"squawk box" begins right now. >> live from new york, this is "squawk box." >> good morning. welcome to "squawk box" here on cnbc we are live from the nasdaq market site in times square. i'm becky quick and andrew ross sorkin let's take a look. you will see that right now things are indicated relatively flat this comes after yet another big day of gains yesterday yesterday the dow was up by approximate 30 points. it was a gain of 1.25% s&p was also sharply higher. it was up by 1.1% brsh the nasdaq was up by 1.3%.

zblienks in italy stocks are slightly weaker, but the biggest gains right now are coming in the u.k. with the ftse up by about .6%. also, take a look at what's been happening in our treasury market here yesterday the yield on the ten-year was sitting at 2.496%, just below 2.5%. it's still weaker today. 2.474% >> in news this morning boeing needing more time to prepare a fi fix for its grounded planes. it will submit new software to the sf aa for government's approval that's only going to happen in the next few weeks, and it's a delay. earlier boeing said it planned to deliver a fix to the faa by last week. now, more than 300 max jets have been grounded worldwide following two deadly crashes >> looch the airlines hoping

that they'll be back for the summer rush, in terms of flights. a quick look at boeing shares this morning they are down just marginally this morning >> other stocks to watch this morning. amazon plans to cut prices on hundreds of items at whole foods. down to just, you know, maybe twice as much as a regular supermarket. the average price drop of around 20% unlike previous discounts. the cuts apply to all customers. that was made up that wasn't true >> they are called whole paycheck >> whole paycheck. >> not just amazon this is for everyone the price changes take effect tomorrow meanwhile, qualcomm's former ceo is dropping its bid to take the company private. paul jacobs was ousted from the board last year. he says the conditions just aren't right for a deal. it who have been the largest acquisition ever of the top $67 billion of emc >> plexur makes the software

used in mcdonald's mobile app. it's mcdonald's second big bet that we've talked about on tech in recent days just last week the fast food giant bought a digital start-up. dynamic yield to help personalize its drive through menus. >> it was timing i think it was -- i remember just thinking that it was minuscule, but big in the plans that they are making this just shows how seriously they're taking the way people are changing how they pick up food >> right >> you'll run out of -- i don't know if taco bell will ever run out of -- i mean, they come up with the weirdest stuff. they do. mcdonnell's, sooner or later there's only so many things you can do then you have to do things fresher, tastier, and then still it's going to be a cheeseburger, most likely, of some kind. >> if are you in the car with kids -- zoo want food fast >> you know what the kids are going to ask for >> the happy meal.

>> they want mcdonald's. >> they want the toy >> big kids want mcdonald's too. snoo when i'm at the drive-through, i do get irritated. it's supposed to go pretty fast, and it does. when someone -- it's like, okay, what are you kegt? is it something custom-made where you are leaving out a certain thing. >> they make those people pull over to the side and wait. >> they do they have parking spaces for those people you know, the custom-made stuff is kind of irritating. kwaen way -- >> but we digress. >> shares of lyft tumbling below its ipo price after the public debut. the stock was down by 12% during yesterday's session. then this morning it's down another 3% 66.96. $72 was where it was priced, and then, of course, you saw the big preponderance on the open. a pullback is not unusual on the second day of trading, but this is pretty severe let's take a look at some other high profile ipos. on the second day.

snap was actually up by 10.6%, and then square was down by 1.7% there had been some people -- i think art cashin, had been talking about this the week before maybe bob pasani wrote about it. they anticipated nobody would sell on the first day because you wanted to get through the first quarter where you don't have to report your sales. on april 1st you have another three months before you have to file to admit that you sold on that first day >> i think sorkin hammered that they're never going to make any money. i heard you ask that question, like, 100 times. it's not like you didn't highlight that it's not going to be a -- may never be a profitable company >> the story here is going to be about what they do in the next quarter and the quarter after, and it's not going to be solely on the profits or demonstrating they're going to get there it's going to be are they taking down costs are they actually able to continue to grow revenue are all of the incentive programs and marketing programs that were clearly put in place

before the ipo, are they still in place those are the questions. if you see them making progress on that, i think the stock goes up if you don't see them making progress on that, i think the stock goes down. >> bigger issue is what does this mean for the uber ipo do you try and rush that right afterwards or -- >> i wish -- i hope -- are they saying i hope that there's bag holders left for us. >> exactly >> sorkin, here's what i'm saying this is a big compliment for you. the same skepticism you routinely show about the market going higher you know, get -- you never got on the train and the tax cut doesn't -- all that stuff. the same healthy skepticism that you always try to bring, it was welcomed to the lyft yesterday >> well, thank you i'll have to take that i don't know which way to take that, but we'll take it. >> i point out all other things, and then i said in this case -- >> broken clock. >> one other piece on uber, though, which is distinct and different is they both the

international space of it, it the size and scope of it, and then the eats piece. the services piece i think people are going to look at that very, very differently >> more advantageously because there are other revenue streams. >> yes, but also whatever kind of premium you put on it what kind of premium do you want to put on effectively a food business there might be a multiple you have to apply just to the food business relative to the transportation, but i think you're going to start to segment that business out. it's just going to be much larger >> i have been seeing commercials. i think they're uber commercials where the guy opens the door, and there is taco bell being delivered. that got -- i mean -- >> that got you excited? >> yes i talked about it twice already. i guess i'm hungry that is -- i mean, if i could -- because there's not one that -- >> it's closed >> i don't know why. >> really? you weren't personally keeping that place afloat? >> i tried i tried. piquets. i tried to get a group of people, don't close, don't close. didn't work.

talking about lyft, we should tell you lyft is not the only tech ipo in focus another company is going to be looking at how that ipo performed because slack is now reportedly in the hunt for its ipo, and it's officially now picking the new york stock exchange for its upcoming ipo. the company is a platform for workplace message. dow jones reporting that slack will do a direct listing on the new york stock exchange following the spotify model. that's a different model president trump's new message now about health care to voters vote for republicans and we'll fix health care after the election asierz of tweets late last night, the president said obama care doesn't work, and the republicans are developing a great health care plan with lower premiums and deductibles he said a vote would be taken right after the election when

republicans hold the senate to win back the house he was moving forward with the notion that it would fail. i don't know why it wouldn't if it went up to roberts. i think roberts, again, would want legislation he wouldn't want the court deciding >> we're going to go to break. we're early. see how that happened. >> coming up, we're going to -- we'll tell you why today marks a major milestone in the worker pig app that many companies are trying to eliminate. here's a look at the big e premarket winners and losers in this case in the dow. we're coming back in just a minute some things are out of

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today cnbc and survey monkey unveiled the workplace happiness

index. that's a new quarterly measure of how americans feel about their jobs across five key categories meaningfulness was biggest contributor to overall happiness while opportunities for advancement showed the most room for improvement. on terms -- in terms of compensation, it's a bit of a mix. 27% of the 8,600 people surveyed say they are not paid well 25% said that they are paid very well full results of the survey are available at cnbc.com/work the day and the year that signifies how much lower -- or how much longer women and minorities are going to have to work in order to catch up with the pay that white men earn last year joining us now for more on the gendered wage gap ahead of the cnbc at work conference, fran. she's executive vice president and chief people officer at cisco. the scary hinge is there's progress being made, but you'll reach equality in -- and i look

forward to this day -- 2070. >> i had like to see that day too. >> that doesn't seem like progress is moving quickly enough >> yeah. it has to come a lot faster. thanks for having me here. what we know is that when we look at the gap today, there are two or three things that we can do differently to accelerate to a number other than 2070 the first is we need to see more women in leadership roles. a lot of times when you look at the pay gap, what we're looking at is the average of what men make and women make. in california it's law you can't ask someone how much they currently make this their role that's important because you don't perpetuate the gap that

exists in the market just pay someone fairly. i think companies just have to work really hard at comparing the pay of their employees >> the way that in looking at the way things work it's about 80 cents on the dollar, which isn't right, obviously when you compare identical jobs that the woman has versus men, is it closer than 80 cents i think the problem is that there are certain jobs that men seem to, i don't know, go after more maybe it's -- i mean, you are getting into glernd gender sensitivity here too in termsz of stem and things like that

>> that that's something that's quite positive when we look at main and a woman in a software engineering role, that gap that just mentioned goes down a bit. >> what we find, and we just ran it again was that we had to correct the pay of about 900 employees. the most important thing to share with you is that's both men and women. when a market moves so quickly, companies have to stay on top of that, and look at where their people are >> what happened why? why did some people fall behind? what were the common reasons >> the most common reason is because the market continues to move, and you have new people coming in at a higher pay, and then you start to see a gap with your existing employees. >> if you stay loyal and -- >> this has always been the case if you stay at a company for a long time, you are always going to be penalized relative to the new player

isn't that historically what's happened >> and that's why companies have to stay on top of looking at the differences and so it's moving that quickly >> obviously, in the silicon valley last week, and i kept hearing the stories about certain engineers who are now getting the $20 million contracts. crazy contracts. unbelievable i met one of them. unbelievable contracts sometimes two or three year-long contracts, but for huge amounts of money these are clearly the superstars of the business. my question is when it comes to these sort of superstar level people are you trying -- i assume that's i don't want to say pure market, but how do you balance that against everything else, and i'm talking about gender, diversity, all of these other issues >> yeah. what i would say to you is those are absolute corner cases. you're never going to have

parody because businesses won't survive if they try to pay everyone at that level, although it seems rather lovely what i would say is what you are going to see is that companies like cisco, we look at teams, and we really want to have teams that work together in the most effective way. wieb going to look at what's most meaningful by employee. it varies by company to company. >> what do you think about complete disclosure and transparen transparency >> there's some smaller companies doing it fully yet where everybody just knows what everybody else is making >> it's interesting because i think about that a lot i think for our employees, they want more privacy. they don't want everyone knowing what they make i will tell you something they we do, foufr for the 900 employees that we had to adjust their pay, we're overt about it we share with them, hey, you have fallen behind, so we're going to adjust your pay

we feel like it's that type of transparency that builds trust within a company as well, and we support that >> when you tell them, we haven't been paying you properly, do they say to themselves, oh, this is great. i now want to stay here, or do they say, oh, you know, actually, i didn't realize actually how much the market has moved over the says last decade since i started working here i really should maybe look around >> we believe our employees should know exactly what's happening out in the market. we want them to know how competitive they are our hope is that they say thank you, one, for telling me thank you for adjusting my pay i feel seen. i feel heard and i'm committed to this place. that's what we hope for. >> are there still -- can you break down certain jobs that are still gender sort of heavy one way or another i was thinking in health care. i would think doctors are probably about half and half, aren't they? they must be nurses, i would think, are still -- are -- there's a lot of

male nurses now, but i would still think that -- there you are going to see a disparity it seems like there are certain jobs that still are gender specific if you use the whole thing again, and just look at total overall pay, it's going to come out skewed where equal people may be much closer than you would think based on antiquat antiquated -- >> i think the change is by role, happening today. i think you're going to see fewer roles where we say this is predominantly male or female i think it's breaking down, but what's -- >> that will help. snoo all companies have the analytics to understand what's going on in the marketplace. at cisco we know when i open up a recollect quiz igs as an example for a software engineer, depending on the city, depending on the state, we have a sense for what that workplace looks like or what that employee

base looks like, so we can be incredibly targeted in trying to overcome some of the gaps that exist as well, and many in some cases build our own supply >> well, hopefully it's not 2,070, but if it's -- let's say it's 2050, will you come back on the show >> please sign me up i would love to be here. >> if -- that's what i mean. if you have an appointment that you're not going to miss, maybe you'll definitely make it. i'll be here you're fine. >> it depends. >> we can only hope -- >> figure that out >> nobody knows on a day by day basis. >> that's the scary thing. >> thank you >> thank you okay coming up when we return, bitcoin alert. the crypto currency now surged 15%. that's happened the last hour basically. an hour overnight. noebz knows why.

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zbliefrmt bitcoin reached 5,000 overnight. it's the highest level since late november. it surged more than 15% in less than an hour before pulling back the move comes as the s&p is

just a percentage point away from its all-time high it was not clear -- >> we actually are doing bitcoin alert on this? that's sarcasm, right? >> i want to say i do think i know maybe what happened i have a rationality so there was an april fool's joke that went around yesterday on-line that a bitcoin etf was approved by the sec and buffett had bought bitcoin >> are you serious >> i'm not joking. this was on twitter. it was also online you can go google it i was trying to understand -- >> april fool's. >> it was an april fool's joke >> what a ridiculous market. i don't know if that's the rationale, but -- >> stupid joke everyone has been looking to try to understand what happened in the past day, and i was thinking what happened the last day the only thing that i know happened last day were these things that went around. i will admit one of them was so well done and crafted and i, of course, stupid me, forgot it was april fool's and was, like, really did that happen? i wonder whether that happened on to other people

>> i hope that's not the case because -- i'm going with april fool's news alerts >> i think that's the best bitcoin -- that's the most positive actual news about bitcoin that it's ever had really i don't really get the people. did you see the comey -- >> i did see the comey thing >> i'm in. >> middle of the road? >> i'm in. why should we assume that that was april 1st when his last one he was, like, in a redwood forest looking up saying someone -- he had someone take a picture of him looking up at a redwood forest so many questions. zbloor wouldn't put anything past him >> manhattan real estate just had its worst first quarter since the financial crisis that's according to a new report from douglas element and miller samuel total sales fell 3% in the first

quarter marking the sixth straight quarter of declines that's the longest losing streak in more than 30 years. the drop steps from an oversupply of high-end and high-priced apartments a lack of foreign buyers and the new federal tax law that has hit real estate and high tax states. one quirk in the data, average sales prices actually rose nearly 10% in the quarter. that was boosted by the $238 million by hedge fund billionaire ken griffin that released the quarter's average about $112,000 robert frank will join us at 7:45 with more on the new york real estate numbers. we'll dig in a little deeper when we come back, though, a relatively slow start for stocks today. we will take a closer look at some of the morning's big movers right after this a programming note willford frost will sit down with brian moynihan. that exclusive interview coming up today at noon eastern time. right now, though, as we head to a break, take a look at yesterday's s&p 500 winners and losers let's build a better world for investing.

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welcome back you're watching "squawk box" live from the nasdaq market site in times square. >> good morning, everybody u.s. equity futures this morning are looking a little flat after another big day of gains yesterday. right now dow futures are down, but by less than 2.5%. s&p futures down by less than a point. we did see the dow up by 330 points yesterday s&p was up and the nasdaq was up, too. right now nasdaq is indicated down by three points >> want to get a quick check on early trade in europe. want to get over there and talk to giomana good morning >> good morning to you andrew yes, in light what we're seeing with u.s. equities, it's a tepid start to the day for european markets. remember, yesterday we did close off 1 m 2% firmer for the stock

600. you can see across the board, we are trading the green a little more muted price action than what we had on april 1st one surprising outperformer, though, the ftse 100 the u.k. index up 50 points already. .7% firmer a bit surprising given it comes one day after the u.k. parliament essentially voted down every single possible brexit option. the index is brushing off some of the political uncertainty for the time being also, shrugging off some of the weaker pmi construction data that he with had earlier today at now trailing at a two-year low for the construction activity could see a lot of green overboard, but one of the underperformance, the ftse mib, the italian index, teetering around the 21,500 level. italy is back in focus yet again. some warnings from the oecd overnight saying italy needs to do something about their public finances or else we will see some more fiscal slippage when it comes to that overall deficit. definitely something to keep an eye on, and it's one of the reasons why that italian index is underperforming

>> can you see that cable over there is trading .3% there is a certain amount of risk premium being priced into the premium here it is a crucial day as far as the cabinet discussions are concerned. the options do appear to be theresa may's deal, no deal, or long extension, and the currency is pricing in for that possibility as well. >> very quickly as well, i want to turn your attention to dollar turkey we've been fog the price action there over the last couple of days there are regional collection elections in turkey over the weekend. today we're seeing weakness in the -- to the tune of .9%. >> thank you for that report we will see you soon in the meantime, stocks top of a strong start in q2 the bond market had a wild start posting its biggest one-day drop joining us to talk about that is jim karen from morgan stanley,

investment management. keith parker, head of investment strategy at ubs. let's go to bonds first. what do you think is driving this, and is this just a temporary blip, or is this the rest of the year >> look, i think that we've had a little bit of reprieve i still think that yields are going to be low as long as the market expects the fed to not hike interest rates. i know the fed is telling us they will. nobody believes that they will the market has prices fixed in i don't necessarily believe that either however, you know -- >> what do you believe >> well, effectively i think the fed is going to be on hold indefinitely >> indefinitely, and the bar for a rate hike is a lot higher than the bar for a rate cut in other words, it's easier. >> you think we're going to cut them >> it's easier to get a cut than it is to get a hike right now.

that's going to weigh on the back edge of the curve 2.25% to 2.75% i don't think there's anything wrong with that. >> if he is right, you might have a problem, sir, on the equity side. >> i think what he is saying is the fed is on hold and dovish. we've taken that down side risk of the fed continuing to hike amid a slowing economy a turn up in growth is not we still think we have room. >> you think the market is completely priced for we already saw retail sales are down. we have an expectation of the corporates at least on a comp basis for the rest of the year going to be lower. you think that's totally priced on the market where it is. >> i think the stabilization in the slowdown in growth is priced in, meaning we overshot the fourth quarter we've come back up to your point, we're in the midst of an earnings recession where we have two quarters in a row of quarter over quarter declines in earnings, and i think to the extent that earnings resume that glide up,

that equities can follow >> in terms of equities, we have this enthusiasm/maybe lack of enthusiasm, depending what happens to this lyft ipo, what is the ipo market saying to you in terms of where equities may or may not go and where the retail -- there was a view this spring, i heard it from a lot of hedge fund managers, there's a view that there was going to be a lot of inflows from the retail investor both in materials of ipos, and that it would push up at least multiples if not prices >> i think to the point about ipos, they usually come when you have big inflows in retail participation. that's what we've had year-to-date through this rally in terms of global equity inflows. have you buybacks in corporate buying that have been supportive >> hold on one second. okay earnings recession what did you just say about

comps? you think at this point which quarters are going to show a decline in earnings? you are talking about a deceleration in growth, or are you actually -- which quarter will we see year-over-year earnings down from last year >> well, we have an expectation where -- >> first quarter first quarter. zroo and how much? >> down a little bit, i think, around 1%. something like that. >> okay. see whether you are right about that >> and what about -- i saw the conference board what about second quarter? >> the point that i was making -- >> i don't think most analysts see a decline in year-over inform year earnings in the first and second quarter >> they may be flat. maybe up 1%, 2%, 3%. it could happen. that would be something that -- >> i think if you look at -- is what what you are forecasting? >> so actual q4 earnings are down almost 3% to 4% >> from -- >> quarter-over-quarter from q3.

>> that's secuential >> one of the most underappreciated risks is china stimulus has been going on since union of 2018, and right now it's starting to gain traction i would argue that china is starting to form a bumpy bottom. that's going to be good for global growth going forward. it doesn't mean it accelerates it means it stops going down it could be go up a little bit, and i think that's the next -- i think that's the accelerant, that's the fuel for the next couple of quarters going forward. i'm not an equity guy. i'm not going to make an earnings forecast. what i am going to say, though, is that it's an underappreciated risk to the extent that where is the surprise to the upside that's where i think it's going to stem from >> i mean, i'll not saying that earnings are not going to fall i just want to know whether that's your forecast or not. as we have more and more people on, i think very few are calling for lower earnings year-over-year lower secquentially.

>> people have forecast for s&p what we heard yesterday. what was it 1600 or something. people were talking about. if it goes from wherever it was in to 18 and you actually have a lower eps. >> if you have lower year-over-year earnings in 2019 for any quarter, then that -- i would call it an earnings recession. at this point decelerating growth is totally -- that's the second -- that's totally different, right you don't know whether you are foeshing first and second quarter to be below last year. >> we are not. we're foeshing a little bit of -- >> you're going with the conference board, which i saw -- i was surprised that they said that >> i was surprised about >> i think they're talking gsh i think they don't want the fed to raise. right? >> could be. >> we're going to thank both of these gentlemen. >> thank you, guys >> why it went up? why it went up >> yeah. >> if that's actually the reason -- >> april fool's joke >> i'm going with that >> that's actually the reason.

>> that's all i got. i got no other explanation for it >> you give me another explanation. >> i'll go with that, but that just seems like a not -- you know, that would make me wonder. >> about the entire -- >> putting my kids' college fund in bitcoin i might think twice about that >> coming up, a new report this is concerning a new report says hackers have figured out a way to trick tesla's autopilot into switching lanes. just -- >> it's incredible >> we'll somehow you -- >> we'll show you. >> we'll tell you how they did it next. >> we're going to tell other people how to do that? that's a bad idea. >> i got -- i'll write some code and tell you how they did it we're going to talk to the ranking member of the house subcommittee that oversees consumer privacy and get her thoughts on mark zuckerberg's call for more government regulation you're watching "squawk box" on cnbc

time now for the executive edge apple and other consumer brands have lowered prices for their products in china. the cut in the country's value-added tax kicked in yesterday, and the price tag for apple products dropped on the company's website. with discounts of up to $75 for some of the latest iphone

models, and the price of louis vuitton and gucci products dropped by 3%, according to local media reports. bmw and mercedes previously announced it would lower -- that they would lower prices following yesterday's tax cut. the move is part of china's effort to stimulate its slowing economy and narrow the price gap between it and some overseas markets. are those real louis vitton or china louis vuitton. >> they have real ones over there? >> yeah. >> down here where we don't. >> there's plenty of them over there. >> canal street, you mean? >> yeah. >> before the break, a new report from forbes seeing hackers in china have now found a way to trick tesla models -- model s's, we should say, specifically, into going into the wrong lane when it's using autopilot. what happens here is they are strategically placing some stickers on the road

just by putting these little stickers on the road, the car will then track those stickers as opposed to track the actual lane keen labs, which, by the way, is known as one of the sort of high-end -- i don't want to say high-end hacking outfits, but high-end engineering outfits has developed several attacks to mess with tesla's autopilot. one of these creating a fake lane with just three inconspicuous stickers on the road by the way, originally they tried to actually put lane markings, but they thought they were too conspicuous, and they were trying to see if they could do it without people noticing. on a test track, the hackers tri tricked the car into switching lanes. this to me not just represents a problem for tesla -- >> but for any auto -- >> this goes back to you will athe issues we've been talking about with these autonomous vehicles people are going to be doing all sorts of things to try to trick cars into different things all the time all the time >> we keep hearing that, oh, autonomous vehicles are five years away, ten years away you hear stuff like this, and

you think it's never happening you had some conversations our at silicon valley where you talked about other problems. >> so many people would say would you really want an autonomous vehicle going through the middle of times square would you want one going to an airport? >> that's pretty low tech, too zhoo that's pretty low tech. >> totally -- >> stickers. >> there must be some special kind of sticker. >> those are security concerns i mean, the things i'm talking about in that respect brsh by the way, one of the interesting things that i had not even thought about when i mentioned airports, there's at security issue. very hard for an autonomous vehicle today and possibly ever to actually deal with going to an airport or picking people up in an airport where there's -- >> trying to we've through the lanes. >> there are lots of cars or commotion. picking people up from a stadium. you think those are -- you would have thought it would be the first use cases. family would use one of these cars like a lyft to go to the airport or go to baseball games or whatever it is. >> way more complicated than we

were probably giving it credit for. i hadn't thought about some of those issues until you came back and talked about them, too >> maybe that was an infrastructure story it's possible airports could redo the infrastructure. then you see the stickers. >> when we come back, the countdown to jobs friday is on we're going to get an early read next from the paycheck small business report. we'll tell you which states are heoswa gwtt geroh. "squawk box" will be right back. at&t provides edge-to-edge intelligence, covering virtually every part of your finance business. and so if someone tries to breach your firewall in london & you start to panic... don't. because your cto says we've got allies on the outside... ...& security algorithms on the inside... ...& that way you can focus on expanding into eastern europe... ...& that makes the branch managers happy & yes, that's the branch managers happy. at&t provides edge-to-edge intelligence. it can do so much for your business, the list goes on and on. that's the power of &.

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president trump has threatened to shut down the u.s./mexico border to combat

immigration, but that move could also have a negative effect on trade and disrupt the flow of up to $26 billion of food imports to the u.s. from mexico. the largest avocado distributor in the world warns that the u.s. could run out of avocados, and that would be a serious problem. >> then you'd sit up and pay attention. >> yeah, a serious problem three weeks if mexican imports were stopped mexico currently supplies all u.s. avocados, since california's growing season is just now starting. it's not just avocados, either nearly half of all imported veggies and -- well, that's okay -- and 40% of imported fruits are grown also in mexico. >> strawberries, melons, all kinds of things. and it's not just the produce. that's going to be something we probably all will feel at the grocery store, but it's also issues, you know, you think about u.p.s. or other businesses that are constantly moving back and forth across, where nafta was really important to them i heard also some of the auto parts companies, the auto parts that the auto cars, the auto

companies are waiting for, that's going to get held up in the process, too. >> i was going to make a joke about the three mexican -- but i'm not going to, because people don't know it's a joke and i will get tarnished with saying it. >> yes. >> you know what i mean? >> you're correct. >> plus, probably not a good idea to cast dispersions at even a competitor about a flawed chyron, because there but for the grace of god -- >> glass houses. >> oh -- >> it could happen to any of us. >> never know what -- >> my favorite chyron we've done recently, though, is the new lift-hailing company from somewhere i think in saudi arabia, maybe, kareem? but we called it carrine, which is an awesome name for an autonomous company. >> going back in time we've had some doozies. >> it happens. hours of live television -- >> an i.r.a. and we had an

i.r.a. terrorist on the screen -- >> really? when we come black, we will talk about a stock that is careening. lyft having a bad day or could be a minor speed bump. we'll talk about it. what investors foresee is something fundamentally wrong? is there a longer honeymoon period for this stock? we're going to talk and discuss this with one of the underwriters from the ipo next investors should watch this. then later, we're going to get reaction to mark zuckerberg's call for more tech regulation with the ranking member of the house subcommittee that overseas consumer products. stay tuned a lot more coming up on "squawk bo x.

lyft falls the stock tumbling just a day after its market debut the bleeding continuing so far this morning is it a sign that you shouldn't rush into the ipo parade making the internet a safer place. facebook founder and ceo mark zuckerberg calling for better regulation we'll speak to the lawmaker in charge of the committee that oversees internet protection congresswoman cathy mcmorris rodgers is our special guest. and the state of new york taking another bite out of the big apple's most wealthy in a new tax on mansions that could hit sellers where it hurts, the pocketbook

that story, plus all this morning's market headlines as the second hour of "squawk box" begins right now ♪ >> announcer: live from the beating heart of business, new york, this is "squawk box. good morning, and welcome back to "squawk box. this is cnbc i'm becky quick along with joe kernen and andrew ross sorkin. the u.s. equity futures this morning have been relatively flat, but again, this comes after a long week or so of gains. all last week, markets were higher when you looked at the end of the week, up by 1.7%, and the dow up another 330 points yesterday, a gain of about 1.25%. this morning dow futures are indicated down less than a point. same story with the s&p 500. the nasdaq indicated down by about four points. let's give you the headlines now. boeing's upgrade to its 737 max software won't be coming as soon as expected, according to boeing and the faa.

the upgrade will be ready, they say, in the next coming weeks with some issues still needing to be addressed by the jetmaker, but that delay impacting airliners, especially airlines looking towards the summer rush, hoping to get those back into service. separately, most of the nation's automakers will be reporting their latest numbers throughout the morning. industry watcher edmunds thinks u.s. sales in march were down about 4% from a year ago ford and general motors only reporting on a quarterly basis but we'll get an update from gm this morning ford will report on thursday the dow jones industrial average getting a new member as of today. dow incorporated will begin trait traiding today see, it sort of makes sense. it's easier to join the industrial average following the completion of that spinoff from dowdupont. dowdupont will continue trading until june 1st, when it spins out another unit known as corteva agriscience and at that point, dowdupont will be simply

named dupont got all that >> i do. >> okay. >> i heard, yeah i guess walgreens has reported i didn't even hear what someone said in my ear because it was a mumble, but walgreens is now reporting earnings i don't have the actual numbers. it looks like $1.64 adjusted i'm going to take your word for it that that's right walgreens boots. and that would be 8 cents below expectations the stock isn't moving -- looks like it is starting to move. it's down about 1% right now try to get some of the other metrics on it. let me just check. yeah, the bottom-line number was $1.24, which would be even further away, so i guess that gets it somewhat close to where it's supposed to be. second-quarter sales, $34.5 billion. >> here's part of the problem, the fiscal year guidance fiscal 2019 adjusted earnings per share growth is expected to be roughly flat, at constant

currency rates, compared with the previous guidance they'd given of 7% to 12% growth. if you look at the street, street was up $1.60 in terms of estimates based on after earning $1.48 last year. so, that is going to be why the stock trends down. >> and you would call that basically flat in terms of earnings there all right, andrew. >> okay. after its debut friday -- >> now down 5%. >> it is now trading well below its ipo price of $72 our next guest was bullish on the name just on friday. does he still feel the same way? joining us -- >> there is a bid to lyft today for a reason investors are getting involved for a reason because of their growth potential so, there is an excellent case to be an owner of lyft today. >> does he feel the same way now? joining us now is john martinko, the co-president at drexel hamilton good morning. >> good morning. >> do you feel any differently >> no. >> do you feel better? >> feel the same. >> would you buy more? >> absolutely. and i think the investors who participated on this ipo, they

did add yesterday in their positions. >> you're saying -- >> well, somebody sold >> -- the institutions -- >> about 41 million shares traded yesterday somebody was on the other side of that trade. >> so, what do you think happened here? some people, including tom farley, who used to run the new york stock exchange, called this the perfect ipo. >> yep i saw his segment yesterday. and you know, the pricing, like he spoke about, it's more of an art and a science. you wish you could just take the indications of interest and dump them into an excel model and it spits out that $72 price lyft's initial range was $62 to $68, so in that ballpark is where a lot of the demand lied and might still be the sweet spot. >> and when you hear -- we also had keith meister on the show, i don't know if you saw him on the program. >> i did not. >> and he's a hedge fund manager, very successful, and we call him the titan of hedge funds. he said he sold on the open. so there were investors who were allocated shares -- >> right. >> -- on day one --

>> right. >> -- on day one who literally turned around and sold. >> right. >> i hate to say this. jpmorgan's one of the underwriters i imagine keith does a lot of work -- >> and credit suisse as well. >> and so they're giving a lot of business probably to certain funds that do a lot of trading with them. >> yep. >> but if you're lyft or if you're the actual -- if you're actually the company and you see people selling on day one, what -- >> well, there's a real number of every ipo that's ever come public where that's happened there's a number you could come up with. that's not new. >> at the same time, you want a little bit of sale you don't want nobody selling. >> you have to have liquidity, and i think they got up to 6, 7 million shares before they launched it. what i'm looking at, though, is that pricing, when it got to 20, 30 times oversubscribed, and you got to speak with management, you saw a lot of the excitement around this new transportation as a service and this sector coming what i'm looking at is, let's not forget also the government was shut down in the first quarter, so you have all this pent-up demand that helped drive

that valuation higher for lyft. >> okay. >> what? what does the government shutdown have to do with any of that >> so, the s.e.c. helps with the registration statements. so, for example, last quarter -- >> so you think because the ipo market was shut for the first two months of the year. >> absolutely. the ipo market, you couldn't take an investor like a lyft or uber or other tech companies are going to file and meet each other in the capital markets when you couldn't get your registration statement through the s.e.c. >> okay, but -- >> i wouldn't have wanted to, if you looked at the markets in december that would have been horrible timing to bring something -- >> absolutely. and one of the things we look at when issuing it, an initial public offering, is the volatility index you have to have that sweet spot one of the handles between 10 and 15 is a really good indication of good conditions. there's an inverse relationship between the volatility index and deal flow. so as the vix spikes, deal flow goes down. >> so just speak to this so, there are investors who on friday said to themselves, i

want to get in on this, i want to bet on lyft, i want to bet on ride-sharing. >> sure. >> they bought in the 80s, i don't know what price. they're now looking at this saying to themselves, i'm under water. you're saying hold, and what is going to be the tipping point at which you think the stock moves back i know we're only a couple days out, so this is all very early. >> exactly let's just all take a deep -- >> take a chill pill, i get it. >> a big, deep breath, a chill pill how could you spend two weeks on a road show, get intimate with management like you did, and exit the stock on first or second day of trading? you have to give them a chance to at least come out with their filings, with their earnings, with their numbers, to reinforce the thesis that you just invested in. >> so, tell us what you're looking for and what investors should be looking for come first quarter, the first time that they're actually going to disclose their next earnings report -- >> correct. >> what do you need to see for

the stock to move? >> you're looking for what they spoke to and reinforced their vision was and how they're going to build their company over the next two to five years. >> that's not going to be something you know tomorrow, next week or next month. this is going to be -- anyone who bought has some idea why they're buying lyft for whatever, to get in ride-sharing that's going to have to suffice for the near term. >> but your investor base, you do all this work and then you're like, i'm out. how do you make a decision like that >> that's the question >> how are you in business -- >> that's what i mean, people buying at the open, were they making decisions like that is this a case of a hype that sucked in retail investors who maybe didn't do the homework or not? that's what i wonder >> and you have those who actually participated in the ipo to get that $72 share price. >> right. >> and then those who bought in after -- >> you can't fault anyone who sold at $87. that's exactly what you should

have done. and anyone that was excited about getting it at $72, you could have got -- i mean, this is all based on hindsight now, but i'm glad -- you know, i was a stockbroker. i would have killed for 100 shares to give to my best client and this is what happens you buy allyou want today at $ below the ipo price. that's not a hot -- >> this goes back to what warren buffett told becky, right? >> well, yeah, and those were interesting comments to me but indirectly, people own companies when you have your series of investors -- >> right. >> people own these companies indirectly >> but you think -- let's just play this out. >> sure. >> 12 months from now, 24 months from now, let's play this and put it in the sort of former facebook camp. >> sure. >> this stock is worth what in your mind? >> you know what, it's hard for me to put a target price on individual stocks. what i look at is the overall market -- >> then why would you want to own it if you have no -- you just think it's going to be higher broadly

>> well, what i'm looking at, and becky, back to that doesn't make any sense to me, the government being shut down, and we only printed 18 ipos in the first quarter versus 54 in the first quarter of last year. >> but now you're talking about a capital flow story. >> exactly. >> you're not talking with a lyft-specific operations, i'm betting on this company story. so, which is it? >> right well, i am not an institutional investor. >> right. >> so i don't make those bets in the future what we do is we issue ipos to the public. >> right. >> we take that company from private to public. and i think, all things considered, this still was an extremely successful transaction. >> john, i should know the answer to this before i ask it >> sure. >> do you own shares of lyft >> i do not. >> okay. >> i do not. >> but specifically what metrics? i think this goes to the larger story -- is it a profitability issue, you think, that investors are going to ultimately bet on, or at least, when i say ultimately, even in the next 12, 24 months? is it looking to see the incentives, marketing costs come

down is it to see the revenue just ramp wildly? >> again, you're asking me to make a decision on a target price on something that i actually don't participate in -- >> it's a story stock. >> but you're talking buy side versus sell side i'm on the sell side, and i help these issuers go from private to public. >> right. >> what i'm telling you that -- >> during that process of a road show, there are conversations, i have to understand and imagine, with the buy side, trying to understand what they're thinking in terms of valuation. this is a company that had a $15 billion valuation in the private markets at the last round and then jumped, effectively, close to $10 billion because the public market decided to value it in a higher way, right? >> sure. >> so, the question is what happened between $15 and $25 billion, and what were the metrics that those investors were looking at that were different than the metrics that the private investors were looking at >> and that's what deployment of capital, and that's what i was trying to explain earlier, was in the first quarter, because

the government was shut down, that deal flow was not put to work. >> people were craving ipos. now they've gotten one that cured me of my craving. thank you, sir, may i have another? give me another one! no thank you. >> your slack, which is going public on the new york stock exchange, although in a different way -- >> that's going to be a direct listing. >> direct listing. you've got uber coming. >> uber's coming. >> you've got pinterest. we can go down the list. >> keep going. >> the lesson from this experience is what >> beyond meets. >> excuse me >> beyond meets. we have a lot of ipos in the pipeline. >> but the lesson, from this experience of the lyft ipo if you're the ceo, cfo or underwriter of these upcoming ipos, the lesson here in terms of what's happened is what >> again, that art and science of finding your initial deal price at pricing is the lesson learned. make sure you double-check and having good pricing. >> do you think this should have started at a lower price >> i think, again, based on the conditions, and when you start

to get into 20, 30 times oversubscribed, those issuers, the bankers at jpmorgan, credit suisse, jefferies did a phenomenal job pricing this thing. >> i have heard -- and let me leave you with this -- i have heard some critique, and this may be a critique of the underwriters, may be a critique of the nasdaq, in terms of building that book, that they should have waited an additional hour, that had they actually waited it out a little bit longer before the opening price -- >> sure. >> -- that they might have actually started at a lower price, not a higher price. >> i mean, i don't know if you're a sports fan, but this sounds very similar to a monday morning quarterback. >> yep. >> so -- >> looking at friday's pricing, and they should have done this, they should have went over here. all things considered in the aggression and the oversubscription of this transaction, this was an excellent deal. >> okay, john. thank you for being with us this morning. appreciate you walking us through it. when we come back, the paychecks small business report.

plus, mcdonald's ordering up another digital deal the details right after this break. and another big interview coming your way today here on cnbc. wilfred frost sitting down for an exclusive interview with bank of america ceo brian moynihan. catch that today at noon eastern time yoarwahi ted u e tcng "squawk box" on cnbc kevin, meet your father. kevin kevin kevin

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the paychex small business report from march has been released, showing the first job decrease since 2016. marty is the president and ceo of pay chew. we said it's a job grow growth decrease, but we're still talking about a very strong job market, correct? >> yeah, we are, becky what we're seeing, even with a decrease into march from february, in the first quarter, the decrease is the best -- this is the best we've seen in four quarters so, there still is good job growth it's just down from last year where we were, particularly for small businesses here under 50 >> so, what is that telling you? if you've had to take a step back and say here's what we see and what happened? and by the way, when we're looking at this graphic, you see that it's really the very northern and eastern-most parts of the united states where we've seen the decline what happened there? >> well, it really is, you know,

the south is still the strongest. the biggest problem these days is still for small businesses in particular finding the right employees, finding them and recruiting them and bringing them on board. the south is the strongest really helped by texas with oil prices coming back up. oil is starting to strengthen again. dallas is the number one city of the ones we're looking at, texas the number one state and houston even bouncing back so the south is strongest because of oil and energy and all of the small businesses around that. and wage increases, we're still seeing around 2.5% overall for businesses under 50, but it's really the strength is those 20 to 49, the 20 and up employee businesses are seeing 3% wage increases. the smaller businesses can't push the wages up quite that much they're lower. >> and what do you anticipate happening from here? i mean, if we're in such a tight jobs market, what does that mean for small business in particular >> yeah, i think it's going to continue to be tough for small businesses you know, they don't have quite the recruiting power, the benefits and the flexibility to

hire in a tight job market, so i think it's going to continue to be pretty stable there is job growth, but i think it's just going to be tighter as we continue through this year until things loosen up a little bit. now, you are hearing more small businesses hiring kind of from the fringe, so people that they wouldn't normally hire, they're bringing people in and training them themselves to get them into the jobs and get the work done that they're getting good news is optimism up a little bit from businesses, so i think they're getting the business, they've just got to find the people. >> when you say you expect the job market to loosen up a little bit later this year, what would spark that >> well, i think, you know, if we saw more of this kind of fringe that we're hearing from small businesses, that they're starting to hire people they don't normally hire -- they might hire folks with high school diplomas instead of waiting for the college degree to try to find those folks and then train them themselves so i think you'll see maybe a little bit of an expansion if they can find more people and do it a different way than they used to. >> do you always see a bit of an uptick just in terms of an

easier job market when high school or college graduation happens? may or june tends to be easier times to find employees? >> yeah, they do, they tend to although some of that hiring should already start happening here in this month of april, you know so we'll be looking for that, because they're already out in anticipation of those graduations, they're out trying to hire those frontline folks right now and make sure they've got them lined up when they graduate in the may time frame. >> marty, thanks so much i appreciate it. >> okay, thanks, becky. >> so, if walgreens is worried about generic alternatives to branded drugs as part of their reason -- >> that's why they're lowering guidance >> that's what they're talking about, but it's down 6% now, instead of -- but they're talking about earnings growth -- >> 6.66%. >> erpgz growth they were looking for 7% to 12%, now flat. but is it really because of that or is it because the economy is not what we keep talking -- remember retail sales? you mentioned it earlier today so, this is a big retailer. >> my gut -- i haven't read through the entire release -- my

gut -- i just read through the offering -- my gut would say the former, not the latter, but that's a good question to ask. >> the front end sales -- >> retail sales yesterday or was it last week >> they got the pharmaceuticals -- >> it was lousy again. that's a really good question. >> i just wonder whether this is another, you know, reason to say retail is not great, the economy's not great. i don't know, or is it really -- i don't know "squawk box," we'll think about that we won't know he oravany answers, but we're going to think about it we'll be right back. measure up?

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at therightquestion.org let's talk about this morning's market movers right now. dom chu joins us with all of them how are you doing, dom >> all right so, andrew, we've got a lot of them going on. we start with shares of walgreens. you mentioned it right before the break. they're down 6% or so right now, just around 40,000 shares of premarket volume the pharmacy benefits and health care retailer posted earnings that missed analysts' forecasts and cut its forecast to be flat growth, when previously it said it would have around 7% to 12% earnings growth, so that's

reflected in the premarket then shares of disney are higher by just around maybe 0.5% or so, roughly 2,000 to 3,000 shares of premarket volume the house of mouse getting analyst coverage initiated at rosenblatt securities, starting with a buy rating, $150 is the price target, about 30% higher than last night's close. they like the probability of success for disney's upcoming streaming service and the direct-to-consumer strategies they currently have, so we'll watch that and we'll end with shares of lyft, below the ipo price of $72, down another 2.5% on roughly 60,000 shares prevolume. it's initiated as a accelerating by stock analysts at seaport securities the price target there is a whopping $42, well below where we are now they cite things like the continuing trend of people wanting to own their own vehicles as their primary mode of transportation, and that current valuations reflect an overly optimistic view of consumer behaviors nevertheless, shares $67.25 in

premarket trading. back to you. >> they really said that, huh? >> yeah. and i'll tell you what, i'm one of those guys who likes owning my own car. >> me, too, but we don't need to stop the presses for that, do we that's what they came up with, that people like to have their own cars >> but they said that -- >> it's going to last longer than people think. >> well, $72 per share maybe reflects a little bit too much optimism -- >> $42 we just had a guy on talking -- i didn't hear him say $42. >> todd white at davidson started preipo with a $75 price target on those shares, right? >> yeah. >> so -- >> it's going to be -- andrew, like you said, it's going to be a revenue thing, for, like, five years it's going to be a revenue thing. >> it's going to be a revenue story. it's going to be how much you have to spend to get that revenue. >> well, to be fair, analysts at seaport also said that they do see the ride-sharing macro picture growing and that there will be competition and lyft will be one of them but that the whole market is maybe a little bit too optimistic for what

these guys are seeing in terms of -- >> it's funny because all the stuff we talk about with autonomous vehicles and the tesla store today, it's a labor problem. it's paying drivers. that's the problem you need to not pay the drivers to make money, right >> one or two things you either need -- >> autonomous -- >> -- the cost to come down so you don't pay the drivers or you need a fundamental social change in which we're really all jumping in cars together if you can get three or four -- >> or autonomous driving to pick up and there will be no more people to pay to drive the cars, which based on the hacking stories we've been hearing about today -- >> they're all related -- >> you either need more people in the car -- >> or a driver. >> i was recently in a lyft vehicle where the guy was telling me that he day trades on the side to help supplement the income he makes from driving for uber and lyft. >> so, this is very much a gig-type situation, right, for these drivers. a lot of them don't do it as their primary mode this is all part of one, big

collaborative collage and portfolio of jobs these guys are doing to kind of -- whether it's to make ends meet or just get some money on the side, i don't know if the driver dynamic really is going to be one that we have to focus on hugely, although you know, you never know with uber coming up, that conversation gets a lot bigger, too. >> well, they've got to make sure they look at the background of all of these drivers, too that's another story we haven't talked about get in a car with a stranger, you'd better hope they've chengd them out a little. and they do. thanks, dom. joining us now with picks for your portfolio, bill smead, er ceo of smead capital management. shares are up more than 8% year to date. how much lyft you got, bill? are you buying it with both hands right now or not >> you know, joe, this is one of the great junket yours you know, growth has been tarring and feathering value for years, and now we've reached the crazy stage where businesses

that are losing money very quickly are being valued at multi, multi billion-dollar levels, so -- >> that's a no >> that's a no. >> that's a no okay, but you led into your value proposition, so what, wells fargo represents value to you at this point? you like that stock. >> you know, john templeton said, when you can see the light at the end of the tunnel, it's too late and this is a banking business that has a lot of really good control over the depositors and also has excellent mobile banking technology, which means that they have a good relationship with the millennials that will drive, you know, the spending the next 10 to 15 years. what it doesn't have is a leader that can get along with regulators and contribute to the

improvement and morale that needs to happen for them to be as successful as they need to be, but at 9.7 times earnings, you know, that's a pretty darn good risk-reward relationship. >> all right that's one how about home depot what is your thesis for the home improvement chain? >> you know, it just, it boggles my mind that, you know, costco's worth 28 times earnings, and home depot is going to have costcolike success, we believe, over the course of the next 10 to 15 years as the largest population group participates in household formation and home ownership. so, one of two things has to happen -- the homes in the united states are 45 years old, the oldest they've ever been on average in u.s. history, so they're dilapidated. they badly need a lot of facelifting. and then secondarily, we have a lot of homes to build because there aren't enough homes right now -- there are in manhattan, but there aren't in most other

plac places because the homes need to be affordable in the $300,000 to $400,000 range, and we've got to build a lot of them. so i can't imagine it's going to be a great air for home depot. and why wouldn't they, after a couple decades of 10%-plus compounded earnings growth, why don't they get the multiple these other folks get? >> okay. and then target not an underowned name. everyone's heard of it, obviously. why target seems like most people know that story. >> target is a comeback story that's about halfway through the comeback you know, they had a terrible me mess-up in canada four or five years ago. and what they've done now is they've narrowed in on dramatically improving their stores and making them the most friendly to the shopper that's shopping both online as well as coming to the store. so, there's an amazing amount of

brand affection there. and then, of course, mathematically, again, there's 45% more people going to be in the 30 to 45 range than there was the last 10 to 15 years as the millennials replace the gen xers, and that's going to put a lot of moms and dads with one or two kids roaming through that store. >> maybe the millennials are going to turn into the gen xers. >> you know, it's interesting, joe -- >> what? >> aren't you hoping >> well, yeah, but they eventually figure -- well, that's just -- that's what happens to everybody as you get older. >> well, we'll see i don't know we didn't have all those phones, you know, poisoning our mind, you know, all that stupid stuff online and social media. >> they didn't have to walk up hill to school both ways >> hope springs eternal, bill. i'm hopeful. i'm hopeful. move out of the basement get a job. get married. have kids. buy something. all right. thanks, bill >> thank you. >> all right, i figured you'd be

with me on that. i'm joking it's a tick. >> schtick. >> right. >> yes. when we come back, after much scrutiny, congressional testimony and controversy, facebook founder mark zuckerberg wants to make the internet a safer place. ranking member on the committee of commerce which has supervision on privacy, cathy mcmorris rodgers is our guest right after this break right now, though, as we head to that break, let's look at the u.s. equity futures. dow futures down 14. the future of technology investing lies beyond the tech sector.

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still to come this morning on "squawk box," senator rob portman's going to join us to talk trade he's our guest at the top of the hour then, with efforts to legalize marijuana stalling in new york and new jersey in recent weeks, the ceo of acreage holdings joins us to discuss where the cannabis market goes from here. also, a huge week ahead for

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mark zuckerberg recently called for more federal oversight of the internet. so, will congress respond? for that, we welcome congresswoman cathy mcmorris rodgers of washington state. she is the ranking member of the subcommittee on consumer protection and commerce, which has jurisdiction over privacy on the internet congresswom congresswoman, thank you very much for being with us today. >> great to be with you. thank you. >> what do you think when you saw zuckerberg's post? are you taking him at face value? >> two major concerns that i have with mark zuckerberg's facebook -- the post in the op ed one is the government regulating free speech and content. the government should not be doing that that is a violation of our first amendment, free speech rights. and then number two is his suggestion that gdpr is the framework that we should be following as we address privacy in america gdpr has resulted in, yes, facebook and google doing well in their market share, but for the small guys, the start-ups,

it's created significant barriers to entry. we're talking $1 to $10 million in costs associated with complying with gdpr, and that's a significant barrier for those start-ups that we cherish in america. >> just for those who don't recognize it -- most of our viewers do -- but gdpr is the eu's version of regulation that they brought down. do you think regulation is likely to come in this congress? >> i believe that congress needs to act i believe that we have a window here where we must act, because the eu, as you said, has passed gdpr america needs to take action we have a patchwork developing of state laws around privacy we need a national standard. i've laid out four principles. one is the national standard to preempt what is happening at the state level. two is the importance of transparency and accountability. the individual has a right to know what data's being collected and how it's being used.

we need data security standards and we need to make sure that we are protecting those start-ups and the small businesses that is what america's all about, and we don't want to do something that's going to stifle innovation and those next tech start-ups. >> congresswoman, i wanted to read you just two lines from mark zuckerberg's op ed in the "washington post" about the free speech issue which you just commented on he says "lawmakers often tell me we have too much power over speech, and frankly, i agree i've come to believe we shouldn't make so many important decisions about speech on our own, so we're creating this independent body," and effectively, he's asking you and the government to make those decisions. why don't you think the government should be making those decisions, and if not the government, who? >> well, they, facebook and companies like that have a responsibility they need to be taking ownership and setting standards and

requirements for engaging in the free flow of ideas and speech on their platforms. their platforms are in -- you know, that's the public square now today. >> -- your version of hate speech may be different than somebody else's, and this is where we've come into the debate about what speech should be protected and what speech shouldn't be, both under the law and under the social norms of what's taking place right now. >> right we need the free and fair discourse in the public square, and internet platforms, these social media platforms have a responsibility to ensure that we have a free and fair debate within the public square if we -- one of the areas that we're looking at is the federal trade commission the ftc currently has the responsibility for ensuring that that is being protected, that the free and fair discourse on the public square's being protected. and one of the areas that we are looking at is whether or not the

ftc needs more authority for sanctions and fines when a company is not ensuring that that is happening. >> i guess just to that point, you say the time is ripe for having some form of regulation, and i hear that from both sides of the aisle at this point have you actually talked to your colleagues on the other side of the aisle to find out if you agree how that should happen because as much as i think this is an area that everybody would like to have some sort of common ground, my feeling that i get when i dig a little deeper is that both sides have their own issues, and i'm not sure that they would cross >> i have had those conversations. >> what are you hearing? >> with the chairman of the committee. we've had one hearing on privacy in the house we need to have some more hearings on privacy. there is a recognition there is some urgency around this that we need to act we don't want others, whether it's the eu, china, or russia, setting the rules of the road. we as americans need to set this

standard we need to pass a federal law that makes clear how we believe that this needs to be addressed. and we're talking about kind of the principles that we can agree on in a bipartisan way we're going to have some more hearings and the goal, i believe, is that, you know, there's some urgency around this. we need to act by the end of the year. >> do you think that actually happens, though? you'd say yes if you had to bet on it that you will find common ground, find legislation >> it needs to happen. >> what are your odds when you actually look at it actually happening? because we talk about things even like infrastructure that you think would be a no-brainer, and that has trouble. >> there is a growing drum beat in america around privacy, around data security, and america needs to act or others are going to be setting the rules of the road. >> are the technology ceos going to play a role in this are they going to be helpful, or do you think it's going to be an adversarial relationship >> well, california has passed a

state law. washington state, where i'm from, is just about ready to pass a state law there is over 90 proposals in different states across the country. clearly, states are starting, you know, some have acted and others are planning to enact laws at the state level. that creates the urgency for the federal government, for congress, for the elected representatives in the house and the senate to pass a federal law, or we're going to end up with a patchwork at the state level. >> which is maybe why you see zuckerberg and others a little more open to the idea of regulation on a federal level? >> well, i think that there's a recognition that that patchwork is not going to be possible. it's going to make it very difficult for companies, for businesses, and especially for the small guys, for the start-ups, to comply with a patchwork of laws at the state level, which is creating this urgency for congress to act. >> congresswoman mcmorris-rodgers, thank you for your time today. >> good to be with you. coming up, new york taking

yet another bite out of the big apple's most wealthy a new tax on high-end homes in a market that's already been declining. i'm just glad you can't put your home in like a stock quote and get a current quote on it, because -- >> you can it's called zillow. >> oh, boy. >> don't do it. >> are you in a bad mood is that what -- did you look at -- you didn't. >> no! but if you go onto zillow, it will tell you the price of your home put your address in. see what happens. >> i'm out there where i have my own parking space, right in front of my door it's incredible. what an idea anyway -- trees, dogs. we're going to discuss that after the break. then at the top of the hour, senator rob portman joins us to discuss the new nafta and trade with china "squawk box" will be right back. so, you're open all day, that's what 24/7 means, sugar. kind of like how you get 24/7 access to licensed agents with geico. hmm? yeah, you just go online, or give them a call anytime. you don't say. yep. now what will it take to get 24/7 access

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you're looking it up now >> i am. that's unbelievable. welcome back, everybody! new york just passed a new tax on high-end homes, adding more pressure to a market that's already in decline robert frank joins us with more. hey, robert. >> hey, we canny also unbelievable. new york real estate just had its worst first quarter since the financial crisis, and the state's answer yes, higher real estate taxes. manhattan real estate sales fell 3% in the first quarter with the lowest number of sales in over a decade total sales are down 36% from their peak in 2014 the decline has now stretched for six straight quarters.

first time that's happened in the more than 30 years since they started collecting data inventory is up. medium prices were flat. and the discounts are now getting steeper. what started as a high-end correction with the glut of high-end, highly priced condos is now cascading down to the entry-level market that's under $1 million now, there is now a 19-month supply of new construction that's up 57% from last year, and it's not likely to get better any time soon the federal tax changes are hitting real estate prices in many high-tax states because of those limits on state and local deductions this weekend, new york added salt to the wound -- get it -- and passed a mansion tax at homes priced $2 million or more. it's a sliding scale starting at 1.25% on homes between $2 million to $3 million, rising to 4.15% for homes over $25 million. it's expected to raise $365 million a year, so ken griffin would have paid $9.9 million tax

on his $238 million property that sale, by the way, boosted the entire average sale price for manhattan real estate the first quarter by $112,000. the average sale price now at $2.1 million >> okay, so it's gotten worse for -- it's trickled down to -- you know, it's hard to say trickled down to homes that are just under $1 million, but in new york -- >> that's the entry-level market, yeah and so, and what's really happening is that homes are just sitting on the market. i mean, the average home is now taking nine months to sell the bigger homes are taking 15 months or more to sell so, the market's frozen because sellers are still stuck in the 2015-'14 price mind-set -- >> that was the peak >> that was the peak. >> we've got to decide what it is -- remember that movie? you've got to figure out what it is you really want you want affordable housing or do you want a housing boom it's like long island city >> they're becoming more affordable. >> long island city, you can get

an unbelievable deal on a house now. >> now. >> is that good to the people that didn't want amazon coming that's what they wanted. and i'm not saying that's wrong. >> you talk to them and they do say prices coming down is good that's the way they think about it. >> why do you -- >> it's not going to become affordable. >> you slump in your chair why do you get depressed about this it's cheaper housing for the people that -- >> it's a complete problem it's the absolute backwards way to do this >> you woke to the woke again! >> on this i'm woke to the woke. >> you own property there? >> on this i'm woke to the woke. that's not why that's actually not why. because i've seen the vicious cycle you can create, because if the prices come down, by the way, at some point, real estate taxes will come down because they'll have to reassess the actual value of the property and then all of a sudden you have less revenue all across the board. >> that's the real question. >> and the fallacy -- >> although they are so slow to reassess. >> i get it, but long term, and there have been towns and cities and villages in the state of new york where you're starting to

see this. >> yeah, and this makes new york city's transaction cost, the cost of buying an apartment, the highest in the country. >> uh. why would you do it? anyway, for more -- oh, boy, and we're going to go to our debate now. for more on taxing the wealthy, let's bring in mike conzale, a fellow at the roosevelt institute and club for growth president david mcintosh all right. i'm going to start with you, mike i was looking up some figures right now about taxing the wealthy. so, the numbers are -- you know what they are. the top 1% pays 40%, whatever it is top 10% pays more than the bottom 90% to make it better for you, you'd think maybe we'd do better in terms of revenue versus spending at the government. what should the 1% actually pay, if 40% isn't enough? would 50% be better? and for the top 10%, instead of paying 90% of taxes, should they -- what, should they pay

100% what would be more progressive for you? >> well, remember, when you look at those numbers, the 1% pay so much in part because they make so much. >> no, i know. i got it >> it's their share of the bubble that's a big thing. >> but what number would you better for you, do you think where would you like to go, 50%, 60%, 80% >> for the top marginal -- >> top 1%, how much of the total tax bill would you like them to pay? >> well, the curve will probably hit its peak around 80%, so we shouldn't be above that, but if we could go back to the eisenhower rates of say 70% and have a very productive economy that worked very well for all americans. now, it's important to distinguish between income taxes and wealth taxes, which we -- right now we do tax wealth in certain kinds of ways, for instance home prices and home taxes. and there it's a very different story, where middle-class people generally pay twice as much on their wealth than the very wealthy because the very wealthy hide their money in, you know, overseas, or it's in forms of wealth that isn't taxed very highly

so, i think looking there would be a more equitable way to -- >> we're talking individual taxes there. let's talk corporate taxes, because you also didn't like the tax reform law there that you said was rushed, i think, even though i think obama talked about cutting corporate taxes for eight years, just never got to it. i'm not sure how much of a rush it was but do you have a problem with u.s. corporations just having a more competitive tax rate than global corporations? and i hope you're not just going to tell me that their effective tax rate was much lower, because they did pay more. and you would like assets to come here, not be left offshore. you'd like to be able to be competitive globally, right, or am i wrong on that you'd like to go back to where we were? >> i think the way that president obama and many other people, not just on the left, looked at say about a 23% to 25% corporate tax rate, which is much lower than it was before, but that was deficit-neutral and largely got rid of loopholes. >> but that's not what you were saying you're not talking about deficit neutral. you're talking about, it's a

gift of the wealthy, cutting corporation's taxes when -- >> right. >> no, you're not saying you wanted it deficit neutral. your point was you didn't want to cut taxes on corporations at all, or did you? >> i think most people were in favor of making the corporate tax code more competitive, but not in a way that just made them pay less taxes overall, but made them pay taxes in a way that was fair and more open for other corporations. >> okay. >> i think at this moment, giving hundreds of billions of dollars to corporations when corporations are already incredibly profitable -- >> wait a minute, it was their money. you're not giving them anything. you're taking less away. david, we have only a minute left you have a lot to work with there, but you can handle it. >> look, lower tax rates have been beneficial for everybody, particularly the middle-class americans. wages have gone up $2,300 per family over the last year. lowest unemployment in 13 years. you've seen 2.5 million jobs created. when you have lower taxes, everybody benefits and same thing on the wealth tax.

the whole vicious cycle that you guys mentioned was going to happen in new york, and i think you're right, on the property taxes, will happen on income if we go to 70%, 80%. you'll see fewer people working because -- or investing their money, because they don't get the reward for it. >> yeah, you know, there's -- i can't remember, maybe it was annie hall, where, we're never going to get to an answer on this, mike and david, because you're going to say one thing, david, mike's going to say the other thing. i need god to come in, or marsha marshall mccrewen in annie hall. they're talking about him, no, he said that then marshall came up -- >> here's your answer. >> we need god because we're never ing goto settle this. thank you both we'll continue the discussion eventually

lyft sees some drag. the ride-hailing company seeing a drop in its second day as the public company is now below its ipo price and trading down in the premarket. delays at boeing the planemaker says a proposed software upgrade for the 737 max will take loppinger to submit fr approval than previously thought. and the united states of weed -- >> marijuana and you can sign for it right here. >> efforts to legalize pot

collapsing to the east coast in recent weeks, so where does the industry go from here to find growth final hour of "squawk box" begins right now ♪ >> announcer: live from the most powerful city in the world, new york, this is "squawk box. good morning, and welcome back to "squawk box" here on cnbc, live from the nasdaq market site in times square. i'm joe kernen along with becky quick and andrew ross sorkin the futures right now are flat they've been flat most of the session, although the nasdaq has turned positive is now is up four points. actually, the s&p is also up, up a point and a half or so the dow continues to trade lower. walgreens is one of the problems today. walgreens boots, which is a very, kind of a flat forecast for growth, versus a 7% to 12%

previous -- sorry, i'm stealing your thunder, andrew quickly, treasury yields spiked from low levels, obviously, but back to 2.50 -- >> spiked from 2.35. >> we were 2.30-something -- >> a week ago. >> now almost 2.5. let's talk about what joe just mentioned dow component walgreens out with quarterly earnings just a short time ago now the drugstore chain operator reported adjusted quarterly profit of $1.64 a share, 8 cents below estimates. revenue also falling below forecast as well and walgreens cut its full-year earnings forecast, noting market challenges that have accelerated. you're looking at that stock now down about 8% this morning and the big question now, is this a function of the retail issue? is this a drug issue how do you think about that? cvs also falling, down 2%. >> interesting, though, that cvs only down 2%, which at this point tells you investors are

thinking some of this is walgreens-specific we'll see if that pans out after you hear the conference call. meantime, here are other stories investors will be talking about today. boeing says it will submit a software update to the faa for its grounded 737 max planes in weeks. that's a delay earlier it said they planned to deliver a fix by last week the faa must examine boeing's software upgrade before the 737 max gets clearance to fly again. more than 300 max jets have been grounded worldwide following two deadly crashes boeing's shares this morning down by about 0.6%, $389.20. shares of lyft tumbling below its ipo price on its second day of trading. that stock fell by about 12% during yesterday's session check it out this morning and it is down once again, another almost 5%. that's a decline of another $3.35. $65.70 is the latest trade for lyft of course, a pullback is not unusual on the second day of trading. here's a look at some other

high-profile ipos. lyft shares down by almost 12%, facebook off 11% after its first day of trading, twitter down about 7.2% snap was the exception, up by more than 10% on the first day of trading of course, we are also awaiting the latest data on february durable goods orders those numbers are due out at the bottom of the hour economists are expecting a 2.1% decline in orders after a gain of 0.3% in january president trump's threat to close the southern border is sending chills through places like southern california, where the economic impact could be severe scott cohn is in san diego this morning on the story scott cohn, the cnbc guy >> our friend. >> reporter: that's me that's me. i'm still around and down here at the border. we're near the san ysidro border crossing in san diego. this is the busiest land border crossing in the world with 130,000 people, roughly, crossing this border every day they're going to work, they're

going to school, they're visiting relatives, they're going to dinner, all the while spending money on either side of the border you shut that down, and of course, you shut that off. we spoke with one woman who works for a transportation company. she lives in the u.s the company has operations on both sides of the border, so she has to cross multiple times a week she expects with a shutdown, she would be laid off and she would not be alone >> you are affecting hard-working people that are just looking for a better life so i don't think it's fair that you affect most of the community just to stop a few of the illegal immigrants >> reporter: and of course, it's not just people. about five miles from here is the otay mesa crossing where the trucks go, about $5 billion in trade between the u.s. and mexico every year. we're talking machinery, cars and car parts, fuels, agricultural products. you've heard about the talk of avocado shortage in the u.s.

within three weeks the shutdown or not, homeland security is already talking about moving personnel from ports of entry here to other parts along the border to stem what they call is a crisis that means that there would be more delays at the border and time is money, an issue that is continuing to go on. and a lot of people here are talking about will it happen, won't it happen? they do know that when the border was shut down for a matter of hours back in november, according to the local chamber of commerce here in san ysidro, it cost just the local businesses about $5 million just out of a matter of hours so multiply that if we have a lengthy border shutdown. >> okay, scott i know it's very early on, but have you heard of businesses coming up with contingency plans at this point? should start thinking about some of the big companies, too, that would be pretty drastically affected by this, somebody like a u.p.s. >> reporter: well, it's hard to come up with a plan when you don't know exactly what the administration is planning but again, the one thing that they do know about, that

homeland security has said, is that they're going to move personnel away from these ports of entry again, that's going to create delays for all of the commerce that's going on. and at this point, you can do little more than just kind of grit your teeth and get through it, until we know exactly what there's going to be. there are also a lot of people who live in mexico, work in the u.s. we know about labor shortages. that's going to be an issue. and the bottom line is that if this does happen and it does go on for a long period of time, it's going to mean higher prices for consumers here in the u.s. >> scott, thank you very much. scott cohn right now let's bring in someone with a big stake in this conversation as well as the power to potentially help u.s. trade policy and the impact that it has on that ohio republican senator rob portman also served as u.s. trade representative under president george w. bush senator, thanks for being here today. >> becky, thanks for having me on. >> what do you think about what scott was just telling us? >> well, it would be terrible for the economy, and as he said,

about $1 billion of trade across the border every day, so you know, we do need to be sure that we keep the ports of entry open. the president's point is a good one, though. there is a crisis at the border. we have 4,000 people a day now being apprehended. mostly it's families and a lot of kids. so we do need to change some laws which would be much more effective than shutting down the ports of entry the problem with shutting -- >> senator -- go ahead finish your thought. >> the problem with shutting down the ports of entry is people will tend to come in in other places, not just the ports of entry and so, you know, it would disrupt commerce, but i don't think it would solve the immigration crisis. >> you know, my understanding is that a lot of the crush of people who are coming across at this point, coming across the border and asking, applying for some sort of -- >> asylum. >> -- asylum on this are coming in through the ports of entry anyway so, what would be the correct way of trying to address that? >> yeah. we need to change the laws right now people from central america, primarily, the northern triangle countries see an advantage in coming to the united states because we don't have the capability to be able

to detain people and under law, we can't for more than 20 days when there are children involved. so families or unaccompanied kids and so, they are allowed to go into the community, pending a hearing, and a lot of those folks don't show up at the hearing. and those that do, i think the number that get asylum is about 10%. so, there are ways to deal with it mexico is starting a pilot program which has been helpful i met with the secretary of dhs on this last week where they're actually allowing people to come back into mexico pending the hearings that seems to have a positive impact because folks that have a legitimate asylum claim tend to be sticking around and those who don't tend to go back home, or perhaps staying in mexico. so, there are some solutions here that are short term, but the longer-term solution is to come up with immigration reform. >> i think about immigration reform possibly being able to make its way through congress and through senate at this point, and it's hard to imagine that that could work is there any behind-the-scenes movement to try and build any

bipartisan support, something that could pass both houses? >> yeah, there is. if you listen to what the administration is saying, they're talking about more enforcement along the border, which is definitely needed, and then other folks on the democratic side are talking about being sure that the daca, young people who came here with their parents through no fault of their own are given some certainty. those deadlines are coming up. there's also the folks who are here under what's called tps, temporary protected status there's a strong urge on the democratic side to deal with that issue, because again, some deadlines are coming up where people don't know whether they can stay here with work permits. so, there is an opportunity here for a trade. >> that deal kind of came and went you really think it's resurfacing? >> i do think, because it's very much out there yesterday i did hear from some democratic colleagues about their concern about, again, deadlines coming up for those people who are here in uncertain status, including these young people, but also the folks who are from about ten countries around the world where there's a lot of strife, where they've come here under temporary protected status so, i think there's an opportunity to move forward. it may not be -- >> the last time that deal

surfaced, it was the president who shot it down have you spoken with the administration would they be on board with something if there were different levels of border security spending? >> i'm confident that they would. recall that we're heading into september before long here, and when we get to september, we're right back into this funding issue, so we've got to come up with a longer-term strategy for the border at the same time, there's a strong interest on the democratic side to handle these other issues, and on the republican side as well. so, i think there is a basis for something. >> that's interesting. >> and my hope is that part of that will be dealing with this issue we talked about earlier, which is an incentive for families to come to the united states >> okay. senator, let's talk also about what we've seen in china markets were up pretty sharply yesterday after we saw some of the best manufacturing numbers that we've seen in china in more than nine months, maybe suggesting that their economy had bottomed out we've talked a lot about how our markets have not been down nearly as much as china's markets during trade talks between the two of them, how our economy has been much stronger than their economy clearly, they haven't gotten out of the woods yet, and you may

not be talking about the economy really picking up, but if it has b bottomed out, does that change the dynamic in terms of our trade talks with them, or is there still a lot of urgency to get some sort of trade agreement done between the united states and china? >> oh, i think there's plenty of urgency. their economy, first of all, is not as strong as they would like it to be, and that's really the point. they're not creating the jobs they need to be able to bring people into their urban areas, and this is a concern that they've had. but second, we have something on track here that looks pretty positive if you look at what happened just in the last couple days, they have agreed to buy some more soybeans, which for ohio, that's a big deal. they've also agreed -- and they did that unilaterally, in other words, without getting any concessions from us. they also agreed just yesterday to finally put on the controlled substances list all the analogs, all of the synthetic opioids that are similar to fentanyl, including fentanyl, which is something we've been calling for for some time. that takes away a sticking point

for us that's very important, particularly for states like mine ohio has been slammed with these fentanyl imports coming from china. so i see some positive signs the vice premier is coming here to washington today. we just had a report back from secretary mnuchin and lite heisser who were in china making progress on these issues, like the tech transfer, dealing with intellectual property and dealing with the state-owned enterprise so, i think there is a deal to be made and it will be in the interest of both countries to get this resolved as early as possible. >> we were talking earlier with congresswoman cathy mcmorris rodgers, the ranking member on the committee in the house that does oversight for internet privacy. we talked with her about what she thinks of mark zuckerberg's idea that, sure, he's now calling for regulation when it comes to internet data, internet privacy. where do you think that stands what would you like to see happen when it comes to regulating the internet? >> well, i think the tech

companies have changed their minds, haven't they? >> yeah. >> and they've done so because individual states, including california, put in place their own privacy standards. and as that california standard starts to be implemented, i think you'll see even more interest among those companies in having a national standard that would preempt the individual state standards i think there are about 13 states that have done something or in the process of doing it. so, it's a different ball game now. it's a tough issue because there aren't a lot of guidelines as to how you would do it, but i think there's now kind of a consensus among republicans and democrats and, significantly, the tech community that something needs to be done at the national level to provide some standards. so, the congress department's working on something chairman wicker's been talking about it i don't know exactly what will be the substance of it, but i do think there's a much better prospect of it happening now. >> senator, i'm thinking about jumping on the mets bandwagon. >> well, you know what, crystal meth is coming into ohio now instead of some of the other opioids -- >> mets! mets >> new york mets >> oh, i thought you said meth

>> no, god >> i was worried about you, joe. >> based on the issues that -- >> i was worried about you hey, the reds' opening day was awesome! >> the reds have the same record as last year again, .333, 1-2. >> oh, 1-2 now listen, you should have been there opening day. you could have been the marshal in the parade. >> thanks for the invite no, what i'm really doing -- everybody in my ear when they said i'm going to be a mets fan, they screamed, "no, no, no!" because they think -- >> you have the kernen curse any team you root for loses. nobody wants to be associated with it -- >> the mets have great pitching, two great new outfielders -- >> i'm jumping on the mets bandwagon. mets >> when you jumped on the sixers bandwagon, they lost. >> no, sixers were doing great -- >> they were until you became a fan. rangers. >> don't give up on your hometown mets. they're coming back. >> don't look a lot different from last year so far, rob. >> better pitching, two great outfielders. joey votto, mvp here

we'll see. >> we'll see i'll give them another week. >> mets, meth, they all sound alike. speaking of meth, we're going to take a closer look at marijuana and where that is headed in the second quarter and beyond acreage holdings ceo kevin murphy -- has nothing to do with meth yw, tegue. anayafr a break to talk pot growth prospects in the u.s., legalization successes oh, wow. you two are going to have such a great trip. thanks to you, we will. this is why voya helps reach today's goals... ...all while helping you to and through retirement. can you help with these? we're more of the plan, invest and protect kind of help... voya. helping you to and through retirement.

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welcome back to "squawk box" this morning efforts to legalize marijuana in both new york and new jersey have now stalled in recent weeks. lawmakers in new york's capital albany just passed the annual state budget, excluding legislation for marijuana for adult recreational use joining us rights now for more on where the industry goes from here is acreage holdings ceo kevin murphy good morning there's been a lot of talk in those states as well as others about the potential tax benefits to help some of these challenged budgets. that seems to be one of the impetuses to actually put this to the fore. where do you think we stand right now? >> well, i think we stand right now at the cusp of medical

transitioning over to adult use. >> right. >> 33 states now have a medical program of which 10 are adult-use program. but each state that is getting more and more comfortable with the plan and really destigmatizing the plan. we now see a lot of these states transitioning because of the economic benefit from medical use to adult use we believe that, yes, disappointed with new york, new jersey, but in fact, it's really not a matter of if, it's a matter of when. >> what do you think of the tax revenues that have been brought in in some of the states that have actually legalized this i'm thinking of colorado i'm thinking of washington where the expectations were not ultimately met in terms of how much money it brought in >> you know, in states that have fully legalized for recreational use, tax dollars are coming in, but make no mistake about it,

the black market for cannabis is anywhere between $150 billion and $200 billion so it's still a prolific marketplace. we capture probably $10 billion to $11 billion of that today so, our competitors are not the crescos or the gtis. it's really, frankly, the black market itself. >> is there an analogous industry that went from black market to legit market that's a good analog for all of this? >> i think alcohol -- >> not in 80 years. >> that's an easy one. but i think that people misunderstand cannabis believing that it's the scary plant of yesteryear. and that's because it's a schedule one drug and we haven't really been able to study the medical benefits of cannabis for 100 years. schedule one drug means it has no medicinal value, but 95% of the country -- >> but that's also because you hear horror stories of people who now, of teenagers, you know,

smoking a joint today is very different than smoking a joint 30 years ago we've talked about this a lot on this set, right? >> and drinking green alcohol today is probably as bad as -- >> but two wrongs don't make a right. if you're saying it's terrible, too. >> two wrongs don't make a right. but clinically, nobody's ever died from smoking cannabis, and tens of thousands, if not hundreds of thousands of people die every day from, frankly, the effects of -- >> i don't know that's true. if you're inhaling and smoking anything, i think you can say that that's not a great idea if you talk to the fda commissioner, scott batley, people tell you just that. if you're talking about taking cannabis as a medicinal purpose and using it through a different injection, maybe that's a different story, but inhaling anything through your lungs is not a good idea. >> probably not. and that's why cannabis has really transitioned from smoking cannabis to the derivative products -- tinctures, edibles, vaporizers, making it for a much healthier delivery than smoking

the plant itself, and we're seeing more and more of this transitioning to the derivative products. >> we've got to run, but quickly. you look at a state like new york, do you think it's back on the ballot a year from now >> i think it's back on the ballot in may. >> in may. >> and i think in 90 days we're going to have a different conversation about new york, new jersey, illinois, and a lot of these states on the cusp. >> kevin, thanks for being here. >> you bet. >> good to see you. when we come back, wall street waiting eagerly for tesla's first quarter delivery numbers, as elon musk's legal team prepares to go to court later this week to defend the tesla chief over one of his tsee we'll preview that hearing as well as tell you what to watch in tesla's delivery data what if other kinds of plants captured it too? if these industrial plants had technology that captured carbon like trees we could help lower emissions. carbon capture is important technology -

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the dow industrials broke

5,000 minutes into the trading day. the dow has surged 30% this year, followed by surges in philip morris, coca-cola and boeing behind the gains has been nearly a perfect setting of strong corporate profits, low inflation and a rallying bond market many market pros predict the dow about break 6,000, if not next year, then the year after. all right, coming up, breaking economic data, the xtrit tebrk.on durable goods is ne, ghafr ea stay tuned "squawk box" will be right back. , your brain naturally begins to change which may cause trouble with recall. - learning from him is great... when i can keep up! - anncr: thankfully, prevagen helps your brain and improves memory. - dad's got all the answers. - anncr: prevagen is now the number-one-selling brain health supplement in drug stores nationwide. - she outsmarts me every single time. - checkmate! you wanna play again? - anncr: prevagen. healthier brain. better life.

welcome back to "squawk box" right here on cnbc we are live from the nasdaq market site in times square, and we're just seconds away from the latest read on durable goods we've been watching the futures this morning, and after a big day yesterday for the markets, markets are hanging in there once again today dow futures are down but only by about 14 points. s&p futures actually up by less than a point the nasdaq is up by 3 1/2. and remember, this came after gains not only yesterday but gains that we saw all through

the week last week, too. let's take a look at the treasury markets the ten-year note still looking at a yield below 2.5%, 2.47% is the last trade look we've been seeing there again, we've got the durable goods numbers for february that are just a moment away rick santelli is standing by at the cme in chicago and rick, take it away >> all right these are preliminary numbers. they will change when we get the final numbers in about another two weeks. down 1.6%. these are february preliminary read that's a little worse than down 1.8% to down 1.9% we were expecting, and we lost 0.2% on the revision from up 3% to only up 1%. ex-transportation, that's up 0.1%, and revision, we gained a tenth. all right, maybe the money ball, capital goods orders, nondefense ex-aircraft, a proxy for capital spending, down a tenth we were expecting up a tenth

but last look was solid up 0.8 now it does stand up 0.9 if we look at shipments versus orders, it was unchanged how does that stack up i want to concentrate on those goods orders, down 0.1%. well, they were down 0.8% at the end of last year on our final read, and our final january read now stands at 0.9% rates are a little off the best levels over the last 24 hours but still well off last week's intraday lows, and maybe that's key. we continue to see a consolidation process, maybe even a larger reversal in treasury rates andrew, back to you. >> rickster, nice to see you, sir. i want to get some reaction to those numbers. mr. liesman is looking at his computer in a very studious way. >> yeah, this is interesting the first thing is the decline in civilian aircraft, which is down 31% usually we kind of ex that out and don't think too much of it i think the point here is that

boeing orders were falling before the recent crashes. and so, some of this may end up -- you can only sort of ex out aircraft for so long because of how important it is for the economy over time. getting a lot of volatility in it, so you kind of get rid of it you look at the boeings' orders and they've been pretty good, so we want to watch that as a potential impact on the economy. overall a lot of negatives the minus 0.1 on nondefense aircraft, the business investment one, that's, you know, been sort of up and down on that, mostly down on the equipment side, but we have barry here who's going to talk about the better way to look at spending i just want to talk briefly about the slowdown, which, folks, it's here it's here now. >> economic slowdown. >> we did 2.2%, a downward rescission to the fourth quarter, and now take a look at our rapid update, which is now running 1.5% for the first quarter, which we just completed, and that was up 2% after yesterday's data, which was okay

and now take a look. yesterday we did our first survey this is not a tracking forecast. it's just a forecast of the second quarter, 2.7% so, it's here. it's not expected to be all that bad. baby get down, take the two averages together and you'll get in around trend. >> although this was not something that was early in the quarter and is now wearing off speaking with warren buffett, he said the rail card loadings he watches on a weekly basis, those are showing interest, each stripping out the flooding in the midwest and how that slowed things down, too he didn't say it's a huge concern at the moment, but you're not seeing it pick up or you're not seeing that it was some sort of a dip left over from the fourth quarter and it's improving, even in the most recent numbers they watch on a week-by-week basis, there is weakness. >> i kind of got the "game of thrones" on my mind, winter is coming and point is winter is here, but it's not that bad of a winter is the point i'm making. >> it's spring >> i know, from -- it's here, it's a slowdown, and everybody expected this.

and the idea that warren would see some slowing, well, you would think he would the guy stands astride how many companies of what part of the -- he has a big order book -- >> looking at burlington, 15% of goods that move through the economy -- seeing a slowdown, i asked specifically where it was, he says all over the place. >> but he's not seeing a crash. >> car deliveries, all kinds of things, the grains, everything they car. >> another thing i want to show you is we had a little bump-up in the fed funds rate and then back down. so we're a little above 50%. not a big deal we're still banking -- >> we flipped to rate cuts we're no longer talking about rate hikes when did that happen >> that's changed. the last month or so by the way, it was an absolutely historic change in yields. i don't know if you noticed that, but we did a study on this we looked at it. it was the largest six-day change from the fed meeting to when we measured it in the two-year yield since 2009.

it was a big move! >> i started getting letters from mortgage bankers again saying do you want to refinance your mortgage? >> jump back in. >> barry knapp is managing partner at ironside's macroeconomics and if you close your eyes at home and imagine george c. scott, you will see general patton addressing the troops, i think. how are you? >> all good. >> ironsides i like that. >> all good. >> makes me think of a different guy. anyway, you want to talk the economic backdrop or do you want to talk about the stock market and it's not always related. many times it is but you just heard that report what do you want to address first? >> well, i would -- i'll connect the two in as much as there was a transitory confidence shock, no question about that we saw it in things like confidence spending plan surveys, but they've rebounded in march, which implies when we are looking at these core capital goods orders in two

months' time, they should be considerably stronger. however, some perspective on all of this in as much as the decline that we saw in november and december was 20% the median decline in a stock market related to a recession is 21%. that's since world war ii. so, the market priced a recession. and as you just said, steve, this was a fairly shallow slowing of growth for a period of time and a lot of the confidence indicators look like it's reaccelerating. so, we way overshot any slowdown, and the market is pricing that i would also add that that decline that you just described in the bond market is quite symmetrical to what happened to the stock market in the aftermath of the december fomc meeting. so our note right after that we wrote was "fade the fed," that the market took fed assurances, which they didn't really provide that they weren't going to raise rates for the better part of a year or, again, this cycle, and overshot it. the stock market dropped 6%

after the december 19th meeting. if you chased that, you got caught in at the lows because it turned around and rallied 20%-plus since then. so we're making the same argument with the bond market right now, that the bond market rally was far more attributable to fed policy expectations, rather than the economic outlook, and that you shouldn't chase it, you should actually sell treasureies here, and that you're likely to get a significant reversal as that economic outlook improves over the next few months. >> so, how much is left for the markets then, the stock market >> i think we're going to new highs. we should get through 3,000 fairly easily. i mean, that's been our analog or our picture for the entire year is this is much like 1988 where we had this almost crash in the fourth quarter that really was not associated with any leverage, it really was not a harbinger of a recession, like 1987, and that '88 would look -- or 2019 would look like '88 and we would go to new highs through

the course of the year. >> will there be a down quarter in earnings? will the first quarter -- will you have a year over year -- >> no. >> what about the second quarter? >> no. >> so there won't be a down -- >> revenue growth will stay around 5%. you'd have to have a historic compression of margins there's no indication that that's happening some sectors with margin pressure -- >> we had a guest on earlier who said we had a earnings -- what'd he say -- >> earnings recession. >> well, that doesn't necessarily mean a down -- that's what people -- >> well, he said sequential. i heard the interview. i don't think even on n a year on year, when you get finished with a typical positive bias -- by the way, those estimates haven't been falling for more than a month -- you'll wind up with something marginally positive in the first quarter, more positive in the second and something closer to a 10% run rate in the second half of the year. >> barry, i don't want to let you go without going on air with the conversation we had in the background on the issue of the tax cuts and spending. and you have a different way -- you've turned me on to a different way of looking at this, which is stop looking at just the equipment, but look at the intellectual property. and you think that's an

outgrowth of the tax cuts, and that's done quite a bit better than equipment, and that makes sense to you, given how the law is focused we have a chart in the background there it is. now, watch what's happened here. over the last -- it's 2017, equipment did better than intellectual property. a lot of oil probably in there -- >> that's right. >> rebounded oil prices. now curiously, equipment's come down since the tax cut's been put in place, intellectual property has come up is there an investable thesis off of this, something that underpins an investable thesis >> absolutely. the tax bill changed the effective rate for equipment only marginally, but significantly lowered the effective tax rate of investing in software quite significantly. and we saw a boom in software and research and development investment, and that's likely to continue so, continuing to invest in enterprise technology, you know, the internet of things, software investment i get that those stocks have performed significantly, you know, or outperformed

significantly, but the underlying core momentum there is quite strong, and it does look like the tax bill really did what it was intended to do, which was to boost those categories. >> and then you get a pop in productivity, perhaps, as a result -- >> we've already seen it. >> you did. >> it went from 1.1 ten-year trend to 1.8 last year and it should follow further. and it's not service sector companies that are finally investing in substituting capital for labor. try and pay a human being for a cup of coffee in terminal "c" in newark airport you can't do it, right so, they finally ran out of bodies, put ipads everywhere, and they are starting to drive productivi productivity and you see this in the performance of restaurant companies, which have continued to have margins expand, despite labor costs going up >> cool story. >> i want you to memorize a quote at some point. i mean, i've get a couple great ones here. >> what's that >> i was there when truman crashed -- >> no poor bastard ever won by dying for his country.

he won by making other poor bastards die for their country but for you to say it i think would sound -- >> i'll go back to -- >> it also says here that he thought that profanity was the best way to make a point, which, you know, i tell my kids you don't need to use profanity. you don't need to say it. >> you don't need to use f'ing profanity. >> i'm trying to overcome 25 years on lehman and barklclay's desk and not use profanity -- >> thank you and talking old ironsides, i'll do raymond burn next time. what to watch when elon musk's lawyers head to court later this week. tesla's legal team set to square off against the s.e.c. over a questionable tweet this comes as tesla gets ready to report first-quarter delivery numbers. the street is watching closely former gm vice chairman bob lutz and oppenheimer's colin ru lloin us to get you up to speed on all of this when "squawk box" comes right back. i'm working to keep the fire going

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welcome back to "squawk box. take a quick look at the futures right now. let's show you what's going on we've got some earnings probably that's weighing on all this as well dow jones right now off about 11 points nasdaq up about three points s&p 500 up a little over a point. want to talk about one of the other big stories of the day it has been a big week for electric carmaker tesla. attorneys for ceo elon musk are scheduled to go to court thursday over a tweet that confused some people on wall street in the meantime, tesla itself is

gearing up to report first-quarter delivery numbers for its cars, and phil lebeau joins us with more on all of that phil, good morning. >> and becky, we'll talk more about tesla in a little while because it is a very big week for tesla, both in terms of deliveries as well as the contempt of court hearing, but today is also important for the auto industry because we get the march and first-quarter sales numbers. now remember, we talked about this yesterday, the first quarter is expected to be the slowest since late 2014. look at the last five years for annual auto sales. we've been over $17 million for the last four years. the expectation is that the first quarter probably came in at about $16.7 million look for something similar for a march sales number in terms of what we are seeing in march, it's sort of a similar story to what we've seen the last several months -- retail business is slowing down that's the people going into the dealership it's still relatively strong, but it is down from the record levels we saw over the last couple of years. trucks and suvs, that's what people want. not as many people buying

sedans and we'll be focusing on the incentive numbers today. the automakers have been fairly disciplined holding the line in terms of incentives. is that going to be the case take a look at shares of general motors it will be reporting its first-quarter numbers. we focus on gm because we don't get them every month now we only get it once a quarter. i want to see what they're seeing in terms of the demand for not only suvs, but also trucks and finally, take a look at shares of tesla. as you mentioned at the top, becky, huge week for tesla now, we have the delivery numbers, which we don't know for sure when they're going to happen wouldn't be surprised if we get them later today, maybe tomorrow, but we know that we're going to be getting q-1 delivery numbers. the key focus there, what's happening with model 3 deliveries we know that they are going to be slowing here in the united states for a variety of reasons, but what's happened with the deliveries to europe as well as to china that's going to be in focus when those numbers come out and of course, on thursday in new york, elon musk's attorneys along with attorneys for the

s.e.c., they will both be in court discussing or arguing in front of a judge whether or not elon musk should be held in contempt of court, and if he is held in contempt of court, what should be his punishment should there be further restrictions on him? will the judge say you know what, you shouldn't be ceo anymore, we're going to have somebody else run this company that's going to be the focus on thursday guys, back to you. >> lebeau, is lyft going to be part of your thing, you know, your coverage? >> i've done stories on it i've got -- joe, i've got tons of fun email and social commentary from people -- >> i'll bet. >> because i did a story the other day saying there is this theory out there that ride-sharing will destroy auto sales. people won't be buying cars. anecdotally, that is true. there is no research that shows that is going to be happening right away so, this theory that lyft, uber, and other rideshare services will immediately blow up auto sales, it's just not -- there's nothing that bears that out.

now, 15, 20 years down the road? maybe, but there's nothing in the near-term that shows that people will stop buying cars and trucks. >> i just wondered specifically whether it's part of your beat what did you tell me if it moves or grooves what was it again? >> wings and wheels. wings and wheels and back in the day, bankruptcy court. >> is lyft going to be your thing or not i want to know what about uber? >> no. well, i will do stories if i'm asked to do them, but for the most part -- >> interestingly, it is a marketplace. >> it is -- >> and uber eats, that could be more up my -- >> your alley. >> taco bell beat? >> taco bell beat. god, i wish there was one, i'll tell you. >> we'll continue the tesla conversation, phil, right now, and the courtroom drama that is bound to take place later this week, the delivery of the numbers. we welcome bob lutz, former gm, vice chair and ceo of lutz communication.

good morning to both of you. let's talk about this courtroom drama. specifically, i want to go to colin first on this. what is your expectation of what the judge could do and what he will do? >> you know, i have no idea what the judge is going to do, you know, to move elon musk into a different role in the organization i think wouldn't be a huge surprise to investors at this point i do think that's been an overhang on the stock. >> so you think if he gets stripped of the ceo title that the market already expects that? >> i think it's starting to get woven in i think the stock will go down and then start to recover after that you know, i think there's no benefit to antagonizing, you know, a regulatory body like this and so, i think people have been disappointed in that and have started protecting themselves against the inevitability of that. >> bob, what do you think? if he gets taken out, if he gets put into, you know, chief creative officer kind of title, chief strategy officer, is that fine >> well, i think at some point it's going to be necessary because he has exhibited an

alarming lack of self-discipline when it comes to his statements about the s.e.c. and other statements, and he's a self-confessed manic depressive. he is known to use recreational drugs, and he probably is not an suited for the ceo title you can argue well, tesla is elon musk and vice versa and taking him out of the ceo role would be devastating for the company and the stock. i think losing the psychological value of elon musk of ceo would have a short term hit on the stock. believe me there are people that can run an automobile company a lot better than he can >> bob, let me ask you this, i don't know if you saw the 60-minute interview he did look, i am the largest shareholder and i control this company and irrespective of

others what role can you give him that will make a meaningful difference >> well, the s.e.c. can find a way to prevent him from having active control of the company. i don't know what the legal mechanism would be but, you know, the ford motor company, ford family controls all the stocks and yet they don't control necessarily the ceo position i think you would get what elon musk did and what honda did but 30 years ago, move it off into a lab and give him 100 people or so and have designers and engineers and be a chief

creative officers and come up with new ideas one thing for sure currently i see no bright future for tesla whatsoever it is very hard to contra up a scenario by which tesla looks good five years from now >> colin, can ucoyou conjure up that >> autocome did not make a commitment, taxonoo autonomy un7 it gives tesla plenty of team to continue to cultivate their brand and getting embedded in consumer behavior but driving cost out tesla is on a track that significantly in terms of driving battery and efficiency of vehicles and in terms of range on vehicles. to see them take that time and

use it effectively would not be surprised considering what they have been done today >> colin, what kind of number do you expect >> we are around 20,000 model s and 50,000 on model 3. >> the market react how to that? >> the news out of the auto industry in the first quarter have been oblique. >> if you saw the news from ford this morning showing there was a hacker tricking the pilot system by putting sticker on the road tesla says if you don't have a driver on the wheel, that's a problem. how much of that presents a challenge to autonomous vehicles

in the future. >> certainly the security issues around vehicles and what can happen on the road is important. i think that's why folks are trying to move judiciously before you get driverless cars on the road. >> a special thank you for colin and bob this morning we'll see what happens this week >> let's get down to jim cramer, jim, did you have a chance to look at walgreens to figure out -- where was the problem >> retail pharmacy was below comp sales was well below. trump of wholesales a little bit below. this is a terrible quarter, wow. i don't know how -- there is no way to sugar coat this retail pharmacy, awful

>> you can say it is amazon. when i met with cbs, he was talking about these things i don't know - they're not doing well i don't know what else to say. this is the most negative of all the retailers i have seen. i comp sales, i don't know i don't know what they would do. they got to think about what to do they don't have any plans. they miss the guidance so democrramati dramatically and now it is going to be flat that's awful >> jim for lyft just changing the subject, when is there going to be a data point that gives us an idea of what to do with the stock and what data point would that be in your view how can we probably, it is

almost like we need to go to ipo school and decide and not based on any of the normal metrics >> the idea is they're going to grow as fast as way fair or amazon may have started or trilio which does a lot of the work for lyft. you know look as i said on twitter, look, i thought it would hold i was wrong. i thought the buyers who liked that '72 will come back. i don't know how they place that joe. where are the buyers of '72? i don't know whether that's right given the fact the company had such great growth. 100% revenue growth. >> yeah, before deciding you know, maybe a couple of weeks or even a month to see what we really think >> like it is very funny i guess i should say it is early

then maybe people won't give me a hard time. you are not 100% okay? >> i made a mistake. ted williams bet at 400. what happens to the other 600. >> thanks jacksonvilim, we'll sn a couple of minutes. we'll be right back.

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check it out the stock is under pressure this morning for walgreen's after an earnings missed and slashing their forecast for four years. that stock is off by 9.54% make sure you join us tomorrow, right now it is time for "squawk on the street. we'll see you. ♪ good tuesday morning, welcome to "squawk on the street," i am carl quintanilla with jim cramer, david faber is off again this morning coming off the dow best days in six weeks. lyft is down another 4%. we'll watch that europe is steady durables were soft here. our road map is going to begin with lyft down