mark t market nasdaq is opening higher as well 42 points higher s&p 500 looking to open about 12 points higher. i don't want to stay on the back of but we'll be watching today and talks are underway with china. the china trade deal with the premier is here. make sure you join us tomorrow "squawk on the street" begins right now. ♪ >> good wednesday morning, welcome to "squawk on the street," i am carl quintanilla, with jim cramer, david faber is off today. european pmi is better than expected, too. 1 10-year is back to 2.5

u.s. and china are closing in on a trade deal lock them up senator warren looks to make jailing corporate executives easier lyft post ipo stumble does not signal a bumpy ride ahead. investors hope for positive news out of the u.s./china trade talks with the vice premier. ft says they're getting close on a whole bunch of issues except how we are going to enforce this thing? >> how do we enforce it? you don't roll back the tartaris it is more kind of like listen guys, we'll keep pounding it until we see what happens. one of the strange things they are looking at whether fentanyl

is cut back. if they see jail time, maybe not capital punishment then i think that's a sign of good faith because the president is really caught up in this situation. china is up almost 30% for the year way above u.s. embassy for the year if we do get some kind of announcements of the summit, how much of this is built in >> stimulus is kicked in >> really the misinformation of china. the other day there was a story about b happle had to cut -- whn you start cutting vat, if you

stimulate, stimulate the state owned companies, one of the sticking points in the talks, the state owned companies have to be cut back that's something china does not want to do they want to cut back because that's where the real bumping is the sticking point they have is tremendously difficult to soft the chinese don't acknowledge their sticking points. >> right >> the chinese do not say we'll reign in our state owned companies because they are dumping. the way move up in an economist party are dump -- mnuchin on the powell hiring. >> we'll get to what the general is saying. >> the president privately railing against powell and blaming mnuchin for it >> powell is a nice guy. i do think we got to be careful

in thinking there is going to be a deal because the last issue. we'll leave the tariffs on and fentanyl cut back. >> that's how our steel is. >> we got two good pmis out of china. pmis are stronger than expected except for the u.k u.k. was the only one that's in contraction first time in 32 months that's a little understandable >> there is a new feature that brexit is already baked in that's the stupidest theme i have heard no one knows what brexit paris is going to be what if you want to ship italian

toe tomatoes or olive oil, they don't let me ship outside of italy. these pmi numbers were shocking. >> yep >> where do they go? and where do they sell their stuff? they sell it in china. when you are at the lamborghini factory, you see those purple lamborghinis, chinese corporate, they make these yellow ones. they can't install them here because it looks like taxi it is going to be heading to china a third of a time. suddenly you got italian business coming back because of china. bmw, china chinese by 25% of your exports we also have a tremendous export to london. this is big. its pmi is big >> you are not falling for the

counter argument that a lot of this on the manufacturing side is stockpiling ahead of brexit, for example. >> that would be very interesting. >> i can't judge it because brexit -- here is what's happening. >> people are sick of prime minister may in front of that podium they're sick of nothing. >> meaning let's vote. they're sick of the hard brexit. no one knows what that is. london prices are going up i think the idea that we know it, we have to see what's going to happen. it is just chaos i don't know, i mean, the company that i know sell into london is u.k. they are petrified it is a big deal >> makes sense, one last thing on global macro.

deutsche goes from 152 to 158. they say euro zone is weaker than expected. >> wrong >> that 2020 estimates are 20% too high why is that wrong? >> because if we get a trade deal, maybe the single dumbest trade that you have ever done is to sell caterpillar. how do you show if you are chinese? okay, you don't bikiuy any props because we don't have any because of our levees. what do you do you buy and you call bumblebee, listen, this year, i will buy. you can't buy liquid natural gas because we are sold out. we'll buy coal

what does the deutsche guys do then does he say - what does he say >> nearly a third of the street is on hold on cap. >> caterpillar is cheap and incredibly well run and mutual leaner >> remember the high water mark comment? you are selling at 11 times earnings and generating menace cash flow. they can't buy boeing. they're like saying listen, max don't work how are you going to make a statement if you are the prc >> caterpillar >> very under rated, bumblebee is very under rated because he does not come on what does he do? he makes real good machinery the likes of which the chinese

will want in order to show good faith. >> the deutsche bank, we have been talking about him all day he better be right he's out there either one they're not going to close cutting a huge amount out. she's the one to watch >> all right, we'll watch european bank. >> hey guys maybe you don't want to keep it over night. >> meanwhile, jim -- democratic elizabeth warren introduced legislation today that'll make it easier to criminally charge executives for company's wrong doing including negligence executive companies with more dh than a billion dollars, exec

tif ti executives can face a year in jail it is time to enform oinform ouo make sure executives see their scams and everyone mentioning tim sloane >> i say a little graciousness necessarily. i think that this was persuaded to it. if i were working for elizabeth warren which by the way i am not. you want to say corporations the way we go after corporations is we find them the executives don't pay a thing. the shareholders do. we have to change that and make it so the executives pay and we single out the executives and we don't take the shareholders. >> prison if we find out, there were people who got away with

not having to pay any jail time. we want jail time for executives there are people that i don't want mention because they have not been convicted there are people we know who violated laws and what happens is the shareholders pay. the top prosecutors did not go over the top guys. they're too hard to get. it is harder to go after individuals. they tugt go after it. the idea that tim sloane who did from every report is nothing gets mentioned in this i thought is unfair. she's running for president. we are tired of the shareholders being heard, we should go to the individual and let's not go to the institution. that would be a more sophisticated argument i am surprised she did not do it >> "squawk" spends a lot of time

talking about tax security as we are in this sort of primary season, jim. should stock respond to these proposals even though there is nowhere near once again they could not fix aca so they're not going to get these through. these are grand standing elizabeth warren becomes president, i think it is not as good of a time for ceos. >> no, i think a lot of these things are posturing and our business of stocks will not be touched. it is not pertinent. we are doing nothing to get the tax break. larry would come back. i always come back and say,

larry every company we start loses money. we'll discuss it endlessly larry is the best guy to discuss it with. >> back to my good friend. my good friend is a moron. i love arguing with larry because in the end, that shot was weird with the head. >> but what i like about larry is he's a jet. he never does like what tru trump -- what are you saying, pal? >> are you saying he's cool? >> do you think larry kudlow would say stuck with you >> we'll get to what the president said about powell in private. when we come back, we'll look at lyft as it tries to get back at ipo. and a big day for -- and our ibm's ceo, ginni rometty is

joining us later we'll get to the opening bell in 15 minutes. i'm off to college. i'm worried about my parents' retirement. don't worry. voya helps them to and through retirement... dealing with today's expenses ...while helping plan, invest and protect for the future. so they'll be okay? i think they'll be fine. voya. helping you to and through retirement.

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plunged 12% on monday. it was a year ago that spotify entered the business market. the offering was not under written by banks and no price was set ahead of the debut here we are talking about the trajectory of the modern ipo >> yeah, there is a lot of ways to skin a cat. i have been on this and on twitter. >> beyond joker? >> i got to tell you the geneva convention does not apply to my twitter. here is what matters, the lyft ipo yesterday at 3:58, the under writer says we did not stable i

ize it today that was a smart call. now you will see the stocks trade up at the beginning because they kept their powder dry. now they can come in under maybe the test was not stupid as i thought. spotify has not distinguish itself like i thought it was i thought they would do a lot of things right they were a sub rows under writing. and free will go to pay. as someone using spotify aggressively, i am surprise that people don't pay it is such a good service. >> i agree i would argue for a small price. >> i think so. >> we talked to daniel ike in february of the process of going public corporate life. take a listen >> you chose to list as oppose

to raise capital are you happy with that decision >> i am, indeed. it was a big idecision for us to make but it felt like the spotify way of doing it. it was not doing it for the sake of everyone else doing it. we have always said we are a long-term company. >> as we are talking, reuters with the piece of i heart media files for an ipo >> they can't dill thkill that . it keeps oncoming back we don't need i heart media, we need spotify i heart media is just a disas r disaster everything you hear out of i heart media is as good as what you hear from walgreen's yesterday. >> meaning not good. >> that was the worst conference

call of the year >> again a new one? >> i had to make room for this one. they would say, listen, we are digitalizing, we brought in microsoft. you brought in microsoft what for what like tom brady having a screen on the sideline. and microsoft azure? it was really painful. i mean they invested nothing they are buying back another 3-point or $8 million of stocks. they need that money to reinvent walgreen wal walgreen's and they bought aetna. >> no clue the person behind it got engaged

recently theranos they're going to put -- >> we'll get cramer m's mad das. more "squawk on the street" continues in a moment. [knocking]

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six minutes until the opening bell are you making hand gesture? >> can we get that insult thing away they called me bryce on the set? yeah what do they call him? >> did you hear the boos yesterday? >> yeah, oh, stop it i am a philly fan. get the heck out of here i will see you in september. >> he's like literally doing this >> jim, you are watching tsm this morning >> you bet i am. this is it now we are ramping up new production rate. this is what micron predicts exactly what micron predicted. that's why apple is going up when apple cancels the order, it is a shot heard around the world. when apple boosts an order,

nobody cares tim cook is right, he does not get his dues are you ready? lamb research and nvidia and micron and intel which by the way is hard for me to cut. >> digital times >> she's killing it. buy it >> we'll watch the semis today there is a look at the taiwan semis. we'll get the opening bell and the mets after a short break

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david buster and gamestop and others we can play with. >> cigna had a terrible christmas. the david buster conference call verses the love canal that's walgreens. this david buster's quarter was amazing. 75.63. > >> they have for people, they have made posh out of zucchinis. >> i had it. >> they're at 125 stores they get great rates because they are known as a traffic

donors they get people in they have done advertisements and moving far more contentional than bringing people in. mobile app and cutting down savings and schedule they are a digitalize confidence they are doing many things right. caterpillar is only down 19 cents, why people recognize deutsche bank verses caterpillar ledger just boarded a plane so he's not responding to my tweet. we said we are going to uncarrier tv this is a first step consumers are fed up with rising costs and hidden feeing and non stop bs. they also hate matt guiver

>> ledger, i am boarding a plane to puerto rico or i would call right now. ledger plays games even when he trues to do this merger, he continues to move the ball one of our great executives and rank and fall. you after stop a guy from t-mobile, they all met him >> no doubt. >> it is not holding up in an ivory tower. >> out of price retailer marshals celebrating its partnership with the mets. >> marshals was indeed where i got that suit. it was a good suit it was brown

>> semi is going to lead her. >> digital times, my kron icrons doing so well. they did get hurt by crypto mania. don't buy amd or nvidia because of crypto mania. they come and they go. >> tom lee is back on bitcoin above the 200 days good news. it is a bitcoin buy back bitcoin is giving you dividend, huh? >> tom is a serious guy. 5-k, man don't use it as an excuse to jump back in >> i would rather be in micron or nvidia. nvidia is going to get to 300 before bitcoin gets to 6,000

the losers, jim, kimberley clarks, colgate and campbell and sm smuckers things you do not buy. i kacan't wait to hear ginni ginni rometty. that's the kind of example that the stock can work if you think the world is coming back they got a huge business overseas firm is with fewer than 20 employees. >> there is a lot of people who feel that jay powell's bear market that little period really shook the people >> "the journal" says that's

what the president calls him >> sounds like powell is being a little defensive and he's not going to leave, adioigight >> he does not need to say a thing, everybody respects him and knows him in the bank business one of the things he did was reverse. >> the anger now is what he did prior to reverse >> there was this period in the country where we were all shocked. gary freedman is a good man. the high end world just got shocked because they felt that the stock market went down that hurt a lot of people, a lot of people were also hurt b by -- the polar vortex that happened during the martin luther king day weekend, the weather did play havoc when home depot uses the weather, it is real.

home depot does not like excuses so we have the weather and the market >> interesting corporate >> something's up. >> cigna is up. it is one of the good guys it really wanted to do well. >> cigna >> intel is going to be helping out the dow as we mention semis. they stole a cfo from qualcomm george davis was a six year vet. looks like swan is doing a good job. he's a good cfo. that's a good call for him look at this >> i know. financials are following goldman and jpm. goldman, they're opening up some of their tradings out go to developers as the street wants

to make quantitative finance more of an open source >> that's a very anti-goldman style. >> dress casual. >> that's just wrong hey, look at this marshals outfit what is he wearing he probably went to old navy new goldman's credit card and sharing stuff? it is a kind goldman i don't like it. >> teach that class, don l't let them out until 11:00 it is humiliation time for the people that don't pay attention. that's the goldman that i like >> when was the last time that goldman was about 200? who talks about malaysia anymore. that's a country, southeast. >> we have not gotten to a few other they thinks about this

inflection to the upside mortgage apps. purchase up 3%, revise up to 38%. >> when powell wrecked the housing market as well as the stock market, i knew housing was going to come back hort horton's is going to storm back. kb homes are good. they got cold feet no, it is the spring selling season go buy some home depot marvin nelson is going to have a good spring. the country is coming back because we are putting that year behind us quickly than i thought. >> all right when does your selling gets a little itchy here? we surpassed 2900. >> if lyft is at 100, we are not

going to be talking about the next ipos. we promise not to lyft you but that means we are going to have to offer more stocks and make it so that we can control this thing and retail buyers not going to come in because they lost so much money >> the stumble of lyft was essential a blessing and longer term that was my biggest worry and supply lyft was so bad, so bad that we are not going to see that happening again. you can fool me once, second time you won't be fooled they won't be walgreens. >> when does the fed -- >> he's still on hold. >> you don't think it will take a lot to return? >> musk making fun of judge nathan by not -- i just think

that the flood of supplies is worrisome and powell is on hold 67 unemployment is not on fire as much this is a nice goldilocks experience we'll see interest rates, this is fine. we'll stop hearing of invert yield curve. if they did not want the yield curve, they'll cut rate by .5. if we got morton fed, i mean he would make life so difficult, he would walk a mile for a camera imagine what he's like in meetings >> i am sure >> hey, you know how we can get that list of speakers?

he'll be on the run. >> one of theory is floating steven moore, not only he's added to the committee but the committee elects him to be the chair. >> would that be something >> the bar for that is relatively high. >> he's hilarious, he would be the first funny fed chief that we have. >> if they did that to jay powell just because he had a one month bear market, it is going to be unfair he's not planning that role anymore. >> we still have a way to get back to those highs.

>> we'll get there >> october 1st was 29.24 >> they wrecked it now we see semis i am waiting for jaime dimon to come out that's a good focus for jamie to come out maybe i will get him on the show >> what do you think >> 106 on jpm. let's get to bob pisani. >> let's call it the slow melt down it continues not just in the united states but continues overseas shanghai had another great night obviously, there is a lot of optimism of trade talks. zero tariffs and free trade zone germany, autos are doing good and stocks 600, kind of s&p 500 of europe. also going through a slow melt up in the last few days. jim is right, semiis a

leadership group but a really good day for amh today banks have been strong as yields have been moving up in the last few days materials industrial and utilities and consumer staples had been lagging here is your cyclical rally. the stock rally corresponded to the yield. there is your yellow line verses the ten-year note yield. that's a fantastic correspondent there. yield were 2.39 last thursday and they're 2.51 some where right now.

i do not think that's an that's corresponding to the bank rallies that we see. >> deutsche bank, downgraded accou caterpillar. 2019 is a cyclical earnings peak this is the play book in december that everybody had. this was the story that was going to happen in 2019. recently though the market had been saying these thesis, china and europe are going get continually worst from here, it is not going to be correct that's the debate. caterpillar is not popular for a long time. 75% of the street, buy 8 and hold 8 and 1 sale. it is not a popular rating for this company all together. the markets have been moving in the last several weeks and even the last several days trying to argue precisely opposite of what

he's been arguing. china is obtaining some kind of bottom europe is struggling to find abbott look at the market look at what the market is telling you. germany is the highest since october. that argues against the thesis and maybe the guy is right, it sounds like december to me caterpillar is only down a fraction of 0.3% on that downgrade. still up for the day for all the major indices. >> bob, we'll see you in a bit let's get to rick santelli >> good morning carl it is a process. there is different types of bottoms in market. v bottoms and rolling bottoms, rolling bottoms that consolidate. that's what we have in treasury yields look at a one-week of ten-yr

the interesting thing is we hop the yields back to 2.5%. i can't stress it enough no matter where you look on the curve, whether 2-year or 238 or 10-year as you see on today's chart. once the treasury curve drops on the early 2019 establishment yields we have bounced from. everything may have changed. the opposite if we can get above on those levels, so close for tension with regards to bund yield. it is a positive development today. go back to march 22nd, you can see when they dip under. if we look at what's going on in yield. brexit, may and all the questions there. the guild is rolling higher as well global sovereign, we see today,

look at this one week chart, it is still holding 97 but it is doing what it characteristically does >> carl, jim, back to you. >> coming up, shares of ibm is up more than 25% so far this year we have an exclusive with the ceo rometty, coming up at 11:00 a.m. eastern time. semis and financials leading the dow of almost 60 points. we'll be back in a minute. check it out, our unlimited plan on the brand new samsung galaxy s10. oooh. premium entertainment on the infinity screen! people have seven different premium entertainment options to choose from. 'cause people are different. like how you cut the crust off of your sandwiches,

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amazon cutting prices at whole foods today for the third time since acquiring the chain almost two years ago take take a look at the reaction. >> we are getting some breaking news on whole foods.

>> wholly cow. >> amazon buying whole foods yesterday was a day for kroger that was tough today will be a tougher day. this is a game changer this is it this is what everybody thought could happen they will now dominate food within the next two years. wow. >> one of the most memorable moments for me sitting next to you at this desk >> kroger never came back. can't. and now cut by more because they want to stop against walmart, which is the number one grocer i happen to respect the kroger people they're terrific but they never came back. >> not a fair fight? >> no, it is not a fair fight. one guy, you know, amazon is howitzer, kroger has sharp knives amazon decided -- their collateral damage against walmart. and you can't beat them. and they haven't even done well with whole foods

it is still expensive f ye ivex. if you look at kroger, flat line from when they came in. >> is it your suspicion they aim tomake it is a more whole food grocer >> i think they have a lot of firepower. if they come in under, they sense that walmart, they got this guy mark laurie, he's one of the most competitive people i have ever met. he's an amazonian in the bowels of walmart mark laurie is -- he's in the fight club >> yesterday, in retail, by the way, courtney reagan will talk to mcmillan tomorrow. >> he's such a sweet guy he's done great. >> he has. >> underrated. speaks too softly. i've been trying to get him to be more pumped up. he just won't go there that's my advice, come on, man come on! get some mojo!

get the juju going he won't do it. >> stocks retreating a bit we're up 11 points on the dow. stock trading with jim is next we are accountable to our clients everyday. we have the freedom to build a plan. a porfolio based specifically on their needs. we're fiduciaries, stewards of our clients' money. entrusted to do what's right. it's a mission. a guiding principle our firm lives by. charles schwab is proud to support more independent financial advisors and their clients than anyone else. visit findyourindependentadvisor.com

let's get to jim anding to trading.

>> sometimes you get a piece that explains the variables for why a stock has done nothing since january 2015 that's barclays piece today about the strategic road map for disney for the over the top. disney stock is a story without a concrete financial anchor. this is from a man who is a buy. i read this, and when bob iger has this upcoming meeting, to me it says he's going to guide down guide down, stock, everyone kind of knows, but you don't know, cvs, everyone knew that larry murlo would guide down and it is catastroph catastrophic be aware this stock may go down more before it heads up. >> telegraphed that synergies have yet to be announced >> bob iger has a lot to say about the future but will this market be forgiving? will they handle a number cut and say, you know what, he's got

a handle on it or just say, you know what, talk to me later when you get it right. >> what is tonight >> there is a company that is one of my absolute favorites i like utilities because i like american electric power and dominion when seven they just decommissioned a slew of coal plants these guys, you know this is one of my big things, like with dow chemical, i'm asking about mission led, purpose led, what are you doing about the environment, tom knows that. and people think i'm sandbagging by asking people what they're doing about the environment. i got news for you that's all people care about who are younger. if you think i'm just a dollar sign represented by a man, think again. >> a legitimate mainstream question. >> go back to suits and ties and bring back professional -- don't

go to marshall's, please. >> we'll see you at 6:00 p.m "mad money" tonight. ♪ ♪♪ ♪♪ ♪♪

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good wednesday morning welcome back to "squawk on the street." i'm carl quintanilla with sara eisen. moderate gains dipping in the red. now ism services, to rick santelli. >> we had a lot of good data of late this definitely is not one of them ism nonmanufacturing, looking for a number around 58, coming off a really good number at 59.7 takes a dip to 56.1. 56.1 we have to cipher back a ways. we had 56.7 in january but we're lower. so 56.1 takes us to august of

2017 when the read was 55.5. we definitely moved a bit lower there. the market should pay attention to this at some point. we need to monitor it is not that these aren't decent numbers for nonmanufacturing it is just we had so much better than decent for a while. sara, back to you. >> all right little tick lower there in stocks on that miss. rick, thanks road map will start with investor optimism of renewed talks between the u.s. and china. sending stocks a bit higher this morning. >> amazon slashing prices on hundreds of products at whole foods in an effort to get more prime customers to the store >> elizabeth warren continues to take on corporations, now unveiling a bill aimed at making it easier to jail quote, negligent company executives we'll start with the markets s&p announced that continuing to extend gains for a fifth straight day new trade optimism on reports that u.s. and china are closing in on a deal joining us here at post nine, ed

yardeni, jill carrie hall with us the numbers are all over the place. that services number, big miss, going back to august 2017 levels, just as there was optimism that maybe the data was bottoming. >> it is still a solid number. it looks as though we still have this kind of first quarter aberration with a seasonally adjusted data. weak for six of the past nine years. we'll start to see a better growth in the spring as chelsea gardener once said. >> higher stocks and higher bond yields >> yes, it does. the yield curve, which everybody was stressing about, may not avert as the bond yield maybe goes closer back to 3% the economy is doing better. not that inflation is coming back, but, look, i think we'll get a china deal and i think we'll get a peace dividend the global economy has been held back by the uncertainty of the tension between china and the u.s.

put that behind us and i think the global economy may start to show some signs of improving. >> how can you say that without knowing how brexit is going to turn out or without knowing even if we do get a trade deal, what happens to the tariffs >> forecaster, i can say anything i want. the question is whether i'll be right or not look, i don't have a clue on brexit they keep stretching it out. they clearly don't want a hard brexit but i don't think even if they had a hard brexit it would really be unsettling for the u.s. economy i think the u.s. economy is still doing awfully well and to some extent can be coupled from the rest of the world. >> jill, where are you thinking? after looking at services this morning, i guess nothing does move in a straight line. but how much can this give us in the way of upside? >> i think it is an important point that a lot of the data coming in has been mixed first quarter is usually a seasonally weak quarter for

earnings season coming up next week, consensus is expecting negative earnings growth for the quarter. so i think overall with a lot of the signals that we're look at, whether it be the fed, the economic data, some of it has been coming in mixed, seeing green chutes globally a little bit, starting to see earnings revisions bottom out in the u.s. and globally so overall we're still looking for upside to the market this year we have a 2900 target on the s&p 500 for year end, but risk reward a little more mixed from here that's not strong upside, and i think the opportunities from here, you want to focus on sector or style or theme specific opportunities rather than buying the market wholesale. >> one thing you've been really skeptical on is the idea of an earnings recession i assume you're looking -- your q1 is negative, yeah in. >> that's what the analyst consensus is right now right now the analysts are looking for a decline at 1.8%.

but as i get closer to the actual earnings season, once you get in the earnings, you see a hook back up, so we're just really just a tad below zero i can see this thing still showing a positive number. and then for the second quarter, still looking for a positive so, look, everybody knows that we're going to have weak numbers in the first half. i completely agree with jill on that the market looks forward it is looking at the second half by the fourth quarter, we should see double digit comparisens for earnings. >> one bullet point in the -- in your full screen there that outlined the bank of america case was 58% of the signpost for bear market indicators are checked. bear market signposts are triggered, excuse me what does that mean? sounds scary >> right we have been trying to figure out when will the bull market end. we have been tracking a list of signals that if you go back to all of the prior market peaks back to the 1960s, we try to figure out what usually happened ahead of those market peaks, the

fed usually hiked a certain number of times, the vix usually rose, the markets were up by a certain percent, certain styles or attributes outperformed investor optimism typically transitions into euphoria. we assembled this list of signals and today we're at about 58% of them that are flashing red. which might sound bad, but actually when we looked back at all the prior bear market that began, you had 80 to 100% of those signals ticked off before the market peaked. so we're not there yet, so we think there is still room for upside to equities but that's something we're watching closely and that investor optimism turning into euphoria is one of the signals that hasn't yet been ticked off investor cash levels are still pretty high. sell side recommendations to how much an investor should put into equities have been ticking up. but are still below levels that would suggest you should sell. so those are some signals that we're watching. >> not quite there

>> i normally wouldn't ask, but the president did today reiterate his threat to close the border how much of this should matter is this within the realm of reasonable expectations? >> i may be a little too -- about brexit i think closing the border with mexico could really be very chaotic for the u.s. economy there is a lot of components and parts and trade that occurs with mexico and -- >> maybe the calculus as we have the cushion to do it >> well, i don't -- i wouldn't want to stress that concept. i think we're very much of an integrated economy with mexico, with a lot of dependence on parts and goods that come from mexico so i think that would be pushing it and corporations reached out to the president and said don't go there. just way, way too chaotic for the u.s. economy. >> i always think of you as the man who invented the bond vigilantes, coined the term, right? and they have been in hiding and it is what is interesting is that our deficit has been rising at a time of expansion

both political parties have a ton of appetite for spending and budget busting policies. where are the bond vigilantes? >> they're first and foremost, most concerned about inflation and we he just really -- it is the same question, where is inflation. inflation -- i'll go out on a limb, i've been on the limb for quite some time, inflation is dead it has been killed by all sorts of things like aging demography around the world and too much debt is actually being -- not being stimulated and then technological disruption is a big issue. so central banks i think managed to offset deflation, rather than bring back inflation and so the bond vigilantes have been pretty relaxed. >> thank you very much jill carrie hall, thank you. amazon slashing prices at high end supermarket whole foods hoping to bring in more prime users. what does this mean for the industry as a whole? we'll talk to former walmart u.s. president bill timen in a few moments.

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in a bid to bring more prime customers to whole foods, amazon is slashing prices on hundreds of products.

rahel solomon joins us now with the story. good morning >> reporter: good morning. that's right this is amazon's latest attempt to position whole foods as more of a competitor to grocers like kroger and sprouts and perhaps nix that whole paycheck image they had the announcement was made on monday and the price decreases across the 480 whole foods stores went into effect this morning. so on average, about a 20% price decrease on 500 products mostly meat and produce products and the discounts here matter and here's why despite two previous cuts in prices, whole foods is still largely considered one of the more expensive places to shop. a recent analysis by morgan stanley ahead of today's repricing found a basket of 60 items from whole foods costs $198 that's 15% higher than a conventional grocery store at $172 that same basket pricing at kroger, $157

and even lower at sprouts, $155. now, as part of the deal, whole foods also announcing additional incentives for the 100 million prime members, but in twice as many items on sale for this group as before. and giving them an additional 10% off store wide sales items i can tell you not everyone is buying into this one analyst we spoke to said, 500 items at whole foods is still a small portion of everything they sell in their stores i can tell you, we were not allowed to bring our cameras in, but my producer and i walked around a bit and the signage is pretty intention grabbing. large orange signs pointing to the new lower prices, same quality standards. so one such example some of the things now on sale, these organic raspberries, yesterday, if i bought those, would have cost me $5.99. today costs me $4.99 a price decrease in effect here. back to you, carl. >> great report. it is great to have you. rahel solomon bringing us up to

speed on whole foods today for a closer look at the impact, let's bring in bill simon. thank you for the help today good to see you again. >> how are you great to be with you >> what do you think they're up to >> i think it is an extension of their strategy it is probably the third iteration of price cuts, probably an indication it hasn't worked the way they expected it to when they made the acquisition, scratched my head, i always knew jeff was smarter than i was, but i figured he a trick up his sleeve he was going to, you know, wing out at us. and i don't think that's the case right now fresh produce is very difficult. whole foods is expensive and has been and was probably post peak when they got into it this is something amazon is trying to work its way through. >> interesting you think it is about -- is it about category or is it about store count and what do you think they should have done, maybe, differently in terms of choosing a target, for example >> yeah, i think that's a

great -- that's a great question produce -- grocery is very difficult in retail. if amazon wanted to extend its reach to provide outlets for customers to interact with the digital platform, in a physical presence, acquiring a grocer and particularly a premium fresh food grocer like whole foods was probably the most difficult thing they could have bitten off. would have been better if they would have gotten into a retailer with more presence and more outlets like target or cvs or walgreens or something, they could have had a whole lot more interactions with more customers. >> i mean, to me, bill, this is so indicative of the amazon effect and the stock market. that is when amazon puts out a press release, the gut reaction on wall street is just sell walmart and kroger i covered kroger, 10% of their stores, geographically, overlap with walmart -- with whole foods. it is not like they're going to

have to go on the campaign to slash prices to compete with whole foods because of a move like this. do investors get it? >> i don't think so. i think amazon already has got the lift that they were looking for from this price action because it was covered in the press. and the example, the raspberries that were $5.99 that went down to $4.99 are actually $3.99 at walmart and kroger they're still expensive. haven't done anything. and it is just this impact of amazon where, you know, they breathe and everybody else has no oxygen left >> you're not saying this as a -- as a homer, right, as a walmart executive and lifer here, you actually -- i just wonder whether or not any biases from your walmart days are creeping into your insights now. >> no, i wouldn't say so i think -- i think amazon is a -- a beast in the categories and in the areas where they operate. i think online they have got a formula that works, you know,

impressive and incredible way. reaching into whole foods and trying to do fresh food, wow, that's a big reach for a company that has no physical retail experience if you look at walmart as an example, we botched up digital for 20 years before we got it right. even close to right. and headed in the right direction. that's what amazon is going to have it go through they try to swing for the fences with whole foods that's a very difficult proposition and, by the way, it was struggling when they bought it. >> credit suisse put out a note yesterday on the report. t they had a survey they just did from the l.a. market showing that produce at whole foods, maybe before the price cut went into effect, was 45% and 30% above walmart and kroger do you think that customers are making these decisions based on price? because produce is so key, it is the traffic driver as you know in these groceries. >> it is and the whole foods customer, at

least the business that whole foods built when it was really at its peak was premium. and it was -- and it was selective in their customer reach. and it is selective in their physical footprint with 480 stores, that's not really a national footprint. that's not enough to make an impact in your comment about overlap with kroger. it is really similar in overlap with walmart just not that much overlap with physical traditional retailers so the price and the niche, focused on high end consumers and high end produce, they're less likely to react to a price reduction than somebody who is, you know, shopping at walmart or kroger they don't have access to whole foods in the way that they do walmart and kroger the customer -- typical customer probably has to drive past three or four competitors at a lower price to get to whole foods. >> sure. we're coming on a week where got

a pretty jarring warning out of walgreens, and there was some discussion yesterday about whether that was a reimbursement pressure or overall macro pressure or amazon i wonder if you have a thought on that. >> you know, i hink, again, i think walgreens is in a very, very competitive space right now that has been regulated. and the growth at cvs and the expansion at cvs made into a broader health business has really challenged the reimbursement in the pbm structure that funds the prescription and flows the prescriptions. i think walgreens is losing out on that play right now >> where do you think whole foods is now that we're reflecting back on the deal. amazon buying whole foods, they made all sorts of moves, they want to open up stores, not just whole foods and grocery. trying to conquer this market. have they made a dent overall, bill >> no. i don't think so it is really hard to say, let me

tell you, they report so little. and in such obtuse way, nontraditional retail reporting like they say that -- they said in the last report they were up 6% at whole foods. they didn't say whether that was same store sales or new store sales or whether it was sort of some digital multichannel sale it is really hard to say what they're doing. last report i heard, the profitability was nearly gone. wasn't much there to begin with. i think the acquisition whole foods was making under a billion dollars a year i think i read a report that says two-thirds of that was gone that was early on. and now they're reducing prices again. so they can't be a profit play i don't think they have enough locations to be a traffic play i still think there may be something that jeff got up his sleeves that with this digital physical integration we haven't seen yet because he's a really capable guy and he doesn't do things by accident so i still think it is something to watch i don't think we have seen it

yet. i don't think we have seen success yet with it. >> and we're all sort of trying to read tea leaves, especially as we get reports of how they're negotiating with landlords on new drive through concept or whatever, i wonder, do you still think there may be reveals for them in the next year or two >> yeah, i don't think they're done i think the conclusion that you could read from the amazon acquisition and all the news about landlord leases and stuff like that is that amazon's decided that in order to get where they want to be strategically, they got to get into a physical retailer or omni channel retail presence and i think that -- what they have seen is that walmart's inroads in digital haven't been from the traditional online platform where amazon is so dominant. it has been in the multichannel -- the physical digital integration. i think where walmart has done well amazon seeing that and realizing they need to get some of that to go where they want to go that's what you're looking at. >> it is a heck of a dogfight to

the consumer's benefit, let's hope good discussion. good education talk to you soon thanks. >> great to see you. >> bill simon. don't miss our exclusive with doug mcmillon. when we come back, a new voice in the fight between hollywood and netflix. the department of justice. we'll look at why the doj is jumping into the fray here plus, an exclusive interview with ibm ceo ginni rometty coming up on "squawk alley" today. why she says ai will change 100% of jobs in the next few years and what she's doing to keep ibm ahead of the curve ghbaawk on the street" wl ilbe ilbe rit ck you still stressed about buying our first house, sweetie? yeah, i thought doing some hibachi grilling would help take my mind off it all. maybe you could relieve some stress by calling geico for help with our homeowners insurance. geico helps with homeowners insurance? they sure do. and they could save us a bundle of money too.

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the doj is jumping into the fight between the hollywood establishment and netflix. julia boorstin joins us from l.a. with some details good morning, julia. >> good morning to you, carl the justice department is warning that the motion picture academy could face antitrust issues if it blocks netflix from awards variety first reporting yesterday that doj is sending a

letter to dawn hudson saying, quote, if the academy adopts a new rule to exclude certain types of films such as films distributed via online streaming services from eligibility for the oscars, and that exclusion tends to diminish the excluded film sales, that rule could therefore violate section one of the sherman antitrust act. this comes after steven spielberg reportedly suggested restricting films from the likes of netflix from oscar contention if they're available for streaming too soon after they launch in theaters the academy telling us, quote, we received a letter from the department of justice and have responded accordingly. the academy's board of governors will meet on april 23rd for the annual awards rules meeting where all branches submit possible updates for consideration. it is worth noting that neither the academy nor the doj actually mentions netflix by name, but this is about the rise of netflix and the ability to shatter the established months

long window between films theatrical and at home releases. insulating the movie going experience now, netflix won three oscars for "roma," in theaters for three weeks before it started streaming online so the question is whether mandating a certain type of theatrical release to qualify for oscars would hurt netflix's chance to compete. but the doj's concerns may be less about gold statuettes and more about who controls the movie industry back over to you. >> i wonder, i don't know if this is reading into it too much, but does it reflect some broader concerns the government level, the department of justice, about traditional tv and movie industries, blocking these upstarts like netflix to compete? i wonder if it goes back to the time warner trying to block that deal before from the doj if there say common theme here and we can try to figure out what is next and where the government is. >> yes, look, i think the question that the doj was so

focused on when trying to block at&t's acquisition of time warner was more about how time warner could use its -- at&t could use the dominance once it owned time warner to have unfair negotiating leverage when it came to the cable distribution deals. what they're talking about here is the question of -- the establishment, what winning an oscar symbolizes, what allowing a company to qualify for oscars is sort of -- means for the industry what is so funny here if you take a step back from this, is the fact that the films that win oscars tend not to do well thee theatrically it is not like there is a direct correlation between oscar movies and theatrical successes we don't know how well "roma" did in theaters before or after it won all those oscars and got those ten nominations.

but the reality is this is about who controls the most important event of the year for the movie industry and that's the oscars and whether netflix could get pushed out of that >> it does feel like spielberg is a little bit isolated here. we'll see if this moves forward. fascinating story. julia boorstin with us on doj netflix oscars as we're talking, director of the national economic counsel larry kudlow saying the chinese delegation is in washington for three days of talks, they may stay longer. can't be specific on whether the u.s. will roll back those tariffs because it is part of the enforcement discussions. and then says they're acknowledging really for the first time problems about ip theft, forced technology transfer, saying they have admitted to some of the problems and previously beijing was in denial according to reuters. >> from investors point of view hoping for a deal and substantive one at that. that's only good news. i think represents progress. the two outstanding issues are

going to be can they get to some sort of agreement on enforcement, and does that involve leaving the tariffs on as a sort of way for the u.s. to keep china in check and that's a big factor because it plays into the uncertainty and the growth barriers that a lot of the multinational companies have experienced. >> hasn't moved stock very much. dow at 35 points when we come back, pimco head of public policy will join us for how she's adjusting her playbook this year. we'll talk to libby cantrill in a few moments. ♪ to inspire confidence through style. ♪ i'm working to make connections of a different kind. ♪ i'm working for beauty that begins with nature. ♪ to treat every car like i treat mine. ♪ at adp we're designing a better way to work, so you can achieve what you're working for. ♪

good morning, everyone i'm sue herera here is your cnbc news update at this hour. chicago has elected lori lightfoot as the first african-american female mayer in its history. she beat toni prek winkle in a runoff election with 74% of the vote she will be sworn in may 20th. >> together we can and will

finally put the interest of our people, all of our people, ahead of the interest of a powerful few. together, we can and will make chicago a place where your zip code doesn't determine your destiny. >> efforts to vaccinate nearly 900,000 survivors of cyclone adai began in earnest today. people lining up to get their shots. so for more than 1400 cases of cholera have been reported. russell west brook scored 20 points, 20 rebounds and dished out 21 assists din against the lakers, joining wilt chamberlain as the only two players to put together a 20-20-20 stat line. he dedicated the game to his friend, slain rapper nipsey hussel you're up to date.

back downtown to you sara >> sue, thank you. welcome back, everyone, to "squawk on the street. i'm sara eisen with carl quintanilla. live as always from post nine at the stock exchange one hour into the trading session, here's where we stand the s&p is up .4%. this is a fifth day in a row that the stock market is higher. materials, technology, discretionary, all leading so nice batch of cyclical groups there. staples is the worst performer as far as the dow, intel and apple driving the gains. off better economic data out overnight from china kind of some mitchxed data on t us us. >> bob pisani for a look at ipos and our etf spotlight. >> the market is just reopening. you know that. the recent ipos have been doing real gang busters. simple way to follow this. renaissance capital ipo etf up 33% this year. outperforming just about everything, frankly. the renaissance ipo is a basket of about 60 of the most recent larger ipos.

market capitalization. they hold the ipos for up to two years, but they're adding quickly. they'll likely add lyft shortly. the holdings are very concentrated here. the top ten holdings which include spotify and altese are 43% of the fund there. not a lot of other choices there is another one, though first trust has an ipo etf called opportunity that's market cap weighted it holds roughly the 100 largest ipos, but a difference here, it holds them for four years, not two years, you have older ip oxs in the mix is differently. if you have a hankering to buy foreign companies, by the way, believe it or not, there is an etf for that too renaissance hans an internationl ipo. you see a heavy concentration with these market cap weighted indices, the top ten are 46% of the weighting.

i'm waiting for terps on pinterest. going to happen any day now. i would say probably by monday we'll get it i can assure you we'll get more cautious pricing than we had with lyft. back to you. >> thank you, bob. bob pisani watching the ipos senator elizabeth warren unveiling a negligent executives bill the new legislation could make it easier to criminally charge executives for a company's wrongdoing and for that we'll turn to ylon mui >> this bill would put ceos in jail if the company is guilty of bad behavior, even if they doesn't personally approve the actions. those executives could face up to a year of jail time for first offense and three years of jail time for the second offense. so whether the company is found guilty of a crime or whether it enters into a settlement with federal or state regulators over civil violations, it could be harder for the top executives to avoid personal responsibility. we know that warren has gone toe to toe with bank executives in

the past but in this bill, she is calling out wells fargo's repeated offenses as one of the big drivers of this proposal in a statement, she said that corporations don't make decisions, people do for far too long, ceos of giant corporations that break the law have been able to walk away, while consumers who are harmed are left picking up the pieces she introduced the too big to jail act today she introduced that before, reintroducing it today and that would create a permanent investigative unit for financial crimes within the treasury department it also would require big banks to certify that there is no criminal conduct or fraud happening at their institution we know these themes are the bedrock of her presidential campaign so we're going to hear her talk more about this over the coming year back over to you. >> hear her talk more about it but it doesn't havea shot at passing the gop senate, does it? >> absolutely not. this is not something that is going to be become law over the next two years, what it does is it sort of gives her something

to stump on when she goes to make her campaign speeches it widens the aperture of what democratic candidates have to respond to and really is something that she is known for, so this goes back to how she made her name during the days of t.a.r.p., the financial crisis so it is reminding voters where she came from, but also giving her something new to add to her stump spoeeeches as she tries to win the democratic nomination for 2020. >> thank you >> investors are focused on trade and policy issues this morning. chinese vice premier liu arriving in d.c. to resume negotiations with his u.s. counterparts the ninth meeting between those two sides. the president is still threatening to shut down large portions of the southern border. for how all of this impacts the markets, joining us here at post nine is pimco's head of public policy libby cantrill.

how seriously should we take the threats to close the southern border and the economic damage it could do in. >> i think what president trump has showed time and time again is that he takes the border security issues seriously. he shut down the government over the same issue i think we have to take him at his word that he is absolutely investigating this and what we also know is that larry kudlow and other economic advisers are really wanting him to limit any sort of economic damage there may be from this shutdown. >> told me yesterday he wants to keep truck lanes open to keep freight moving as to not disrupt the supply chain. >> exactly i think you'll hear more of that from his advisers. they're saying publicly, they'll continue to say that privately but i think what we had to take president trump on his word on these issues this plays very well with his base and, again, the shutdown, the evidence, you take him seriously on this. >> we also learned from patterns of the president's sort of position, we need to take him seriously, but he's also made a lot of threats of economic

damage, pulling out of nafta, and then not going through with the worst case scenario and not creating any sort of economic disaster he doesn't want that either. he's going to run again. >> his economic record to him is very important and going into 2020 is going to be increasingly important. however, you go back to trade issues people take him seriously on china. we have tariffs on $250 billion of chinese imports you're right to a certain extent that he hasn't necessarily followed through with the worst case threats at the same time these issues are important to him and he will act on that. >> which do you think is a better or stronger more potent campaign issue for him the economy, or border security? >> he has to choose. yesterday he suggested it would be security, right >> i think it is the tension between these two things he clearly cares about the markets. he clearly cares what you all are saying on your show. at the same time, he's going

back to his base and i think the people have sort of erroneously underestimated the president on some of these issues they think these are just political issues for him, he's just saying this to get re-el t re-elected i think these are sincere policy issues for him i think he fundamentally believes these border security issues are putting the country at a nation allege security risk. >> how does this impact his effort to pass the -- >> we need mexico not only to ratify this, and their legislature, and they also need to pass some stronger labor laws to actually implement the usmca. we need mexico to sort of cooperate with us. i think at home he faces a lot of obstacles i don't think this is any surprise anybody who has been watching house democrats and how they voted on free trade agreements -- >> judiciary just voted now to

subpoena all the mueller reports. >> on free trade agreements, you have to understand it has been the democrats who have been less pro free trade this idea that they would be able to just easily ratify this, gives president trump a win on trade, i think it was misplaced. the point here is it is going to face some obstacles. and the more obstacles that it faces, the higher chance we'll see an after withdrawal. >> you think we could see an after withdrawal. >> he said he would withdraw five months ago. >> i think his advisers have given him -- said, look, let me do our magic, let's work our magic on the hill. i think there will come a point, coming to the summer, if we don't see ratification, don't see house democrats bring this up for a vote, there is a good chance we could see withdrawal what withdrawal does, it triggers this six-month clock so congress has six months to do something about it

but, of course, markets will not view that favorably. >> we mentioned the elizabeth warren op-ed how much of the policies you're hearing now, you just dismiss out of hand, because of the season we're in. >> i think, look, from a market's perspective, you have to take some of this, somewhat seriously. it is movingi inthe debate among democrats. personally, i think this is just the beginning of the season and we'll see more of this, this is a way to ingratiate them, the democrats with voters, who really are disenchanted with big business big business under both democrat and republican administrations have been let off the hook from personally i would take this very, very seriously. >> you would or would not? >> i would not even if democrats control the senate, i very skeptical that -- >> agree with you, but look at what happened with tim sloan elizabeth warren just piled on

the pressure to the point where wells fargo felt that, you know, it was too much and it was a distraction. >> that's a good point i think the democrats on the progressive left are moving the debate left and that will have market imapplication et implicae next 18 months. >> it is an interview you do not want to miss ibm's chief ginni rometty on "squawk alley" in 15 minutes dow in a narrow range, holding on to gains. s&p is up just below 2880.

facebook just cracked above a key level. one technician says the breakout could signal a bigger rally for the stock. find out more on tradingnation.cnbc.com

to the cme group in chicago.

rick santelli and the santelli exchange hey, rick. >> thank you, carl i hope that we get along better on the air we haven't agreed on anything this morning let's start out with the board what we do agree with that should we stock trade, stop traffic, close the border between us and mexico? we don't know what all the answers are. but i wanted to give our audience an overview on how this is so much like the china negotiations >> yeah. a billion and a half dollars of trade flows through the border every day. our economy is ten times the size of mexico's economy that hurts mexico if we close the border >> and ten times the size. and even more concentrated with our relationship on trade. the point i'm trying to make here is that nobody likes upset status quo, hurt business, maybe temporarily hurt stock mexico pays a much bigger price. >> absolutely. china pays a bigger price with the trade negotiations they got much more to lose than we do. >> it is hard for us to talk about it you got to get in the shoes of

the people on the other side of the table. as for the fed, our disagreement is what the market is pricing in and how unimportant i think that is so let's go to the primary character in this play, the markets. do you think that if interest rates didn't move for the next six months, and the stock market kept depreciating 1.5% a month, with the next move in that time period be neutral or a tightening >> well, if you put it in those terms, the stock market of 1.5% -- >> 1.5% for next six months. >> right that's still 10 or 12%, yes, i think the fed would lean towards a tightening i think that would be a mistake. i think the data has not been good the earnings are expected to be negative on a year over year basis. but a yield curve and the market is pricing -- >> we're now discounting earnings at a lower rate we see certain numbers, like, today's housing mortgage -- the mortgage data that was out today. listen, i know rates going down

may -- i get it all. i guess what i'm saying is things can turn in a more positive way, and right now everybody is just coming out of being hypernegative. >> i think what we're talking about is that the bond market and the stock market are giving you two very about is they're giving you two different messages right now. >> not much, but lately, yes. >> that doesn't meanwhile we're going to see an '08, but we see the bond market and stockmarket will have different messages in '09 we saw that the stockmarket was falling off the cliff and warren buffett was calling it an economic pearl harbor. >> one thing that's going to get us maybe closer to an agreement because it's just not happening today is friday. we know adp today was on the weak side. i'm not a big fan of paying a whole lot of attention to adp, but if we went from 200,000 jobs

last month and now it's mediocre, you and i are on the same page. >> adp wasn't good last month's payrolls was not very good. everybody dismissed it if it's not revised away with a big bounce, then we've got a big issue. >> you know what we're talking about? pay attention to real time jayapal gets it. i don't think the president does so much. thank you, jim bianco. carl, back to you. >> thanks, guys. let's get a look at what's coming up on "squawk" alley. >> we're going to talk the future of artificial intelligence and those topics and where the money is and more importantly where those things are coming up on "squawk" alley.

let's get to eamon this morning. >> the president has signed a new referendum it's regarding counterfeit goods and inappropriate drugs being sent overseas through online retailers, the administration says, including amazon, that are reaching american homes and

bypassing some of the traditional checks and balances that are aimed at weeding out counterfeit goods and brands from the american marketplace. the president signed that today. peter navarro, the trade supervisor has confirmed that. back over to you, carl. >> had this been previously telegraphed? is this something we knew was happening? >> yes, particularly opioid drugs coming in pack js through china through online retailers what this does is directs homeland security to work with federal law enforcement to stemming the tide of counterfeit drugs and goods. that's something that's already been under way, but the effect of the memorandum is to alert them that the administration i watching this space carefully. navarro and his op-ed said he

hopes they're placing their own efforts and these are not coming through the system. >> does it impact anything with regard to trade talks with china? >> no. they said they're clamping down on fentanyl and production there. that's been a big piece of the china trade talks, but this is a september issue. to look at this administration's sort of hostel toward amazon as a company and jeff bezos as a ceo as one sort of animating factor in the mix, they've talked a lot about the idea of counterfeit goods and drugs coming in through online retailers more broadly than just amazon this is a presidential memorandum it's something the dhs does on a regular basis, so this gives sort of the force of presidential authority to that and alerts the retailers that the administration is watching and paying attention to this

issue. >> got it. ahman, thank you. >> you bet. >> coming up later today, we'll see you on "closing bell." we've got virginia drosos. it's time to get an update from her. the stock is moving up, but it's down aaron levie will be hear to talk about box. and ginni rometty is coming up "squawk alley" starts in a moment

good wednesday morning welcome to "squawk" ellie. i'm carl it's been a series of good trading days in the meanwhiletime verizon's ceo hans vesper is going to join us today to talk 5g rollout. >> they're talking to roll