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good morning it is 10:00 a.m. at berkshire hathaway headquarters in nebraska 11:00 a.m. on wall street, and "squawk alley" is live ♪ ♪ ♪ >> good monday morning, welcome to "squawk alley," i'm carl quintanilla with morgan brennan. the sell-off, major averages all in the red over the president's tweet over the weekend the dow is down 225.

kaylai to you she has the news moving stocks. >> reporter: a make or break week for the potential trade deal between the u.s. and china after a six month truce is set to expire this friday. the result will be a principle or a canceled visit resulting in the doubles of tariffs on $200 billion of goods on friday president trump on twitter friday lamented the progress is being made too slowly after negotiators returning from beijing last week raised concerns about china's waffling on prior commitments china sensors are blocking the tweet in the country showing this blank page in the space 69 president's declaration for much of today twitter is banned broadly in china but many access it through a vpn. officially china's foreign ministry spokesperson says our hope is that the u.s. will work with china to meet halfway we are hoping to get more

information. what i can say is that the chinese del indication is preparing to travel to the u.s. for cuonsultations they were supposed to begin a round of negotiations on wednesday. the working assumption was there has been a hope for a deal on principle by friday. we will see what happens in the coming days and whether the president goes forward with the doubling of tariffs. >> kayla thank you joining us this morning is barry banister as well as steve leishman guys, happy monday good to see you both barry i want to talk about your call-out today and target for a dip here in the markets in request -- in q 2 or q 3 how much of today's reaction is notable. >> we said in the second or third quarter the s&p 500 would

dip to 2750. if you look at inflation is not coming through the real rate crept up the real rate, where it is in the last three, three year federate cycles the last 30 years would portend about a 17.5 multiple on this queer's number. the other thing is our earnings model is $157 this year, the street is at $165. being $8 below the street and not seeing a lift-off in the second third and fourth quarter with quarterly earnings at $30 in each qurlt i think it is time to be cautious in the second and third quarters. >> steve, based on the way the trump administration has talked about the economy and the puts and takes of trade negotiations based on how the u.s. economy is doing, can you help put this into context as far as how serious this might be for the markets and the economic impact we could see from president trump's, i guess, threat, about friday >> yeah, i mean there is a lot of different ways to put it into

context. trade is one piece of the growth story. probably by the way boosting growth in the first quarter, the 3.2% number might have encouraged him a lot of it came from inventory trade side that might even be getting around it. by way of context tax cuts are seeing.4%. tariffs take off half of that. maybe more of that global slowdown of .3% could be because of tariffs in 2020 there is no tariff drag. 70% of our respondents can seen a deal this year between the u.s. and china honestly they don't care what kind of deal they don't see the trade deficit as a big nevertive for the economy. they just want a deal to get it out of the way -- it is 77% sorry about that that thing an

agreement is coming. had no drag. now you have got to the go back take your pencil out and deepen and prolong the drag from trade. >> barry, the stakes here are arguably longer term, bigger than a trade deficit coming into the weekend the department of defense published its reports on military and security developments regarding china. a 136-page report that goes into a lot of depth in terms of next-jen hags technologies, id sheft, what the longer term implications on china mean when i see another gong gdp number, a strzok jobs report, if the president was ever going to take a hard line stance on some of the major fundamental trade policies it seems like now would be the time, right >> yeah. you know, i remember in the mid

19 1980s reading some defense review by the soviet union soviet union was decrepit by then china is not the soviet union. we have cold war it is an enduring bipartisan political theme. i think it would be a mistake to try to understand and underestimate the current administration in terms of their trade priorities and how they view the world whechl i look at the market overnight just initially the shanghai fell three times more than the s&p futures. so the market voted on who is more affected by the trade actions. china's position is weaker so i would expect that the administration would revisit the issue and future administrations would be interested in it as well. >> barry, the u.s. stock market is a whole lot bigger, both in size and as a percent of the u.s. economy so that in fact if you look at the percent of gdp the u.s. stock market is 165% of gdp. it's just 71% in china

i think it is not exactly correct to say their stock market fell more than ours ours is 2.3 times what theirs is i don't think that's accurate. morgan, to your question, all of those things seem like really big deals but the president and the administration are going after the trade deficit. that's something a lot of economists don't see as a big deal we buy stuff over there, we sell it over here for more and the economy goes up. if it was just the issue of defense and security i think the market would be on board they are not on board with the positive outcome of -- >> steve -- >> of a trade deal that gets rid of the trade deficit. >> steve, the conversation has been yes, trade deficit but also forced technology transfer, ip theft. >> all that is good. >> state subsidies >> but look at the tweets. >> a method to enforce -- >> look at the tweets, he says we are losing $600 balds year.

we are not losing i. if you have a german car and a deficit with germany you are not losing you have the car. >> right he also says that the treasuries's coffers are full of money from china obviously the tariffs are paid by people who are importing goods and ostensibly pass that on we can't correct every single tweet. barry, quickly, on your call today you said interest rates relative to neutral remain too tight. you say eggs will have to break before the fed turns chicken 22 and 50, when is that, q 3 somewhere? >> yeah, we are looking for the global pmi and u.s. tender yields to fall between now and the third quarter and that would push the market down then on steve's point about the current account capital account i think that's all well-known but the kremtal return on gdp on each dollar of additional debt has begun down over time over 50

years. what we are seeing is a rebalancing of savings investment i think an enduring theme economically speaking. >> barry banister, steve leishman, guys, we will talk more about this in coming days see you soon. up next, warren buffet becky quick is in omaha with more on her sit-down with the legendary investor. meantime, dow is down 224 points, 26,280 parring the losses in half more on the dramatic sell-off after the break. stay with us we see breakthrough medicines getting to patients in record time. we see harnessing natural gas unleashing the promise of clean energy. we see engineers simulating the future to improve today. at emerson, when issues become inspiration, focusing core strengths to create a better world isn't just a result, it's a responsibility.

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welcome back to "squawk alley. it is the interview of the morning. becky quick sitting down with legendary investor warren buffett in omaha listen to what he had to say about apple buybacks >> they are repurchasing shares. when they repurchase shares our interest goes up and we don't lay out a dime i love it. obviously it is better to buy it at x than 2x >> they said they have reauthorized up to $75 billion in additional shares. >> yeah. >> are you behind that you are in favor of that, i should say wildly in favor of it. >> and that was just one headline from the interview. becky quick joins us now from omaha with more. hey becky. >> hey mardi grasson good to see you. tim cook was actually here this time at the annual meeting for bark shire hathaway for the officers time. obviously for berkshire it is a

big deal, apple is their biggest equity holding and for apple, berkshire the third largest shareholder in apple tim cook told me when it comes to buybacks, buffett schooled him long before buffett was actually a share holder in apple. >> this is a funny story back in 2012, i -- i had been in the ceo spot maybe a year or so. we had a growing amount of cash. i think close to $100 billion mark if memory is correct. i was getting lots of input from a lot of different people as you can guess. when i don't have experience in something i always make a list of the people that i think are the smartest people that i can contact to talk to them and get advice and warren was on the top of the list as you can imagine i had never met warren before. so i get his number.

i call out to omaha. and i wasn't sure he would take the call you know, i start calling out of the blue he doesn't know me from adam and -- but he took the call. and i had a great conversation with him and that was the first time that i had met warren and he was very clear to me. i still remember he said -- he goes let me cut through it if you believe your stock is undervalued, you should buy your stock. and i thought that was just the simplest way of looking at it. >> now, buffett also told me today that steve jobs had actually called him a few years earlier and asked the same question of him that tim cook asked. buffett said he safe of gave him the same advice but steve jobs didn't take the same advice the way that tim cook is taking it in terms of buybacks the other big knows has to be with ipos, initial public offerings, particularly with

uber coming public this week he declined to comment on uber because he looked at uber 18 months ago although nothing worked out here's what he had to say about ipos in general. >> i don't think berkshire has offer bought a new offering. all the selling incentives are there, commissions are higher, the animal spirits are rising. that's going to be better than 1,000 other things i can buy where there is no similar selling enthusiasm and the desire to get the deal done and extra commissions. that's the single best thing to buy on a given day >> i can't think of a time when we've ever done it >> that was charlie munger, of course weighing in at the ends of that. again they are not in favor of ipos in general. when i asked buffett what he thought about the stock market overall, he said if interest rates stay at these incredibly

low rates then the equities market is extremely undervalued. that's a very big if, in terms of whether interest rates will stay at these levels. >> becky, great stuff. what a weekend thank you for bringing us some of these comments around tech and apple specifically becky quick in omaha. joining us now, whitney tillson as well as apple employee number 66, bruce. gentlemen good morning to you. whitney i will start with you. you were at the berkshire meeting to tefr weekend, too some of the comments about apple or even some of the other tech names like amazon and google, what was your take >> look, it was my 22nd consecutive annual meeting i have been a long time berkshire and buffett and munger fan. generally i loved what i saw people asked me what changed over the years in many ways it is the same people asking the same questions and getting the same answers amazingly enough, an 88-year-old

guy and 95-year-old guy are actually getting abouter with age. amazon, if you look at buffett's first for real estate into tech it was ibm which was a terrible value trap. he was lucky to escape without losing real money. he recognized the mistake. he sold. bought a much better company, apple. i was delighted to see them -- at least one of the two managers buy amazon last week. >> bruce, one of the comments that got my attention in terms of what tim cook said becky was that berkshire's investment in apple shows that buffett understand the iphone maker is really a consumer products company at its core. i feel lining every company across many sectors right now wants to be valued as a tech company. that seems very contrarian to me -- [ audio problems ]

>> the idea that buffett's investment in apple could be seen as a consumer products company, apple, seen as a consumer products company rather than just a tech company your thoughts on that? >> well, i think it is that. everything is about the end user everything is about that person that's going to join or stay with apple so there's a 100% focus. a lot of tech companies are interested in selling their products to managers who are then going to have workers use them so it is a different -- it is a different approach >> whitney, tim cook just on the apple earnings call a week or two ago said that sentiment in china around trade had turned positive, and that was the cause of their bullish outlook for the current quarter. sent the shares higher now, even if we do get a trade deal of some sort, sentiment

certainly can't be as clearly positive as it was during the call what do you think of the impact on apple and other companies that might have been relying at least on this momentum in the chinese economy and u.s. china trade talks to do good thing for the market. >> look, there is a big wild card you know, trump is -- is -- you know, there is a lot of bluster and he's sort of trying to bully the chinese into a deal. it might work. but it might blow up it is a pretty high stakes game he's playing that has real implications for an awful lot of companies not just apple i think i tend to think calmer heads will prevail and there will be some sort of deal here the chinese are super rational at the end of the day trump is a deal maker and wants to point to a deal it will end up being something that's not going to disrupt apple or the market too much is the most likely outcome anyway. >> bruce, in term of the

services story at apple, obviously, i-phones are still a big part -- still a majority part of the revenue here but as the company does shift into more subscription models, i guess do you think that the -- do you think that the stock is trading where it should be based on those future lines of revenue? >> well, apple has an upward trend. it will continue to have an upward trend and this expansion sideway is certainly going aid that the other part of the subscription model that's unrecognized right now is the subscription to the phone itself they have a program where you get a new phone each and every year and as more and more people drop into that particular subscription, that's also going to overcome this rhett sense people have to buy a new phone for example, when i upgraded from the x to the xs, i didn't expect much. but the fact is that the xs is a

much finer phone the interface that the x could barely handle with all of its improvements just glides smoothly with the xs so people, because the phones no longer look so differently externally, are hanging around, waiting, not realizing that the technology has improved. and by getting people into subscribing to the phone as well as this growing body of services which hold you in the walled garden okay i am going to switch to a samsung phone. among the other things i am going to lose all of a sudden i lose my apple music. i lose this wonderful new magazine and newspaper service that gives me access to a couple hundred publications for very little moneycompared to subscribing individually to these things, a tiny fraction,

and i lose the ability to slide photographs to all of my friends who have iphones and ipads and macs and so forth. so that walled garden, it has a huge wall around the outside true but, boy, inside it is completely flat and open and inviting and people don't want to leave that >> yeah. >> so it makes this whole thing stickier and stickier. >> whitney, you have been invested in amazon in the past the fact that berkshire -- i realize it is not buffett specifically, the fact that berkshire is now buying shares of this company, were you surprised? >> honestly, if you had asked me to bet i would have bet the next tech stock which i was been begging them to buy would be alphabet or google rather than amazon but that's -- i was delighted to see amazon keep in mind you can see from the cash flow statements in the first quarter it was less than $2 billion so this is still a very small starter position i expect them to add to it i hope they add alphabet to it over time as well. >> all right

gentlemen, thank you for joining us today whitney and bruce. as we head to break, major averages selling off take a look at the names having the biggest impact on the dow's drop this morning. a little china theme here. apple, nike, 3m. more "squawk alley" still ahead. pnc bank has technology to help make banking easier,

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dow session highs, this is now the worst day since april 9th as apzed to marched 22nd or january 3rd. chef ron green, disney is green. mcdonald's, dow, inc.. more than just chevron, which is what we had at the open. >> it is gone from a tumble to just a slump speaking of markets, european markets set to close in just a couple minutes seema mody joins us with more on today's sell-off and the companies with some china exposure. >> also lows in europe as well

still renewed trade tensions are leaving vefltors worried about the effects on europe, which strategists this morning point out on average is more exposed to china than the u.s. european auto stocks leading today's losses given their heavy foot print in china. daimler one of the biggest losers, bringing in $16 billion euros last year from china the most of any european automaker tech and chip names in particular weighing heavily. asa international run of the big laggards revenues come from china also, several consumer names, swatch, montclair and adidas, the watch maker swatch generates more than 30% of total revenue from the chinese market. uncertainty around a trade deal comes as europe is still reeling from slowing growth though important to know last week we did see an unexpected rebound in

first quarter gdp coupled with a faster than expected pickup in inflation. and today the latest pmi came in better than expected still the weakest in three months. germal industrial products many times seen as a proxy of europe's growth. that companies out wednesday night and we will see what it tells us about europe's potential rebound. >> a close one to match. seema mody thank you let's get over to sue herera for an update. >> good morning everybody. here what is happening secretary of state mike pompeo speaking in finland today warning of the dangers of russian militarization in the arctic area. monday appears to have bruning a cease-fire to gaza at least 26 people are thought to have died after more than 600 projectiles were shot at

southern israel in the past two days the tentative truce comes at the start of the muslim holy month of ramadan and it was brokered by egypt and the u.n.an. 1 million species for 1/8 of those on earth are threatened with extinction because of mums according to a new report by the united nations the evidence was collected over the past five decades from roughly 15,000 scientific and governmental studies. the owner of maximum security says the horse will not race in the preakness stakes and he plans to file an appeal after maximum security became the first horse in history to be disqualified from the kentucky derby for a rules infraction what a derby it was. that's the news update this hour i will send it back downtown to you, carl. >> what a weekend of news, sue. >> absolutely. >> thank you very much. still to come this morning, who tim cook told our becky quick about apple's push into privacy. in the meantime, stocks under

pressure we continue to chip away at the losses now down 169 >> announcer: the c nbc nbc trend tracker live data board is brought to you by the cme group. cme group, where the world comes to manage risk delivery drones or the latest phones. $4.95. no matter what you trade, at fidelity it's just $4.95 per online u.s. equity trade.

dow is down 200. we continue to monitor for headlines regarding china trade. in meantime, stocks managed to climb back from the initial lows in a big way is it that the market doesn't believe there is going to be a problem? >> i think that's the correct way to look at it. the low print was at the open, 2898, right at the open and they bought right into it the vix was 19 at 1:00 in the morning. it is at 16. even the options guys are not desperate to go out there and find some way to make it we talked about it if this materializes into something earnings estimates are too high and the multiple is too high in the s&p. >> the additional tariffs would have to come on more consumer goods. it widens the story a little bit. it is a test of this mark's

resitual compliance, muscle memory, markets refuse to pull back from as much as even 3% from the high this year. so far the test has been passed he will with see if it carries through. it seems like we were coming into this period already with a fair amount of good news baked into stocks. >> i think the worry is if we are wrong. if the market is really actually wrong. i complained about this last week we were at 17.5 multiple that -- the historic average is 15 to 16 everyone is assuming the global economy is going to expand okay, we are fine with a 17 multiple but if the global economy is going could track because of a trade war that multiple is too high and earnings come down. the earnings and multiple comes down, you put a 15 multiple all of a sudden you could be at 2600. >> no one has an edge. difficult to get an edge. >> the answer of this puzzle is in the heads two of guys in the world. don't know how that plays ow

also there is a fatigue with the issue. we kind of thought traders and investors could set it aside for a while. pretty much pencilled in some kind of a deal i think it refocuses attention on okay what might not be able to go right in the overall story we have been telling ourselves about the market. >> china didn't really respond the way some people might have expected to the president's tweet. i wonder how much of that plays into the way the market has responded thus far, you know, with all the major indexes being off the lows i mean state media, everything has been measured on their end. >> measured from the state media. if you look at the market reaction, 8% is a serious drop the problem of course is the shenzhen and in fact all the markets on the mainland are dominated by retail investors. there is very little institutional trading. there you sue the vulnerability with china they need more institutional

invest ears who are not going to freak out when news like this breaks out >> it is smaller. >> a fifth of the size $7 trillion market cap in china. >> is our business comparing daily drops. >> if we baked in a decent resolution in our markets. china seems to be edging in that direction as well. >> fair to point out 95% of the brokage accounts are small retail investors institutional companies are in the market ever day that provides a ballast for our kind of rkt market i think it is important to point out the difference of the kind of buyer over there, holder of stocks over there. it is different. >> 13 ipos this week. >> the big nest a long time. of course you have uber, which is the biggest ipo, arguably,

certainly, since alibaba and the largest u.s. based ipo since facebook way back in 2012. not only is the market opening it is opening in ways that people are extremely on theist innic about. the one misstep was lyft you could argue they overpriced it, you could argue the losses were a major issue but that's practically the only misstep that's been out there. i am impressed with how well the market is opening up that's the problem art hit it on the head last week he said a lot of things have to go perfectly right for everything now to keep going up because the market is so expensive. you have to have the china economy keep improving, the trade talks go through, you have got to have strong u.s. economic numbers like we had on friday, the perfect jobs report with the wage growth. all of those thing need to continue to go right a blip like today you see what happens. >> how much risk for the ipos this week? anything could happen between

now and friday as far as this china trade thing. and we have seen and talked about the risk involved in investors assuming things will be okay. are we going to see ipos getting delayed? >> i think it would have to get much worse to have it to affect this week's clean doctor of ipos maybe it affects the dollars or the pricing of it. i think the bigger question means what does it mean. do these deals mean we have smart money investors deciding that the public markets were going to hit their bid it is not easy to isolate one market topping moment. an active ipo market is a positive thing until it is overdone and silly i don't think they are there yet. >> we have been cutting losses today in the u.s. equity market. when you look at what is showing the biggest losses, tech companies, erls the, industrials, which have been some of the highest performers year to date do you think we are on the verge

of seeing a bigger rotation given their so many uncertainties? >> if you look at semiconductors the commentary was not good. texas instruments, lamb research kept pointing out the issues in china. yet everybody kept buying semiconductors today it is the usual knee jerk reaction look at the sell-off it is heart hearted. the low point in caterpillar was at the open and they bought into at the sell-off. it was a half hearted sell-off we are going to sell it here and buy it back. we like the volatility because we will buy it on the low and sell it higher i don't know there is a lot of conviction there is going to be actual real trade wars right there >> yeah. >> i was going to say, if you look at overall market, it was a

tentative move to a high last week marginal didn't put a lot of distance between the old highs. it seemed like it used up the fuel in the tank the markets sometimes need one these little sling shot moves, pull back, see if there are buyers below, if there are, then we don't have a trade and a sell-off >> as cashin said, we want to see plane tickets, and soon. guys thanks. don't go -- we should do this more often, bob and mike. a lot more on today's climb back up. first, rick santelli, what are you watching >> i am watching the effects of potential tariff threats on the market and about when i was getting rid of all my weeds in my yard this weekend it is kind the same thing? you don't understand i'll explain after the break. ♪

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. center in new york city where we are live from the irason conference tracking ideas from some of the nation's top investors and raising money for pediatric cancer the goal of this even for 27 years we are all over the market sell-off today our investment committee is here they will size up the president's new trade threat what it means to your money. we'll see you at the top of the hour right here from iris zone

morgan, one of our favorite days of the year. >> we are looking forward to it scott. let's get over to the cme and rick santelli with santelli's take >> good morning. thank you. working in the yard, as many americans are doing on some of these nice weekends as we get into the full-fledged heat of spring i noticed crab grass and dandelions the thing about crab grass is, et cetera hard to get rid of it made me think about policy, approximately see decisions, those made during a crisis, those made during times when we have an ultimate goal we want and we will do just about anything we want to get it any china, wto, december 2001. the issue is is that crab grass are are related. it is difficult to kill one and not kill the other in other words when you get weeds they tend to be hartier, it is hard to get rid of them and control them and when you do there is collateral damage, just

like policy. it plays into unintended consequences, politics, with regard the china back in the '90s it was pretty obvious 246s going to be a force to reckon with, not only just the sheer size of its population but the fact that so many lived in rural poverty that the notion of a middle class in china just made businesses and institutions around the globe's heads explode with the possibilities so we allowed them in. but the problem is once they were allowed in for the most part, like all trade deals, whether it's with china or mexico or canada, they tend to be neglected like we do with our yards. and by the time you look out and you see that you have problems, you see the different colored green patches in your yard, you know the lighter green are weeds, what do you do? well, it takes a while to extract and control them and this president, really, it's impossible to tell if he is making or gaining ground one thing i can tell you for

sure the last thing we need is kind of a combover of the trade agreement where the big issues don't get solved it is all about technology verification, i have no idea how mr. lighthizer is going do it. that's the big part. i mentioned politics there is nothing more confusing than putting important issues under a silver plate of politics i heard this weekend that the last president, barack obama wants to take a lot of credit for planting a lot of the seeds that have grown into a strong economy. i get it there are elections coming up. but i have to tell you, most of the best stuff that is making the economy happen wasn't the seeds planted by the last administration it was more about controlling the seeds, think about regulations, think about taxes, think about debts, when we don't have a lot to show for it. i don't agree with $2 trillion infrastructure project but if it passes i would certainly like to see something big, like a hoover dam.

what about you jon fortt back to you. >> last thing i want to see is a combover rick santelli thank you. >> thank you. >> when we return, more from becky quick's interview with tim cook later stocks making a comeback we will tell you which names to watch next "squawk alley" is back after a quick break. call the insurance company it's them, calling us. it's going to be a week before they can get through on these roads shhh, sorry, i didn't catch that. i said ask how soon they can be here not you. right now? what's now? he says they're surveying our property now they're probably at the wrong house i don't see any hovering his name is hovering? look up? by using machine learning and analytics to automate claims, cognizant is helping insurance companies advance how they serve even the hardest-to-reach customers. cool ♪

a couple numbers in bear in mind session low on the dow was down 471. we've cut that essentially in

half vix was 19 in the early hours of the morning. now below 16 "squawk alley" is back in less than three minutes interesting clock.

oh, there weren't enough hours in the day to maintain are old data center. so we made a twelve a fifteen. three extra hours. but that really doesn't add hours to the day. yeah it does, look. i'm not sure it works that way, but at cdw we get that time is precious. so we'd access your needs then design a nutanix enterprise cloud. to give you more time to grow your business. yeah that's better. hey we still on for lunch at 15 o'clock? you bet. for private cloud solutions you need nutanix and it orchestration by cdw. we don't traffic in your

data we very much are on your side. we also curate our platform. we've always viewed that there's a web, and we support a free and open web and we support net neutrality. but we've never viewed that our platform should just be a replication of this. we think it should be unique and curated, and we think our customers want that. that they want the safety, security and privacy that goes along with that. and so we've always curated. we haven't had -- we don't get wrapped up in a prets zell about saying, no, that doesn't go on our platform no that app doesn't work and, therefore, it's not going in the app store. that has opened us for criticism. >> that was apple ceo tim cook and our own becky quick. again, trying to separate apple from its peers when it comes to data privacy the issue continues to be one of the chief concerns of silicon valley critics

our next guest is a former googler and founder of the time well spent movement. tristan harris he says these tech platforms and the privacy issues that go with them are undermining humanity. great to have you. >> thanks for having me. >> so there's a shift, i knowledthink, in the way you're characterizing what's happening on the social web, social mobile even right now. it's gone from being saturated yeah, you can have a bit of it, to being tobaccoless as it exists, this is fundamentally bad. >> yep >> so what do lawmakers, what do policymakers need to believe about this for them to actually move against it in the way that you're suggesting? because i don't think that's the general popular opinion. >> i think people are waking up to the fact that these issues are connected. we used to view tech addition, polarization, outrage, teen mental health going just down the toilet these were separate issues

but you realize the business model is extracting human attention. it's a race to the bottom of the brain stem i have to go lower on the brain stem to get attention out of you. i have to get attention from other people and that's creating all sorts of harms on the balance sheet of society that we call human downgrade we're upgrading the machines, we're downgrading humans and we'll look back at the attention companies as sort of like the exxons of human attention. they are mining human souls. from a regulatory standpoint and investor standpoint, we have to look at these attention companies as having a systemic risk that we're going to look at outcome like apple that are protecting human sovereignty -- >> so when you think of practical solutions that we're hearing about right now, one is twitter, for example, looking into underplaying or downplaying the importance of follower account or facebook hiding likes on insta in some test cases. is that a solution or not? >> that's definitely a step in the right direction.

but a question is how will wall street react when twitter shut down 70 million fake accounts last summer, wall street penalized them for doing the right thing when they were actually cleaning up a bunch of the garbage. so long as the stock price is directly linked to the users, they can't do as much as we need them to do which is why we need policymakers to step in and say we can't have an extractive attention economy that downgrades humans. >> part of the reason people are as engaged as they are is they have access to it in the first place which comes back to the device and the smartphone itself how do you remedy this >> this is where apple is in a really interesting position. they think about government. they think about washington or the eu think of apple like the federal reserve of the attention economy. they are actually holding the rule-keeping measures for what apps can do and can't, do and they can start to do quantitative easing to improve these -- to be from a race from the bottom of the brain stem to

a race to the top to how do we help people with their lives >> but there's android at the same time. and there have been markets created around attention and advertising. that was the rise of google. and it has gone viral in a way that it hadn't in the past can you really turn back the clock on markets when they're working the way they are now >> this is the challenge like with exxon and fossil fuels. we're kind of addicted to these business models. we'll look back and realize free was the most expensive business model we created your business model is downgrading attention spans, downgrading politics, downgrading democracy and mental health you want a system in which billions of dollars are piled on tops of mining attention out of children, teen suicides have gone up 3x in the last years. we don't want a downgrading of systems by profiting off of it >> really quick, give us a sense of how you -- design assist at

google >> yes >> do these conversations take place at the google plex is it going on actively? >> i think now things are starting to change because employees on the inside are waking up to the fact this business model is corrosive. and so we're seeing a lot of people speak out from the inside the walkout was internally organized at google. and it's going to increasingly happen with facebook and the attention companies. we need the whole industry to move in that direction that's the transition we have to make happen. >> quickly, when you look around the world, places like europe, for example, that have imposed much more strict regulations around the internet, are they doing the right thing, do you think there are any countries taking the right tact toward this >> gdpr and things like that are great first steps but they're band-aids on what is a bad business model we need to correct the business model and that's starting to move especially because in places like france and new zealand where there's actually shooters and things like that that are happening because of

the hate speech on these content platforms. these are the governments starting to act much more aggressively the uk, france, new zealand, australia, starting to make the executives criminally liable when there's hate speech >> tristan, thank you. it's an important issue. we'll continue to watch it dow down 234 let let's goat the judge and the half >> our breaking news coverage of the market sell-off continues. welcome to the "halftime report." i'm live from the conference in new york city. some of the brightest market minds are here for a great cause to raise money for pediatric cancers. we're tracking and trading the best ideas delivered on the stage here as well in what's become a hot ticket in the investment world joe terranova and steve weis are also beside me today as we look at everything taking place here at sohn and elsewhere. cnbc contributor ron insana joins us from cnbc hq. we want to begin, where else, the markets. stocks down sharply, off the