>> thank you three of you for several hours together >> a final check on our market we have been in the red. 450 points on the dow and s&p. nasdaq is off 141 points on a threat by president trump about the china deal may not happen. "squawk on the street" begins right now. >> good monday morning, i am carl quintanilla with jim cramer and david cramer the president tweets he'll raise tariffs on chinese goods buffett on the tape ahead of the big week of earning and youtuber shanghai was down and our road map begins with trade threat for stocks china considers skipping the next round of trade talks. warren buffett's of the warning.

>> first up, stocks are selling off around the globe a day after the president tweeted a threat to hike tariffs on friday after the current 10%. we followed it up this morning, the united states have been losing many years, 600 or $700 billion a year on trade with china sor sorry we'll not be doing that anymore. this is what buffett told becky this morning about trade tensions >> we actually have a trade war that'll be bad for the whole world and could be very bad depending on the extent of the war. you can't shake your fist first and finger later on. it is not a technique that works well

he did say this morning's reaction is rational he said a trade war is bad for everything for bershire. >> the president took in a couple of numbers, 3.6 employment 3.2 gdp. he's shaking everything. you got to take a shot at it as the president. i think he is -- we were wondering mnuchin who likes to speak to the press when he's not speaking to whoever he's speaking to. he's been saying it is all good. the people i talk to have been saying are you kidding me nothing's changed. we are not going to give in. we may not have to give in with anything we don't need them right now wait a second, have you talk to united technology or proctor the press is not about earnings

per share. he's about this trade war and winning it >> right >> listen, i asked you the question for a reason the last couple of weeks of what's the downside of the market >> here we are >> and properly discounted of the possibility of not reaching a deal in part to your point and i think it is one that's made clear among those that are more hawkish on china trade 3.2% ggdp and stock market at a new highs. if lighthizer is in the driver's seat for example > >> yes >> mnuchin has settle off but not where things stand and given a positive tone. if lighthizer or steve bannon

still have influence >> today is the best day of the presidency of some reports >> the president's people, lighthizer don't want to defend if there is not an enforcement mechanism. look, first of all, we'll lead the tariffs no matter what i think this is like a prelude to saying there will be no deal unless you set the fact that are current tariffs are going to stay which is what lighthizer wanted we got this thing mnuchi mnuchin -- well, mnuchin speaks with a couple of people in the press. he's like a cheerleader. >> you don't reach a deal. if you do get into -- again, back into the idea of hostility between the two countries and the chinese retaliate in certain

ways, perhaps, unexpected ways it is not going to be good >> 1.3 trillion of our debt. >> we do have a lot of companies that do a lot of business there. >> look. if you areapple, stocks hit 21 and had a good quarter n this is not good >> if you are starbucks. >> boeing. >> we keep on waiting for starbucks to go down >> if this were to collapse which by the way is far from saying and deteriorating from there. you do get to a point where you have to be concerned of everything >> it has not been a concern for the market because everybody's expectations have been - >> the president does not care at all he's looking at the averages hey, they're down and the

averages are down. and ours is down two therefore, we'll wait. come on, he gets like that >> he's going to change his tune, is that what you are saying >> there is been some firms over the weekend looking at the timing of this call for rate cuts and trying to link it to the progress with talks. do you think if there is no deal and this collapses, the fed is too tight and that's where the president knew >> yes yeah yeah, that's what he knew. >> there is a large camp thinking this is a tweet on rainy sunday and by friday they'll have a deal. >> if he's busy playing golf, it would have been a happier story. >> does not look like happy. >> have you read the tweets come out on sunday morning?

>> i watched him this morning on the show >> derby. >> tiger woods is going to get m his medal today. life goes on >> let's stay focused and there is reason you should not look at stocks >> okay, not going there >> sorry the thing that matters is that lighthizer wants tariffs not to go away. i know there is a fist finger thing. that's off the desk. that's the non-mnuchin camp. he likes to talk to certain people he gets a kick out of it >> can we do better than that? >> one last thing here, north korea is firing short range projectil projectiles. how much of that is in this mix this morning

>> protection of force, defense department is just watching their southern china to see if it will go to them i don't know about iran, sending a fleet there. >> who's the acting secretary of defense? >> boeing executive, right >> anybody got a name? >> is this jeopardy? >> i know he replaced. mattis >> shanahan. >> he has a good record. >> we'll move from this to -- >> someone thinks that we mean that >> let's talk about occidental

and anadarko and chevron occidental did something not unexpected but that without a doubt eliminated certain doubts that may have surrounded its bid for anadarko it vastly increase the cash component so much so that it is not showing enough shares. it requires a shareholder vote it is removed from shareholder vote from the list of concerns that anadarko may have had in terms of occidental bid. it is 76 bucks a share and 78% of that or $59 is cash the remainder is occi stock. >> i would have thought 74 or 75 >> yeah. >> that stock implies right now, we'll hear something on chevron.

>> even though 12 days have passed, it did not actually deem it to superior there has been not a lot, there is been some back and forth but really in the occi field is certainly been some delaying tactics and we have been hearing this from many number of people. they didn't give an update of share account until recently >> yesterday they also announced occi deal itself of -- let me i give you a little piece of news here, it is not completely unexpected i am told by people close to anadarko that by the end of today, they'll deem occidental bids superior. one would expect -- they got to do that. it is basically worth 76 bucks a share. far in excess of 61 or so but

the chevron deal -- that stock price started at 65. by the end of today, we expect it will be deemed to superior, that'll start the four day match clock for chevron. at which point they'll finally need to decide whether to compete. in doing so, it is no longer becoming 72 or one would have to argue going to have to be in the mid-70s to at least equal this current large cash component why were they able to go to the large cash component and avoid a shareholder vote well, because of this guy, warren buffett giving them $10 billion. here is what he had to say to becky quick of the deal earlier this morning >> 100%, we do not have any control nor we want any control over occidental did with our 10

million. there is nothing in our deal that provides they have to come back to us and request permission it is a remarkable deal but that's the way we do them in that respect they got our 10 billion if and when they call a deal with anadarko >> that of course now will be a decision up to chevron whether or not occi succeeds mike wirth will have to decide whether he wants it. >> elon musk, they have balance sheets, everybody knows it he raises a couple of bills like that using goldman sachs settlement have to go pay four times. >> 8%. >> wanted to get it done as fast as possible. >> there is only one guy that can make a decision in ten minutes. >> elon musk was able to get his

money immediately. >> they did get the deal fast. >> you think if you went to morgan stanley, hey james, goldman just raised $2 billion, can i have 10? what do you think it is? it is a burning bed? >> ohio mattress >> i think this was tactically a bad way to raise money elon is a magician but vickie has assets >> we'll talk more about whether tesla raised it enough futures looked to be at this point of the lowest since january 3rd. that level is right around 460 on the dow we are back in a minute. ♪

(vo) i know what you're thinking. electric, it's not for you. and, you're probably right. electric just doesn't have enough range. it will never survive the winter. charging stations? good luck finding one of those. so, maybe an electric car isn't for you after all. or, is it? ♪ we sunleashing the promisegas of clean energy. at emerson, when issues become inspiration, creating a better world isn't just a result, it's a responsibility. emerson. consider it solved.

bershire hathaway is apple's third largest shareholder. becky quick caught up with tim cook and asked him if he

considers apple a tech company or a consumer company. here was cook's response >> we are in the tech industry but we work at that intersection technology and so we make products for people and consumers at the center is what we do. so i love the fact that he looks at us like that. we want consumers to look at us like that. we believe the technology should be in the background and not the foreground technology should empower people to do things and help them do things they could not do otherwise. if things appear as technology, they're not used very much you know they are for other people and not for all of us so i love the fact that he looks at it. >> for you, jim? >> this is fabulous. this is the most clear vision of kind -- i am a tv guy.

please, you know the best technology company product that's consumers it is the consumer product with unbelieverab unbelievable technology. you would get a stock that's 270. obviously, they're throwing their last legs in it. tim cook appears in it before. come on, and tony does it. of course, he's a nice guy >> we actually learn a little this weekend about cook when he came to the job. cash level were getting at a certain. he called becky and told the story about how buffett did not know him abut he called him advice on what to do with the

cash with the buy backs. >> he's the guy. >> i don't make enough to call >> no. >> is there a level, can joel m embiid call? >> the only criticism he has was it may be hard to get insurance for elon musk. >> what's that >> there is a heads up for you >> we are going to cover what was said in omaha over the weekend from top to bottom we'll get cramer's mad dash and countdown to the opening bell and futures, we'll see how we open and trade this monday, don't go away.

dear tech... you've been making headlines. smart tech is everywhere. but is that enough? i need tech that understands my business. i need tech that works at scale. dear tech... dear tech... dear tech... we're exploring quantum to develop next generation energy. we're using blockchain to help make sure food stays fresh. we're using ai to help create more accessible health care. we're using iot to create new kinds of digital wallets. let's see some more headlines about that. let's expect more from technology. let's put smart to work.

does your wealth manager a cfa charterholder does. you've worked hard to grow your wealth. make sure you're working with a wealth manager who can grow with you. cfa charterholders have the investment expertise to unlock opportunities other advisors might not see. learn what a cfa charterholdr can do for you at therightquestion.org

stock prices with a lot of uncertainty this morning we'll talk china trade ahead of a big week of ipos and earnings with opening bell begins in about eight minutes. this is my headquarters.

this is where i trade and manage my portfolio. since i added futures, i have access to the oil markets. and gold markets. ok. i'm plugged into equities.

trade confirmed. and i have global access 24/7. meaning, i can do what i need to do. then i can focus on what i want to do. visit your online broker today, to learn more.

all right, we got a few minutes before we get to the opening bell with a market that looks poised to open far lower on the tweets of the president's trade yesterday of china trade >> david, they're talking about introducing an all new alt me.

>> they sold their state in beyond me. they're going to go beyond me and have their own product remember, they got good distribution they're natural and the fact is they have their chin in the game must beyond me now we see how much people want their product, you got the impossible, possible >> yes >> the possibilities of our super market being flooded with alienate products. it is going to mean you sell beyond me. >> i am not up to date on the product selection available. it is beyond burger. >> it is sausages and hot dogs it is everything that you would like and i am not going to go there in terms of the -- tyson already own the space. we although tyson chicken bought

beef now, they're going all beef. >> they still make those chicken though, bigger and bigger. >> the breasts it is acalled augmentation. >> can't stand up because their breasts are too big. wow. >> what are you saying >> what do you mean what i am saying >> let's move on from this i am worried >> that's unbelieverabable >> they own 6% of beyond meat. >> because of distributions. they got unbelievable distribution they got the truck and the isles, give them some isle space. beyond me is a nice beef business >> certainly a great idea if you bought on the first opening.

how is your pinterest doing? >> my pinterest? >> zoom is still going up. that's the most over valued. zoom continues to go up. that's what you buy. >> a lot of coverage of the upcoming uber. a long story this week any thoughts as we get closer to the pricing of what will be the largest ipos of all time >> this market takes a lot of enthusiasm out which is really good news. >> you have been calling for some caution last week, i would think you would be welcoming this >> i can't be joyous i told my wife i was right, that was about it she says you are always right. >> a lot of commentary that,

well, a few things, china's policy standpoint if this goes bad badly. the lesson of the year has been buy. >> i think that's still true >> i think we have a one-two punch trade related and uber possibly doing poorly. when i check at the list, there is a great checklist in "the times. >> i don't know if you saw that. they know how to stop the back door selling >> yes >> specific thing that we discussed of the sorrells purchase of icahn. they won't let it happen >> that's great. we learn fred from the lesson ad cool off the market. don't know when the president is going to tweet then. it is nice >> we are getting lyft earnings this week. tuesday night along with disney on wednesday and it is going to get busy let's get the opening bell, s&p

500 at the cnbc. at the nasdaq, it is the cme group celebrating the futures. names that got away from you or slipped away in the rally. >> i totally agree you sit there, i don't want to change, i want to wait for the market wide pull back. you can't just say okay, i need a bigger pull back tough start buying something technically these stocks have been so hot that they left the train station. >> now they're coming back if paypal were to come back a little disney is harder because there is a bigger gap. how much is microsoft really

hurting here and how much is facebook facebook is not there. alibaba, i think they're having a fantastic quarter. >> well, alibaba's shares will be down. we don't get to a final trade deal >> well, to your point, the difference of the level of decline between the u.s. and china. that's the biggest drop in the year >> the president is glued to the averages if we are down less than they are, there is going to be a series of tweets saying we are down less than they are and we have them where we want them that kind of thing he looks at the hours. >> as an investor trying to

understand what is going to happen here is very difficult. you have to understand where i think the president's miend is n terms of how farthest pushing the chinese or who's listening and negotiating rading right no. what's a must-have in my deal? >> is it stopping espionage or having some sort of forced mechanism. everything is across the board >> state's subsidies, right? >> it is all the things and i think that's why the most important thing is if you say you are going to raise them, at least you got to keep it steady. i know the white house did not want these tariffs >> they want to keep them on until -- >> this is not trust to verify it is don't trust and verify because they don't trust them. >> friday is a big day only four days away.

you have to scramble it and hasbro >> i think david's yquestion is more about the chinese and how they're going to react and look to their own people. if they don't act buy friday fr these go up. >> i think he'll have to offer something between now and thursday i do he has to offer something which is a way out for them. which will make it look lik like -- right now they did not save a lot of face kind of like the terminator in terms o f tf the face >> china did offer some cuts on reserved rierequirements this

morning. >> well, they need to keep the ball in the air. >> yes >> a lot of company -- we speak to 3m. they unfortunately, they had a lot of businesses in china they're basically saying that's not great. it is not going to get better. apple, no boycott, doing okay and starbucks is doing okay. >> all doing fine. >> we have talked about it for a long period of time have not come to intuition. in part because for less, at least for months there is a widespread expectations that you will reach a deal. it is may and i think there are so many people believing you will get to a deal soon. >> the ministry of sports have

contracted t >> how is the minister of troops doing? >> it is a ministry -- >> there is been reports that the president's tweets were blocked on various sites with china. >> wow twitter. >> boeing as you may expect is down there is another 2.3% which seems sort of in line of what you may anticipate given its presence in the chinese market there are other stories on boeing, too, in the wall street journal and not sharing it with the airlines effectively for the max. >> i think boeing, it is the best headline of the day yes, let's still accept the fact that this stock is not crushed yet. i would own this stock

they say determining resolutions of the issues in terms of discrepancies once they were identified >> which is everyday >> now they're starting to speak to pilots. you can get everybody to talk. you speak to pilots, nothing is going to happen with boeing. it is just not what you want to own right here it is a little more dicey. guys, about 100 points of this drop if it were not for the occi news, chevron may not be the only dow component in the green. >> chevron will choose not to -- well, that's why the stock is up, right >> right >> it is not a higher price. s occi eliminate the risk of shareholder boat it is not issuing enough stock and so the occidental bid of 59

in cash and the rest of the stock, 22% cash stock mixed, it is a mirror image of chevron's bid, 65, it was originally and worth less than that now because chevron stock had been down as we said earlier today or at some point, people oppose to anadarko will deem occidental a bit. that'll begin the four-day clock of chevron having to meet that higher bid or lose the deal. the question is what chevron will choose to do. >> this is two stocks a row. >> yeah. >> really painful. >> amazing occidental is not saying much. >> people like to yield, i guess. >> it lost its values, too and now not using that much stock. they took in 10 billion from mr.

buffett. they arranged the sale of african assets apart of the company for $8.8 billion in a sense already deleveraging the balance sheet to some ext t extent and their shareholders at this point at least, not reakicting o badly. what about the government? don't we have a role to play and should we have a voice in some place? >> people are going back to hershey and dardin or chipotle, that really makes sense because it is red hot and they're going back to red hat. mccormick, they're going back to the company you buy when you think there is dpoigoing to be recession. it is really boring if they kee

on doing that. >> they were down about 3.5% and deer now amd. >> micron. >> when luke at syou look at sk, they're going to pummel on it. a lot of china exposure. the company that i thought would be down more of their stocks, i would thought walmart. produce. these dpguys bring in a lot of stuff from china barely down. >> what do you think of that >> you know it is not good when qualcomm is down >> their stock is up 34 when we broke the story. >> it is up 53% the last few weeks but it is down >> i want people to watch facebook if facebook turns then you have to buy it today. facebook has nothing to do with

china. facebook is the key. >> time is over the weekend. talking about the disagreement of the ftc about how harsh this penalty should be regarding their deal on privacy. whether or not zuckerberg should be held possible for 35,000 employees actions in the future? >> that would be like holding jamie dimon. >> i don't know, it is a good question >> i think they're going to get away with this much more savvy than they used to be. i reiterate that's the one i would watch. the insanity and beyond meat is not coming in. do people think it is a blue chip is it like verizon >> as i keep telling you, jim, it is beyond meat. >> you don't recognize the value

of beyond? >> it is a 16-seed these things are up against the final four we all have a big contest o of -- honestly, that's what passes and what you should buy faang meanwhile is pathetic. >> disney is not too far from the flat line. "avengers," $2 billion in 11 days, one of only five films to cross that line. ticket prices obviously inflated over the years >> it took "avatar" a thousand days or 2,000 days it has been taken a lot of subs. there is one that's down a great deal and from where it was disney was much more -- it is

good level >> just watch this point imagine this market value of what trump is going to do? >> he'll have a tweet. >> i think he'll say nothose in the mainstream media who thinks the chinese are all powerful, have you looked at the averages? >> and conversely we are not coming to d.c. this week >> this is exactly what i wanted and they're fired. >> so if the mark det goes up, e gets tougher in china. if the mark is up and their market is down, he's going to say hey, we'll meet them but you can see they need us more than we need them >> it would be better if we can stick to actual economics, don't you think? maybe that's apart of it

the economy is strong. >> what was the most highly rated tv show during the period of "the apprentice"? who won the night all the time >> not "the apprentice." it creates its own reality >> exactly, david. you said it, i did not say it. it creates its own reality is that what you think okay, look, once the average is up, he's unbelievable >> never had a president who rela relates to the market quite this intimately we bounce around 28.98 at the very opening here. >> he's trump. the only person you would call -- trump. >> he's not calling me, not the

president. >> next term i ring her off. people at home think that well, i have no respect for them >> hi, it is jim, please leave your phone >> don't you know i am on television right now >> do you have an apple? >> i do. >> you are being hacked. they're hacking you, pal they bought a lot of anadarko. they hacked you. >> dow is down 350, off the initial lows let's get to bob pisani. it was the initial low 10 to 1 declining. that does not happen very often. take a look over in asia, japan is closed and korea is closed. you see shanghai is down 6%. we have said this many times here, 95% of the appropriate accounts in china are small

retail investors they are very easily spook this is why you need institutional investors who are steady hands in the market notice our markets are down 2% take a look at the u.s. 17 on the vix. already down to 16 early on and you get the knee jerk reaction let's sell semiconductor and big global stril naindustry name. banks are a little bit and they have been a market leader and energy a little bit of a decline. consumer stable is still down. the big industrial as i mentioned, your caterpillar and your other big names and fedex, all to the ownside i don't think you think of in terms of let's just sell industrial or semiconductor.

this there is a trade war, this whole game would go out the window we said the mark is expensive. we are almost at 17.5 half low earnings for this year, that's historically high. think of 15 to 16. well, you are down there and if you go back to a standard number like 15 or 15.5, the s&p is 26.50. that's why this is really real and yes, you have a reaction if you want to think a way to gain it, down here, is that location coming with or without lu hei, if they come without him, chances of it getting done is lower the biggest ipos week that we have seen? this is the biggest week in three years. uber here would be the biggest

ipo. alibaba was 2014 it is the largest u.s. space ipo since facebook that's all the way back in 2012. that's all going to happen on friday they're going to be pricing thursday night, uber for trade right here behind me we'll look at 180 million a shares that's about 8.5 building. we have a whole bunch of big names out. this is one of the big government cracker that's kikr s >> the bottom line is we'll raise a lot of money if all goes as planned this week the that's a new sthistoric hig for them >> guys, baa k to yck to you. >> let's check in with rick santelli good morning carl.

i am not sure if anybody knows whatst in t what's in the president's mind if you are going to pick a day to drop a bomb in the market, it is best to know when it is at an all time highs if you open it up to march 1st, do you realize the low yield curve for the year was 236 here we are sitting on 2.5 >> last week we set below 2.5. we have not spent a lot of time there. this is going to be a good test. the other parts of the flight to safety whether it is the dollar or the yen it is already at lofty levels. you can see the mid march charge really we are now at the lowest levels in the green back on currencies since early april since all of this has to do with

china and trade. let's go right to the epicenter of that? the dollar verses the chinese you want tl doll the dollar is at the best level since early february the dollar was drifting when there was a notion of something good coming out. maybe about their currency being weaker >> carl, jim, david, back to you. >> rick, thank you very much dow is down 369 here we are at 29.7 buffett weighed in on how investors should approach today. take a listen. >> look stocks, little pieces of of why in the rld world to do you celebrate on headlines

you have extra money and it goes down and you feel better because you can buy more cheaper >> the bond report is sponsored by pimco 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.

like.. pnc easy lock, so you can easily lock your credit card when its maximum limit differs from its vertical limit. and clover flex, for when you need to take credit cards when no one carries cash. or requesting a call to help get a new credit card- one that hasn't followed the family goldfish.

pnc - make today the day. there is a look at the heat

map. the semis are having their worst day since march 22nd keep your eye on the president's twitter account though just stalked to abe about north korea and trade. back in a minute music: [ 'watch me walk' by spencer ludwig ] ♪ can't take no class about this ♪ ♪ i'm on my way i'm on my way ♪ like this! ♪ hey! to start your investment plan, find an advisor at massmutual.com sfx: [ mnemonic ]

how many credit cards did i well, now that i'm debt-free, i can contribute to my wedding... and have an actual honeymoon. this is why i sofi. with sofi's no-fee personal loans, you can consolidate your credit cards.

time for cramer and stock tra trading. >> chipotle is amazing great quarter. i thought this would be one i would push on the show if it were to come in. because everything is really turning up for them. numbers keep getting better and better but they didn't even give it a chance watch chipotle, that is the hot one. ulta is second these companies are executing so perfectly. talk about execution they are -- they're the executioners like in the "brothers grim," the red shoes, the executioner, boom, right at the ankles. that's what they're doing. >> what do you tonight >> funco they made a bunk of cramer bob heads, like 10,000 of them, and they're all in my basement. >> you can sell those? >> no, i'll look at them like rosebuds.

>> orson wells' birthday today. >> is it really? >> yes. >> war of the words. >> see you tonight. >> that was fun. >> "mad money" 6:00 p.m. eastern time you'll hear more of what buffett told becky quick this morning. dow is down 322. with all that usaa offers why go with anybody else? we know their rates are good, we know that they're always going to take care of us. it was an instant savings and i should have changed a long time ago. we're the tenney's and we're usaa members for life. call usaa to start saving on insurance today.

your daily dashboard from fidelity. a visual snapshot of your investments. key portfolio events. all in one place. because when it's decision time... you need decision tech. only from fidelity. i'm workin♪ to make each day a little sweeter. to give every idea the perfect soundtrack. ♪ to make each journey more elegant. at adp we're designing a better way to work, so you can achieve what you're working for.

good monday morning. welcome back to "squawk on the street." i'm carl quintanilla with sara eisen and david faber at post nine of the new york stock exchange markets repricing, the tread tensions between china and the united states, well off the initial lows, dow down 291 >> that's where our road map begins, stocks plunging as the president ramps up trade threats on china full market rundown for you. >> hear what the oracle of omaha is saying, where to invest in the current climate and more. >> and why buffett's investment is a statement that apple isn't really a tech company anymore. >> we'll begin with kayla tausche in washington. trump's tariff threat. what is the latest are we going to see the talks this week? >> we're waiting to see what the

latest is. chinese officials are weighing whether to proceed with trade talks in washington that were expected to produce a deal in principle. china's foreign ministry said they're preparing to come to the u.s., but evaluating the situation after president trump raised the stakes for talks yesterday, tweeting that tariffs on $200 billion in chinese goods would mark than double on friday to 25% which would end the six-month truce with beijing ark the two sides negotiated in earnest. negotiators warned president trump that china was waffling on some of its commitments. china's vice premier was set to visit with a 100 person delegation with the u.s. officials telling me last week the working goal was to have an idea by the time the visit concluded this friday. the president's announcement is abrupt the treasury secretary said talks last week were productive and had suggested a deal would move uncertainty and lift market goesing into the election. then you have hawks like ambassador lighthizer and peter

know vario navarro saying record highs provide a cushion for any volatility to holding china to account. chuck schumer tweeting that president trump should hang tough on china, strength is the only way to win, he says it is unclear what senator schumer's motivation is there, farmers, business groups, and many other industry associations are advising the president to keep tensions down we will see what china ultimately decides and whether it feels that it is negotiating under threat sara >> so what is the current feeling in washington, kayla about whether we are going to see the tariff rates rise this week and further tariffs go through? >> i think the president is trying to raise the stakes here because there hadn't been this working assumption that the goal was to get a deal by this friday and he wants to make sure that china knows that the stakes are

high there is a real cost associated with doing that. that being said, china in the past in september when president trump has made some of these overt actions even as negotiations have been going on, they said, look, domestically that doesn't work for us to come to the u.s. and appear to be negotiating with a gun to our head in september, you'll remember that the chinese delegation canceled its trips and couple sources who had been briefed on talks say there say real risk that happens this time around. >> the specifics on the tariffs going up, can that happen on friday as the president tweeted? does any process have to take place or is that given they already have gone through that, a date that actually can immediately go to 25%? >> there would need to be a presidential memorandum that would have to -- put that policy in writing, go into the federal register those are things that can happen in 24 to 48 hours if the team feels like that is the situation that is going to happen. they can put that tappaper work together pretty easily because the list is already assembled.

the report was sent several months ago that's something that could pretty easily happen and just change the number that customs officials are charging when those goods get to the ports of entry. >> kayla, thank you. >> sure. the effect on the stock market was swift market getting hammered here with us at post nine, mike santoli, turn in bonds as well, safe haven buying there, commodities getting pounded overnight as well as the chinese market how severe does this reaction look to you? >> right now, looks like a quick gut check. the context matters, markets going out last week, at an all time high or within a fraction of an all time high for the s&p 500. at a time when people are beginning to embrace this rally had some legs. the economic numbers were coming through. the trade situation has been getting to the point of being taken for granted, i think it was kind of minimized on the home screen of investors at this point, wasn't necessarily seen as one of the key drivers. but now the market is still

showing you that it is in a decent shape in terms of absorbing little shocks. the s&p trading above last thursday's low if you remember. we went to 2900 on the dot last thursday at this point, a wait and see. i don't think the market is that terribly interested in handicapping every little aspect of what does it mean tactically and what is the absolute kind of sum total of what is go to be in deal if there is a deal. i don't think the market ever likes trade aggression for its own sake or this idea it will be tough, tough, tough. every time it seems like the administration was willing to make concessions or fold, the markets seemed to rally. right now, still not the major swing factor. >> your column, though, this morning, seems to suggest that the phrase the pain trade is higher, that might get flipped >> i think it expired to some degree going into this weekend simply because of that embrace of the rally and you had effectively institutions were badly underinvested coming into the year i think they raised exposures. but interestingly, not to the point where you say, wow, everybody is way out over their

skis, somethinging is going to come along and really disrupt this market and something like today, the headlines liked tody keep that process from happening. you get a check on animal spirits and people say we have to be mindful of the risks and then nobody is massively overconfident going into the uber ipo and we have a blowup. >> you think it is an elongater of the -- >> if it doesn't cause analysts to start slashing earnings forecasts for industrials, right? that's the process we could have interrupted here, this idea, let's raise the sights for the rest of the year we don't know if that's going to happen it hasn't happened yet forecasts are flat even though companies beat at the rate of 3-1 in the first quarter. >> isn't there a little bit of a been here, done that before? he's threatened, he's made u-turns and they have been really good buying opportunity because, you know, what investors have observed and this is sometimes known as the trump put, which is that the market goes down too far, too much, it threatens the economic outlook, the president is going to back

track. >> that is very true and i think it basically also because trade has been put in its place in terms of how much it can really drive things if you're talking about this added round of tariffs would put china into a hard landing, that's a -- the market has a hard time with the idea that china will not be a source of growth in the world. we're not anywhere close to that being the case of tipping china in that direction. wouldn't seem right now. >> thanks. we'll see you in a little bit. for more on what the possible breakdown of trade talks between china and the u.s. may mean, we're joined by james spurling, former director of the national economic council for both president obama and president clinton. good to have you back. good evening. >> thank you for having me >> knowinging what you know about the president and his negotiating tactics, is this posturing or not >> i think what is puzzling people that is not the tough message was sent as the chinese

delegation was on the way. but that it was done so publicly and with such a public threat, you could argue, and i think markets could feel this way, that it kind of hamstrung the chinese delegation into actually giving the deal that president trump wants. in other words, had lighthizer -- excuse me, had the u.s. negotiator lighthizer come and said, listen, the president is upset, we don't get this or that, we might walk away, that's a tough message. when you do it publicly, like that, in a threatening way, you can put -- you can start raising these issues of whether now you put china in a position where they actually can't give what you want this week because they may not be a democracy, but they still care a lot about not looking like they're being weak and cowering and threatened by the united states and i think any of us who dealt with china

understand that that -- understands that mentality still holds there. >> i think, gene, the difference now is what we learned is that our economy, the u.s., despite a lot of hand wringing over tariffs and trade tensions can absorb a lot of this and do just fine we got a first quarter gdp number better than any economist expected last year was very strong in anticipation of the tariffs. so how much more can we handle >> well, look, you never want to take chances with your own economy. and, you know, everybody should be, you know, pleased that, you know, we have seen some continuation of strong numbers but, look, we all know that there was dispute even over the gdp number when it came to final demand for spending investment, so, you don't want to take unnecessary chances. but i do think the point that you made was right, that i think the president may feel more

emboldened by the recent numbers to think, you know what, rather than take a deal that might get me criticized by democratic presidential candidates for not being tough enough on china, maybe the economy is doing well enough or the stock market is doing well enough that i can afford to take this risk of being tougher for a while. look, i think people want to see the president be strong, but i think they want to see him be strong and smart and strategic and i think what worries me is when looking strong and strategic, you know, does it start looking like hot air and a bit of recklessness and i have to question the wisdom of having such a loud and threatening public tweet at this point, whether it will serve or not serve his interests. and i guess we'll see. but you can see that it even raised issues or questions of

whether the chinese delegation would still come it looks like they will. but i still think it puts them in a harder position to actually cut a deal and even raised the threat of not just going to 25% on the existing 200 billion, but now raising the tariffs on the 325 billion that is not touched. again, these might be good threats to be taken quietly, i think the real issue is going to be whether doing it so publicly as the chinese delegation was leaving was a smart strategic move or a blunder. >> right that we don't know the answer to, gene, but market takes every piece of information it can. thanks for the insight of the we'll talk to you soon gene sperling. warren buffett commenting on all of this, possible all-out trade war and president trump's negotiating tactics.

>> if we actually have a trade war, it will be bad for the whole world. and could be very bad depending on the extent of the -- but there are times in negotiations you talk tough one thing you can't do is you can't shake your fist first and then shake your finger later on. that is not a technique that works well >> becky quick is with us after her three-hour marathon with the oracle of omaha. good morning what were your biggest takeaways? >> good morning, sara. good to see you. obviously the trade war was front and center because this news coming out last night who better to speak with than charlie munger about these issues they all agreed a trade woar would be bad you start digging through it, all three of them have some experience with china. both charlie munger and warren buffett made investments in

china. bill gates is the one who really spent more time, more time traveling to china and more time with the chinese administration working on all kinds of projects including world health and other issues that the foundation has dealt with and his own investments as well. when we sat down with him today, we asked bill gates for his perspective on what the chinese perspective might be on this entire situation >> it is a dilemma when it appears you're reacting to an ultimatum. in the chinese case, there is no elections scheduled. so their leader won't be unelected simply because they had to take a tough stance on trade negotiations >> now, none of the three were surprised by the market's reaction to this news. just talking about it, all of them said the same thing, gates said it the best, until

recently, the market has been figuring this would be a slam dunk, it would be done, a trade deal would be reached. that looks less likely today gates said, look, it is the logical thing to do to actually reach a deal and he still says the odds are in favor of a deal being reached eventually in something like this. we spoke with buffett about other news of the morning. talked about kraft heinz and the issues there and talked more to him about occidental and the bid for anadarko berkshire hathaway will be financing that deal, $10 billion worth of the deal. with the news overnight being that occidental is changing the structure of the deal. still $76 a share, but 78% in cash and 22% in stock. up to noithis point it was a 50 split. we talked to him about what that means with the changes and if his support of the deal would change if the price went up. >> we committed the $10 billion 100% we do not have any control, nor

did we want any control, over what occidental did with our $10 billion. there is nothing in our deal that provides that they have to come back to us and request permission really to do anything it is a remarkable deal, but that's the way we do them. and in that respect. and they -- so they got our $10 billion if and when they close a deal with anadarko >> buffett also confirmed what david faber reported last week, that he would have signed this deal to be up to $20 billion in support, double the $10 billion he ended up laying down on that. he said several times both he and charlie munger did, they're doing this deal because they like the permian basin and the future for oil back over to you. >> i thought it was interesting, you know, well, one thing is interesting, he embraces shareholder democracy this mr. buffett, it is interestingly his

money that is enabling them to avoid a shareholder vote and also i thought it was interesting they talked about -- you asked whether they would have been interested in anadarko and they both said, well, they never asked us >> right they got $110 billion plus in money that is sitting around, they constantly complain they can't find deals they would like to do at the right price and anadarko is $35 billion. so they could have easily have done that deal without anybody else they say they like for deals to come to them, and when i said, i forget which one, charlie, i said how come you didn't buy anadarko outright, he said nobody asked us. interesting thoughts, interesting perspective on this. he later added to that, though, it is nice to have somebody who knows what they're doing in that field and understands the industry so they don't have to try and figure it out themselves anadarko probably knows what they're doing in that business too. but i thought the same thing you're right, on the question of why they're doing this, occidental said it themselves, this assures the deal will get done, they're not going to have

to ask the shareholder base, they have been voting with their feet this they don't like this deal buffett said, look, he understands that if he were someone involved in the deal, he would prefer to have a deal where you're doing more in cash and less in stock, he never likes issuing berkshire shares in any deals he's doing it is only happened very rarely. recently i think the biggest one was the burlington northern santa fe any day he would rather spend cash on something than diluting a company's shares, especially if he thinks that company has a bright future. >> all right, becky, great stuff. what a morning to have him and you. becky quick with buffett this morning on "wasquawk". off the initial lows, here is a look at the three biggest laggards on the s&p. which sits at 2914 back in a minute ♪ feel that? that's the beat of global markets, the rhythm of the world.

but to us, it's the pace of tomorrow. with ingenuity, technologies, and markets expertise we create the possible. and when you do that, you don't chase the pace of tomorrow. you set it. nasdaq. rewrite tomorrow.

markets getting hit this morning on the heels of the president's threat to raise tariffs. off the initial lows, dow is down 260 ubs director floor operations art cashin is with us at post nine good to have you how should investors be processing all of this today >> a little difficult. you remember on friday everybody was talking about being within a week of signing a deal we heard from mnuchin, and kudlow and others that we were getting very close, that many things have been removed and

suddenly over the weekend the president surprised everybody with these tweets. what the market is going to watch for is will the chinese delegation continue to be coming to the u.s., furthering the negotiations will they be bringing the vice premier with them, so those are two touch marks. i think the way the market is trading right now is they think negotiations are still going on. there is a chance for a deal, but certainly looks like it has been delayed and there are some things that are going to be a little tougher to work out than anybody thought. >> if you look at where the pain is, technology materials, industrials, places -- companies that have exposure to china, which is typically what we see, everything from jd.com to semiconductors getting hit pretty hard. those groups have been very strong lately. so do you see this today as a one day blip until there is more information or do you get out of it because the whole china deal

looks uncertain? >> well, i don't think you can say that quite yet the idea that people running out of those positions or those industries on the basis of a couple of weekend tweets doesn't really look right. i think the market believes that it is in the president's best interest to get a trade deal done he looks like he wants to run on the economy and one of the things you need to keep this economy going is continuing world trade. and, you know, the democrats appear they'll give them a hard time about the successor to nafta and variety of other things so he can't afford too many surprises, so the gut feel down here is that somewhere they'll find a way to renegotiate a trade deal. >> you got the election a year and a half away, right, and playing with house money for now, with markets at all time highs, what is the harm in the -- for the white house in letting this drag on six months, a year, and then

lettingi inthe top off the kett >> he has to believe it is in china's best interest too, otherwise you run the risk of -- it would send a very strong message to the market if china announced that the delegation is not coming and i think -- i think the sell-off would reaccelerate, we were lucky we bounced off the 2900 area, the 2600 area you could get more damage done and so i think the next couple of days are going to be very important. you want to see the delegation come, you want to hear some feedback we'll know pretty soon if they wheel out mnuchin and kudlow that they're trying to calm things down here. >> we need to see plane tickets is what you're saying? >> right. >> thanks. art cashin warren buffett saying this morning that despite the ongoing tariff threats, he's not too concerned with current events when looking at potential companies he wants to invest in.

listen >> we watched the prices of things we do more than current events because in the end, we aren't buying them because of what's going to happen next month or next quarter we're really buying them because we think they'll be good businesses ten years from now. if somebody came to us with a good business day, we would buy it and we would buy it regardless of what is going on in the service situation. we might -- you might -- we're more likely perhaps to get something when other people are fearful. >> joining us now, long time buffett watcher lawrence cunningham, professor at george washington university law school who wrote a book called "berkshire beyond buffett" also with us, doug cohen, portfolio manager at athena capital advisers good morning to both of you. what was the big takeaway from buffett talking about tariffs and the potential for an all-out trade war?

>> i would love to see warren buffett in the negotiation leadership position for the united states. he's a savvy insightful guy who takes the long-term and provides sage advice to investors this morning that as much as this is rattling the markets short-term, if you're a long-term investor, there is no reason to be too concerned this morning >> what if you're a long-term investor in berkshire hathaway anything said over the weekend >> it has been a tough decade, underperform the s&p he won't change his socks, he's had a 40-year run, has a very strong bench and got to see a little bit from a couple of those guys over the weekend, gray gable answered several questions and people have a sense of him every time i talk to greg, i sometimes think i'm talking to warren i'm bullish long-term on berkshire. the meeting this weekend ratified that sense. the meeting is really less about providing information than

strengthening the culture of berkshire hathaway by repeating venerable practices and positions. and on that score, the meeting was a success. >> as a shareholder, do you agree? >> not quite i would say, look, berkshire hathaway is outperformed the s&p 500 by something like 2.5 million percent over the last 54 years. they earned an enormous benefit of the doubt that being said, they have underperformed for the last five, ten, 15 years. and i think when you look at this weekend, of course, we got the folksy wisdom, some tremendous insights on business, all the things they do so well, the same kind of things they did with you for three hours this morning. i'll take a little bit of a different view than lawrence, in the sense that i think the challenge now becomes about the next generation. they have done this for 54 years. they're not going to be around for the next 54. i think part of what has caused this stock to struggle is that they haven't been very clear about a lot of different things.

corporate governance at berkshire hathaway has done very differently than most of corporate, modern corporate america when you look at the nature of the board, the insider nature of the board, the lack of transparency on the individual companies, they give a lot of big picture details, not a lot of precise details and certainly succession you don't hear a lot from jane and abel a little bit at the meeting. they won't put them up on the prime stage. would have been great to see them this morning on your air. i do think there are some possibilities or some things they can do that will help the stock. >> 10, 15 years is not a short amount of time to underperform, doug and to your point, they look great, munger and buffett. one is 95, one is 88 can you imagine, though, a berkshire without either one of them at the helm. >> it is going to be a reality at some point. they have done a tremendous job creating a culture 245 stood the

test of time and my hope is that they -- the ultimate best thing they can do for their company and for their shareholders is to lead it in the best hands possible. but i will say, and this is not a revelation, if it were virtually any other company that has allocated capital, that has not really committed significantly to buybacks or dividends, a lot of the things that are unique to berkshire hathaway, there would be activists lining up to enter the company right now. and it will be a real test when warren and charlie are no longer there for that management team to have the same ability to withstand some of the pressures that are going to be placed on them >> lawrence, to you on the final word, you have written a ton about this, i would just say to doug's point, that issue was addressed. i think i read that at some of the notes of the meeting about whether his deputies would come on stage and buffett said something you might see and we have been planning for this for a long time. >> greg is out there he's now leading on the press

releases and announcing successions. he appointed his own deputy from berkshire. they're calling a lot of the shots. they're no longer getting most of the email traffic internally. they're already making big significant internal changes to doug's point about berkshire's uniqueness, it is governance being unusual, it is structure being unusual, that's the strength and they have built a solid culture there, obviously none of us know what will happen in five or ten years they have made the strongest possible succession plan for the company that they have built so we -- none of us can be sure, but there is a very strong case that the future is bright. >> thank you both very much. >> thank you >> when we come back, shares of boeing are down this morning you see 2% we're going to tell you why. let's give you another check on the major averages at this hour. one hour into trading. you can see down 1% across the board and a little more than that on the nasdaq "squawk on the strt"s ck teth qck break measure up?

a cfa charterholder does. you've worked hard to grow your wealth. make sure you're working with a wealth manager who can grow with you. cfa charterholders have the investment expertise to unlock opportunities other advisors might not see. learn what a cfa charterholdr can do for you at therightquestion.org

how do you determine the durable value of a business in the transportation industry without knowing firsthand the unique challenges in that sector. coming out here, seeing the infrastructure firsthand, talking with the people behind the numbers creates a different picture. once i know what a business is truly worth, we can make better informed investment decisions. that's why i go beyond the numbers. ♪ good morning, everyone i'm sue herera here is your cnbc news update at

this hour. michael cohen, the president's former lawyer, reported to prison this morning in otisville, new york. he's set to serve a three-year sentence for campaign finance violations, tax evasion and other crimes investigators are looking into three possibilities for the russian plane crash on sunday. inadequate pilot training, equipment failure and weather. 41 people are reported to have been killed during the crash when the plane made an emergency landing at a moscow airport just seconds after takeoff. the uss abraham lincoln deployed to the persian gulf in response to, quote, troubling and es ca latory indications from iran. that's co out within the last hour, meghan markle, duchess of sussex, has given birth to a baby boy both mom and baby are said to be doing well prince harry saying it has been the most amazing experience i can ever possibly imagine. no word yet on a name. congratulations to markle, prince harry and, of course,

their new son. we'll keep you posted. that's the news update this hour back downtown to you, david. >> thank you, sue. shares of boeing as you saw a few moments ago are lower this mo morning. this after officials say the company did not tell the faa for over a year that a safety alarm system was inoperable on the grounded 737 max phil lebeau joins with us more on boeing which is also under pressure because of the china news as well, very important market for the company >> absolutely. >> but with regard to the max, and that's what we're focused on in this report, what boeing knew and when they knew it and when did they alert authorities and airlines as well boeing did not alert the faa about inoperable alerts on the 737 max for months after delivery started in 2017 they did not notify airlines all the airlines of the issue at the same time. some were told shortly after the lion air crash, others told a few months later yesterday boeing put out a

statement saying the absence of the aoa disagree alert do not adversely impact airline safety or operation accordingly the review done by boeing concluded that the existing functionality was acceptable until the alert and indicator could be delinked in the next planned display system software update that's why the airline, the company said airlines could continue flying the plane. for dennis muilenburg, fresh questions about what senior management knew. boeing says senior management was unaware of the alert issue for months and boeing named a senior counselor to advise not only mr. muilenburg but as well as the board of directors. speaking of the board of directors, look at shares of boeing, interview in the washington post, one director says, look, they're defending their decisions with regard to the max. as you see from the pressure that is being applied here and yes, we know china is part of this, all of this raises questions about what the company knew, when did it know it, and why weren't they more forth coming perhaps telling the faa and their customers about it

>> even more questions on all of that, thank you. >> yeah. you bet. >> phil lebeau time for etf spotlight looking today at the semis president trump's tariff threat against china, on track for the worst day since march. the grouping led lower by names like amd, micron, applied materials, amd on pace for the worst day in about a month keep in mind, this say stock that is more than doubled from a years soaring 140% big leader in terms of the market comeback over the last four months. >> when we come back, apple's tim cook commenting on buybacks. we'll talk to alpha one's dan niles about the markets here global trade his position in the semis. get a check on the major averages, dow down 253 teth see bk hetrt"ac afr is

stocks continue to sell off here, dow down 265 on the heels of the president's tweet threatening higher tariffs on china. he wrote for ten months china has been paying tariffs to the usa of 25% on $50 billion of high tech. 10% on $200 billion of other goods. these payments are partially responsible for our great economic results the 10% will go up to 25% on friday $325 billion of additional goods sent to u.s. by china remain untaxed but will be shortly at a rate of 25%. the tariffs have had little impact on product cost, mostly borne by china the trade deal with china continues, but too slowly as they attempt to renegotiate. no eunice joins us with more from beijing. >> sources told cnbc the chinese

are considering pulling out of trade talks after president trump's tweet. officially the foreign ministry said that a delegation from china is preparing to go to the united states but there is no mention that china would cancel the talks. however, i spoke to a source familiar with the chinese side of the negotiations who said that some of the working level officials were told not to go ahead with their plans to travel to d.c. and that possibly they could get on board those planes as late as may 8th that same source shed some light into possibly what the motivations are for president trump's tweets he said that the chinese side felt that certain points had been previously agreed to were in his words hard to implement so the chinese went back to the u.s. during the beijing round of talks last week. and tried to reopen some of those issues which according to the source the americans were not very happy about now, talking about president trump's tweets, something else that was interesting here is

that, of course, twitter is blocked in china, but the chinese government went one step further today by scrubbing any image of president trump's tweets also for the most part, today, the state media did not report about president trump's tariff threat and unofficial media also, we were told, instructed not to report on the tariff threat. now, there isn't any official reason why, but the speculation has been because the government wanted to gauge its response to president trump's tweets and also that they wanted to control the fallout in the financial market so you guys were reporting about it as well but the stocks were looking really bad in shanghai, more than 1,000 shares were limit down with the tech sector like 5g, chip software, the hardest hit. as for the american business community here, for the most part, people are worried and somewhat irritated by president trump's tweets they say that it appears to them

that president trump has hemmed the u.s. into a corner and that potentially this could mean that they're just going to see tariffs raised on friday a lot of people are waitinging to see what happens on friday and also re-examining some of their supply chain plans, the ones they had shelved at the end of last year guys >> eunice, thank you, for the update from beijing. for more on how investors are digesting all of this, we're joined by alpha one capital founding partner dan niles usually talk to dan about specific tech names. so are there any opportunities or risks presented by this new tariff threat by the president, dan? >> i think absolutely. if you look at it obviously the semiconductor space is the biggest that we're dealing with, that's where a lot of the intellectual property theft that the current administration is trying to protect us from, from china, that's where that is involved obviously that's where a lot of the tariffs are involved and that's where a lot of the

american, you know, know how ingenuity comes out. that we're trying to protect the u.s. companies and their ip. i think that's really where the threat is and the hardware side and specifically semiconductors. >> what about apple, dan it has been on the front lines here, and even had to cut guidance once on china. >> absolutely. as you probably remember, back in august of last year, you know, while every other stock was getting hit, apple sort of seemed immune and we he said, look, you know if you're worried about china, it is silly not to be worried about apple because apple's business in china is a big percentage of the revenue, about 18% or so they blamed -- apple blamed china, big source of these issues in the trade negotiations i think quite honestly it is a different problem. that has something to do with it but the biggest issue being the

average selling price of the phones are way too high. we saw over the last quarter that apple started to cut pricing. and that helped to kind of reinvigorate growth. but, yeah, clearly apple is going to be affected by this, no question >> dan, you have some doubts and, it is david, about the ecosystem that apple is creating of reoccurring revenue in terps of their ability to continue to increase it at the rate they have don't you? some of it going back, in fact, to even the deal with google and anniversarying that. can you explain? >> yes excellent remember on your part. completely completely if you think about the apple story taking one step back further, it continued to change. if you were bullish on apple in late 2017, the bulls were saying, it is a super cycle, iphone clearly that didn't work out when that didn't work it was well, service is going to be great. you look at services, services grew in the june and september quarters at 25 to 26%.

in december, that decelerated the 19% and then in the most recent quarter that decelerated to 16% what are the services sitting on they sit on iphones. iphone units are continuing to fall if you look at the most recent launch of their new streaming service, even the bulls couldn't really come up with it being particularly good. there wasn't a whole lot of content, compare that against disney, disney had an amazing launch of what they said they were going to able to do and so i think if you look forward in time, and we have seen this in the tech space, that's what makes investing in the tech space so difficult. you have market leaders supplanting other market leaders over a period of time and i think with apple, you're not seeing much innovation with amazon on the other hand, which, you know, berkshire is investing in, you're seeing a tremendous amount of inno he vacati innovation that's the difference between the two companies. >> dan, we talked in recent

months about your preference for software names over hardware names. last week, did you say you were net short semis in general has china trade today done anything to embolden that trade or as prices get cheaper, does your position soften >> no, i mean, it is really based on fundamentals. it is a great question you have. no, we're net short semis, remained net short semis, added to the positions there actually on friday, which today is lucky. but in terms of, you know, when we think about the fundamentals, it is pretty simple. with semiconductor companies, almost all of them are still cutting forecasts going forward. at the same time, the space is going to all time record highs so the multiples are going way up, and, you know, if you look at the end markets, not like pc demand is growing that well. we heard that. it is not like smartphone demand is going that well, it shrunk

last year, probably going to shrink more this year, autos under pressure so when you look at all that, the risk reward isn't there, there is a lot more downside, as we go through the summer the stocks are hanging in remarkably well today. but this continues forward, which i think it might, you know, you expect to see more downside there the flip side is, if you look at the internet space, they don't have any business with china because the bad news is they have been locked out of china. talked about how twitter is getting spread, et cetera. but there is not a lot of business that goes in there. those are the names i'm looking at. >> just to be clear, dan, on your apple comments, are you short apple now? >> we're not involved in apple we will be short that stock again before the fourth quarter. i think the expectations that people have for this year's q 4 is completely out of whack

because you think about it, there is no ig phone coming out and investors are looking for 42% subsequential revenue growth this last december they did 34 i don't think they'll make that. >> all right, dan niles, thanks for jumping on the line today. >> very welcome. >> when we come back, former house financial services chairman jeb hensarling will join us to talk about trade today in the wake of the president's tweets if the dow can shave its losses to minus 190, only the worst day since april 9th. heading into retirement you want to follow your passions

rather than worry about how to pay for long-term care. brighthouse smartcare℠ is a hybrid life insurance and long-term care product. it protects your family while providing long-term care coverage, should you need it. so you can explore all the amazing things ahead. talk to your advisor about brighthouse smartcare. brighthouse financial. build for what's ahead℠

as earnings season rolls on, there is one under the radar trend that could spell trouble for the market find out what that is on trading nation.cnbc.com. for "squawk on the street" come up

welcome back to "squawk on the street." rick santelli with a special guest, former congressman from the great state of texas and

chair of the house financial services committee jeb hencerling thank you for joining us this morning. >> thanks for having me, rik >> now, if i recall, last fall you got to meet and spend some time with the chinese vice premiere now, the fact that he is so integral into the possible negotiations and solutions to the u.s. trade issues, and now of course we seem to have a bit of a standoff, maybe you could weigh in with some of your insights, jeb? >> well, i had the honor of leading a bipartisan congressional delegation in the fall i was told by the state department at the time it was unusual to have the vice premiere meet with a congressional delegation, which clearly indicated they take this trade issue very seriously now the vice premiere held his cards close to his vest but takeaways were, number one, that china took this seriously, that they were concerned that america did not want to see them rise, and that they adhered to the

wto. the message we delivered at the time is guess what, regardless of what happens in our elections, both republicans and democrats are unified that china was not living up to the wto in spirit and in letter, and we were happy for china the rise but not at the expense of taking our intellectual property and technology and so here we are a number of months later, and i guess what i would say is, you know, last week it was a little early to break out the champagne. i think this week it may be a little early to be on suicide watch. i still think clearly it's in both countries' interests to reach an agreement i think the probabilities still favor that it is not the first time the president has threatened tariffs. i am not here really to speak on the negotiating strategy, whether it was good or bad clearly, i think the timetable has been set back. i think the question, rik, is at the end of the day do you end up

with no deal, which is clearly in nobody's interests, do you end up with a good deal a better deal, or a best deal a good deal is we have a schedule to get rid of the tariffs and maybe the chinese buy more semi conductors and soy beans. >> jeb, we have about 40 seconds, i want to interrupt you real quick i guess my other issue is i hate to say that this is part of the trump negotiation process, but there are large swaths of the country that are virtually blacked out by some of these issues very quickly, do you think, if you had to guess, that we are still close? or do you think that there are issues of enforcement that are the sticking points and this is a bit of a way to get closer to a solution >> well, i still think that there are issues that have to be resolved with respect to verification i have a paper weight on my desk, the reagan quote, trust but verify

that's at the heart of the matter, how are we able to going to be able to verify that they are keeping -- >> we have a hard rap, jeb thank you for joining us "squawk on the street" will return after a short break see that's funny, i thought you traded options. i'm not really a wall street guy.

what's the hesitation? eh, it just feels too complicated, you know? well sure, at first, but jj can help you with that. jj, will you break it down for this gentleman? hey, ian. you know, at td ameritrade, we can walk you through your options trades step by step until you're comfortable. i could be up for that. that's taking options trading from wall st. to main st. hey guys, wanna play some pool? eh, i'm not really a pool guy. what's the hesitation? it's just complicated. step-by-step options trading support from td ameritrade

coming up this afternoon on closing bell, carson block from muddwarsy te focuses on china. perfect day to have him. we will be all over the selloff next drivers just wont put their phones down.

we need a solution. introducing... smartdogs. the first dogs trained to train humans. stopping drivers from: liking. selfie-ing. and whatever this is. available to the public... never. smartdogs are not the answer. but geico has a simple tip. turn on "do not disturb while driving" mode. brought to you by geico. every curve, every innovation, every feeling.

a product of mastery. lease the 2019 es 350 for $379 a month for 36 months. experience amazing at your lexus dealer.