zbrierngts good morning. welcome to "squawk box" here on cnbc live from the nasdaq market site in times square i'm kayla with joe kernan and -- becky and andrew are on assignment it's great to be here today. thank you for having me. >> wow, kayla, i mean, is there something brewing down there i mean, are you here to report on something that happens today and we needed you in studio? >> maybe there's less happening in d.c. so i'm allowed to be here >> look at this guy. grasso >> something is happening. >> steve grasso is our guest host for the next two hours. you know limb as direction of snuksal sales at -- that seat is very warm for you. >> thank you very much.

>> lower earlier in the session, and then turned positive you can see where we are right now. japan is down by about 1.5%. hong kong is slightly positive shanghai is down about 1%. what had moved those markets intraday is that reuters report there had been unprecedented -- europe followed the moves in asia you see germany, france, and the u.k. are in positive territory skpilgts sman slightly negative. a lot of that is following the action in the bond market which we talked about later on.

>> this is day five at this point. the s&p is down 2% over time, right? it seems as if the market has been kind of knocked back by this -- by the yield curve drama. and it's not really -- zoks are playing rope-a-dope with the bond market. see if we tire out this bond market move and see what's left after. >> most people were focused on the 210, and then it became the three-month ten-year last friday, and that's what everyone is myopic on right now, and that's what matters. that's what the fed really has said that they watch that's what banks watch. they watch a three-month versus eye two-year, and that's been problematic.

both negative right now. people do the calculations on how much of the world is negative, and -- we're moving up again in terms of the negative, and we didn't think we would be back here. no way. >> secretary steven mnuchin, and robert lighthizer begin talks in beijing. he looked forward to product i meetings overnight including forced technology transfer

>> does that really mean unprecedented? >> i think it means how you enforce it the issue here, as a lot of people have mentioned, is that china makes a lot of promises, and even if these are unprecedented promises, do they feel any more urgency to actually make good on them that's going to be the case. we should note that some officials are backing off an april time frame and saying that makes it's june now. maybe it's that g20 meeting that we're going to see as athe breakthrough zbrienks the company now expects that price to be between $70 and clars 72 a share targeting a valuation of $24 billion that is up from previous expected range of $6220 $68 a

share. it's expected to start trading tomorrow on the nasdaq under the ticker lyft. >> the chaengsz are primarily software-related boeing is also enhancing pilot training for the 737 max meantime, the senate panel demanding answers on how boeing planes get approved. the faa says it currently delegates some of the certification work to manufacturers. the faa also warned that it would take an additional 10,000 workers at a cost of $1.8 billion to assume full responsibility for aircraft certification. take a look at where boeing shares are right now after being

in the hot seat yesterday. slightly positive. just by about a quarter of 1%. the expectation is that this investigation could take several months certainly, the agencies are shifting a lot of the onus here on to the manufacturers themselves >> you want to talk about a stock that's had a tremendous run, take out this last down this stock has been a double and then some. then it's been the poster child for -- now we're starting to see the safety concerns, so where do the trade positive headlines come out and give it a tail wind going into what's been a safety concern negative headline?

>> people are in love with the cycle. >> it's become almost like a tech trade it's been a tech growth company. when you take all the noise out of it, we're talking about lives. this is some serious stuff obviously, that we're in >> we think about facebook's stock going down, and not as serious a situation for, you know, personal safety, but the stock went down because they were going to hire tens of thousands of people for content. boeing would have to hire maybe not tens of thousands, but hundreds to review its safety measures and its software upgrades now are they going to get hit with a similar margin crunch? >> i would assume there's going to be a margin crunch. people will want to be safe. we take it for granted when we get on a plane that you are on a safe plane and i think that that has been a variable now in the

equation that's going to be a major headwind, and, yes, there's going to be a margin >> i would think that for investors, you have to see something happen in the back drop people aren't cancelling orders. this cash burn that you are talking about that they're missing for a month, seems to be a transitory event, but if it starts to stick around for six, eight months, then that's a problem. >> you saw -- what was the low in december? president trump sigtsd down with boog diddle ceo pichai to address google's work in china the president tweeting "stated strong that he is totally

committed to the u.s. military, not the chinese military." the two discussed political fairness various things that google can do for our country he said that the meeting ended very well. google also releasing a statement saying, in part, "it was pleased with the productive conversations about investing in earning many's work force. terms of tech companies, i would tread lightly. it wouldn't be a bad thing for some overtures of -- >> isn't it amazing when you show up at the white house, things get better? >> that's what i mean. i was trying to say it in a way that a lot of people would not like to curry favor with the trump administration >> pick up the phone, show up. see where it -- it can't get worse. zoo there's a way you can do it and not, you know, really

alienate all of your -- i don't know how you can do it that's -- >> after the president tweeted about the meeting, then company sources said this is part of the campaign to help washington understand the business, that the ceo had been meeting with lawmakers and regulators a lot since his appearance in front of congress in december. >> the world is the world, and i'm sure, as i said, that some people -- >> i'm not saying it's a good ar bad thing, but should the company have disclosed it?

>> we had a massive -- >> ceos. remember when that happened? yeah >> i don't know that there's a long list of. >> the problem is there's only a couple that really matters >> i think it's peter thiel, he is it. the rest are -- i'm just saying it might not be a horrible idea the president isn't beyond working behind the scenes, you know, and not being.

>> this next story in the strange but true category. a travel alert for you if you bought tickets on iceland's budget airline wow air, you might be out of luck. the airline collapsed overnight, which means it's gone out of business i think after boeing you could interpret that a lot of different ways the business had been in talks to raise new financing, and those talks failed all wow air flights have been canceled, stranding passengers on both sides of the atlantic. when we come back, best investment ideas from our guest host steve grasso.

we'll give you two minutes to think of some of those >> number one best idea? >> i am struggling >> best ideas? isn't there -- >> i thought it was going to be -- >> three best ideas? that didn't make sense to me >> here's the question, do i start off with really the best one and then -- >> second west best or third best >> letterman style work into it >> build it up >> meanwhile, becky quick is in texas speaking to warren buffett today. that's at 1:00 p.m. eastern to catch that conversation live, and then watch "squawk box" tomorrow for more highlights, including the big investments in apple and the airlines as we head to break, here's a look at the biggest premarket winners and losers from the dow. [leaf blower] you should be mad at leaf blowers.

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let's get back to our guest host steve grasso for some of his best investment ideas. >> just some >> let's characterize some of these picks. i'm looking at it. it seemsz like if there's a theme, it's kind of either contrarian or recovery stories or some kind of value. >> so the two contrarians are ge and avis budget

avis budget has been up and then down it was down 50% last year. you have to really play with money that you're risking within the market, but this could be tremendous upside from here. it's a recovery story over what was thought to take their bread and butter we haven't really seen that come to play. 350 million of free cash flow annually i think you're okay here, but probably a high beta situation >> steven had a great call he called it stock was up 77% then it bounced 75% off the bottom obviously this is another roller coaster. do you belief it's going out of business, or do you believe there might be light at the end of the tunnel? >> investors believe that there's light at the end of the tunnel larry getting maybe a free pass still. you think it's going to 15 or 20 i do i'm staying invested.

>> you are have low mortgage rates with the bond market move. >> existing home sales, not to cover off the ball on estimates last week. you saw mortgage apps tick up. i think that people have to start understanding that housing is recovering. joe likes to talk about people living in their parents' basements. i think that is subsiding. household formation is ticking up affordability is ticking up. i think at this point with the home builders, i think you are okay there let's remember, all these stocks that we're talking about, were up over 30%. avis budget is up 50%. basically year-to-date these are stocks that -- that's actually where the market is in the sense of up 20% off the

low. still 4% off the highs i mean, you can kind of look at it from different angles. seasonality is a tail wind for you right now. lennar above $50 has a clear runway as long as it holds >> you think they're underselling the nike deal, too? >> i think that they always talk about synergies and a guide towards this 2% synergy, but in the past with their acquisiti s acquisitions, they've actually performed 10%. i think they're underselling it. i think they have a lot of tail winds. i think it's a win-win especially for lenar a lot of upside. >> all right three best thanks coming up, two retail stocks

are soaring. what time does javers get up >> i'm sure it depends on the day. >> he gets up early since he has to -- >> why get up early every day if you don't have to? >> i wonder if he is going to be watching >> think about what time he goes to bed there's a lot going on >> work with me. >> one eye open. >> if he sees this, because i think he gets up early to, like, steam press his wool suit pants so that they're absolutely creased because doesn't dress comfortably at all, and this is going to come up on this next story. some people lead some follow. has lululemon been a pretty good stock? >> i think it's one of the best. >> correlation is not causation. it's not because i wear these pants. >> you never know. >> you don't know. anyway, plus chaos in london after lawmakers struck down eight different brexit plans theresa may offering to step down as part of her divorce deal we will get a live report from london next. no matter where you are in life or what your dreams entail,

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no matter what you trade, at fidelity it's just $4.95 per online u.s. equity trade. stocks to watch this morning. lululemon fourth quarter results beating forecasts. same store sales rose, what,

16%. on-line sales in china were especially strong. up more than 140%. the company also projecting profits this year will come in above analyst estimates. i saw the stock. i didn't realize that -- i thought it was about the twitter war that it was having with eamon javers we don't always agree, but your take is that eamon is just misinformed fundamentally about what lululemon pants are >> based on his comments, he seemed to think they were sweat pants.

>> i don't think of him about a conservative guy, but he is very conservative about wearing the suit pants do you have any idea >> washington is a very buttoned up place >> is that what it is? >> he is standing in the white house lawn >> there are dress codes in buildings in washington. >> but you think he needs to know that there's a difference >> i'm not sure that's going to bring him around they're kind of stretchy, almost khaki type pants >> he can get away with it, and then they feel like jeans. >> pvh also strong today fourth quarter earnings. pvh also raising its guidance citing higher demand for its tommy hilfiger brand chaos in the u.k. as lawmakers rejected eight brexit

proposa proposals. willem has all the latest on this good morning >> good morning. what was meant to be the focus of events in parliament yesterday was this idea that the lawmakers would have an ability to try and find alternatives to the deal that theresa may spent 18 months negotiating. they had eight options in front of them. they turned all of them down the two that came close to winning a majority involved permanent membership of the customs union that would help businesses in the u.k. maintain continuity in their trade, and also the idea of putting the brexit deal back to a second public vote. the bigger news, arguably yesterday, it was the prime minister, theresa may, she offered to resign if her version of brexit, which is twice being repeated in the house of commons behind me, if that deal went through. she said she would not leave the second round of negotiations when it comes to brussels. however, despite a few lawmakers coming around her side, her way of thinking on brexit, it was

not enough for this very shawl northern irish party, the dup, to back her deal and so right now ahead of a possible vote tomorrow on her deal for the third time, its the numbers. >> willem, that leaves the situation as a bit of a three-way stalemate, right, with the same options and now the same deal to be voted for a third time >> the architect of this parliamentary plan to try and look at alternatives said they didn't expect to get any concrete results from last night. they're going to try again on monday maybe witle down the options from eight to as few as three or four they're hoping that will concentrate the mind of lawmakers and help them try and find some kind of kenscensus that may offer a way forward still desperately that her deal goes through to avoid a no deal brexit that would have been tomorrow, but it's now been pushed back two weeks to april 12th >> all right

willem marx, thank you very much a new report says china has made unprecedented offers in negotiations with the united states we'll get a live report from beijing next and as we head to break, a look at yesterday's s&p 500 winners and losers the future of technology investing lies beyond the tech sector.

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welcome back you're watching "squawk box" live from the says nasdaq market site in times square good morning futures at this hour indicated up 31 points on the dow. the s&p indicated up two nba a little over three, and the

ten-year treasury indicated -- trading down under 2.4 where it's been. inching up a little bit in yield. 2.375. our top story trade talks in china and a new report that says beijing has made unprecedented offers, including on forced technology transfer. eunice yoon has more good evening, i should say >> thanks a lot, kayla, and it's really nice to see ow the desk robert lighthizer and steven mnuchin, are dining with the chinese vice premier tonight secretary mnuchin told reporters at the hotel that he is looking forward to productive meetings the commerce ministry has confirmed that the two sides are going to be talking trade tonight and continuing the conversation for the whole day on friday. the ministry also said that since the last round much progress has been made over the phone on a lot more meets e needs to be done sources familiar with the talks have told me that the two sides are still working out a lot of

the details when it comes to the definitions in terminology in the agreement, that the two sides also need to find a way to make this trade deal enforceable, and look into how and when tariffs will be lifted. it appears as though there might be some movement on structural issues u.s. officials have told reuters that they feel encouraged because the chinese have gone farther than in the past on the scope and the size of one of the tougher issues forced technology transfers. now, speaking at a forum, the premier addressed this issue by saying that he was putting a timetable on a new foreign investment law saying it would go into effect next january. he added, we will heed this input that -- we will heed the input from various parties especially from foreign investors, and that really showed that beijing is addressing the complaints of its trading partners including the

united states. the vice premier then is going to be heading to washington, kayla, and you are going to be there for that next week if these discussions all go well. >> i will, and the trip will coincide with peak cherry blossom season i don't think that's a coincidence. interestingly, the reuters piece said that this idea that the u.s. would be keeping tariffs on, that beijing has been balking throughout the course of the trade talks. the reuters piece said they've come around to that. they don't like it, but if that's a precursor to getting a deal, they'll deal with it for now. are you hearing anything on that front? >> just from that report, but from my conversations with people within the -- on the chinese side of the negotiating team, of course, this has been something that they have not been happy about for quite some time, and the chinese have felt in general that the u.s. shouldn't be imposing what they believe are their own ideas on

to the chinese, so the chinese vice commerce minister had also referenced this earlier saying that he believed and so did many chinese that this kind of deal needed to be equal it's difficult to say, and i feel like with these kind of reports that -- i'm sure you have seen this as well, that there tends to be a pattern ahead of these discussions where it looks as though things are going really well. people are saying the talks are going great, and then we find out that the two sides are at a stalemate. i think it's probably good if we kind of wait and see how everything works out >> a tendency by both sides to negotiate through the press. thank you very much. we'll look for headlines from that dinner with the vice premier this evening we're monitoring, as i do, the president's tweets, and this is a general news thing. the president weighing in on the -- smollett. fbi and doj to review the outrageous jussie smollett case in chicago it's an embarrassment to our nation weird, the other day rahm

emanuel, david axelrod, i was reading their comments it was like i grieve with these guys cats are going to start living with dogs. it's like the end of days. >> i was shocked that -- >> david axelrod there must be another one. this is the first time in history that i said, wow, this guy is making sense for a second let's talk -- this is not our thing, but we'll keep an eye on it. we do keep an eye on tweets. >> they are often newsy. >> is that really a word now i think it is. anyway, let's talk trade >> it's a day that ends in y news days. >> that's right. i like it. anyway, let's get to our market roundtable ellen hazen. ed, chief investment strategist portfolio manager. our guest host on this morning is steve grasso, and he is

giving us all his best ideas you got anything else? >> i might have a couple more. >> we were just talking trade with eunice. you figure some of it's in the market, but it would still be a big deal if it were to be resolved favorably it's not completely reflected in -- >> absolutely. if you look at what the sop has done this year, we're looking at earnings that will be in the single digits, and then the stocks are up 12%, 13% for the s&p, and moreover, if you look at those companies that are most exposed to trade, so looking at the semiconductor companies and the semiconductor equipment companies, some of the industrials, some of the materials companies, those are up even more than the market i think a lot of this is already in the stocks, but, of course, when you get the final news, the details will matter, and maybe that will cause them to bump a little bit more. honestly, it may be a good idea to fade the rally if the stocks go up on the deal. >> you get a specific sector you like consumer discretionary

banks. you like transports. why do you like them and you point out how on a multiple basis they're, like, 12 times earnings why are they 12 times earnings why do you think that it's a place to go now? >> so late in the cycle transports often work, and in particular, we like the rails, and in particular we like union pacific because of the change that's going on there with the new coo and the decision scheduled railroad scheduling. they're able to really improve markets. >> it's not a macro -- >> transports is less of a macrocall. consumer discretionary much more of a macrocall, particularly now that the fed has paused. consumer discretionary tends to be early, right? it doesn't do that well late when the fed pauses and is no longer raising rates and you add that, add to that the fact that over the last decade it's only in the last two or three years that the bottom 80% of wage earners has seen real wage growth that's a tail wind behind the consumer discretionary center as well >> it's always kind of episodic.

i think about the last thing you said when you were on because you are on all the time. it would be wrong for me to say that you're in more of a trading mode right now in december you figured out it was a time that i think you deployed some cash, but at this point you are back from where -- you are not overly excited about a lot of gains for the rest of the year >> we have made probably more moves in the last four months or so than we normally do >> trade >> trade underweight in early december and back to neutral and now slightly overweight. we have been moving our position around a little bit. i do think you've got most of what you are going to get. if we do get a really breakthrough china deal, there is really substantive process on some of the tough issues like technology transfer, intellectual property, then i think we could still get a leg up on this rally i suspect we've already seen most of the gains for the year if we were able to get back to

the old highs by the end of the year, that -- >> do you have a trade deal that would fit in with this notion that this year we've seen kind of the subtraction of all fears. we worried about a too tight fed coming in the year obviously, worried about a u.s. kind of hard landing of some sort if that all goes away, maybe it's an excuse for people to get more excited about the market. however, now are we just begging the fed? now we've kind of -- >> well, the last six months have been all about the fed, right? the move down to the fourth quarter, started with powells comments about nowhere near neutral. the fed did a 180 on us. we have round tripped that whole move we're back more or less where we were in january of 2018, slightly above that. i think it all comes down to what happens to the economy. i don't think we're going to go into recession, but if i'm wrong about that, we'll be neutral on the other hand, i think the more likely course is that we continue to see the economy grow at a modest pace at 2% or so, and i think the market continues

to work its way hire under those circumstances. i think also, what's happening in the bond market, it turned out in an odd way to be positive for stocks in the sense that if the reason that sovereign bonds have such low yields, and the u.s. especially in europe and asia, that maybe what it signals is this savings deal of ben bernanke is what's driving that move >> since we're not going into a recession, but normally when you see the yield curving the way that it has, that precedes a recession by one to two years. what do you buy going into that? >> upgrading equality for the last nine months or so in our client's portfolios, and so very slowly migrating away from pro-cyclical names and to a little bit more conservative position on the equity side and bond side. during the periods when the yield curve is in the process of inverting, and i'm not saying that it is because we look more at the two tens than the three-month tens if you look at the time when

it's inverting, the s&p returns on average 9.3% and lies over those months as you say, it can be a year or two before we enter a recession, but those can be some of the best years >> when you look at earnings, so we have, obviously, major stories. you have brexit. you have trade wars. you have everything there. when you look at earnings, is it unreasonable to think that's where we're getting our next directional move for the markets? where is eps and where is the guidance >> i think we're going to have a perish great center of the boston celtics. his number was 00. it probably would suggest that as we get towards the second half, we look ahead to next year, and that will probably sit, like most of the zero growth is largely a reaction to last year. the economy is still doing okay. the weakness outside the united states is dragging down the earnings of the s&p, so even though we're at 00, i still think we can look at the foreign

markets. >> do you know robert -- >> well, just -- it was a while ago, but he was amazing chief, and he was 00, but i think i can relate it to your world in that the most -- one of the most -- is larry bird and the tweeters, the little tweety guy, tweety bird, the gi on twitter, health insurance name is -- >> i did not know that >> the little -- >> well, i know. he played -- that was at the same era >> and to be fair, also sending an e-mail. >> by the way -- >> full disclosurure >> tweety bird's name was larry. >> i didn't know until last night on "jeopardy." i did know who robert perish was. the chief. coming up -- >> let me thank helen haze and ed, portfolio manager of a lot of things. job cuts at turner media

after the at&t acquisition we'll hear from at&t's randallsteinson on the combined company's new strategy, and later, we'll hear from a pilot and risk management -- and boeing's proposed software fix stay tuned you're watching "squawk box" on cnbc

welcome back warner media is taking steps to reduce its head count. that's according it a wall

street journal piece that said the company is offering buy-outs to some turner employees as part of a restructuring yesterday leaders in finance and technology gathered at the fin tech ideas festival in san francisco hosted by the bank policy institute andrew ross sorkin was there and spoke to at&t randall stevenson and here's what he said about at&t's acquisition of time warner and its shift in strategy think about taking a media company, standing up a direct to consumer platform because this is hbo and warner brothers studios. this is an intellectual property library that is unlike anything else, and warner brothers is a production studio at a scale that few others can even talk about. standing up a product that takes advantage of all of that, the very unique product, and they have, they have, 170 million customers and ways to shove that out through wireless, broadband, and tv product they could scale it on the at&t

distribution they want to sell it everywhere. this is a place we're running. we have amazing data over here in this distribution company why is that important? it enhances the value of the media company. in fact, if this media company can monotize advertising the same level we do over do here,a lot of money so the reality is, a distribution company can really enhance the value of a media company, and that's the player' running. >> a lot of headlines from the interview. he said hbo will not be exclusive like netflix and denied there is a brain drain going on at at&t after that acquisition. he said bob greenblatt is no chump. see much more of the interview on cnbc.com. coming up, this consumer facing company is trading at a level not seen since its ipo in 1992 we'll take a closer look at some of the all-time highs and some of the consumer stocks, and find

out who is the mystery chart there, coming up next.

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time for "what's working." today we take a look at consumer facing stocks facing 52-week highs. steve grasso is our guest host we want to get your thoughts on the stocks and whether they are for investors or the state of the consumer you have so many ideas today >> it is people reaching for a sort of performance. we always see that in the marketplace. everyone's trying to outperform everybody else i think it's more about the marketplace that we're in, versus the consumer. the consumer is stronger in the united states but i think people are getting on the end of the

spectrum where they are going out on things that aren't normally as safe to try to reach for those performance numbers. >> so like starbucks, for instance >> starbucks is always one of these things, whenever you count them out, they always surprise you. i'm still questioning china for them i'm not sure how easy the china growth story is going to be for them transactions in the u.s. are flat, but ticket charges are up. that's helped same-store sales i don't know how sustainable that is. a lot of these things are making bets, have they come too far, too fast no one's ever going to argue of taking a profit in some of these. >> you have seen personal savings reach 7.5%, 8%, according to the fed when people start saving more money, are they not buying lattes, not going to chipotle, not making some of these $10 and less transactions? >> i think that in the united states, people make these transactions, when you go back before starbucks was ever there,

would you ever think you'd be spending $5, $6 on a cup of coffee and people get used to it >> the bare case on starbucks was who is going to pay $2 >> now people go in, line up to pay $5 and $6 and $7 >> they buy starbucks for their colleagues before the show >> i dropped my daughter in front of a starbucks, meet you down the street. she said do you have any cash on you? i said here's $10. she was just buying one drink. she said, "is this enough? i said if it's not enough, you shouldn't be buying it don't you understand how much you're spending. the younger kids don't have any type of point of reference >> before we go, ultas could medme ultas could m s coulcosmetics. >> more lip gloss, more lip packets if they roll that out you'll have more of a runway make no mistake, this is all

branded, all kylie jenner. >> the reason the stocks are working is because people are crowding into the reliable consumer stories that don't need a roaring economy to work. >> true, but ulta had headwinds and you look at it, their online is down and their brick and mortar in-store sales are up that's about the brand >> 1,000% in two years, that stock, incredible. >> great test to that. coming up, we'll dive into the recent yield curve spread inversion that's been making all mht msalines and whatesge isig be sending to the fed

how low do yields go the dash for safety driving. the trading on wall street is it a sign of a slowdown coming or a bet on the fed's new norm normal an intense hearing on capitol hill regarding boeing and the role of the faa. why the faa is relying on aircraftmakers to certify their own planes and the latest on the boeing software fix, straight ahead. plus the ceo of newcorps

joins us to talk trade, tariffs and the company's plans to open a new plant, as the second hour of "squawk box" begins ♪ i've got good news >> announcer: live from the beating heart of business, new york, this is "squawk box. >> good morning. welcome back to "squawk box" here on cnbc i'm joe kernen along with kayla tausche. andrew is off and becky is on assignment speaking to someone, warren buffet, oh, buffett stay tuned today at 1:00 p.m. to catch some of that conversation live and watch "squawk box" tomorrow for more highlights including berkshire's big investments in apple and in the airlines with us this morning, steve grasso, director of institutional sales at stuart

frankel and cnbc fast money trader u.s. equity futures at this hour indicated up 24 and change nasdaq indicated up 3. s&p basically flat, up about a half a point this morning. here's what's making headline this is hour. lyft raised the price range of its initial public offering amid heavy domestic demand for shares it is demanding $72, up from $62 to $68, could value the company as high as $24.3 billion we'll get a final reading of fourth quarter gdp in about 90 minutes. economists think the u.s. economy grew at a 2.2% annual rate during the final three months of 2018, that would be down from the prior reading of 2.6 and treasury secretary steven mnuchin say he and robert lighthiser are looking forward to productive meetings with chinese leaders. officials told reuters china made unprecedented proposals on

a range of issues including forced technology transfers. the ten-year note hit its lowest level since december 2017 yesterday. steve liesman joins us with more on interest rates and the market reaction steve, we are heading down further? >> this was not a one-time blip. i'll tell thaw we were on monday talking about well, these futures could go back the other way, they're volatile futures markets are trading and economists are talking with increasing certainty about a rate cut coming from the fed, and a whole group of other folks are saying, what did they miss what the fed said last week? look at the futures here these are a 56% chance of a cut in september, and this is for a single quarter point cut it rises to 62 in october and 72% in december. over at mufg "should our models forecast of the economy's neutral rate" and that's 1.75%, not 2.75, as the fed says, "prove accurate, then the fomc likely may enact three 25 basis

point short-end interest rate cuts over the coming 14 months "i think that's an out of sample call the decline in the two-year note dates back precisely to 2:00 p.m. last wednesday when the fed came out with its statement. i didn't hear it it was dovish. here's what fed officials said charlie evans "if activity softens more than expected or inflation runs too low, then policy may have to be left on hold or perhaps loosened." there's the possibly robert kaplan from dallas pushed back "before cutting rates, i'd need to see an inversion or some magnitude of it, and right now we don't have either." we have to see if richard claren pushed forward to the gathering of the idea of a rate cut. it's too outrageous to say, a cut and chris rupke saying three, why not four? >> mohammad el erian on tuesday

said the market tends to do this, you give it what it wants and it asks for more of the same interesting robert kaplan cites the option of the yield curve as a potential driver of a decision >> he last year said he wouldn't take action to invert the curve. >> how much do fed officials take into account negative yields all over the world? >> they do >> in terms of lead indicator for what they should be doing here >> i think they were going to try to do what they wanted to do, what they thought was right for the u.s. and see how much the negative yields overseas made that difficult for them to do, and i think they found that there's, i like to watch a lot of, you know, astronomy stuff and physics and ecb, it's like jupiter. the gravity of jupiter is like a major, major planet that we cannot escape that gravity with our interest rates >> steve, doesn't it make you nervous the fed -- ecb is out of bullets. if they're out of bullets, go with me on that premise, and now

the fed has 250 basis points of bullets. i get it, they have the balance sheet but if they start using the balance sheet again, that's throwing in the towel saying that we effectively have lost it for the last ten years >> steve, i think that's a smart way to think about it, because you could make one calculation about what the right interest rate is. say the fed is 50 basis points higher than that it's also going to think about having the 50 basis points in its pocket for the next downturn i think that's part of what animated the fed's idea of normalization, was let's try to get ready for the next recession, without causing it. some people think they might have >> if you think about it, that's a really preposterous idea if you think, because it isn't -- you don't shoot yourself in the foot to create flexibility for yourself >> before you answer that, christian amani, we haven't introduced him, to continue the

conversati conversation >> i think the idea the central bank wants to create flexibility but in turn screw the economy over, that doesn't make much sense. that would have been their motivation, if it was, it is somewhat misplaced i think your points about the inversion of the yield curve is important. it's a signal that we ought not to ignore. however, i think what matters is level of real rates far more than anything else and real rates today are meaningfully lower than they have at any point in any past inversion. so look, we as market participants, ought not to draw too many conclusions out of the inversion of the yield curve with respect to rate cuts. >> weigh in on this. you don't want to dismiss a signal that preceded previous recessions on the other hand, we have a quirky shape of this yield curve. the yields go lower from short term to five years and pick up again. you might say the markets are hoping the fed should ease and

it will be okay after that >> yes, there's a bit of a kink in the curve right in the belly of the curve, and there is a signal maybe the fed is going to cut a couple times, but then it's going to engineer a soft landing, and the yield curve inversion, it's important, but it needs to be taken in context. it's not a binary thing that okay the ten-year is three basis points below the overnight or three-month build so therefore in a year, we'll have a recession. basically the market is putting the fed on notice it's too tight and then it's really a response function of when and if the fed responds to that if it theoretically responds tomorrow with a rate cut, we could have a '98 scenario where we have a melt-up and there's no recession and we get an extension of the cycle, or if the fed completely ignores it and while the market is saying it needs to cut three times a year from now, maybe it's a different story, but to krish

krishna's point, the level of rates is as important as the shape of the curve every time the fed, if you will, has caused a recession, for the lack of a better way of putting that, we had an inverted curve, but also we had a policy rate that was 200, 300 basis points north of what is considered to be the natural rate or r star, and we have the first, but we don't have the latter. the funds rate is right at r star i think we're missing the ingredients for a complete risk. >> how much of this recent move is based on economic fundamentals, and how much of it is based on the stephen moore effect who on monday said he's still learning how the fed operates and yesterday told the "new york times" he thinks they need to immediately do a 50-basis point cut >> put the chart back up, at the tick at 2:00, 2.000, the market must have been primed to buy

bonds, and waiting for this signal that they knew was coming, came, because really, powell delivered as expected, and then i think you had some additional economic weakness overseas i think that powered it forward, and then i think this moore thing adds to it i don't think the market sees one guy come on who sees 50 basis points of a cut and decides that's what the fed will do the market is more rational. i was listening to the 6:00 hour and heard grasso talking about his very bestest ideas, ultimate, toppest, bestest ideas, and one of them was housing. a lot of economists are talking about a housing rebound and it's not crazy to think about, if this story we're talking about of lower yields is not a flash in the pan, and it sticks around, the interest rate sensitive sectors, which everybody was so worried about back in december, autos and housing may be helping the economy along.

>> thank you for watching that i appreciate the "bestest. >>w you might be positioned right now? >> i think housing for sure. autos, i'm not so surea lot of sense. the delta, the sensitivity of housing to interest rates is quite substantial. i think it took a dip when the fed was tightening i expect it to come back in the second half. it's one of the sectors that we like a lot >> jurrien, i was talking to a gop strategist monday night he was putting off a home renovation because he got hit with a massive tax bill. how much do you think april 15th is an indicator for economic strength going forward >> it's going to be really interesting. we've been looking at sort of refunds and tax receipts to see whether the tax cuts really are paying a dividend. so far there's little evidence of it, but we won't really know for another couple weeks, when obviously april 15th passes, but i think the rate side is

important. that really slowed down the housing markets in the fourth quarter of last year and there's clearly signs that's starting to recover, and the other thing to consider from a sector point of view is that if the fed does end up cutting rates, that's going to give tremendous ammunition to the chinese government to start stimulating more so than it's been able to do, because it's been stuck with sort of this policy pegged to the u.s., and the chinese currency not being able to go below 7 so if we end up getting rate cuts in the u.s., there could be a whole other upleg to china and therefore emerging markets so that could create somewhat of an early cycle phenomena >> maybe another echo of 1998. we used to talk about single best ideas as being a stupid thing to say, because it's redundant. but now you've got three best ideas. >> i loved that.

>> the exact opposite. there's a lot of them, but now single best idea makes sense you got three best ideas >> i'm the single best >> we're just bastardizing the english language >> it's early. i'm here until 8:00 so i could have ten more. >> we had 16 best teams in the ncaa >> ten of the best ideas, right? >> bestest >> 16 best teams >> bestivus. coming up, small arrival of well care. are other health care businesses in play? we'll talk about the sector and what it means for your port pfoi and later, newcorps announcing a new plant. is the u.s. steel economy coming back we'll discuss with its new ceo stay tuned you're watching "squawk box" on cnbc ♪

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well care is putting focus back on health insurers. we'll get other names you should be looking at in this space after the break and under fire from lawmakers, the head of the faa's defending its practice of relying on aircraft makers to help certify their own planes for flight we'll get reaction to yesterday's hearing and the boeing fallout in a bit. "squawk box" will be right back. >> announcer: time for today's

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today's aflac trivia question. who won the first ncaa championship the answer, the university of oregon, defeating ohio state 46-33. >> in what, lalacrosse time for today's market moverers dom chu joins us >> good morning, kayla lululemon sup, the athleticwear maker noted for yoga pants gave positive guidance and announced a $500 million stock buy-back program, helped along by strong demand during the past holiday season and joe kernen's continued purchase of abc pants. all kidding aside, shares up 12%. shares of accenture up around 4% the tech services and consulting company posted earnings and revenues that came in better than analyst forecast.

it is seeing continued momentum in its digital and cloud services offerings, those shares up by 4% or so right now there's nielsen, the media metrics and performance management company is around 11%, 10% on around a thousand shares of premarket volume, helped lower by a report from the "new york post" that blackstone was dropping out of an option to buy the company, according to sources familiar and also demand waning from apollo global, according to one source familiar, again, that source reporting down 10% for nielsen shares, some of your morning movers i hope the abc pants are fitting well >> dom, dom, was it ten years ago a yoga pants maker these are not yoga pants >> no, but they still make yoga pants. >> you're implying i do yoga, and eamon javers, a downward dog, saying all this stuff i don't know what they are >> i don't think anyone's

implying you do yoga >> i'm not implying you do yoga. i supported you, joe, because i have mull imitle pairs of the abc pants. i wear them whenever i'm not wearing suits in front of these walls. >> you know what they call their customer category, mamil middle aged man in lycra >> i'm middle aged >> i got to listen to you, dom, but someone else is talking to me you know how you play 200 rounds of golf a year and cause friction at home >> plus or minus >> could you could leave from the pants and look good on tv and go to golf there's a lot of uses for these. >> listen, no, no, if you can get on my side, i'd love to wear the abc pants here at work because i've been told this is the attire i have to wear, this charcoal suit, but i have

multiple of those abc pants. i'd love to hear them. >> can't see your pants anyway, dom. >> you can in front of the wall. that's the thing >> we'll talk about something a lot more -- javers continues to instigate. >> eamon is an instigator. >> mamil i don't like that either >> spamil, middle aged, is a compliment >> let's go. lots of movement in the health care sector the most recent yesterday's deal between -- that's why i took it -- insurance rival wellcare and santine. here's what the ceo of santine said last night on "mad money. >> they have a strong medicare product. we have a technology platform they need for work geographic expands our footwork in all 50 states short term i don't think about it we have a lot of time and patience for long-term investors.

>> so is more consolidation coming and what about the deal that was just announced? joining us with their picks in the health care sector, anna gupta, senior analyst at svb partners when the deal was announced initially, what'd you think of it and after listening to some of the explanations i think you like it more, there's some fears that were allayed. can you go into your thinking on this, before and after you looked into it more deeply >> definitely. it's creating a $100 billion government powerhouse. no ones athat, end to end, medicare advantage, medicare part d and medicare and exchanges. the scale, as the ceo says, they're in 50 states i think the street has been and partly i have been, too, a little disappointed on the timing they were trading at $3.30 six months ago and told at $3.05 i don't think there's a fundamental issue. they had a reception, the ceos

of well care and centene last night and we dug into it a bit i don't think there's any issue. they wanted to do it now, the price was right. it's going to spark a whole new round of consolidation who is left standing maybe five big companies at the end of it. >> you had some of your picks and favorites are similar over the years, they haven't changed a lot. they've never been based on merger and acquisition >> true. >> are they now or you figure that might come along if the fundamentals are tractive with or without consolidation >> i don't usually pick an event. i pick it on fundamentals. consolidation offers optionality to the upside and bullish on the government space humana has the likelihood of being taken out. it will probably take two years because cigna needs to de-lever from the express scripps transition molina is probably going to get

taken out soon maybe united is a buyer, maybe centene. i don't think they maxed out on their debt capacity with well care and magellan as well. broadly speaking, i've been a bull on managed care think it's a real buying opportunity. the weakness is not sparked by fundamentals at all. i would be buyer of united you're getting it at 15 times right now next year's earnings realistically, and i'd be a buyer of anthem as well. all of those i think are really my top picks >> when the administration gets behind the lawsuit, like we heard earlier this week. >> yes >> does that change the dynamic whether it's success envelope higher courts or doesn't change it at all? it caused a raucous politically. >> the fifth federal court of appeals i think it's going to go to them in the third quarter,

and it's very possible that they agree with the texas decision. i would think next year, when it ends up in the supreme court, they're going to uphold the law. it would be very surprising to me just because the doj says we should throw this whole thing out -- >> so they'll reverse the lower courts you still have got roberts there. i don't know whether his earlier decision was based on the law or based on his perception of whether the supreme court should reverse something that congress passed i don't think he's ideologically driven -- or i do think he's ideological driven what if it were? >> i don't know they'd reverse medicaid expansion i would be shocked that's relevant to this deal and other names as well. i would be surprised if they took the subsidies out on exchanges. i think the big ideological divide seems to be around the preexisting conditions and whether they actually keep that

provision in place i'm sure that's the political football at this point, ahead of the election i'm not sure it's serving the republicans well, but we'll see. >> ana gupte, thank you. >> thank you >> appreciate it coming up, the ceo of newcorps steel joins us to discuss plans for a new factory in kentucky, tradetraf tari tariffs. u.s. equity futures a little to the negative dow at this point set to open rhtac 1potsin beig bk. dso should the way you bank.. virtual wallet from pnc bank. just one way pnc is modernizing banking

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>> and yet not enough. >> yes still to come on "squawk box," the ceo of newcorps discuss new plans in kentucky, the state of the steel industry and tariffs. and faa administrator daniel allwell, the strategy of relying on aircraft makers themselves for self-certification we'll get reaction to yesterday's hearing. and top of the hour, trade talks resuming in beijing. we'll find out what the latest round of talks could mean for a final deal a lot more "squawk box" when we return everyone, look at your phones. the design thinking, the digital engineering, security, blockchain, and we will be first to market! yes. when we do we launch? unfortunately, in 2 or 3, hours. why the delay? cognizant is helping banks use digital technologies

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newcorpse announcing yesterday its new steel plant will be open in brandinburg, kentucky how does the plant fit into the long-term plans with uncertainty surrounding the future steel tariffs. joining us is ceo john ferriola, good location on the banks of the ohio, right, john, you decided a new plant made more sense than expanding old facility >> it's a different product line for us, an additional plant in our product line of plate, so yes, and it's a great location it's a great town. >> louisville. >> great people. >> yes, very close to louisville when you look at where the plate market is today, the largest plate market is in the midwest so we're in the heart of the largest plate mill market and we have scrap availabilitere,ourgeo it'sreatation. we're excited about pland it will takes fre g a supplier to the e market to bea ma lea in the pla mar withu work for dan, ed >> i worked wind fan, yes. >> a youilarsome of your voint d.c. and >> ist ways, yesent p? >> because i sll hfromim all the me, and he was a bigsuto steedustere, in the face a lf opposition to that are yoa suter t? >> absolutel fielsk is a level plg i am so confent ur t the nucor teamifget level playii will outcompete comporea world.uny anre ie sohat eed hat level playfield i'speaking particularly aboutor bse product diversity anr ma but in general, prodg st if you have a al f market, ana faarke a global basise lol place to makeel he uted stateswhou t about all the cleawe a the biggestteelhen the, marks rihere so we can e thrket we're in. ave raw materials to steight here. we have abundantnd rivel together, that compoabouraw maty of our cost struure, rit in the heart othe ma, the li world. so all oe adagesing steel in tniteates the local e in the world arifelpeeel, number one orce incentivized companies toet t ste om u.s. companievers foreign companied allowed to you raise voices because you know that many more companies are going to be looking for steel here in the u.s. how much you have raised prices on consumers and will you continue to? >> prices have gone up, but what drives prices is market, economics 101 and supply and demand prices went up $750. in the beginning of 2018, our steel pricing on hot band was industry wide about $750

>> i think it was much more driven by the economy. we had a strong economy, energy was strong last year, demand was up, and to kind of verify that point if you look at where we are today, today tariffs are still in effect. the price of hot band is back down below where it was back in january of 2018. it's about 730 today it went from about 750, it went up to about $1,000 in the middle of the year and now back down to about 730. what was driving it was the strong economy, strong energy. those were the things that were driving the economy. for example, another point i would make is that manufacturing was very strong, because of the tax new tax program, because of deregulation manufacturing as a whole, the industry, did very, very well last year. steel companies did well, but so did our customers do well.

>> what happens'tariffs go away. there are different versions of a potential bill on capitol hill to reform the process that gave us these tariffs in the first place. senator grassley said he would work to implement some sort of compromise on that front, and some of them are retroactive and would revisit the steel and aluminum tariffs are you lobbying against that? >> we think they should stay in place, but you asked the question, what happens if they go away. it's an important question to answer if the economy stays strong, if energy stays strong, the things that are driving the resurgence in the steel industry, tariffs are a tailwind, one of many factors, but deregulation, tax reform, which gives us a competitive corporate tax rate with the rest of the world, which we haven't had for years, so deregulation, the tax reform bill, a strong economy, if the economy stays strong, manufacturing remains strong, and remember, that in addition

to 232 in terms of trade, we have successfully prosecuted so many trade cases over the last five years, and a successful trade case, take for example china, who successfully prosecuted 12 trade cases over the last five years and the duty, counterveiling duties or dumping dew pointies assigned to the cases are well over 200% so yes, and trade cases the last five years with the possibility of a sunset review >> we open ourselves to criticism we're practicing unfair trade that's what we hear all the time, but in my view, if you're responding to -- someone starts it, but you can see how we want to be free market, we don't want to be protectionist, but in the real world, we know that other countries, for some reason, don't seem to be held to the same standards as we are, so why do we need to play by the free market standards, when we saw what happened in the steel industry >> i don't think we should

i think we should have a level playing field. you mentioned what other countries, they don't have to play to the same standards we talked about some of the economic standards how about some of the environmental standards. >> human rights standards. >> so when they said that china, we weren't getting steel from china, we were getting it in other places, china goes through other countries to get it here >> that's all it is, circumvention. if it's not coming from china, they move it over to vietnam that's one of the reasons why we needed a comprehensive trade remedy >> i'm with you. it really feels there's a resurgence for the steel industry, the best you felt probably in ten years. where is nucor on the ladder what advantages do you have over your competition the whole group can work, why does nucor work better >> we've got a lot of advantages number one, we are the low cost producer or one of the lowest cost producers in just about

every product that we produce. we have market leadership in 8 of the 12 markets in which we participate in, and by the way, the plate market, plate project we announced yesterday will take us to a market leadership position in that, so market leaders in 9 out of our 12 we have the most diverse steel product and steel products portfolio anywhere in north america, so we have a lot of those advantages we have great geographical diversity. but our greatest advantage, our greatest advantage is our 26,000 teammates, men and women, who work safe and smart every day for nucor. >> we're just about out of time. i want to mention this new mill, construction will begin later this year but won't open until about 2022 is there anything that could happen in the economy or the trade war that would lead to you scrap these plans? >> no. >> we'll leave it there. thank you, john. >> amica always said what he meant but is it more now

he was always like that. >> who, dan? >> yes >> i've worked with dan over 20 years and dan was kind of always like this. i share so many of dan's beliefs, my style is a little bit different, but the passion and the desire to make american steel great again is the same. >> follow him on twitter, i do thanks, john >> okay. >> you surprised, kayla? following? >> we are watching shares of boeing this morning, after yesterday's hearing on the hill. we'll discuss the aircraft maker software fix and much more after the break. check out futures at this hour you see a little bit just a slight move to the downside, s&p 500 set to open do lwness than three points "squawk box" returns after this break. i'm working to keep the fire going

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a get your questions answered by awesome experts store. it's a now there's one store that connects your life like never before store. the xfinity store is here. and it's simple, easy, awesome. senator, safety critical pieces of equipment on an aircraft are mandatory that's what certification does if it's safety critical -- >> so you don't think they should have been mandatory, is that what you're saying? is that what you just said they should not have been mandatory? >> sir, i'm saying that any safety -- >> yes or no should they have been mandatory? yes or no. >> sir, the distinction between what goes in a flight deck and what stays out is a discussion >> that was an exchange between senator ed markey and acting faa

administrator daniel elwell during the space subcommittee hearing. earlier in the day boeing laid out plans to fix the problem with the 737 max phil lebeau joins us with more >> mike, we were out in renton yesterday and the day before talking with airlines, with pilots, some of those who had a chance to look at the new software fix and they believe this will do the trick in terms of alleviating any confusion or concern there might be that pilots are not fully aware of how the mcas automated flight control system works within the 737 max. so let me bring you up to speed in terms of the latest with the max and where things stand the pilots, about 200 of them with regulators tested the software in a boeing simulator yesterday. boeing will submit this software, along with its plan for enhanced pilot training. they are going to submit that to the faa, likely by tomorrow, if not early next week and then the faa certification most believe it's probably going to take a week to two weeks, and as you mentioned, there was the hearing

in washington yesterday, looking at whether or not the faa certification process should be revamped, you know, enhanced, so to speak, so it's more stringent. the head of the faa said look, you want to give me $1.8 billion and 10,000 more employees, simply to work on certification? we can enhance it, though the inspector general says let me take some time here to analyze exactly where the process is, and what can be improved >> ksh k-- confidence in faa foe gold standard in safety is shaken we can provide information to the secretary and to the congress to determine how best to restore faa to that position. >> as you look at shares of boeing, keep in mind we're in the process of the certification of the software and separate from that, once that happens, there is the question of when these planes will be deemed worthy, air worthy, so that they can lift the grounding not only

with the faa but with regulators around the world and that's going to happen over the next 6 to 12 weeks, that's the question how long it will take, not only for the faa but regulators around the world >> phil lebeau, thank you so much, following this story for more on yesterday's hearings and boeing's proposed fix we bring in anthony roman, founder and ceo of remnant associates and a licensed commercial pilot. anthony, what were your takeaways from the hearing, first and foremost >> you know, the hearings are political football at this point. it was congress that reauthorized the liberalization of the recertification process, and the self-certification process by boeing in '05, in '11 and '17. it was the d.o.t. inspector general that, in 2012 conducted an internal audit of the faa and found, based on faa engineered complaints, that the faa was not

properly overseeing boeing self-certification process >> although the faa did review the software update after the lion air crash isn't the onus on the faa? >> the onus is on boeing the onus is on the faa and congress we have three liberalization programs self-certification has been a very successful program throughout the decades, but the over-liberalization of that program to speed up the competitive advantage that boeing has against airbus has created some questions when compared to the increasing complexity of aircraft, aircraft in the past decades were strictly mechanical machines engines, cabling systems, gyros. today they're filled with millions of lines of software, far more complex machines that require software engineering and a lot of oversight >> and so complex that none of the 4,000-plus employees at the

faa could wrap their heads around it? >> well, that's not the case the d.o.t. audit in 2012 found that faa engineers objected to some of the data being provided by boeing, but nothing was done after that >> what should have been done after that >> well, i think the engineers at the faa should have been given some credence and some authority to countermand their objections >> we don't have a conclusive determination of finding what caused these two >> that's exactly the point. >> hypothetically say pilot error, in other words boeing might not be culpable. do you think the process of re-examining the safety reauthorization process and everything is going to result in some kind of a change, no matter what, because now we are scrutinizing it? >> i think there's the risk of overanalyzing it, and then

having a knee-jerk reaction and going in the opposite direction. yes, we have to remain competitive but that's not at odds with safety you can overliberalize it. you can liberalize it to an appropriate degree, to maintain the competitive advantage, while maintaining safety >> where does it go from here? if it's the faa, boeing, it's congress, where do we gro from there and how does it not primp profits going forward if things slow down to a point where it's critical mass for boeing >> well, allow the faa engineers, when there's a disagreement with their superiors, within that organization, to have a mechanism to object and override, in some cases, their superior's objection with impeerical data. >> do you think that would work? there are a half a dozen political appointees at the faa and oftentimes they call the shots and to have the bureaucracy overriding them,

that's what the president would criticize as being the deep state. >> there is a new appointee by the faa to be appointee, has to be approved by congress. is he the former executive from delta who has an impeccable record of safety he's a u.s. air force academy graduate, certified of the 757, 767, has 30 years flying experience, and was head of the safety programs for 11,000 delta pilots i think it's the right person for the job, at a critical moment in the faa's history. >> we'll be learning more about him in the coming weeks. i'm curious if you think this debate will affect any of the orders in boeing's backlog >> i think it already has. part of the european union, many of the countries are considering

legal action for business interruption against boeing. indonesian airlines is considering canceling 49 orders, clearly, clearly confidence has been shaken. >> do the u.s. airlines have any legal recourse, american canceled 2700 flights. is boeing going to get sued from all of these carriers? >> they may well be sued, but boeing issued, and there is some evidence of this, but it has not been verified, that boeing issued a statement to all potential purchasers of the max, and that was, if we have any interruption of service, if you have any problems with the aircraft, we will reimburse you $1 million per aircraft, should they have to be grounded now, boeing is not answering questions now with regard to those statements, and they haven't yet been verified. >> those are questions that we'll need answered. anthony roman, we appreciate

your time this morning thank you. coming up, china trade talks are set to resume today in beijing. will a deal get done, and what does it mean for your money? we'll find out from yale university senior fellow and former morgan stanley asia chairman, steven roche and former wisconsin governor scott walker joins us to discuss his recent op-ed in the "washington times" on the benefits of tax cuts "squawk box" will be right back.

china reportedly offering unprecedented concessions in the trade talks with the u.s., but are the new promises legitimate? we'll get a live report from beijing. ip oh boy. the wait for lyft's public debut is almost over what is expected from today's pricing. and closing the books on the trump economy in 2018. the final read on fourth quarter gdp is out in 30 minutes we'll bring you the number and instant analysis as 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 kayla tausche and mike santoli andrew is off. becky is on assignment and the futures right now have turned south and at least down a little bit, ten, flat lined for most of the morning, been up 30 or so on the dow. s&p never got going, it's down three and the nasdaq indicated down eight the ten-year yield was ticking up slightly, 2.75 last time we saw, not 5.70, 2.375, now it's 2.368. 2.37 right now boeing unveiling major fixes for its grounded 737 max planes,

primarily software related boeing is enhancing pilot training for the 737 max the faa is warning it would take an additional 10,000 workers and $1.8 billion to assume full responsibility for all aircraft certification. president trump sitting down with google ceosundar pichai, addressed washington's work in china. he is totally committed to the u.s. military, not the chinese military, and that the two discussed political fairness and various things that google can do for our country he said the meeting ended very well and we're counting down to the final read on fourth quarter gdp, the number is due out at the bottom of the hour forecasters expect a growth rate of 2.2% in the final three months of the year we'll see what we get and whether it keeps the annual growth above the psychologically important 3% level the department of housing and urban development is

charging facebook with housing discrimination hud says facebook is encouraging and enabling discrimination through its advertising platform by restricting who can view housing related ads. the department says it is seeking appropriate relief for the harm it says facebook has caused facebook has not yet commented on that charge and trade talks resuming in china early this morning a new report says beijing made unprecedented offers, including on forced technology transfers eunice eun joins us with what that means >> hey mike. the "wall street journal" is reporting that china is offering to make concessions in its all-important technology sector. "the journal" is saying china floated the idea of concessions in the cloud computing industry, saying that foreign providers would be allowed to own data centers as part of a pilot program in a free trade zone this would be the second report

china is willing to make changes in the technology sector u.s. officials have said that china had put forth some very dramatic proposals when it comes to forced technology transfers, saying that they had gone further than in the past in their size and in their scope. still not a lot of detail there, but of all of this stuff discussed between the two sides, as trade representative robert lighthizer and steven mnuchin continue their discussions, dining with the chinese vice premier. the discussion also continue for the full day tom mow commerce ministry said the two sides have a lot more work to do, and sources familiar with the discussions have told me that some of that involves really nailing down some of the language in this agreement also, figuring out exactly how the trade deal should be

enforced, and clarifying how and when tariffs will be imposed the reuters report said u.s. officials want to keep at least some of the tariffs in place in order to maintain leverage on the chinese. the chinese though so far have not shown any willingness to really have those tariffs imposed continuously imposed on them and also, they want tobe able to retaliate as well. and separately, china's premier spoke at a forum pledging to open up the financial market even further to foreign investors. also put a timetable on the new foreign investment law saying that that law, which is meant to address some of the issues around the forced technology transfers would go in effect on january 1st, next year he also added, "we will heed the imput from various parties, especially from foreign investors. that's really to drive home the message that the chinese government has been putting out

for the past several days in more particularly that they want to address some of these complaints that their trading partners, including the united states, have, and now, if the conversations here continue to go well, then the trade talks are going to continue in washington, where the chinese vice premier is expected to go next week. guys >> eunice yoon in beijing, than you. we welcome steven roche with morgan stanley asia form eerly d now yale university. multinational tech firms could host data firms in china is this a meaningful concession by china and the fact it discussed it with the companies themselves mean it's real? >> kayla, it's good to hear there's some progress in a key industry like cloud computing, but you know, i worry that this

is sort of this piecemeal approach, chipping away at a big problem industry by industry i was in china all of last week, and actually saw eunice, which was great to see, and we talked about this as well i think the framework the chinese are using is wrapped around this new foreign investment law that was passed a couple weeks ago by the national people's congress, and it's a law that still preserves the so-called negative list, which excludes 40 or 50 industries from any relaxation of standards. the language on forced technology transfer is very vague, and i think there's still some broad implementation issues that don't address ownership caps in the joint venture structure. i think a far more preferable

approach would be to restart the negotiations two countries engaged in over the last ten years on a bilateral investment treaty this is a much more effective way in dealing with the legacy issues of joint ventures and the allegations of forced technology transfer that takes place there. >> stephen, you mentioned the vagueness of the new investment law. the u.s. side says enforcement will be key and it will be enforced through talks bilateral talks with government officials at every level, local to ministerial level, and that they will rely on u.s. companies to tell them when china is not holding up their end of the bargain. what u.s. company is going to do that, if the risk is more escalation, mortar i haves and potentially some sort of regulatory backlash in china >> well, that gets to the thorny issue of forced technology transfer we know that, when companies go into china and they form joint ventures, that they willingly do that, number one, because they

want to get a piece of the market, and when you go into business with a chinese partner, of course you share people, ideas, strategies, and the technology associated with the business that you're in. the question is, are companies forced to do this? and the u.s. trade representative in his famous section 301 report a year ago admitted they don't have any evidence that the transfer of technology is forced so they rely on these surveys of companies who say they're uncomfortable, but you know, the allegation of forcing is not verifiable by him, and you're right. companies themselves who enter into these agreements are not going to own up to the fact that they were taken into a dark room and their hands were tied behind their back and they were forced to turn over the blueprints to their processes. >> stephen, you mention that you just returned from china i'm curious what your read is on

the economy there. we saw the premier at the boal forum cutting interest rates saying china has a lot of policy tools it can continue to use who has more leverage economically, and how much is this global slowdown playing into the likelihood or lack of a likelihood for a deal? >> well, one thing, the premier doesn't cut interest rates the central bank does. the premier was talking about -- >> he was messaging it was in the works. >> he was talking about the fact that they have a lot of optionality on policy. there's no question that there's a lot of downward pressure in the chinese economy. late last year, continuing into the first several months of this year, reports of sharp contractions in industrial profits in january and february, that came out yesterday were an indication of that, but they've already taken a lot of policy

actions on the monetary front with cutting reserve requirements five times in the last year. there's an announced cut in the vat tax scheduled for april 1, just coming up, and then another cut in social security taxes coming up in may i think that will stabilize the economy by the middle of the year, and you'll see some gradual improvement in the second half, and i think the chinese economy will come out of this current downshift in reasonably good shape, committed to their longer term structural rebalancing issues there are question marks about the global economy and i agree with that, those are serious and likely to impact policy decisions both in china and the united states, i might add, as well >> we'll see if we get that stability in the middle of the year stephen roach, thanks. >> thank you coming up, does the u.s. tax code favor u.s. companies over

jobs president trump's tax cuts are little more than a year old but companies are starting to point out what they see as flaws and adverse side effects, as they're still in an unlevel playing field on taxes we're going to ask former wisconsin governor scott walker, when we return you're watching "squk x"n bcawbo o

welcome back to "squawk box. news out just a short time ago on deutsche bank "the financial times" says the bank is discussing plans to raise as much as 10 billion euros in equity as part of a merger with commerce bank. executives are considering a capital raise of between 3 billion and 10 billion euros the government wants to deutsche to raise as much as possible to not have to return to the market after the deal big business cheered it the president trump's rewrite of the tax laws in 2017 but some companies are having second thoughts elon moye joins us with more from washington. >> the most sweeping changes were the international side of the code the goal was to stop businesses

from shifting profits overseas but instead congress accidentally created incentive for them to do that. under the new law the effective u.s. tax rate was supposed to be 13% on foreign earnings and if a company paid more than that to the country, it was operating in, it was supposed to get a tax credit for most of that amount that plan hit a snag and could cost businesses millions of dollars. when it wrote the new law, congress didn't change the rules that limit tax credits, so without a big credit businesses face a bigger tax bill u.s. companies face a disadvantage overseas and fewer benefits to staying right here in the u.s business groups say this is a giant thorn hiding inside the new tax law. the members include coke, dupont, p&g, 3m. they've been vocal about this. the national association of manufacturers are warning of this problem as well but it does not say this is going to be fixed any time soon. treasury is not sure it has the authority to change the rules

and the chances congress will step in with a legislative fix are slim to none back to you. >> ylan, thank you let's talk more about the impact of taxes on the economy. joined by former governor scott walker, governor walker explained in "the washington times" tax reductions have consistently had a positive impact on the economy, something he thinks democrats don't understand governor, thanks for being with us this morning. a lot of people around the set on different occasions, governor, always talk about the counter factual, and whether the positive economic results we're seeing aren't offset by the increase in the deficit, et cetera, et cetera, et cetera i mean, if there's any issue that there's no consensus on politically, it's whether tax cuts help or hurt long-term. >> i think the evidence is true not only in washington but in

the states wisconsin, for example, we cut taxes during my tenure by more than $8 billion, and politifact just checked it the other day, the statement that revenues went up during that time frame is true that's because, as we help stimulate the economy, we put more money back in the hands of the people of our state, and in turn with the federal policy in the hands of people in this nation, they put that back in the economy. lawrence lindsay and kevin brady wrote a great piece today in the "wall street journal" talking about the inflation going up, for all the talk about some of the opponents of the president and the congress's tax cuts from the past, somehow inflating inflation, and other concerns that they had previously, the facts are in, and foreign direct investment is now higher in america than it was going out. that's a big deal. when you look at unemployment rates, some of the lowest that we've seen since the 19 60s, lowest ever recorded for african-american and latino

workers in the country you see the labor force participation rates going up there's a lot of good things happening and even in that prior segment, there's a few weeks that need to be done to continue to improve the tax reform package, but in the end, it is a net benefit for the hard working people of this country >> governor, we've seen some polls lately that, and they're not new and not a new idea, americans, when they are polled, they want a bunch of free stuff. they want entitlement expansion and a lot of it is majority numbers that we're seeing, and i don't know how the question is asked, and i don't know if it's asked with, do you want to do this, if you have to pay for it with higher taxes, or do you want to do this if the deficit explodant free this, free that, more this, more that how do we possibly do it without blowing out the deficit, if we don't somehow raise more revenue or raise more taxes?

>> well i think the debt and deficit are huge problems. it's why i go back to ronald reagan talking about a balanced budget, it was an incredibly important thing to do, just about what every state in america does it. in my state in wisconsin we cut taxes and had more money for schools, more money for health care and saw budget surpluses every year in office requires us to do what effectively people do in business every single day. they don't cut their product quality in half or raise their price by double what it was in the past they find a way to balance the two things out unfortunately, our federal government doesn't do that and that's why there's got to be a mix of fiscal control and things that help stimulate and grow the economy going forward, that's something we're on the path to doing, but we haven't quite seen that completed yet at least in our nation's capital. >> i remember simpson-bowles, which some people point to as a rare bipartisan proposal

they weren't trying to do it without raising taxes somewhere along the line i know we always can talk about spending and government waste and that's where the problem is, that's why the deficit is blown out in the last year, it wasn't the revenue is basically flat. it was just more spending but we never seem to be able to cut spending, and i'm not sure president trump, with defense spending and everything else, i don't think that's necessarily been a priority so far in his presidency >> well, there's no doubt about it, that spending control needs to be about it that's why i support going forward, whether it's in the states or the congress proposing a balanced budget amendment. that would be a way to force the congress and force any future president to keep spending under control. it's part of the parameters that make sure not only wisconsin but every other state in america does just that, but the answer is clearly not where the democrats are heading these days they just had a vote the other day in the united states senate

about the proposed green new deal top marginal tax rate under that plan would go up to 70%. try explaining marginal tax rates to fifth graders and i pointed out it would be like where the tax rates were at before ronald reagan was president when we last had a 70% marginal tax rate, like the kids going to their grandparents, doing some chores and paid $10 and coming home and having their parents take 7 of the $10. students when i explained that said that's not fair even fifth graders get that. that's not the way to grow the economy and put us back on track and to control spending. that encourages more deficit spending going forward we need to have good tax policy as we proved in wisconsin and other governors have done across the country increases revenue, while keeps spending under control. >> governor, how does the republican messaging need to change in the state of wisconsin? a poll out this week from firehouse strategies showed biden, bernie and beto head to

head against trump would win among likely 2020 voters is tha helping voter, because the trade war is hurting them or something else >> i think it's a clear combination of two things. one, supporters of the president like myself and others need to do a better job of explaining the benefits of tax reform here in wisconsin we checked ok jekively the wisconsin department of revenue estimates a typical taxpayer, two parents working, two kids at home, a lot of folks working hard to make ends meet, they save under the president's tax cuts $2,508 on average each year, those aren't crumbs like nancy pelosi said. those are real dollars that working families in the state like wisconsin benefit from in this tax cut and a lot of them, unfortunately, somehow think it's big businesses or that it's the wealthy, the super wealthy on the east or the west coast who benefit. it's right here in the heartland in wisconsin, michigan and ohio and iowa and other places across

the country that benefit they have to contrast that with the radical ideas. the green new deal may sound good you talk about raising tax rates at the top end, seven out of every $10 goes into the federal government, you talk about forcing people to retrofit every single structure in america, when you talk about literally in the talking points saying they want to eventually get rid of farting cows and airplanesin wisconsin and those are the things the democrats in wisconsin are pushing. >> i don't know about the cows, you talk to them and they don't listen, they just continue thank you, we got to go. good to see you, gerovnor. thanks fourth quarter gdp on the other side of the braeg. break. eak. break.

coming up, the final read on fourth quarter gdp out in minutes. "squawk box" will bring you that, when we come back. alpha seems more elusive today. is it because so many go after it the same way,

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welcome back to "squawk box. perfect timing breaking news, another look at fourth quarter gdp, and it definitely slipped a bit, as many were anticipating, 2.2. 2.2. we're expecting a number maybe a tenth or two higher than that but definitely a little less than our first look at 2.6 let's go through the numbers, shall we consumption 2.5, that slipped just a bit the gdp price index 1.7, that's down a tenth personal consumption expenditure quarter over quarter, actually rose 0.1, finally jobless claims for the current week down 5,000 to 211,000

originally released at 221, moved to 216, lop off five, here we stand at 211. boys, these are low numbers. welcome back in to the '60s on continuing claims week in arrears moving from 1.74 million up just a smidge to 1.756 million. we're treading water on change dollar index is having a nice bounce but that makes sense. when the world gets a bit nervous, sometimes they reach for dollars, financing gets expensive, forward swaps have moved. lots of things are changing. the recalibration with interest rates at least in my opinion is well under way let's see where this complex levels off joe and the gang, back to you. >> all right, thank you to rick santelli joining us for more on the data, cnbc senior economics reporter steve liesman pretty much as expected? >> pretty much as expected worth noting how it happened, lower on consumer spending $0.3

down in the goods sector, not the service sector a little bit less in business investment, down 0.8% with 0.1 down on equipment. the intellectual property remains strong up 13.1, now up 10.7 housing investment worse, it gets to a theme we've been talking about this morning, whether housing can help propel something of the rebound with the change in interest rates government went changed signs, up 0.4 in the original, now down 0.4 with a big drop in state and local. federal though up 1.1% so it was weaker, i think you're still at that 3% q4, q4 for what it's worth, maybe it's 3.1 maybe i have to do the math on in a i'm sure somebody will write to me shortly and so the slowing is obvious and evident there, and slowing but growing was a phrase that somebody used yesterday i think that's still the case,

and whether or not you have that q1 aberration of the weakness in there and the other actors in there, a bounce back in q2 is a big question >> our guest the american enterprise institute's alex brill and hutchins center on fiscal and monetary policy director david wessels we need a shot of the hutchins' name, david. >> that's right. >> otherwise we'll hear from you-know-who all right, alex, i think that's a pretty good phrase, slow but growing. do you think this will be the low point, not the fourth quarter but the environment that we're in right now, will this be the low point for the year on gdp? >> i think that's the key question the 2.2 number sort of sets the bar for q1, whether we'll get over it or under it, as steve pointed out, i think right now the expectation is that the q1 may be the low point, we're

looking to be under in the current quarter. some of that just has to do with the government shutdown that we're trying to forget from earlier this year. so it's a timing issue, things should pick up after this quarter a bit. >> alex, the slowing that we're seeing, and we know about the first quarter historically, but what you can attribute to that, is it the effects, for lack of a better term, is it the effects of the sugar rush wearing off, or is it the global slowdown in either europe or trade friction with china, what is it that's causing it did the tax cut just last for one year >> well, no. the tax cuts didn't last for one year the tax cuts did provide a little bit of an extra boost in the first year, relative to i think its longer term positive impact, so there's a little bit of fading there, but that's not to say that the tax cuts aren't continuing to improve incentives for investment here in the united states, to be a positive contributor to the

tax bill overall, i think it's a multitude of factors a think things are slowing a little bit around the world, as you said, and i think it's a little bit of a timing effect between the seasonal issues that we know and the shutdown issues as well. >> david, do you share your namesake of where you are, do you share glenn's viewpoint on this or are you your own man he thinks that the tax cuts were the worst thing that we've ever done and that he predicted it would just add to the deficit and peter out quickly. >> i think we don't get much news about the tax cut in today's gdp. what we are looking at is in the rear view mirror, the fourth quarter is a little less robust than we have led to believe, although to help steve liesman out, the fourth over fourth growth is 3.0%, so kevin has said and president trump can still claim they had a 3% year last year. i think the big question is

what's happening now first quarter about 1.5, is that an aberration or slowing i think the tax cut was a mistake. i think it did add a sugar high, as you said, in the first quarter. what's really the big question is, will it increase business investment will it work as intended, so we have faster growth, faster productivity growth in the future to be honest, we don't really know yet i think there's conflicting signals. i'm skeptical but people who think we have a verdict on the tax cut already are talking their prior views, not the evidence >> alex, we've had this big pop in intellectual property and software, up 10.7% whereas the equipment numbers have been eh and some of the guys who are proponents and supporters of the tax cuts say that's what they might have expected equipment spending was already advantaged in prior expensing tax changes that have been made but it was the software one that's new, and you're getting this big pop, plus there could have been the possibility of companies moving over to the united states because of the

more favorable tax treatment, their intellectual property. what is your read on whether or not the effects of the tax cut are showing up through the intellectual property and software angle which is up a healthy 11%? >> i think that's one of the pieces where we are seeing it. we're seeing it in both numbers. i think we're seeing it in the business fix investment as well. i think one of the issues here is to some extent, some of my friends have oversold the expectations around the tax bill so i think that creates this disappointment, while we don't see, you know, plus three-point quarters every quarter we are seeing this channel work, user cost of capital is coming down and investment's been strong it's been a positive contributor to gdp, but let's not oversell this either. this is something that's going to play out incrementally over a longer period of time. that's the intent of the policy. >> alex, is it flawed -- i listen to david and i don't know, maybe everything i've always been taught is wrong, but

if you make u.s. corporations more competitive globally, and they have more aftertax dollars for whatever, even if it does go into buy-backs or repatriation if you don't have the motivation to leave everything out of the united states, how does, why do we still argue whether that's a positive thing, david? why is that something that you wouldn't want to do, just logically? is it wrong? all that thinking is flawed? >> i think there's two things. one is there's a question of did the details, three things. did the details of the plan work as intended. the "wall street journal" had a good story of the multinationals because the way the various overseas tax breaks work, so gilti. it seems some feel it's not working as intended. it was a problem, not well desi designed second it's a question of

degree i don't think anybody argues cutting taxes on business basically leads them to make more money and if they make more money they're more likely to invest it's a question of how much and the third thing, do you think that long-term deficits are a big problem, in which case you're reluctant to have big revenue cuts when you're unwilling to cut spending in an aging society. i think it's a matter of degree, not direction. >> you think that the bang we got for our buck with the previous 10 trillion in the last administrati administration, those policies take your pick you think the tax cuts for corporations are inferior to the stimulus that the shovel-reashovel-ready cash for clunkers? >> i think they're totally different. >> one is 10 trillion and one is 1 trillion >> it's totally different because we had 10% unemployment and a classic -- >> and the slowest recovery from a deep recession that we've had in post -- >> do you think it would have been better if they had done

less >> i think if they didn't do obamacare in the first two years dealing with the crisis. >> it would be better with the pain of the sequester which cut government spending at an inconvenient moment. the reason to have a tax cut now is as the proponents say not to juice the economy with 3.8% unemployment but do things that lead to faster investment and faster productivity growth i think alex is exactly right. the proponents oversold it, and they are trying to look at short term -- there's lots of reasons businesses investment in the first quarter. tax is only a part of it >> if we get unemployment to stay what it is, it should bring in wage gains for the income disparity we've been hearing about. alex, do you have a response to that >> yes, i think that there's no question, we're seeing a great labor market today, and i agree with david, that the objectives here from a policy perspective are about the economy in the

long run, and what we're trying to do with tax reform is permanently increase the capital stock, increase productivity of workers, and make the u.s. economy that much larger when it reaches the steady state ten years from now there is obviously a political temptation to kind of dig into the moment and talk about whether it's bonus checks or the latest statistics and try to attribute that to the tax policy, and there's some validity to that i think we are bigger and as an economy, because of the tax policy, but that's a secondary second order of importance, because what was the intent behind the design was to make this a more competitive place, not for this quarter or next quarter, but for this decade and next decade. >> all right, alex did we do 3% last year or 2.9? both of you. i'm still confused >> if you measure it from fourth quarter to fourth quarter. >> what do i say or hang my hat

on if i had to bet >> what did you bet with him what was the bet, q4 q4 or year over year? >> alex? >> q4 q4 is the more relevant. >> it is >> 3.0 was the q4 q4 >> wessel if i get three from you, i'm not paying for goldsby. >> i'm not settling that if the economy is so good, why is the bond market pessimistic >> i don't know, talk to germany, will you, all your entitlement state economics are working well over there, david, maybe we're stuck down at, they can't get anything going over there. >> they have a balanced budget i thought you'd love that, joe >> all right thank you, gentlemen good discussion there. alex, thanks david, thanks. glenn loves when we talk about him, one way or another. anyway, see you. meanwhile, president trump just tweeting very important that opec increase the flow of

oil. world markets are fragile, the price of oil getting too high. thank you. take a look at crude prices, we are down for what would be a third day, down about 1.7% we had a surprise inventory jump yesterday, but certainly the president's commentary is probably going to drive that even further >> it might a little bit peak above $60 a barrel for wti the other day so it is at the top end of its range it has been. when we come back, the countdown is on to what will be the most high-profile ipo of 2019 lyft stock expected to price today and trade tomorrow we'll tell you what to expect as the company gets ready for its first trade and ithow could stack up against other unicorns going public stay tuned to unlock opportunits other advisers might not see. learn what a cfa charterholder can do for you, at therightquestion.org

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welcome back to "squawk box. pricing is expected for the highly anticipated lyft ipo tonight. dominic chu joins us now more on what to watch. dom? >> so we know that valuation range has gone up maybe as expected, given all the chatter about the lyft ipo and its oversubscription levels reportedly we'll see what happens here is your crib sheet so to speak. talk about the pricing range we know now $70 to $72 per share. at the $71 midpoint, about $2.2 billion raised in capital, over $20 billion in valuation, like you said, pricing tonight expected to trade tomorrow on the nasdaq lyft.

if you look at some of the financials behind it, to reset things and give you an idea, gross bookings for lyft $8 billion last year, revenues of $2 billion one of the biggest losses for an ipo coming to market in the year it becomes public $911 million analysts, tom white at d.a. davidson making some waves slapping that $75 price target on the shares before they even go public. they think the market share gains and momentum are there, also a bigger growth picture for ride sharing but of course, at that $71 midpoint of pricing, assuming that happens, mike, we're talking only about 5% to 6% apway from that $75 target price. >> who knows where it will open. >> exactly >> dom, thank you very much. jim mcveigh is ceo of syndex, for companies seeking investment >> good morning, great to be here >> we have an unusual situation in some senses of lots of

relatively mature private companies lining up to go public pretty much all at once. lyft is the first one. what does it tell you about the deal environment, the corporate finance backdrop >> one thing is the private market has gotten so big the companies can stay private longer and obviously advantages to that, where you can keep your financial metrics private and your customers don't necessarily see what's going on behind the scenes it gives the companies the ability to extend out how long they can stay private because before they go public because the private markets are so deep. eventually the companies whether they have too many shareholders or need more capitol have to go public, which i think you'll see a flood of them coming out this year >> that would seem to be the priorities or the demands of this company, of this size, having to find a public hands to put the stock in is that a cautionary sign? in other words would you want to be a buyer of somebody who feels look, it's just time, we had to do this? >> in honor of opening day, i

think there's going to be a home run ipo. when you think about the market opportunity, this reminds me of when i took lyft public and facebook you're taking companies public that have massive engagement with consumers, they're transforming industries. when you think about transportation being a $1.2 trillion opportunity, $2 billion of revenue is nothing. and like i was down at south buy and waiting in line for the lift and uber pickups, you had hundreds of people, the taxi line was 20. so the dynamic has changed for how people are engaging with these services, and once you have that customer engagement, then you just add on incremental services and profitability so whether it's amazon, whether it's apple, whether it's facebook or whoever, it's about that user engagement at the end of the day >> the facebook comparison is instructive perhaps, because first of all, $1 billion in profits before it went public on

an annual basis and two customer sets, advertisers and user the users gave the information free advertisers were paying them for it lyft has to pay drivers, make a good deal for them, make it a good deal for users and both sides seem subsidized. >> probably the bet earal gee om subsidized. >> amazon where you are providing a platform through which people can buy and sell things and engage on commerce. at the end of the day i think that's probably the best one investors were willing to absorb losses because they saw the huge market opportunity and ultimately what it became. i think that's the better analogy. if you look, you can see they went from 26% to 40% market share. that's pretty dramatic so do you need to continue to do that i think you'll have more flexibility. >> investors talk about their ability as humans to match company shares with long-term

blue chip investors who aren't going to flip the stock on day one. how do you sort for that can you? >> you can you know by definition who are the long-term investors so you try to place it with them. there's always going to be some people who if there's a huge pop in the stock they're going to get out of it. there will be buyers in the after market that's what you're going to see, i think, when it goes public. >> do you think investors are going to look at lyft and uber as essentially the same way to play a potential market? >> it's not like they don't know uber is coming at the end of the day they've factored that in i think there's more than enough appetite for both companies. when you think about the public equity that's come out of the market, that's pretty high relative to what's come back into it.

investors, i would argue, are starved for these kind of names. if you want to play this kind of a change in the economy, there's not a lot of places to go so i think you have to play. >> if it's good thing right now that there's a rush of deals because it does feed that appetite, what would be your sign that it's gone too far? >> i think at some point valuations, you have to take into consideration what's a realistic expectation over the next three years that's how i think about it. for someone like a lyft that's doubling every year -- going from 1 billion to $2 billion in revenues is pretty dramatic. i would look over the next two years what's the likely trajectory they will realistically achieve. the fact that they identified

50% of their users are using it to get to work, that's a pretty fundamental change in terms of how people are engaging with these platforms. even in a downturn, people still have to get to work. that part is kind of like the floor of a convertible bond. those people are going to be there because they've changed how they're engaging with transportation. >> how many people have both >> everybody everybody. >> i tried to use two ubers the other day and couldn't you can only do one at a time. i like what you said, though at south by southwest, one line had like 200 people waiting for their lyft or uber the other had 20 for the taxi. i'd go in the 20 is that a good thing that you can't find your lyft driver? >> the cost is half as much. >> i know, but i don't want to wait in a line with 200 people i'm going in a cab. >> joe's time is worth more.

>> you know what my time is worth? >> those are at airports if you go on a street corner, you're not going to have -- >> i understand. i'm being dragged into the future. >> thanks a lot. >> great to be here. make sure to join "squawk box" tomorrow when we'll be talking with lyft ceo logan green. >> jim, i never know what you want to take us because you've got important stuff that you're always working on. but we had dan d'amico's successor on which was interesting. i don't know why i like talking about it i do. >> it's a great maf nufacturer they've made a lot of money for people a lot of money for the workers. they've done a great job they are what you think of when

you think about the tariffs. you're adding workers in jobs who are not computer scientists but people who want to have a valuable role in life. it's not just a feel good story. it's an american might story i am a big john fan, almost big dan fan. these are important issues that don't get talked enough about. >> played into the china stuff do you believe that there are some unprecedented things being considered by the chinese government at this point you think it could be a better deal than we're thinking >> i, i'm fine i know a lot of people feel he's an extremist death by china is a great book i think that navarro understands there's a systemic attempt to be able to take away our strength in the world, whether it be going to italy with belt and road or whether it be venezuela where they want to take over the country, or whether it be a squabble with the russians

there's no way that we get a deal unless navarro checks off on it. and that's good. >> all right thank you. >> sure. >> we will see you in just a couple of minutes. becky quick is speaking with warren buffett in texas. tune in to "the exchange" at 1:00 p.m. eastern to catch that conversation live. then watch "squawk box" tomorrow for more highlights. each day our planet awakens with signs of opportunity. but with opportunity comes risk. and to manage this risk, the world turns to cme group. we help farmers lock in future prices, banks manage interest rate changes and airlines hedge fuel costs. all so they can manage their risks and move forward. it's simply a matter of following the signs.

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crude prices moving lower as 29 minutes ago president trump, very important that opec increase the know of oil world markets are fragile. price of oil getting too high. thank you. i like when he ends with sad i do that now with a lot of my tweets. >> although we should note that crude is actually above the level it was at when we started the show today even though it's in the red, it's doing a little better. >> it backed off like 20 cents

after the tweet. >> 60 is better than 100 i know that. >> yep. >> unless you're an oil producer, i guess. anyway we're done. kayla, you going back, what are you doing? >> my arms are tired >> thanks. sorkin is back tomorrow we'll get his take on the mueller report join us tomorrow "squawk on the street" is next ♪ swing batter batter swing ♪ good morning welcome to "squawk on the street." i'm david faber along with jim cramer on this opening day carl has the morning and the rest of the day off, i'm pretty sure we don't have futures right now. >> no? >> now we are good let's take a look at them as we set up a half hour fro