up, politics and profits in the u.s. auto industry gm planning to shut down a factory in the all-important swing state ohio great state of ohio. but the president is blasting the decision we want to know if car buyers and gm shareholders care where the company builds its cars. stay tuned you're watching "squawk x"n cn bcbo o

still to come this morning, a live report from lordstown, ohio the site of a general motors plant that's the focus of president trump's twitter anger this week. gm is planning to shut down the factory for good trump says he wants it open or sold fast. we will talk about whether car buyers really care u e tcngsqun yoarwahi "uawk box" on cnbc

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♪ hold on, i'm comin' ♪ hold on ♪ don't you worry, i'm comin' ♪ here i come

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on cnbc. we are live from the nasdaq market site in times square. let's talk about some of the stories investors will be talking about today. first up shares of general mills are rallying in the premarket trading. then food producer beat estimates on both the top and bottom lines for its latest quarter. results were helped by higher prices general mills also improved their forecast mortgage applications rose by 1.6% last week according to new figures from the mortgage bankers association. that was large by because of an increase in refinancing activity the average 30-year mortgage rate fell by nine basis points that's a relatively large amount in one week. shares of sony are under pressure this morning. jeffries downgrading it. jeffries is concerned about a possible peak in related profits as well as sony's inability to leave the market ahead of his latest visit in

ohio, president trump is loudly calling for the reopening of a shuttered general motors factory there. frank holland is in the buckeye state joining us with more good morning >> reporter: good morning, melissa. this is our second day in lordstown, ohio, where people are holding out hope this will remain open. the president who will be in ohio today visiting inin ining k manufacturing site tweeted about this factory over the weekend. i want jobs to stay in the usa and lordstown opened or sold to a company who will open it up fast it closed on march 6th although it could open back up in december gm made the decision as part of an effort to focus more on trucks and suvs. chevy cruze sales in the u.s. have fallen by more than half

over the past five years now hundreds are in limbo. many here say it is especially heart breaking after 2017 when the president said these jobs would come back. >> i don't think he lied to us i don't. i just don't think he fully understands the situation. it's just not as simple as calling someone out on twitter that he needs to, you know, be serious. >> i think it's a little too late i think he should have been on the bandwagon when they first -- when they cut the other shifts and when they announced they were going to cut the shift. >> i feel like it's the company's fault. not the president's fault. >> reporter: and the average salary here at lordstown was about $60,000 per year the closure of this plant's expected to have a $3 billion negative impact thisyear melissa, fwook you >> all right thank you, frank holland

joining us now to talk about president trump's scrutiny of gm and how much investors care where the company's cars are built is fred ingrasia we had a gentleman on yesterday. i think bob was saying that everything we're trying to do for manufacturers here, we haven't fixed the dollar strength and the labor disparity between the united states and other places when we haven't fixed that, it's kind of an uphill battle to succeed. because you just heard $60,000 a year how do you match -- equate that to what you can get cars built for other places it's tough then i'm going to follow up with it's gm's fault. if they were building suvs there, it could support, right it was their idea to build that car no one wants >> well, joe remember where we were a decade ago. almost exactly a decade ago.

general motors declared bankruptcy it went into bankruptcy because it kept factories open it didn't need building cars that people didn't want. no one in this country, not even the president wants to go back there. gm's also in the process of sort of downsizing its operations around the world, really got out of europe, india, russia in order to put more money into futuristic things. driverless cars, electric vehicles, et cetera, et cetera that capital's got to come from somewhere. but, you know, look. this factory might reopen with a new vehicle. we don't know that yet another possibility here and i can't kwfigure out why the relationship wouldn't work here. during the last presidential campaign potholes, new jersey transit, all of it. so why couldn't some sort of a public/private partnership be established to get these people who are now building cars that people don't want to buy into

rebuilding infrastructure that this country so desperately needs. >> you point out other companies are moving here and adding the production so that's where the problem comes in for gm pr-wise. we all know they have the same labor problems there must be a way to -- other advantages to building stuff here that overcomes at least the cost of labor in this country, right? >> well, yeah. i mean, this is a pr problem for general motors that's why i think they just need a different approach. suggesting a public/private partnership. instead of just explaining, explaining, explaining why they're doing this there's a rule of thumb in pr that goes like this. if you have to explain, you've already lost so i think gm foods needs to ta

different approach opposed to action on these explanations that doesn't mean this decision is wrong, however. let's be clear about that. >> the other thing with president trump and i understand good intentions and a lot of times we know where good intentions lead. when does it get to the point where he's asking a company almost to do something like over in china where they stay open? you know, where it makes no sense and it doesn't help anyone in the long run. i mean, sometimes things need to be closed down because it's not economically feasible. and, you know, instead of losing 100,000 workers when the whole thing closes down, maybe you downsize a little and only lose 50,000 is he right about this with lordstown or some of the other times where he's weighed in or is he not looking -- is he not looking at the real economics of what needs to be done to run a profitable business? >> well, that's exactly it he's not, joe. i mean, i go back to where we

were a decade ago. gm declared bankruptcy and guess what far more jobs were lost in that bankruptcy and bailout thacn wil be again >> i feel bad for the people working there because once again, it's gm's management that didn't, you know, they screwed this up. and the car they're building and how they're doing it and everything else. it's the workers that take the -- gm's management is still fine and they made all the wrong decisions on what to build there and where to build it. >> don't forget the suv thing has been building for awhile there was a demand for small cars for a long time some people would prefer those opposed to suvs. but the whole suv/truck thing has entered a new phase of this swing, joe 37. >> there's other small cars. you know, there's a way to sell

a small car too. i don't think -- i don't know. japanese small cars probably do better i don't know make it a hybrid it's got to be some way to make it more marketable that wasn't done with that car how many chevy cruzes were they actually selling, paul not as many as they had the capacity to build. sales have plummeted in the past years. also part of gm's thinking, i think, is after a decade of booming car sales, after the bankruptcy and bailout, they suspected downturn is coming it's a cyclical business this upcycle has lasted a lot longer than people have thought. guess what they're kind of girding their loins for the next downturn. >> to your point, joe, if the government is going to meddle in the affairs of companies, are they then going to get into the business of giving backstops to companies because they made decisions that the government

wanted that was not necessarily good for business, per se? i mean, are they going to go in and backstop gm again if a reopening cruz is not going to work out that's a bigger question here. >> it is >> absolutely. >> go ahead, paul. >> i was just going to say that capitalism, companies make mistakes that's part of how the capitalism system works. that's kind of what's happening ear had. >> all right paul, thank you very much. we appreciate it and we all just want, you know, the best i don't know tough decisions are hard i'm not sure that either side is exactly 100% right on what to do here but that's like a lot of issues, i guess. right? thank you. when we come back, your biggest premarket stock movers and in case you've forgotten, it's fed day economists expecting the fed bank to cut the number of projected rate hikes for 2019.

we'll have the rate decision and chair jay powell's news conference live. it starts at 2:00 p.m. eastern today. stay tuned "squawk box" will be right back. yeah, that too. i don't want any trade minimums. yeah, i totally agree, they don't have any of those. i want to know what i'm paying upfront. yes, absolutely. do you just say yes to everything? hm. well i say no to kale. mm. yeah, they say if you blanch it it's better, but that seems like a lot of work. no hidden fees. no platform fees. no trade minimums. and yes, it's all at one low price. td ameritrade. ♪

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welcome back to "squawk box. the futures right now are flat, flat, flat as you can get. up three points on the dow the nasdaq up a little better. four and change. the s&p is actually down just under a point. what we need is someone to go over some of the individual

issues that knows what he's doing. do it with a lot of energy and good looking person. >> i don't know where to go for that oh, wait >> dom dom chu. >> oh, you guys. i love you guys. i really do. >> a low handicap golfer whose wife forgives him a lot. >> i'm not nearly as low a handicap golfer as i used to be, but i do try to provide a bit of energy i try to come here because i really am excited about being on your show. i love talking about movers and stocks and everything else >> you should. people are dying to get on this show >> i know. anyway, let's look at these stock movers like joe said because the markets are flat overall but these guys are moving a bit fedex shares taking a dip down about 140,000 shares premarket volume after what's being viewed as a disappointing earnings report after yesterday's close. we've got a slew of analyst actions happening this morning

early ones from jpmorgan chase downgrading fedex to neutral from outoutperform also watching what's happening now with monster beverage. those shares down just around 2% on light volume. about 1500 shares premarket. analysts at goldman sachs downgrading those shares at neutral. they had it at buy before. they cited the possibility that u.s. sales for energy drinks could be softer than expected. the target price goes down from 67 then there's fox corporation we're going to call the new fox. it's the first day of trading as a new entity the stand alone company with fox news, fox sports, and assets not being bought by disney is initiated with a buy rating and a $52 price target by bank of america. they like among other things the proven brands they have, live news and sports, and stronger

subscription revenues among those other things back over to you >> thank you and i should add to this conversation that dom is probably the nicest and most gene uni genuine person in the newsroom >> i'm going to go shed a tear. >> dom came up to me last week when i was in studio and said i just want to say thank you i love your show, i love being on it. and i said, are you being sarcastic? because nobody ever says nice stuff like that. >> don't say it's because you work next to me. no it's the industry. nobody says nice stuff if nobody is yelling at you, you're doing a good job. if somebody says good job, they don't believe you. >> you think that intro was not sincere? >> coming from you >> i love you guys because obviously there's always a good amount of nice debate and controversy that we kind of talk about every day, but between all of you guys on set and here, i

always feel like the discussion makes -- i hope viewers feel this way i feel the discussions make me take into account different views and look at things a little more completely than i other side would >> now i feel like we should play a kissing noise i appreciate that. >> bye, dom. see you later. >> got it. joining us to tell us where he is finding opportunity in today's market is jeff soud. just overall you're feeling pretty bullish about what you're seeing in the stock market, right? >> i sure am identifying the selling climax in late december was pretty easy it was one of the biggest selling climaxes i've seen we talked about an interim target of 2800 to 2830 and on the fourth attempt they finally got through it the correction we had was just that i don't think it's the start of a bear market.

i think it's upward and onward >> what are the areas you especially like? you take a look around and think there are some areas and stocks and better places to be putting your money right now >> yeah. i like actually old technology not per se the faang stocks. i'll leave that to somebody that understands those valuation metrics. but names like microsoft and intel make sense to me i like the energy complex. they're trading the same valuation metrics they were when crude oil was 26 bucks a barrel. and crude oil is $59 a barrel. which are like transportation companies without wheels because they have the pipes and storage facilities they have long-term relationships with people like that >> what is it about intel and microsoft. that's a stock that's been firing on all cylinders. a phenomenal turnaround with that company and finding new arenas why do you think there's still more room to run

when you look at faang stocks, they're trading at 60 to 90 times forward earnings and intel and microsoft are substantially -- they're trading actually at a discount to the market multiple. my dad used to tell me good things tend to happen to cheap stocks >> you don't think the faang stocks, their valuations are going to come down to create equal librium. you think it's just microsoft and intel that will continue to take off >> i've been doing this 48 years in this business i don't understand 80, 90 times earnings i leave that to people like amy zang and people like tom o'halloran both of those funds i actually own. >> what about in the energy sector you like specifically enterprise products partners. what does that company do? >> they're a mid-stream master partnership with pipes to

transport or oil or nat gas or whatever through and they have the storage facilities the mlp, the midstream mlp yields 6%, 7%, 8%, sometimes 9%. and part of that is tax against the potential of inflation picking up they're the cheapest they have been this 20 years as a group. and my dad used to tell me, good things tend to happen to cheap stocks. >> it is not everything that you think is going to be rides ising though a few areas to stay away from. which sectors? >> well, i'm not real wild about utilities because i think we don't think rates are going up in the short run we think over next three to five years rates are going to normalize and get the ten year guide, 4.5 to 5% yield if you can find a utility increasing dividend over the next three to five years faster than the fed raise rates, that's probably okay. but as the sector i don't care for them that much i don't like the consumer staples that much. a lot of portfolio managers have not believed this rally and yet

they had to put money to work and they put it to work in consumer staples as a group, they're expensive. >> jeff, thank you always good to see you >> pleasure. >> down to the new york stock exchange and jim cramer joins us now. and just, i don't know, just being around fred smith is awesome. i know the gentleman too icon total icon but between the lines, when's going on, jim, really, do you think? >> look, in the end, it is a leverage play on world growth. and there is a remarkable worldwide growth slowdown. and the tnt integration is still hard there is still a lot of heavy lifting in europe. they need to do that to block everybody else out obviously asia is slowing. united states had to spend more money. they have a lot of infrastructure to turn over. could they be -- should they have guided down more? it is impossible to know what's

going to happen, even with brexit, ten days from now. those that want to own the stock have to accept the fact if you had a trade deal, you make 20% on the darn thing. bliss was talking about the peak in january this is a trade war story. it is the trade war. it is far more than trade war than boeing. particularly now boeing going around town really kind of asserting once again this is not -- the max is not something you need to be as worried about as people are. so fedex is disappointing. no one more disappointed about it than fred and fred -- they want to build out, they want to dominate, this is a cost of domination >> if, i mean, amazon has been great for fedex up to this point. is it possible it starts becoming a really key competitor to fedex or is that a i was owaf >> no. i think they made that point why do they keep bringing it up? you made it clear, very, very small part and they can't dominate look, what fred has done is stretched the whole canvas

he's done so much new business he has to keep putting in more money. but the fact is they have md, mcdonald douglas plants. mcdonald douglas planes, how did that happen? we have a real issue, which is that they had a cost structure to keep changing they decided to try to block everybody else from europe, trying to block everybody else from asia. and when you're blocking them in -- and everything turns down, because of governance, there is no way fred can see that i thought fred said that he understood they need tariffs not in favor, but understands we need them. that i thought was a little incremental change for him i think he's recognizing as a republican, maybe we have to do something about china. i like that. you did see green shoots in asia and some turn around in europe but europe is slow so sell fedex, that's what people do. >> do we do anything with either -- do we think the transportation average differently with fedex or at least the overall market, the s&p, they peaked a while back already, didn't they

>> yeah, they did. i think that there was a big pull through ahead of the tariffs, fred mentioned that too. fred give you the great panoply. the transports, the weather has been bad in central. there was a lot of pull through ahead of the tariffs very tough read through. they do make you feel like that jay powell should be patient. >> who -- do we have to pick duke do we have to pick duke? >> you know, with a heavy heart, with a heavy heart >> i know. for a lot of reasons not the least of which is you know how happy harwood will be if he wins again this year? >> painful >> i know. >> it is painful i try to figure out, like, is there any way you could have a sleeper go anywhere deep looks uniquely like you can't have a sleeper go anywhere i'm very disappointed in my own picking. last year i had nova i pick nova every year this year, no. i said upset first round >> you did >> yeah.

had to >> st. mary's beat gonzaga, right? >> that's why. i think st. mary's -- i think kentucky goes deeper i'll see you in the finals >> all right thanks, jim. that was sarcasm that was sarcasm. >> i didn't notice >> okay. >> is this me or you >> i don't know. >> coming up this afternoon, jpmorgan -- maybe fairleigh -- >> they won the game yesterday they played really well. that's all it takes. >> no reason to play a game, don't show up. jpmorgan chase ceo jamie dimon will appear on the exchange with american university president and former obama health and budget official sylvia matthews burwell. they'll talk workforce development, amazon, some stuff jamie said the other day, which i agree with, i just don't know what to do about it. i like what they're doing. they're taking it upon themselves, $350 million to try

to -- that interview at 1:30 p.m., ahead of ted rhe fate decision don't miss it. "squawk box" will be right back. 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 at therightquestion.org

. let's take a quick check on the move in the british pound. we're watching a sharp move at that down about a percent last check. british prime minister theresa may requesting a brexit extension until the end of june. that is a much shorter extension than had been anticipated. also, she says, that this does not take off the table a no deal brexit, which would be very h har harsh. ian shepherdson has been with us what do you think? >> i don't think there will be a crashout but way less than 50/50 but the market doesn't like it. >> if the pound goes -- if there is no brexit or soft one, that is good for the economy. >> the pound goes up. >> if it is -- but if it is bad, the pound goes down and that's supportive of british stock prices >> well, supportive, yeah, the ftse is a global index the problem is the last time the pound went down, they did nothing and the net benefit was pretty much negative.

>> do you take the band-aid off like -- is that how you do it? rip it off rip it off do best out of three vote again if they say stay and best out of three, what do you want? >> i want a proper deal. >> you want to stay. >> yeah. >> thank you we'll see you back here tomorrow right now it is time for "squawk on the street." >> rip it off. ♪ good wednesday morning welcome to "squawk on the street." i'm carl quintanilla with jim cramer at the new york stock exchange, david faber has the morning off. tight range for futures after yesterday's failed rally it is fed day. decision at 2:00 eastern news conference to follow. we'll watch that along with fedex, boeing, lyft, apple and more europe lower may you heard will ask for a short brexit extension ten year 259, some parts of the yiel