good morning welcome back to "squawk box" here on cnbc we're live at the nasdaq market site in times square i'm andrew ross sorkin melissa lee with us today. becky is off she'll be back tomorrow. let's start with a stock market's incredible turnaround during yesterday's session at this time, dow futures are down 500 points. everything was in the red. the dow recouping to finish all of there that in the red the comeback from mixed trade headlines. we'll have a lot more on what those headlines are saying and what's behind those headlines a little bit later we are indicated lower the dow looks to lose about 121 points at the open

the s&p looking to be done by 15, and nasdaq down by 43. a key level to watch in the s&p 500 will be $2898. that was yesterday's low stocks in tokyo reopened after six session holiday commemorating the new emperor. the nikkei closed lower by 1.5%. stocks in hong kong and shanghai after yesterday's big sell-off in china we had the shanghai up by .7%. over in europe, taking a check over there and see how they're fairing. we have the dax down by .4%. mostly red arrows across the board. a check on treasury yields we'll see if the bid to safety is intact. we have the ten-year note at 2.476% two years at 2.29 >> you get a lot of bang for our buck in terms of point moves on the dow. like yesterday, it was down 450. that was 1.5%. you want a real move, shen zen then back to minus 60.

i was looking at some of the news yesterday, and it says, wow, lighthizer says that they did reneg. any gains that they had, they gave them -- half of them back wrish i looked and it was down 150. okay, we're down 450 and 60 and now down this is all noise. this is, you know -- we still pretend like it's something, and the nightly news, oh, my god >> the context is that we're still close to all-time highs. >> yes and we're coming back from all-time highs, and we just have not figured out that point moves on a percentage basis at these levels aren't what they used to be.

>> they're going to always go back to the way things used to be >> it never really was on the table. >> i don't know what to believe. i don't know whether -- >> was it on the table or was it pulled >> i'm saying maybe they were smiling and saying, yeah, we'll do some of this stuff, and when push comes to shove, i don't know if they ever really -- they always said that do you see who came to trump's defense. chuck schumer. the first time he has called him the president. they were in quotation marks, but, anyway, let's look at -- this is your thing you know what's going on here? >> i do. >> okay. well, let's talk -- i don't know why i'm reading it an update now on the bidding war in the oil sector.

anadarko's board says occidental's takeover offer, they can add it's new math. it's superior. it's like how much higher? like $10 higher. >> it was higher last week, too, by the way 23% higher >> yeah. >> superior to chevron's current bid. thank you for that as you recall, chevron reached a deal last month to buy aina darko. a few days later occi p offered $38 billion, which is more than $33 billion. bolstered by an investment by warren buffett, the star of yesterday's show chevron now -- or was munger munger is so funny, isn't he >> so rye. >> becky knows how to do it. i know it's going to be a one-word answer to my first question, so then i'm going to ask him to expand upon that, and then that's not enough, and i'm going to have to ask him again then when you get through all of it, it's like, wow, did he really just say that chevron that is four days to come up with a better offer if it can't or its revised offer was -- anadarko must pay chevron

a $1 billion break-up fee. >> there was a view that it could come back at a lower number because people were not convinced that they loved the -- that they loved the occidental stock. it was also the view that it was going to be tough or some shareholders were worried that occidental wasn't going be to able to deleverage so quickly. i think that they're in a box at this point >> the other critical aspect to this bid being superior is no shareholder vote i think this should really ring alarm bells among shareholder

bases of all sorts of companies. i mean, that insures that the deal will go through for this hostile takeover bid, although it's raising the ayre of a lot of major shareholders. t. rowe price has said it will vote against the entire board of directors for occi come the shareholder meeting on friday. this is a very interesting setup. new period of time was in love with disney. he wanted disney stock so much that, oh, the shareholders would rather be with a better company like comcast they were unable really to get a fair shake from ru period of time because he was in love with, what, i don't know, disneyworld? what was his -- >> he was in love with disneyworld and disney stock >> what about disney stock we have universal. we don't have mickey mouse >> i would never poormouth our great parent company, but at this very moment mr. murdock's decision actually was a good one. >> the good one was that we got in there and -- >> that's true, too.

>> it cost them almost 50% >> that's true, too. we want to talk china this morning because that's whapg moving markets all over again, and we want to discuss what's happening. china confirming its top trade negotiator will be in d.c. this week for high level talks. the big conversation happened on thursday we want to get to union yoon who is live in beijing this morning. tell us about the feelings on the ground right now >> andrew, as you had said, the latest news is that the commerce ministry did announce that the vice premier is going to be traveling to washington for trade talks on thursday and friday with trade representative robert lighthizer and treasury secretary steven mnuchin there had been some concern that the vice premier as well as the entire chinese delegation wouldn't show up to the talks because of the tweet that president trump had put out earlier threatening tariffs.

overnight lighthizer said that the u.s. is going to make good on that. lighthizer as well as mnuchin said they believe the kmienz remember backsliding on certain core tenants of the trade deal now we know that the trade deal is on. the trade talks are on however, in a strongly worded commentary just moments ago the people's daily, which is an official party paper, said that the u.s. should not even think about concessions and the paper reads when things are unfavorable to us, no matter how you ask, we will not take any step back, so this hardline coincides with what the chinese have been saying repeatedly that they are willing to negotiate but not with a gun to their head the chinese have also said that they want to have a trade deal, but they are also quite mindful

of what is going on back home and the perception they do not want it to look to the chinese people that beijing is being cowed by washington because of that, it doesn't necessarily bode well for the discussions this week that we could have a resolution, for example, by friday this might take a little bit longer than what people had anticipated. >> younis, how much pressure do people feel, though, given what's happened to the stock market in china even over the past 48 hours? >> there's been a lot of investors worried about the stock market yesterday because of the dramatic falls. also, i was just talking with some exporters, chinese expo exporte exporters, who sell to the united states and they're panicking because they're worried about this huge jump for the tariff, and also they're concerned about what's going to happen with the currency

however, when you think about the calculation that beijing has, the government itself is worried, but what we're seeing is that they've been tloel a lot of money at the problem. stimulus has been taking place there's a feeling there's more time for the chinese when you think about how long the two sides have been negotiating over the course of a year, we haven't seen the chinese government really make a massive change when it comes to the way it runs its economy, and that tariff threat has been out there for a while. now it's going to be possibly implemented by the end of the week because of that, there is pressure, but the chinese government might feel as though that pressure is controllable.

>> you have a personality, too i find you very entertaining do you >> you are tweeting out about brian sullivan >> do i entertain you? >> tweeting out about him. how many followers have i gotten you on twitter how many have i gotten you i follow you >> hundreds. hundreds hundreds hundreds yes, that is true. zoo does he do all that for you? >> no, he doesn't. no, he doesn't >> i didn't think so >> yeah, that's really annoying. yeah he should. >> keep it up. keep it up thanks when is this going to be over? we are going to still do this by friday i'm counting on this no >> you think it's happening on friday >> probably not. >> i'm hoping. i'm hoping so we can all relax >> you think this is getting done on friday >> i think the tariffs will go on >> you think the tariffs will go on friday. >> midnight thursday >> you remember u.s. mca that was weird >> with canada, right? >> it could loo like we were so far apart, and then it's like

the next day it was like, oh, yeah, we're going to -- >> same thing happened >> we'll see, eunice thank you. i liked what you tweeted out yesterday, eunice, that showed what it looked like. did you see how they centered that yesterday you can see the chinese people have no idea what trump tweeted. >> it's still happening today. >> is it really? >> yeah. that's right that's right >> should we do it right now should we do it right now? >> what people were doing -- there is no talk about trump's tariff threat, and then people were starting to screen grab the tariff threat. anybody who had a vpn was taking a shot and putting it on-line. >> what if i read a twiet right now snsh what if i read that tweet in total right now what will happen. >> >> i don't think that we're going to go black. i don't. >> you don't unless i bring up that cute little bear. unless i bring up a picture of -- >> yes don't do that. >> the person who voiced that bear who will remain unnamed, the guy who voiced that passed away did you see that >> oh, really? >> yeah. yeah the guy with the little bear that will go nameless.

okay thank you. in other trade, eunice tomatoes at your grocery store are about to get more expensive. the u.s. is going to impose a 17.5% tariff on mexican tomato imports. remember we were worried about guac, after kaudos for a while >> cinco de mayo >> they'll be coming in season soon, so maybe it won't be so long >> i had chipolte with guac yesterday. as a delayed cinco de mayo to celebrate, exactly. >> i did know that -- in fact, we did it saturday night, more or less, with some margaritas. >> if it's a saturday, though -- >> it was a saturday >> it is a margarita day >> it's a margarita. you're right coming up, the financial success story from northboubc's own ame ninja warrior.

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>> it's par our partnership with corn the microinversing app american ninja warrior he is author -- that's almost like -- i was approaching one of those obstacles. >> i know, right the last name. stay calm. under duress you got it you're good. >> you want to try that? not on -- >> no. >> don't try it at home. he is author of the new book everyone can be a ninja. we're honored that he is part of our wellness advisory council. >> it's gooed to be back in new york >> it's good to have you you are on a roll, obviously

crenshaw district in south central. basketball star. >> yeah. >> picked up football kind of late, and did pretty well. you wouldn't call yourself -- you dent make millions of dollars. it was always the transition period we go through different phases in our life, and so that was probably the critical point. you hear a lot about these athletes, especially when they're transitioning into retirement a lot of them are going through what people at 65 are going through, but they're experiencing that at 29 years old. what is the mindframe? how do you transition out of there? a lot of that has to do with having a purpose and understanding what your purpose is especially when you are doing playing. you have invested so much time in that. like anything else, like investment, if you don't have a purpose, you don't understand

what you're actually getting into, it could be very, very hard and very scary to make that change you are talking about your money lasting 40, 50 years, you need financial lit ragy, a plan, you need, in viewer view, you stay fairly humble. you grew up with not a lot of stuff. humble beginnings. you stay humble, and then you appreciate what you have you are going to keep it, hopefully. >> well, the humble beginnings, i think, gaive me this appetite for wanting to learn more, and i realize at a certain age, especially a young age going into the nfl, how hard it was to understand the concept of finances, because nowhere in our education process do we learn about financial literacy, but now we're supposed to get to making money and learning how to deal with that save money, invest money, deal

with money that was a tricky part for me it all started with my mentorship at food from the hood at crenshaw high school, which was really groundbreaking. it was the first student-owned salad dressing company, and i learned so much through that. a stone throw away from where it happened is where it happened to me as well talk about overcoming those obstacles, and a lot of it has to do with not just moksy, but understanding, too, not being a victim of your circumstances it's very easy when you have a circumstance that, hey, i'm a victim of this it's going to be very hard to bounce back from that if you are a woe is me person >> most people don't have that story that sets their mind frame in temz of savings and they need

to save. what's your message for the average 20-year-old who is just starting out who may not have come from such humble beginnings, but they are at a point in time where they have to understand the importance of finance because if you start now, you start in your 20s, it's going to make a big difference >> i love that question. yeah i love that question being able to go out and humble yourself and ask the people before you i'm not the know it all 20-year-old. i think back to how arrogant i was when i was younger oh, i know all of this stuff my dad knows nothing as i get older, i'm going, boy, i didn't know anything dad, like i lean more and more on my mentors and asking them for the areas that i don't know about because at 20, what do you really know? >> do you think there's a way to do this even younger meaning to teach financial literacy >> yes >> how do you think we should do it >> start at the elementary level and make it a part of curriculum whether it's -- and kind of bringing it down, scaling it to sides for the audience because i think most of the time, like, i remember going into the nfl and

i had all these financial advisors wanting to meet with me, and they're going right over my head. then they try to make you feel good about yourself. oh, but you're a smart guy i don't know all these terms you guys are talking about index what s&p who? who is s&p i don't know him now all of a sudden, you know, you start getting that educational process. if you start that at a young age and start building the foundation, i think it will grow >> it's great. >> yeah. >> you want to try it? >> try what? >> the last name >> this book is about overcoming obstacles. this is your opportunity right now to overcome this obstacle. yeah everyone can be a ninja. >> final question, tell us your daily workout. >> daily workout >> he is ripped. he is ripped i want to know what we can all do >> he started out with some advantages his hand swallowed my -- >> it's just high intensity workout. just keeping it up >> that's because i had surgery just a couple of months ago. that's from the playing days that's what happens. >> yeah.

>> we have no shot >> the two of us, i was thinking -- >> i want to he so you guys get on american ninja warriors >> i would like to see that, too, where. >> he does things like that. i know the title may say -- but maybe -- >> i've done stuff like that, but not like -- this is a whole other situation. >> can you hook that up? can you have them do that? >> absolutely. >> are you guys up for it? >> i know some people. >> you know some people? okay >> you work out, joe >> honestly. >> we would need a six-month training session >> you should see me on normal steps. you'll see you'll see when you get in your late -- >> i know what that means. >> when you get in your late 40s, you'll see. for more from invest in you, visit cnbc.com/invest in you we should note that nbc universal and comcast ventures are investors in -- >> coming up, facebook under fire we will tell you about a bipartisan call from two senators that says a $5 billion fine is not enough, and, later,

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a reliable income that lets you retire, without retiring from life. that's the power of pacific. ask your financial professional about pacific life today. >> facebook under fire democratic senator richard bloomen that will and josh hawley wrote a letter

criticizing a potential facebook settlement with the fcc. they say eeven a $5 billion civil penalty is a bargain for facebook some people calling it a traffic ticket the senators are calling for new rules on what facebook can do with consumers' private information, such as requiring delesion of tracking data, restricting the collection of certain types of data, and curbing advertising practices. they also want the ftc to name names of facebook officials who violated any consent agreements. unclear whether you would have to put regulators inside facebook the way they do at the banks to oversee something like this.

>> tim cook on the record. we'll show you that sbu from becky quick and what he told her about privacy regulation and a lot more then we'll talk to an analyst about what privacy changes could mean for apple stock as we head to a break, a look at yesterday's s&p 50000 winners and losers back in a moment

sflierjts welcome back you're watching "squawk box" live from the nasdaq market site in times square. auto good morning, u.s. equity

futures are in the red this morning. triple digits down 122 on the dow. the nasdaq taking it on the chin a little down 45 points the s&p indicated down 16. tim cook made an appearance at berkshire's annual shareholder meeting for the very first time. selfies everywhere, by the way the second this guy walked into the place, it was like pandemonium. apple's is berkshire's largest holder becky quick spoke to cook about the efforts of regulators to reign in technology companies. >> that would be like saying all restaurants are the same or all tv networks are the same you know, they all have their own personality and characteristics and so forth if you look at apple, we are large, and we are geographically in the same location as a lot of

tech companies and that is about the extent of the commonality. market cap may be another one, perhaps, but put those aside, i don't think anybody would call us a monopoly. or anybody that has a very deep anti-strus kind of mindset you look at our share. we have 15% share in the world on smartphones and eight or nine on personal skpurts and so on and so forth that's different depending which of the companies you look at, right? the privacy thing is a huge difference.

we support a free and open web we support net neutrality. we've never viewed that our platform should just be a rep indication of this we think it should be unique and care outed, and we think our customers want that. that they want the safety, security, and privacy that goes along with that. we don't say that app doesn't work, and it's not going in the app store. i know that that has opened us up for criticism.

>> tech is being painted with a big roller, and it needs to be parented with a fine brush >> joining us is analyst at robert w. baird. i want to talk about the advantages and disadvantages of the apple strategy, will, in terms of where apple places itself and how it can separate or distance itself, frankly, from some of the other players do you believe they've distanced themselves it does feel and maybe it's just a presidential election that there is a critique out there that has emerged around the app store and other things like that i happen to disagree with that i'm actually with tim cook on this one all the way, but i do wonder how they've been able or whether they've been able to differentiate themselves when it comes to the regulatory scheme that's out there right now >> well, i think the question they have, and part of it steps from the fact that, you know, they are ad driven, and i think as tim cook said in the becky

quick interview, which i thought she did a great job, you know, throughout, is they view privacy as foundational. they've advertised that differentiation in consumer circles and financial circles, et cetera. i think that is something that ultimately provides another ring fence, if you lrks around the broader ecosystem for them >> gin their stance on privacy, will long-term, especially when it comes to a.i. and data processing, and, by the way, this came into the siri article, the article we were talking about yesterday in the washington post about the collection of data on alexa, which is also being collected on siri, and whether it's harder for apple to be able to provide some of the same services that google, for example, does so

tlaetsz a sacrifice apple may be willing to make. the more data you can feed into some of the a.i. engines, the better results you can produce, right? you know, the wider outcomes, you can derive, and so to the degree that they're injerszing less data, and that's more information they have to feed into future services that's a balance they're going to have to figure out. it certainly appears they're coming out on the side of privacy as to more data. >> isn't it easy tk out on the side of privacy when you are primarily a hardware company, will you are talking about these future possible streams of revenue where you might use data in order to sell other future services.

i think they've gaup out of their way to do what they can to stand out from some of the other what, i guess, tim would describe as monolithic tech entities they've got a different business model as you look at google and facebook and others who are driven by ad dollars they've got a different set of circumstances. they grew up in a different world and different business model. you're right, apple in some respects is advantage odd that front, and, you know, they're taking advantage of that, and i also think it's part of their dna. >> real quick. just in terms of stock price, one of the things that you did hear from war enbuffett over the weekend was in temz of his rationale for this stock, it seemed to have less to do with next level innovation or necessarily where the company was going so much as it was a story about buybacks

was it not a financial engineering story so much, but it wasn't a story about product innovation does that concern you at all, or do you this that that thesis unto itself is a worthy one? >> i think product innovation is still part of the apple dna as well, right? whether you look at apple watch or air pods. it's pretty clear they continue to work on new products as well. obviously, they haven't had that game changer like the iphone for several years in terms of moving the financial needle, but i think a lot of it's about in addition to the buyback, it's increasingly a consumer brand, right? i think increasingly gets caught up against consumer staples, and consumer brand names and ultimately that's what drives, we think, further multiple ecretion >> we appreciate your time thanks for coming on >> great thanks for having me >> talk to you soon. >> coming up, a spotlight on crisis pr. we'll talk to one of the most powerful women in the industry about some of today's biggest publicity problems from facebook's privacy scandal to the college admissions scam. and, later, former aetna ceo ron

williams joins us to talk changes he thinks the health care industry needs. u' wchg quk x" yoreatin"sawbo on cnbc

>> time to the executive edge, pr pro susan across a consumer

travel, real estate, special events and also a 2019 recipient of the new york women in communications matrix award. i think micca, was she the presenter? bloomberg does this. you have done this for 30 years. right? and i think you've got, what, an 86% client retention rate. in new york you are, like, the queen of pr, i would say is that overstating it >> i'll take it. thank you very much. is it better to brand someone before crisis, or is your hardest thing to do is to manage something after it's already happened or you do it all you do it across the board >> i think we do it across the board. i think the best thing to do is to understand that the minute you are getting into business and running a company, you are on you are it there's no you start when you start. it begins at the beginning i think you create your brand the minute you go out and you start doing what you are doing, and you have to expect anything can happen, and you need to be ready for anything to happen >> martha was one of -- martha stewart. you don't need her last name

one of your first clients, right? any p.r. issues that you had to manage for her throughout the years? >> i mean, i think that martha is a unique situation. martha is so incredibly tal ened >> bigger than ever and more popul popular. >> she lives her brand, and i think that's true of a lot of other people that you hear about. particularly in silicon valley you built people around them, and some sooner, some later. i think the sooner you recognize what your strengths and weaknesses are in business and surround yourself with the people who may be better at it than you are, that's how you really build a team, and communications is more important than ever. we see it every day. everybody is communicating digitally, television programs >> stick with some first names has mark or cheryl called you for advice >> they haven't, but -- >> what would you do what would you tell them at this point?

they've got some work. i don't know if they ever completely recoup, and reputation is everything did they get it all back to where they were? >> it keeps going. personally i remember his very first ever "60 minutes" interview. i remember his first charitable contribution it was for the city of newark, which was wonderful, different not what i would have expected as the very first one. i think that he needs to get more comfortable with what he is doing. i looked at that picture in "the times" on sunday, and it was staged it wasn't this >> right >> and i think it's important to be real. >> does the calculus change, though, given the stock price has come back? is there any adjustment in the strategy a notion that maybe reputation hasn't been ruined it's back. it's fine because there's some recovery in the stock? >> well, i think that you have to have credibility, and the more that you can emphasize

credibility in your messaging, the better that's going to be. i'm not -- >> i guess the kbe, though, is do you think the reputation is kicked to stock prices ever? , meaning do you ever look at a situation where the stock price comes back >> or it has moved on a scandal and so you think -- >> and you go down >> and that helps to some degree >> i think trust is the most important thing. trust and credibility and integrity. that is what i believe in. that's what i have always done, and that's how i have advised my clients. >> here's a really tough question what do you do when you have a client who you want to do something with from a p.r. perspective but you know in your heart that their heart is not really there meaning that they don't necessarily have a trust and integrity that you want them to have, and i'm not casting aspurjones, but i know that that's -- when it's not authentic, it's a problem. >> i agree >> and so you may have a great idea, but what to do about it, but if they're not really actually going to do it, what do you do >> i have certainly been in that situation, and sometimes it's

been before we're engaged, which is obviously you have to be honest and say this isn't the right time i think if you realize you have that situation on your hands, you have to manage through it and advise against it and find someone to carry that message. >> do you remember 30years ago was it tough in new york as a woman to do this your idea was if you borrow money only borrow from your father but you paid him back. >> very quickly. >> right >> yes, yes. >> what was it >> $10,000 >> sharp elbows back then? >> i think that i was fortunate that i believed in myself, and i think there's benefit in doing things early in life because you don't know everything, and i think sometimes that works to your advantage, and you work hard you are ready to work hard.namet

bigger, right? >> bigger and better, joseph. >> do you have one >> no. >> likability is really important. >> that might be a problem or i could use some help. >> nobody can help with that >> i could use some help susan magrino, thanks. congrats on the matrix award. >> thank you. we have a lot coming up on "squawk," two big hours ahead. we'll have investment ideas from portfolio manager sarah malek, including this chart here's a hint, a little mystery. that february drop was its worst day in over a decade after lowering its 2019 guidance anybody have some ideas? want to guess? don't. as we head to a break, a quick check of european markets right now. "squawk" returns in just a moment

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although yesterday's session ended well off its lows, what stock should you be looking at this week if the markets continue to come under pressure. sarah malik is joining us. you brought along some picks we showed a chart before, and it was a beverage-maker that fell precipitously, and that was, of course, coca-cola. what do you see? >> we see strong growth. they are looking to transform into a total beverage coffee, buying costa coffee, moving that through the distribution system to midsingle-digit organic growth, new ceo in place and even though half of their

revenues are outside of the u.s., we think the growth story stays intact and actually they're set up to beat earnings. >> is this difficult because that's not the business they are in >> it's minimal because they can buy costa and other nonsoda brands and move them through their distribution system. >> and lind is another one you like. >> linde is a self-help story, kind of messy with divestitures, but moving forward very strong management team from prax a r. strong growth story in a macro strong market. they're going to have volume and pricing power because they're the number one player in the industry and if the economy weakens, they have $3.5 million in backlog they can execute on and they plan to return $14 billion to shareholders over the next couple years -- >> even with the backlog, they should be fine there's no risk that any of that backlog could be canceled in a tough environment? >> a significant portion of that is take-or-pay, so it's very

much a nice support for them in any kind of environment. >> and costco. >> yeah, costco. so, this is a company that we love, could get hit over time with tariffs because of what happens to the retail sector, but we think they'll benefit because their pricing model, their low skus makes them very efficient. and if retailers try to maintain their gross margins in a higher inflationary environment, this will be a benefit for costco, which has some of the thinnest margins in the industry. so, i think they have an advantage as customers look for value pricing in the retail industry. >> they have thin margins at the same time. they can't absorb any sort of impact when it comes to inflationary pressures, like, for instance, tariffs, which could go up on friday. so, how does costco manage through that >> two ways. one is their limited skus gives them more pricing power in terms of they're not trying to sell anything then a relative advantage over other retailers who will also be trying to maintain their margins. costco should have a lower relative price, which will be attractive to consumers in a

higher-price environment. >> saira, thank you so much for coming by. >> thanks for having me. coming up, energy secretary rick perry joins us to talk about iran and the crackdown there, the move in crude, and some new initiatives that you might not associate with the energy department, but did you know they have two of the most powerful supercomputers in the world and with plans for the most powerful, two more, that will help in a lot of different areas. plus, joining us for the rest of the show with that very distinctive walk -- who does it better the cameraman's walking backwards. weird. mohamed el erian will share his thoughts on yesterday's turnaround, trade headlines, will help us look around corners in a multispeed economic universe stay tun 'lbeig bk.ed i'm working to keep the fire going

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markets and your money trade tensions, the fed, and earnings in focus this morning we break down what matters most to your money with guest host and executive adviser mohamed el erian. an update on the oil patch energy secretary rick perry joins us in a first on cnbc interview to discuss global tensions and energy markets. and capitalism versus socialism. some democrats pushing for more socialist-leaning reform in

2020 businessman and philanthropist john hope brian joins us to talk about some of the ideas being floated by presidential hopefuls, as the second hour of "squawk box" begins right now. ♪ just hold on loosely, don't let go ♪ >> announcer: live from the beating heart of business, new york, this is "squawk box. ♪ good morning, and welcome back to "squawk box" here on cnbc i'm joe kernen along with andrew ross sorkin and melissa lee. u.s. equity futures at this hour at some of the worst levels we've seen on the dow, down 172 points this morning. the nasdaq indicated down 61 s&p down about 20. all this is on, i don't know, this netherworld we're in in terms of trade tensions with china. i don't know what's the day, tuesday? >> mm-hmm. >> things can turn on a dime, or not. we'll see what happens. >> well, they did over the weekend. >> they certainly did. all right, here's what's making headlines this hour

u.s./china trade talks will continue this week in washington but tensions between the two sides are escalating u.s. trade representative robert lighthizer says china has reneged on prior commitments in the talks. he says talks will continue, but increased tariffs will be in place as of friday the fed says u.s. stock prices are elevated and business debt is at historic levels those are some of the conclusions in the report on financial stability, but it also says that the u.s. financial system is healthy and resilient. and anadarko says a $38 billion takeover bid from occidental petroleum is superior to the deal it had in place to be bought by chevron it's informed chevron that it is terminating that $33 billion deal, although it has given chevron four days to respond with another bid anadarko would owe chevron a $1 billion breakup fee. >> mistake they could have gotten the higher bid without paying $1 billion to anybody the whole thing makes no sense anyway. our next guest for the next

two hours is mohamed el erian, chief economic adviser at allianz. i want to hear what's going on with the china trade talks and what you think it really means economically and also this report from the fed in terms of the idea that we are at elevated stock levels right now. >> so, i think what we heard from president trump is part of the negotiation process. it reflects that the u.s. has much more leverage than china and that china is going to have to make concessions. and i think that we do get a deal in the short term however -- >> a deal by friday? >> i don't know if it's by -- the timing is hard. >> okay, but if on friday, they actually raise the tariff level, that's serious you don't think both the stock market and that will have some real economic impact >> so, first, i think it has -- >> or do you think it just gets delayed? >> it does have an economic impact here, but it has a much bigger impact in asia and in china, and i think that's what you saw. you saw that with the markets. you saw that with a very disappointing bounceback overnight in asia. the real concern is over there

i think, importantly, is not whether we get a short-term deal, it's that these tensions aren't going away. it's no longer just about economics. it's about economics and national security. so, these tensions are going to come up over and over again. >> right do you think, by the way, we as a country -- i mean, once you start implementing tariffs in a meaningful way, do you think this becomes a broader theme for the united states for a very long time? not just with china, but across the board, which would be a very sort of distinct shift >> so, i think the broader theme is that the u.s. is saying, enough is enough, we want to participate on a level playing field. so, you had mexico, you had canada you're going to have china and next is going to be europe, and i think that is -- >> next is europe. >> next is europe. and you're going to have agreement. i think the fact that mexico went first tells you a lot it tells you that in a trade war, if the u.s. is willing to incur damage to its economy, the damage it imposes on the other economy is a huge multiple of that. >> what do we know we know that we put on six

months ago minimal tariffs, the 10% level. what have we seen since then that was really probably not predicted by anyone? 3.2% gdp in this quarter -- or in the quarter that we -- you know, in the first quarter -- continuing strong job gains. people can say the fed backed off, and that's why we're at new highs, but for some reason, we're at new highs so -- >> and no inflation. >> and no inflation. >> right. >> so, you couldn't see anything, all of the doom and gloom that we heard about that this was going to cause, and we didn't know whether to call it a skirmish or a war or whatever. but at this point, we know who got hurt a lot more in the evidence of the first six months, do we not? can't we extrapolate that maybe this goes on for a couple of weeks or whatever, that it might not hurt the united states >> you've heard me say this over and over again, okay the u.s. economy's a good place -- i said, in fact, it was

ridiculous that people were predicting -- >> probably got nailed, too, for that, for not loge along with -- >> so, the inflation issue's a lot more complicated and the fed issue's even more complicated than that. but in terms of growth, the economy's in a really good place and the labor market's in a good place. >> we're going to continue this conversation with mohamed. we have two hours with him i know you have thoughts on that and i want to get to the elevated stock price issue, but we have a very special guest. >> geopolitical unrest hitting energy markets lately. we are joined by rick perry, the united states secretary of energy secretary perry is at the oakridge national labs in tennessee with some news to share. but first, we have to ask you about what's going on in the middle east, the uncertainty in venezuela, oil market stability. you didn't know you had to be a computer programmer, a nuclear physicist, and a secretary of state all at the same time, i think, mr. secretary you've got to be a real renaissance man. >> well, they don't call it the

department of everything for nothing. so, d.o.e. is the most fascinating place in the world, to say the least so, we're here at oak ridge today to kick off x-lab. as you can see over here the different companies that we're working with cray and amd are partners on some advanced manufacturing that i'm going to show you in a little bit but we don't have enough time to talk about all of the really fascinating things that are going on you brought up what's going on in the middle east, the challenges that are there. making sure that we have a market, a global market. and you know, our partners, if you will, our allies -- saudi arabia, for instance, they're increasing their production to meet these needs relative to the iran sanctions so, the fact is, the united states is in this incredibly unique position now that we didn't find ourselves in for the

last 50, 60 years. we're the number one oil and gas-producing country in the world. we are just about to be a net energy exporter, just within a few months of that occurring so, the challenges that we have are good challenges, whether it's on the side of artificial intelligence and all of this work that's being done here at oak ridge national lab, or whether it's in building the infrastructure that we need to continue to supply the world with this insatiable appetite of energy, particularly liquefied natural gas. >> it was a year since we exited the iran nuclear deal. then we did the thing where we're going to penalize anyone that doesn't play along with us in terms of the embargo in iran. and next thing you know, israel, apparently, informed us that our troops were in danger, and also,

we had what's happening in gaza in the renewed tensions there. it looks like iran is behind all of this, and i just wonder, geopolitically, and even for financial markets, whether we're factoring in -- it's not a black swan, but that's certainly something that is not maybe on our radar screens to the extent that it should be. and it seems like it could get worse quickly. >> well, obviously, what secretary pompeo's doing, the other members, john bolton, members of the national security council, which the department, the secretary of energy also sits upon that -- we're keeping a close eye up on all of the challenges that we have, but our real focus, not taking our eye off the ball with iran and what they're doing -- their support of terrorism, et cetera. and clearly, the smart message for all of our friends and allies around the world is don't do business with these people. until they understand that there

is a way that you conduct yourself in the global community, we're not doing business with you. and we don't expect our friends to do business with them so, it's the right message it's a strong message. but while that's going on, making sure that the united states has the infrastructure in place -- it's one of the reasons that having a ferc fully functioning and getting these permits done --the department of energy, obviously, is very speedy in getting our permitting done for infrastructure that's to be put into place, whether it's an lng export facility or whether it's a pipeline that ferc is overseeing -- all of that together is part of a plan that the united states is putting into place to continue to be the dominant energy supplier for the world i'm just back from europe. i was over in brussels meeting with my counterparts in the european union and the desire to purchase

american lng has never been higher our ability to be able to put that into place, to counter the russian gas over on the eastern side of europe, and the stability of that market for these europeans. you know, ask the ukrainians what they think about russian gas, and they'll tell you it may be a little cheaper, but what's the cost in the long run of your energy security? >> just real quickly 50 times faster, this computer is going to be by 2021 and we don't have enough zeros, really, to figure this out a billion-billion calculations per second. >> yeah. >> but it's got uses not just for energy, but for genetics and for health care and for predicting weather events and so many different things. and this will be the leader in the world, and it's ai

and this brings back our rivalry with china, because they're behind now on ai, but they certainly look like they would like to either catch up or pass us and this might keep us ahead, right? you're spot on this computer, named frontier -- and again, amd and cray are partners in this -- you said it, a billion-billion movements a second that's beyond the human mind to really get your grasp -- being done is what the power of this exoscale computer. we announced one up in oregon a couple of months ago this one now at oak ridge. lawrence livermore will have one that's coming onboard. america has five of the ten fastest supercomputers in the world, the two fastest ones belong to oak ridge and to lawrence livermore i mean, this is some fascinating

equipment that basically is putting us on the leading edge when it comes to, you know, medical research is a great example of it. we're in a partnership with the university of california-san francisco on a traumatic brain injury, post-traumatic stress, concussions. we're talking to a number of groups about working with us on the concussion side of things. and i mean, just a broad band. when you think about artificial intelligence, machine learning we obviously got in the business back after the testing of nuclear weapons, and we needed the ability to do this, to replace the underground testing so that we could keep up with that now the application across the board, whether it's in applied -- i mean, this is the core for a reactor, a nuclear reactor, a microreactor. this is the core this thing was made here at the lab with 3d printing and speaking of 3d printing, check out that cobra right there. they built this at oak ridge

national lab then, of course, my favorite is right over here, this front-end loader it was built with machine learning, a computer and 3d printing if i had to take my choice, obviously, give me the crawler with the front end loader, but -- >> that's your amd trade, agriculture -- that texas a&m comes -- >> that's the living -- >> your aggie. >> that's the living in roundtop, texas, right now, and needing that right now to do a little bit of road work. anyway, long story short, fascinating work that is going on at our national labs all across -- 17 national labs the most incredibly talented, gifted scientists and technicians in the world working with the fastest computers in the world. that is a formula for success. >> and mohamed -- the computer might be smarter than you. >> secretary perry, going back to energy prices, the u.s. is increasingly viewed as the swing producer because of shale. as prices go up, more shale production comes in.

as prices go down, less shale production how sensitive is shale and do you see us trading in a narrower band or not, in terms of price >> well, i try to stay away from the price side of it i'm more into the stability side and the key from my perspective is the united states continuing to build out the infrastructure. for instance, removing the associated gas from the permian basin is going to allow it to continue to be a major, major producer of crude. making sure that you have the pipelines, that you have the lng export facilities, and that you have the market around the world for that gas that's got to be taken off of the permian basin for that example that i used so that you can continue to produce the crude to keep the stability in the market, and obviously, the price at a reasonable level. >> secretary perry, before we let you go, i'll let you say to the camera yourself, because i think that your spokesman may have denied it, but there was a

report two weeks ago that suggested you were considering stepping down from your role >> you know, i told somebody the other day, i've been, i think, the va job was one i was headed to, the department of homeland security was one i was headed to i think dod's been in the mix from time to time. i've got the greatest job in the government here working at d.o.e. i'm a day closer to the day i go back to roundtop, texas, i will tell you that, but it ain't today and it ain't tomorrow. >> okay. secretary perry, thank you other things -- really, i mean, you do need -- you're all over the place. we don't have enough time. hope to see you again and have you back i think i might -- what would i use the front end loader for i might take the car wouldn't you, sorkin >> joe, i'm telling you, the predictive work that these computers do -- as a matter of fact, i asked them to give me a little prediction before i walked in. they were getting ready for the show and the prediction was that

you're probably not ever going to wear a coat on tv >> ha! you got -- you know what, when i interviewed the president, i wore one i did. and the vice president. >> good for you. >> i wore one. but that's it. below that, no coat. >> take a picture and send it to me. >> all right any european leaders no, no coat. anyway, thank you, mr. secretary. appreciate it. >> you're welcome. >> programming note. the ceo of amd and cray will be on "squawk alley" later this morning at 11:00 a.m. eastern. that should be interesting you need to practice your scientific notation, seriously quintillion. you add the zeros, i think, with the billion -- what is it, billion is one time ten to the ninth. so, if you do a billion billion, i think it's one times ten to the 18th, is it not? isn't that right >> you're over my head and most of the viewers -- >> no, no, scientific -- did you ever do scientific -- you did scientific notation, didn't you? >> i mean, yes, but it's a long time ago

save us. coming up, despite health care's strong move yesterday, it is the worst-performing sector in the s&p 500 this year this as democrats push the idea of health care for all we will discuss the idea, if it will work, with the former ceo of aetna, vaughn williams. and check out the futures this hour we are looking at a dow open, dow looking to be lower 160 points, s&p looking toose l20 points at the open stay tuned you're watching "squawk box. really?

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♪ ♪ i feel like bustin' loose, bustin' loose ♪ facebook under fire again. democratic senator richard blumenthal and republican senator josh hawley writing a letter criticizing a potential settlement with the ftc. they say even a $5 billion civil penalty is a bargain for facebook the senators are calling for new rules on what facebook can do with consumers' private information, such as requiring deletion of tracking data, restricting the collection of certain types of data, and cushing advertising practices. and they want the ftc to name names of facebook officials who violated any consent agreements. all right, coming up, former aetna ceo ron williams joins us after the break to discuss the

state of health care and the idea of medicare for all wasn't it charlie munger yesterday who said, if you love the post office, you'll love this a plan some democrats are pushing to replace private health care as part of their 2020 campaign. then, later, the biggest risk to your money right now we break down earnings, the fed, onicmore with alian's chief ecom adviser, mohamed el erian. balancing his checkbook right now. "squawk box" will be right back.

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welcome back to "squawk box. the health care sector moving sharply higher during monday's trading session. the s&p 500 health care sector jumped more than 6% on the session, led by a big gain in united health care the state of health care was just one of the topics that becky covered over the weekend at the berkshire hathaway shareholder meeting and berkshire's vice chairman, charlie munger, sounded very dire about the nation's system listen to what he had to say. >> this system is out of control. the deductibles in ordinary corporate health insurance are ridiculous if you're a poor family and you've got a $5,000 bill for a baby, you don't have medical insurance. they just changed the system

and then if you take the elderly unnecessary treatment, where people find a way to tap into these government streams of money and do a lot of unnecessary work, like prolonging inevitable death and all kinds of ghastly things they do, i would say we have a pretty disgusting system. >> joining us right now to talk about this is former aetna chairman and ceo ron williams, author of a new book called "learning to lead: the journey of leading yourself, leading others, and leading an organization." and we want to get to talking about all of the lessons that you learned as a leader and for so many of our viewers who are leaders. but we want to talk a little bit about the health care industry and really given the comments that charlie munger made, i peen, i think that that's the popular sentiment, that there is a serious problem. what the answer is, is clearly much more debatable. as joe mentioned before the break, there's a question about whether it's a private-sector solution, whether it's a

public-sector solution, whether there's something in between you lived this what does it look like to you from here? >> well, i would say that it looks like the best answers are public-private partnerships, and i think we have a good model in medicare advantage, where the government sets the rules and the private sector goes to work competing to offer patients the best value and so, i think from my point of view, that's the model i don't think that government-run health care itself is a good solution. if you think about the 160 million people who have employer-sponsored insurance, to destroy that system, move them into a government-sponsored program would be highly disruptive to about 18% of the country's gdp. >> charlie's main point was that there are people that have skin in the game, and a lot of it is not about either preventing illness, treating illness,

chronic disease. it's about continuing to pull the dollars into the people that somehow have a vested interest in things, and they're not going to let go easily and that's, you know -- people want to do operations. hospitals want to charge a certain amount per day for delivering a baby. i mean, there are all these monetary interests that cause that now, that makes you think, if you could get rid of the profit incentive, somehow that that would fix it, but then we've seen what happens when you do that there's no accountability. nobody's minding the store so, it's very intractable and hard to figure out. >> well, i think it's a complicated problem, for sure, but i think also we have some really good models of where we have examples of integrative care systems, where we're using the data to actually eliminate the variability. bad actors is a different problem, and i think -- >> what would medicare advantage for all, not just for people, what is it, over 55 or whatever -- what would that cost >> well, i really don't know, but the answer is --

>> is it doable? >> a lot. >> it's not doable, is it? >> i don't think so -- >> so what do you mean medicare advantage for all -- >> let's back up because i'm not advocating medicare for all in any form, fashion or matter. let's be clear about that. if you think about medicare, you have medicare as a government-sponsored fee-for-service system. >> yes. >> next to it, you have the private sector operating a set of health plans operating under the regulation and rules of medicare so, the best role for the government is to set the rules, to make certain that people are treated fairly, they have consumer protections, and they're getting access to the services and that there is no fraud and abuse. the best role for the private sector collectively is to manage that system and to be able to eliminate working with physicians, the variability in the health care system, because a huge source of the waste comes from variability in care that is

outside of the standards of care that a particular speciality group has established. >> would that be fundamentally less profitable for the sector that you are part of >> no. the answer's no. >> it wouldn't why do you think the stocks are reacting in such a manner? >> i think they're reacting to enormous uncertainty the stocks are reacting, i believe, to not solutions, but really, slogans. no one really knows what medicare for all means it's all in the details. and i think what the stocks are reacting to is simply uncertainty, particularly among unsophisticated investors who don't really understand all the nuances of this. >> is there one piece of the health care space you've focused on and said, you know what, that's just a complete waste if we could just fix that one piece, that would be a big chunk of it. >> i think one of the biggest things we can do to fix is to invest more in the primary care delivery system and prevention and recognize that people need a primary care physician to think about their care end to end, in

collaboration with their specialists, to make certain that the prescriptions that are written are not in conflict with each other among the different specialists. i think the biggest thing we can do is really focus on primary care and making certain that people have a relationship with the physician. >> who are the worst actors right now, if you had to pick? i mean, are physicians -- can physicians still self-refer to some things that they own or for unneeded medical procedures? can they churn their account like a stoke broker used to -- >> well, i think the answer is in every profession, every area, you have bad actors. but i think systems of care is the best solution. there are systems of care -- one of the companies i'm involved with, a private company, agilon, we partner with 300 primary care physicians in columbus, ohio they have good data, good analytics. we're the analytical engine, the human capital that supports their particular practice as it relates to medicare advantage. if you can get a system of care

as opposed to a freelancer who i'll say is more of a cowboy or a cowgirl, that's the way to really help improve the quality of care. >> i want to pivot the conversation to the book and this idea of leadership, because i think you went on a journey yourself as being a leader and just tell the audience a little bit about that journey and what you learned, because i learned a lot from the book itself >> well, i think i would say that i grew up in a household where dinner table talk was not about writing plays or legal cases or about medicine. it was about how many cars my father parked or how many passengers there were on the bus. and so, i had to figure out how to lead myself into a place that led to a professional career then i needed, once i got some traction, i needed to learn, how do you manage other people and then ultimately, i had to learn, how do you manage your organization now, the book's not only about my experiences it's about other executives who come from nontraditional backgrounds, some from very traditional backgrounds.

so, the journey i've been on is a journey i think anyone can take, if they apply certain corporate -- >> tell everybody about one of your favorite quotes, and i was surprised by who the quote was from, which is napoleon. >> that's correct. and i have to say that it's a quote i actually got from ken ch chenault one of the purposes of the leader is to define reality and to give hope and in a business setting, defining reality means you understand your competitive position in the marketplace, that you have accurately and realistically assessed what your strategy needs to be, that you have built a human capital plan of people around that strategy, you've built a culture that supports that strategy, and that you are operationally executing. and in communicating, that gives your organization -- >> i have to get you off of "the huffington post" and "media matters" and "mother jones." earlier this week, drudge had a report that not polian was a

pretty nice guy, so we've got to revise the whole napoleonic complex. because you had a stigma >> i did. >> supposedly, he wasn't so bad. so, not everything on drudge -- it was on drudge get off of mother jones -- >> is that al jones telling you those things >> ron williams, go out and get the book it is called "learning to lead," and it is out today, and we appreciate you coming in this morning. >> thank you very much. also, a quick programming note a special cnbc event is coming to new york on may 21st. the cnbc healthy returns conference is a one-day event for health care decision-makers and investors, and you can join the gang visit cnbcevents.com/healthyreturns, if you want to register. coming up, we've got your morning market movers. and as we head to break, take a look at u.s. equity futures and how we are setting up a huge bounceback in yesterday's session, but the s&p 500 is looking to open 20 points lower,

nasdaq down 56 points. stay tuned

♪ keep on rockin' in the free world ♪

time for this morning's market movers. dom chu joins us now with some of the movers. dom? >> all right, joe.

an earnings focus for this morning's movers check so far. we kick it off with allergan, just up over 2%, just over 2,000 shares of premarket volume now it's drifting lower. the speciality pharmaceutical company best known for bouton, facial, body contouring and lind zest posted better than expected profit and sales and boosted its forecast allergan was helped along by growth in core products like botox but hurt in declines in things like restasis eye drops and breast implant products. also, shares of ferrari are racing higher, if you'll forgive the pun. tune of 2% or so the italian luxury and performance carmaker said profits rose 22% revenues were up 13% over the same time last year. it also reaffirmed its full-year guidance, helped along by a 31% jump in sales of its 8-cylinder models and a 79% jump in shipments to the greater china region, so we're watching those

shares and we end with shares of aig. the insurer's up 4% or 5% or so on roughly 10,000 shares of premarket volume it reported after the close yesterday. it posted results that topped wall street estimates. the general insurance unit had its first underwriting profit since the financial crisis, and aig says it expects to have a full-year underwriting profit as well, so those shares, melissa, up big in the premarket. back over to you. >> all right thank you very much, dom chu let's get back to guest host mohamed el erian what do you make of earnings season so far? we did have a number of companies saying that china has been an issue for them, or a cost to them intel saying it was an issue for them cat and gm saying china-related tariffs are a cost to them so, given that the tariffs are going to go up, potentially, on friday, can we actually book this earnings season and say this justifies where we are now in the markets >> so, ferrari aside -- that's

interesting. that's a huge jump in exports to china. everybody was exporting to china has witnessed a significant slowdown, and it's not just the u.s. look at south korea's numbers. look at taiwan's numbers and i think that's the reality that the chinese economy has slowed, has slowed significantly. it has lost the tailwind of the global economy and i don't think that goes away i think at best they're going to stabilize, but we're not going to see a bounce back to the higher growth that we've seen in the past. >> so, you're not optimistic that this, all these stimulus efforts, which number, i forget what, 70-something in total over the past six months or so, that they're going to finally kick in, that there's a lag time where we're just starting to see the green shoots now >> so, they're going to stabilize the economy. but two things you've got to remember -- one is they've taken this time around a tremendous amount of stimulus to get the impact you got with much less, and that tells you the economy is less sensitive as it has evolved. but second, and i think much more important, and people don't

realize this enough, melissa, is that these stimulus measures are inconsistent with where china wants to be over the medium-term. their return back to where it was rather than pivot forward. development economists will tell you that really matters because china is in the trickiest transition in the development, called the middle-income transition there's a reason it's called the middle-income trap, because most countries don't get through it, and china will have to move forward. so, stimulus is great in terms of stabilizing, but that's not going to power china higher. >> we were talking about the costs of tariffs before and the impact to the economy, and if the tariffs do go higher, at what point will we start to really feel it to the point where it could be a drag >> so, distinguish between the economy and the markets. >> yes. >> the markets will feel it because the average s&p company is outwardly oriented. so, they will feel it. the economy is very different. the economy is actually quite a closed economy so, we're going to feel it at the margin, but i don't think it

does much to derail a strong consumer, and i think the strong consumer will continue to power this economy forward. >> but then that's sort of -- we have to wrap this, but that's sort of a double-edged sword, because if we're a contained economy and the economy chugs along, doesn't that put the fed back on the table, which would then make the markets feel that? >> yeah. >> you can say they're two separate things, but at this point, they're very intertwined. >> so, i said it at the time, i think the fed went too far in terms of taking rate hikes off the table, in terms of specifying september as the end to the balance sheet reduction and i think they're going to have to revisit that during the year, and that's going to be a really tricky communication. just look at the tantrum that happened recently on one word -- >> right. >> imagine if they had to change that guidance completely. >> all right you're going to stay mohamed. a lot more coming up on "squawk. making the case for capitalism warren buffett and bill gates talking to becky yesterday about the push by democrats on what some would call more socialist

policy we'll get reaction from philanthropist john hope brian after the break. meantime, european markets at this hour are in the red "squawk" returns in just a moment

welcome back to "squawk box" this morning warren buffett making the case for capitalism at berkshire hathaway's annual meeting over the weekend. it's a subject of a column i wrote in "the new york times"

this week as well. here's what bill gates had to say about capitalism, given what seems to be a little bit of a political controversy these days on "squawk box" on monday. here's what he said. >> some people think when you defend capitalism, you're defending the tax rates we have today and saying that higher absolute tax rates or more progressive tax rates, that you're disagreeing with them, and i don't think warren and i are disagreeing that you could make the taxes more progressive. in fact, we've been very explicit in some areas, like the estate tax, and saying we think that would be a good thing socialism -- >> you got your way. she came back. >> socialism, used to mean that the state controlled the means of production. and a lot of people are promoting socialism actually aren't using that classic definition

so, what we're going to have is capitalism with some level of taxation most people really aren't arguing against capitalism there may be a few, but most people are just saying that the taxes should change. >> and joining us right now is operation hope chairman and founder, ceo john hope bryant. do you think there's a confusion? because right now we're in a political climate with a number of democratic presidential candidates who either have been socialists, call themselves socialists or say there's a problem with capitalism. we have a lot of people talking about capitalism is broken ray dalio's come on this program to talk about that is it that capitalism unto itself has changed and shifted, and by the way, it may be that there are trends in some ways in which, in terms of the way labor and capital work have pulled apart -- or is it a situation where capitalism is working and we just need to change some of the policies around capitalism,

around either regulation or taxes? >> well, first of all, as warren buffett said, when you have more specialization, you create more distinction, and the poor get poorer and the rich get richer capitalism needs a software upgrade, but people also need to understand the difference between socialism and capitalism even if you want to treat money like a socialist, you have to first collect it like a capitalist so, capitali isism has created enormous opportunity in this country, but unfortunately, the opportunity is now beginning to be concentrated. you had a jobs report last week. >> right. >> great report, except the gaps so, 40% of all those jobs are $15 an hour, hourly wages or less and 40% of all jobs are going to, poof, go away with automation and ai in 20 years. we need to be talking about skills that allow people to participate in the free-enterprise system people say they hate rich people no, you don't! you hate rich people until you become rich. what you hate is a game system

so, we should be having, in my opinion, not a debate about how to defend capitalism, but how to create more capitalists who don't look like you. and that's about massive free enterprise -- >> but part of that question is, if you believe that our version of capitalism or capitalism today is specialties and requires more education and requires, not just requires it, but is ultimately going to be more concentrated in certain hands, then that's actually an issue with capitalism unto itself, not everything around the edges. and do you see -- >> the problem -- >> this is where the debate lies. >> the problem is all of this. you've heard me say before, we are not signaling to the marketplace the right things we need massive internships. i keep, like a broken record, we need -- i was on a show this weekend. lady's a producer. how do you become a producer, young, white, female, educated i was an intern. it wasn't that she passed the genius test or she was a brain surge surgeon.

she knew the right person. conversely, if you hang around nine broke people, you'll be the tenth. i don't care how smart you are, you end up being a drug dealer on the streets of chicago rather than being steve jobs. so, we need entrepreneurship schools. you have qualified opportunity zones. this is the positive part of the story. qualified opportunity zones, which is bipartisan and was signed into law by this president, will unleash at least $100 billion in the poorest neighborhoods of venture capital, but there's $2 trillion of unrealized capital gains sitting on ledgers and balance sheets $2 billion over ten years would wipe out poverty and create a whole bunch of capitalists if we do it intelligently. if we don't do it intelligently, it will be a rocket ship tied to wagon wheels and every inner city in france is called paris, so inner cities are gold mines, but we're not seeing it that way we're saying look at all these poor people over here. no, no, this is untapped human potential. go ahead. >> i agree, john, with the notion of we have to think more seriously about the untapped human potential in terms of

training, retooling, but i want to go back to something you said earlier, because it really struck me. you said collect like a capitalist, spend it like a socialist. >> well, that's what they do in sweden -- >> people will say there's a fundamental inconsistency between the two. explain what you mean. >> in sweden, you've got timber. in norway, you have oil. it wasn't like they woke up in the morning and said, ooh, let's just distribute money. they had to first gather it and make it meaningful and build it -- capitalism -- and then the tax code -- >> right. >> -- their tax treatment decided how they wanted to -- >> but that works if the state owns the natural resource. >> i'm actually not advocating for that model i'm just telling you how it works -- >> let me ask you about these opportunity zones -- >> i don't think that works at scale, by the way. i don't think it works in the u.s. >> the opportunity zone issue is an interesting one because it should help a lot of inner cities however, the people who will ultimately, i think, be the greatest beneficiaries of the opportunity zones are probably people -- >> investors. >> -- with capital >> exactly right.

>> investors in those spaces who are going to use, by the way, some of the capital gains that they have in other things to go into these things and get the tax benefit. >> yes. >> so, it's not -- if you don't have capital, right, if you're living in the inner city, you're not -- it's not that you get the opportunity to invest in that opportunity zone -- >> no, but your neighborhood gets better, right >> correct. >> your housing gets better, your infrastructure gets better -- >> this becomes a bad word there's nothing wrong with gentrification, it just means a move into middle-class values, except what andrew's talking about. unless we populate the populations -- by the way, that's where everything negative exists -- crime, homicides in neighborhoods where you and i live -- by the way, that's not black and white, that's green -- those are 700 credit cord neighborhoods. if we can move the credit score 100 points, you change the neighborhood you get the human capital, the human intellect to use the capital in the right way, access the opportunity zone funds to

start up businesses in their neighborhoods. this doesn't have to be either/or. it can be and. >> it took a follow-up question before you said i don't think it's scaleable in sweden. >> you didn't ask me the right question, joe. >> no, no, it took a follow-up before you said it, and i think therein lies one of the problems with the left, in that bernie and others that are way out there in terms of where they want to take us, they've put forth the democratic socialist countries of europe as where they do want to take us. and when you clarified it and said it's not scaleable here, that's an important distinction to make, because at first you sounded like you were right on board with bernie and -- >> no, what i have is compassion, joe, you know? and when you and i had breakfast, you sounded a whole bunch like a capitalist with a heart. my point is -- >> i think all capitalists have hearts which capitalists don't? if you create jobs and -- >> ceo of enron, there was bernie madoff, there was -- >> there are always bad apples,

john. >> i agree with that. >> there are always bad apples. >> who should own the means of production and when dalio was here -- i still don't understand what his deal is, but we talked about it, it's a tax -- bill gates said exactly what i said that day we're talking about the tax system, not the economic system. >> you have not encouraged higher taxes you want lower taxes. >> i would like to keep as much money in the private sector as possible, because that's where it's treated best and i think that's where you grow the pie so it can be divided up. >> and you will have no graces, which is a young lady who is the intern who is a person of color who -- >> if you give me great things to spend it on, go ahead. >> thank you for the conversation the debate continues ♪ for beauty that begins with nature. ♪ to make connections of a different kind. at adp we're designing a better way to work, so you can achieve what you're working for.

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go to flexshares.com for a prospectus containing this information. read it carefully. trade turmoil. a flurry of headlines on trade talks resulted in a roller coaster day on wall street new tariffs now in sight. oil battle anadarko likes the latest multibillion dollar offer from occidental, but chevron's got a chance to fight back. and on the road to ipo what does lyft's debut earlier this year for uber >> took a gamble picking you up with that one-star rating. >> one star? what do you mean i'm not a one-star i'm a five. >> you might feel like a five, but uber says you're a one,

buddy. >> and can the ride-hailing king avoid its smaller rival's missteps the final hour of "squawk box" begins right now ♪ >> announcer: live from the most powerful city in the world, new york, this is "squawk box. good morning and welcome back to "squawk box" here on cnbc live from the nasdaq market site in times square i'm joe kernen along with andrew ross sorkin and melissa lee. becky is off today our guest host, mohamed el erian, chief economic adviser at allianz. our levels look like the worst of the session, 194 on the dow add the 60 to yesterday that we did and we're down 250, which is still 200 less than the lows yesterday. so, since that sunday tweet or saturday night tweet, which looked like we were really going to be down 500 points or more, we're still down 250, so we'll

see what happens i don't know how it plays out thursday and friday of this week, but this is where we are this morning treasury yields, as you might expect, headed lower on some of this that 2.46% dollar, a little weaker on some of this trade sension that we're seeing. let's get you through some of the stories investors will be talking about today. perhaps the biggest one in m&a land, anadarko officially saying the bid from occidental petroleum is officially superior to the deal that had been in place to be bought by chevron. it's finally informed chevron that it is terminating the $33 billion deal, though it's given chevron four days to respond with another bid anadarko would owe chevron a $1 billion breakup fee. it's worth noting, the occidental bid was always higher than the chevron bid, even before they -- >> but it was the mix to cash and also the shareholder guarantee -- >> even before they accepted the chevron bid there was an

occidental bid out there, but a much bigger mix about stock. >> right. >> now they've made it more to cash with the backing of berkshire hathaway and deleveraged part of that with the help of totale. >> and no share of the vote -- >> no shareholder vote, which is a key, but also a big governance question we've had also talked about. the fed says u.s. stock prices are elevated and business debt is at historic levels those are some of the conclusions contained in the central bank's latest report on financial stability. however, it also says that the u.s. financial system is healthy and resilient. so, try to square both of those. and then we have two senators who have written a letter criticizing a potential facebook settlement with the ftc. democrat richard blumenthal and republican josh hawley says even the penalty is a bargain for facebook the senators calling for new rules on what the social network can do with consumers' private information, and they want the ftc to name names of facebook

officials who violated any consent agreements. confusion around president trump's threats to increase tariffs on china and rumors that a chinese delegation would cancel a trip to the u.s. wreaking havoc with markets to start the week eamon javers has the latest on the trade back-and-forth and it looks like the chinese are coming. >> it does look like they're coming, melissa. that's what we're told as of last night we had a briefing for reporters by robert lighthizer, the u.s. trade representative, and steven mnuchin, the treasury secretary. and they put some meat on the bones of what the president was tweeting about over the weekend that roiled the markets yesterday. what both men said was that something happened on the chinese side, they said, over the weekend, and the chinese backed away. lighthizer called it an erosion of commitments that the u.s. side has seen from the chinese over the past week or so mnuchin called it a big change in direction and as a result, they say that tariff hike is going to take place at 12:01 a.m. eastern time

on friday, but they said that the talks are still going on they're not walking away from the negotiating table. and they do expect liu he, the key chinese official, to be here this week in washington for negotiations that was an important barrier to cross because liu he is seen as the deal maker, the guy who can actually agree to something for the chinese side so that means there is still a live ball in lay in terms of a possible deal. u.s. officials had hoped to see that as early as this week, possibly by friday now that is very much in doubt not clear exactly, though, what it was that the chinese walked away from. lighthizer and mnuchin suggested that there were commitments that the chinese had made on paper that they were now backing away from and they wanted to renegotiate over the course of the weekend, but they did not tell reporters exactly what those commitments were so, we know that there was some trouble in this negotiation, guys, but what we don't know is exactly what issues it was over. nonetheless, we do expect those negotiations to continue,

starting tomorrow, wednesday, here in washington, when the chinese delegation arrives and we'll have to see what happens. >> all right, eamon. appreciate that report we'll talk to mohamed about this let's talk more about the impact of the trade headlines on the market mohamed el erian is chief economic adviser at allianz. and we have cnbc markets commentator mike santoli joining us as well we've already been through this sort of asterisk, mike, in terms of percentage versus point moves. >> yeah, sure. >> i mean, if we saw shenzhen-type move, 7% -- >> it would get your attention, yeah. >> that would be about 2,000 points, i think. >> sure. >> so at the worst levels -- just on the dow -- on the worst levels, down 450 add today's loss to the indications, still 250 it gets your attention, but we're talking really about 1%. >> it tells you, i think, that the trade issue matters, but it's not nearly all that matters. also, the context of where the markets were before we got this little complication in the trade picture matters a lot, which is

markets just about at a high, people just kind of embracing the idea that things look like clear runway in terms of the u.s. economy, even the fed so, i think we may be reaching for an excuse to have some reason to pull back, but on the other hand, yesterday's intraday reversal also told me the market's worked so well that the first dip -- people say this is not going to be the big one. so, they basically were bold enough to come in and say we're going to try to shrug this off, then we get the aftermarket news so we're in the zone of headline surfing. >> does it also sort of tell us the floor in the markets in terms of, we stared into the abyss of higher tariffs, tariffs going from 10% to 20%, and that abyss was 2,898 on the s&p 500 >> well, i don't know if we can call that the abyss. honestly, i do think if you expand it to all those other goods, you're talking about the consumer -- >> that's a whole other round of tariffs, but in terms of 10% to 25% -- >> i think more broadly -- we've been living with this for two years, metabolizing the probabilities and the rest of it so i don't think yesterday's news was going to be the thing to tip you over.

>> what's the biggest risk to the market, mohamed, the tariffs and trade with china or something we're not even talking about? >> i think it's global growth or a big fed policy mistake but let me ask mike something. so far this year has felt like 2017 you've made money in every asset class. volatility has come down significantly. it's great, all three things -- volatility and correlations, all going your way and that conditions the investor to buy the dip. >> right >> right so, do you think that's what we're looking for a few months, or do you think that at these levels, it's a different behavior >> i think we have to remember how extraordinary the fact that 2017 lasted for all of 2017 was. i think we have this four-month phase of this, also coming off a much deeper hole, right, from the end of last year so, i do think that the muscle memory is right there that says this market has shown a knack for rotating away from the vulnerable spots to safer ground you saw a period of time when

yields stayed very low earlier this year, when, okay, fine, we're going to buy the staples and the real estate and the utilities. that will keep the indexes supported. yesterday, domestic plays got a bid because, you know, you were selling the semiconductors and the heavy industrials. it might seem a little bit too cute, this orchestrated rotation, but it's working so far. i don't think that that inoculates the market from something more than the 3% pullback, which is all we've had this year. >> so the biggest risk in your mind >> i think the biggest risk is that -- whether it's the trade thing or something else, that some kind of sense that global growth, to your point, but if this is china hand lard landingf this is what we're talking about, that, and some disorderly unwind in emerging markets, that's always the things to me. >> we've seen turkey at stress level. we've seen argentina at stress level. and even the emerging markets have shrugged that off so far. >> right, exactly. no, you're right you know, global yields staying where they are, and i do think that it seems like liquidity is still there.

so, right now, you don't look at the dashboard and say, oh, credit's telling you to be worried. >> no, not at all. >> the vix is interestingly yesterday popping three points and coming right back down is actually -- it's bullish, all else being equal, when you get a little spike in the vix like that, that unwinds really quickly. >> when you say policy misstep, that is poor communication -- >> yeah, we saw it in december it replayed again last week, right? and it speaks to the market wants to hear consistently that the fed has our back covered -- >> you wrote an op ed saying the fed should have a better feel for the markets. >> absolutely. i think the fed wanted a no-drama nonevent. that's what they wanted. and they had it up to the point that the word transitory got repeated over and over again. >> to point where it became a drinking game almost it was ridiculous. but are you up for any sort of

fed nom -- i mean, herman cain is out stephen moore is out. >> i'm not i'm not. >> you wrote op eds on the fed having to have a market feel -- >> i'm happy with what i'm doing. >> that was a no, a firm no. >> just to your point, though, i think the fed looked at the market getting a little bit greedy and saying, oh, we have low volatility, markets at highs, a 3% gdp print, give us a rate cut, right? i don't think the fed necessarily wants to feed that thinking and trade tensions, global growth slowdown, undershare inflation, that's probably what you need to get a rate cut, so decide whether that's something you want to wish for. >> understand that if you're going to give the market something, the market's going to ask for more that's exactly what happened now, it's ironic that the stability report said that prices are elevated, said that debt has gone up a lot, and said that 40% of the new debt has gone to the most highly indebted companies. and the reason for that is risk

appetite is high, and why is risk appetite high because of the fed. >> well, herman cain said, you know, $185,000, i can't take a pay cut. you're used to making that before lunch, so i don't see you going to -- right? i mean. >> i'm speechless. i don't know how we pivoted from -- >> exactly. >> i don't know either. >> i'm speechless. >> he already said no. he said he is not in the running at all whatsoever -- >> he can do it, because he doesn't have herman cain's financial constraints. >> oh, because he doesn't need the money. >> you don't need -- are you sure you're not going on the fed if they ask? >> i am positive >> oh, i think -- >> he just said no i mean, several times. if he says yes, then we'll play that tape. >> no means yes. thank you. >> no, no, wait a minute, wait a minute, no >> it's a no >> i think that's pretty inequivocal. >> we can talk you into it. >> there's still 45 minutes. all right, coming up, it's a pivotal week for the

ride-sharing business and lyft is due after the bell and investors are looking closely ahead of uber's expected ipo we'll tell you what you can expect from lyft tonight and what the markets could mean for uber's first trade stay tuned to "squawk box.

welcome back to "squawk box. futures right now indicated a little bit better, down 166 points, still in the red, but we were almost down 200 earlier nasdaq indicated down 20 and change, or 65 and change s&p indicated down 20. okay, talking about the prompter here, here's what it says lyft reports earnings after the bell today for the first time as a public company shares of the ride-sharing company have tumble ed 15% sinc going public in march. what can uber learn from its smaller rival and what we can glean from the numbers later today. joining us is cnbc contributor ed lee and deidra bosa is in town thank you, both of you. >> good morning. >> sure. >> let's talk real quick about what we're expecting to hear from lyft this afternoon then we can talk maybe about

some lessons, if there are some for uber. >> right i think that revenue number, obviously, the top and bottom line -- this is a public company now, first time they're going to report results and you're expecting revenue to double. so, the revenues from lyft have been in terms of growth faster than uber. and it's interesting because we already have uber's first-quarter numbers so we have a direct comparison when lyft reports tonight. losses supposed to be north of $250 million and that's adjusted, right so, they're still losing a ton of money, and i think they would like investors to look at things like contribution margins, active drivers, but the question is, are the markets just going to be looking at these enormous losses >> how focused are they going to be on the losses and in particular, they said they were going to try to slow down some of those promotions. >> yep. >> and as a user, i keep getting texts from them since the ipo, with more and more discount programs being applied. >> i think i've got like $60 worth of discounts from lyft already in my inbox somewhere. i think, you know, it's this

sort of war -- this pricing war between these two guys, which has been great for us, but longer term, i mean, i think the losses is really everything at this point are these businesses that can actually turn profit per ride? i think certain concentrated markets like new york with uber it does work, but i think most markets it still doesn't so i think that's the bigger play and if you're an investor. if you're already in lift and looking to go into uber, i think it's between these two, it's a zero-sum game. if you're buying one, you should not buy the other. >> no, and i can you look at a city like new york, right, and it's one of its top five markets. so, yes, it may be going towards profitability faster, but it is so competitive we had two interns take lyfts all around the city to compare lyfts and ubers, and it is remarkable how on par they are in terms of wait time, price, route. and it's costing them so much money to do that, and you can see how refined these algorithms are to do that. >> what's fascinating, though, is that the bulls in lyft prior to the ipo -- i mean, lyft went on the road not too long ago, so

the financials theoretically aren't extremely different from what they might report tomorrow -- >> similar, right. >> and yet, there's been a tremendous sentiment change where the losses before weren't a problem going into the ipo it hit high 80s and then sank, and then all of a sudden, it's a huge problem what happened? >> well, i -- i think you know better than i do what happened. >> it's a good question. i think that when they thought they would come to market, investors would be forgiving you look at the venture capital world in san francisco, right, and they ask, what's your addressable market and you look at uber and lyft, and their addressable market, uber says it's in the trillions of dollars but public-market investors are more concerned with the path to profitability, and that is a long way off. >> okay. i've got two other topics to pivot to quickly first, let's talk facebook and the multibillion dollar fine the company's facing from the ftc, $5 billion some folks in washington say that's not enough. they say it's a parking ticket, and they want to name names. they want heads. >> it's like 20 -- it's like 23 cents out of every dollar profit

that facebook made last year so, it's not a small amount. i think if we really want to make it hurt for them, you need a structural change. it's not just a one-time fine, necessarily. and i think if they want to go after zuckerberg directly. i mean, he controls the company, right? so, you could go after him now you could sue him now. he's still in control. so, unless there's some change to how facebook operates in terms of, you know, you can think of data like currency. if there's a federal regulator that sort of regulates these things the way that the fed regulates banks, i mean, it's still going to be a slap on the wrist. >> do you think consumers care >> yes, i think consumers care, certainly, more and more, that you get these headlines. and the question is, do you let facebook regulate themselves do you let mark zuckerberg be chief regulator? >> they've been regulating themselves since the beginning >> and i think lawmakers are asking for actual business changes. and if you look at the u.s. versus a place like europe, the ftc is so far behind in a lot of senses, in terms of regulation so, this will set a precedent,

how much they're fined, but also what changes are put into place, either that they're allowed to do themselves or regulators will hold them to. finally, want to get to some of the recent headlines. anchor and management shake-ups taking place at cbs is the big headline today "new era at cbs. gayle king getting a new deal. norah o'donnell becoming the anchor on "the evening news" there. >> the women are in charge. >> the women are in charge. >> the head of cbs news, she's putting her stamp on these management changes they're trying to get past the whole scandal -- >> does it change the game in that cbs has been in third place in the evening and third place -- >> distant third place distant third place. >> and third place in the morning, behind the "today" show on nbc and everybody else is watching "squawk box," of course, and other sister channel, msnbc and the other "morning joe." so, the question -- no, but the -- >> the other one. >> the other one >> this is the original morning joe. >> the reason i ask the question is that they're spending a lot of money on talent

they're moving a lot of things around do we think it fundamentally changes the dynamic and the math >> moving to d.c. >> i think it's tough. i don't know that it changes -- i think when sort of you have broadcast news and television news generally has been challenged you've got the internet altogether my daughter's on her instagram looking at stuff all the time in the morning anyway so, i think it's a structural challenge there. i think you've got some standouts like gayle king. i think it's nice, but i think longer term, i don't know that it's going to move the needle all that much. >> $12 million for an r. kelly interview? does that make sense to you? here's the other thing -- >> that was a bright spot. that was -- >> i know it was but did you read some things about zirinsky, where she's managing like a producer -- >> treating the news division like it's a show -- >> but it's chaos. people are hearing things, you're new to here -- >> she's new to the job. i think there are a lot of people -- >> this wasn't handled well for poor jeff galore, i don't think. and where's he going >> that's the question. >> is there a saturday morning

opening for the lead anchor on cbs news >> thing is, when you're in last place, you have to make a bigger shake-up, right? that's part of the point here. >> somebody's got to be in last place, don't they? >> i don't know. you tell me. >> no, no, no. but i mean, the numbers are pretty unbelievable, are they not, when you look at some of these things they said, poor norah is not making the bucks she's only making $7 million to go -- >> yeah, i don't think anyone here's going to cry for that necessarily. >> smallest violin in the world. >> just one person >> norah >> no, mohamed pay cuts. >> okay, fabulous conversation great to see you i'll see you guys and probably talking lyft and uber all week. >> that's the last one i'm sorry. that was a bit too far i apologize. love means never having to say you're sorry. coming up, does faang still

have bite? we'll talk tech as earnings season winds down. and shares of ferrari up big after a 22% jump in net profit during the first quarter from a year earlier streng ithn china and asia-pacific "squawk" will be right back. (indistinguishable muttering) that was awful. why are you so good at this? had a coach in high school. really helped me up my game. i had a coach. math. ooh. so, why don't traders have coaches? who says they don't? coach mcadoo! you know, at td ameritrade, we offer free access to coaches and a full education curriculum- just to help you improve your skills. boom! mad skills. education to take your trading to the next level. only with td ameritrade.

welcome back to "squawk box. take a look at the futures right now after yesterday's big bounceback we are looking at a lower open, pretty much across the board the dow looking to be down 160 points boeing, a downgrade from barclays this morning putting pressure on the dow jones. the s&p 500 looking to open lower by 20 points and the nasdaq looking to be down 65 points. okay, and it appears that westroast is one place starbucks need to crack. they got some buzz after a "game of thrones" fan thought they spotted an errant starbucks cup. "wall street journal" reports that the cup wasn't actually from starbucks, but rather, from the production's onset craft services you see it in the corner but the editing oversight prompted a response from starbucks -- we're surprised she didn't order a dragon drink," which is a drink the company actually sells hbo apologizes and acknowledged that the drink was sitting there on the set

>> this has happened -- >> if you can suspend your disbelief for everything else, flying dragon, fire-breathing -- they could have had paper cups i mean, if they've got flying dragons, they could make a paper cup, couldn't they >> with a sippie lid. >> they also could have removed this digitally, i imagine. >> if they had caught it. >> if they had seen it, exactly. you know, that's some of the most fun to look at things like that in old movies -- >> or they had a wrist watch or -- >> yeah, or a plane flying by, you know, carlton heston looks up and he's on a chariot and there's a plane going over. anyway, coming up, has the fed found the right voice to speak to the markets as president trump pressures the central bank to lower rates and the fomc stands firm, messaging from chair jay powell is more important than ever. is he rising to the test if someone was, like, saying that i was -- i would be so flattered to even be considered. i wouldn't snap. anyway, we'll ask our guest host, momeel eanhad ri, and talk about what the fed needs to do

next, when "squawk box" returns. your employees must love you. thank you. ah, you could say that. so how are things with you guys? great. thank you. thank you, sir. lunch next week? terrific. say hi to the team. will do. call my office, i will. -sounds good. alrighty. servicenow. works for you.

welcome back to "squawk box" this morning, we are live from the nasdaq market site in times square a couple stories that investors are going to be talking about today. we're going to get another snapshot of the u.s. job market later this morning with the labor department's so-called jolts report it's expected to show that the u.s. economy had 7.25 million job openings at the end of march. that pushes the number back near record levels. and amazon opening its newest amazon go store. it's happening in new york city. it's happening today these have essentially been grab-and-go operations, but this one will have a little bit of a twist. it will be the first one of these stores to accept cash. this follows criticism that cashless stores discriminate against the poor used to be literally walk in with your phone or you could do it completely without any cash even though consumers have already preordered -- this is a separate store, by the way -- even though consumers have preordered samsung's newest smartphone, the company says it cannot yet confirm a shipping

date for the galaxy fold they delayed sales after the reviewers we talked about on "squawk" many times discovered deficiencies with the display. it was cracking, it was breaking if the delay lasts past the end of this month, samsung will officially cancel preorders unless customers opt to keep their orders in place. well, it's may 7th, and that means we are almost midway through the second quarter after a strong q-1 we want to check on expectations for growth in the second quarter and how a renewed trade battle could change things. steve liesman is here with the latest >> melissa, our first look at "rapid update" is in for the second quarter, and the caution here is there is not a whole lot of data here, but we have a number, nonetheless, because we have a trade deficit number and we have the current number so, 3% now is the tracking for q-1. that's come down by 0.2% from the original print the cnbc rapid update is the only median on the street of 10 to 12 tracking forecasts out there. there is the first number for the second quarter, 2% you put them together, you run

2.5% that seems and feels right to me i think that's the number mohamed el erian talked about earlier. amherst peer upon the is 3%. moody's, 2%, goldman sachs at 1.9% and the atlanta fed, which i don't like the early number at all -- i think it's biased to whatever the ism is, and that was weak, so they come in weak, 1.7%, along with deutsche bank let's look at the estimated impacts of trade here. the tax cuts, according to our cnbc fed survey, are going to add 0.4% to potential growth, okay now, this year and next, tariffs will take off 0.2% of that and the global slowdown, which i think is related to the tariffs, 0.3% and what we have here is an argument between folks who disagree with the means. and i think everybody agrees with the ends. let's talk about the upside of these talks being successful less intellectual property theft, greater market access for

u.s. companies to china and ultimately more efficient markets. if the chinese government is subsidizing companies, that's negative for global growth in general. trouble is, the means, the down side of the tariffs -- lower growth near term, higher prices, and less efficient markets as people have to say, you know what, it's 25% more expensive potentially in china to get this thing, i'm going to find a way around that. that means maybe they go to thailand, maybe they go someplace else question is, do they ever bring it back here and for that, i think we are going to need long-term, sustained tariffs, and that's really one of the things that the market worries about >> so, steve, this is a classic journey versus destination. >> exactly. >> you like the destination, don't like the journey. >> right. >> right the question then is how long is the journey? >> i mean, i thought -- i think we thought that the journey was coming to an end we were getting our coats on we were getting stuff in our briefcases we were zipping up the briefcases and then sunday we got an idea that we had another couple legs to the journey

the problem i have is not that the problem i have is if the administration really wants to reduce the u.s./chinese trade deficit, if they really want to help u.s. companies start and take back some of that business, it strikes me you're going to have to have sustained tariffs and that is the real fear, that it's not just -- tariffs are not just the journey, that tariffs are ultimately an end, if they want to have protection. according to something i saw on yesterday by deutsche bank, the u.s. now is one of the highest tariff countries in the world, higher than other people now, if it's just a journey, i think everybody's cool with that, but if it's an end, then we've got problems, i think. >> what if the current tariff regime is the sustained tariff regime does it then have any impact on the economy or -- >> yes. >> it does. >> if it's a sustained tariff regime -- >> more of an impact than we've already seen in the past six months >> look, and i think joe said this earlier -- the impact is de minimis, right it's about maybe half of the potential impact of tax cuts this year, but the tax cuts

should keep on giving. the way the economist had done this -- for what it's worth, ladies and gentlemen -- you can take this for what it's worth -- is they've dialed in a 0.2% decline this year and no decline next year. so you go from 10% to 25% on the tariffs, it means you deepen -- you make deeper and longer the potential negative impacts. >> when did we invent the wonderful income tax was that 1908 or something when was that, steve do you remember? prior to that, it was all tariffs. that's how we funded -- >> that's how we funded the government. >> is it possible, andrew? ready to sign on for that? no more income tax, just tariffs? dude, think about it that might be difficult, right >> got to think about it. >> at this point. >> impossible. >> but we were a tariff country for, you know, probably longer -- >> that's true. >> from when we were founded, longer a tariff country -- >> we didn't run the world back then. >> we didn't have penicillin back then, so there were things

that weren't so great. >> there wasn't penicillin we didn't understand the importance of say communicative diseases we didn't have medical education back then. >> there were some other issues. probably won't go back there, but tariffs are not -- you know, it's not a new concept. >> no, no, no, but -- >> we shouldn't be annualizing these effects, though, because i don't think anyone thinks it's -- we still think -- >> we didn't we didn't! >> i still think -- we still think it's basically a bargaining -- >> we had 77% of our fed survey respondents believing there would be a deal this year between the u.s. and china that was in the prior survey -- >> this year >> this year. >> we were hoping this week. >> right there we go. can i just ask quickly, m onk hhmohamed, here i have -- i can't believe this number here's the number. i'm not doing anything with it 91% chance of a cut january 2020 i think a more believable number that the market's really pricing is a 54% cut by december is the market onsides or offsides here? >> i think both are high

both are, in fact, very high i think that the base line is no change, and the balance of risk is towards a hike, not a cut that's why i think those numbers are way too high. >> you know, this is historic. you are right in line with our survey respondents 63% of whom said that the fed would be hiking in 2020 versus the market, which has a majority plus of a cut. and for the 10 or 12 years i've been doing this survey -- i don't know how long it's been -- the market and our respondents are almost always together i don't understand the split here, but the market certainly is betting -- people betting with their money -- >> so, can i provoke here? >> please. >> don't you feel the market feels it can bully the fed >> maybe i mean, maybe it feels that way. i just don't think people -- >> look at -- >> but the consensus, i don't trust economist consensus. if you really were going to go against the grain, the more surprising -- i think rates are going up i mean, who doesn't? you've just got to tell people

what the employment -- tell people what the unemployment rate is. it sounds like we're going higher new highs in the stock market. so, the obvious thing is that rates go higher. maybe it doesn't turn out. maybe the con census is wrong again. >> i'll push back a little bit -- >> that's right. >> these guys, i like to say, don't tell a blind man where the furniture is in his house. if he knows one thing, he knows that and this group i've been following, they get the fed almost always right. they are not separating -- >> did they get the fed right last year? >> they did. >> a very tricky year. >> they had that fourth hike in there. they stuck with it, despite the change -- >> did they have the pause >> the pivot >> the pause, i have to go back and look i'd have to go back. but that, i think, that came on everybody very suddenly. i don't know if we were able to poll -- >> what if inflation stays so loach and --

>> the other thing is people don't believe in the powell transient explanation. and one piece of data that i have -- you remember he mentioned financial services declines >> yes, yes. >> i do. >> and i questioned that because it seems like a structural change in the industry, where fees are pressured permanently. >> that could be or the idea that something is pressured permanently at all times in the economy, in a downdraft, which is i think what joe's talking about, the idea that you have this inflation and statistically, if you look at a trim mean, which the chairman has cited, you will always miss that one thing that's going down because you're always chopping it out of your calculation. but here's the story with the financial services it was down 3.7% on the month. so, you're right, except when you were near 2% inflation last year, that number was up and helping it be near 2% last year. so, you can't selectively remove

it and some of the things that are transient, a lot of economists are questioning whether or not it really is transient, which means joe could be right if you're down 1.5%, 1.4%, you've got an inflation problem. i think there was some members of the fed that are thinking about how do we address this >> but steve, we talk about amazon, we talk about google, we talk about uber. amazon this intermediates, lowers its prices google makes price searching very easy. >> yep, yep. >> and then uber brings on assets that are underemployed, which -- >> can i tell you the coolest thing i've come across recently? >> hold on, hold on. i worry that we're so obsessed that 2% is the right number that we forget that by trying to target 2%, we may break something somewhere else. >> that's possible the coolest thing i saw recently -- i don't know if you remember the story i did about the government's use of big data so, a big department store decided they didn't want the government price-takers in their store. they said, you know what, we're going to send you a file at the

end of the month with real prices, okay what happened to the pair of prices in the last cpi report? they fell 1.9% that suggests -- it's not evidence, but it suggests we ought to be looking at the idea of what the government guys when they go in to write down the prices, that real prices paid by people might be lower, which suggests the google, the amazon, the uber, the everything, you might have a bigger downdraft of technology-driven inflation. >> or 1.55% is actually lower. >> right, exactly. economists have, by the way, to their credit, suggested that the inflation numbers are overstated and now i'm going to get a whole bunch of twitter now, or whatever you call it, tweets, saying, liesman, how can you say prices are going down when all the prices are going up? >> i get that, too and people talk about, you know, health care premiums, things like that. >> education. >> and they complain but think when we finally get cost containment on health care -- >> depends how we get there.

>> by definition, folks, almost none of you out there is experiencing the actual cpi. it is an average of a price basket, and you are not doing it but that's the best we've got. >> the more you know steve liesman, thank you. >> the more you know i like that. coming up when we return, some big movers ahead of the opening bell we're monitoring them all and we'll get you caught up in just a minute. plus, with the street about to put earnings season in the rearview mirror, where's the best value in tech and specifically, the biggest players like facebook, amazon and netflix. next up, what is working in the faang sector, enwh "squawk" returns right after this break

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welcome back to "squawk. we showed you what was going on during the commercial breaks we are now -- >> we fall asleep. >> we are under an hour away to the opening bell on wall street. want to get over to dom chu. he's going to take a look at some of the stocks that are moving in a big way this morning. dom? >> i have a sense of what happens over there, but i'm going to keep what stays at the nasdaq -- what happens at the nasdaq stays at the nasdaq, guys anyway, shares of boeing, we're going to check those out now they're down just about a percent or so. roughly 60,000 shares premarket volume because analysts at barclays are downgrading it to equal weight from overweight the target price is being cut to $367 that's where it's at right now this is a survey they conducted which found many airline passengers may choose to

actually avoid flying model 737 max jets for an extended period of time, even after it's cleared to fly again, so that's putting pressure on those shares also, shares of roku jumping by around, just around maybe a percent or so, on roughly 50,000 shares of premarket volume the maker of online streaming hardware was initiated with a coverage by analysts at stevens. they've got an overweight rating and an $84 price target. they like the longer-term industry position as an independent branded platform and think it's rell positioned to grow users and average revenue per user, rpu. and we'll end on shares of beyond meat. beyond something, which they're up about 3% again premarket, 100,000 shares of volume the recently ipo'd maker of plant-based meat alternatives was started with an outperform rating and an $81 price target by analysts over at bernstein. they like, among other things, the recent planned expansion of production capacity. they think it could facilitate rapid sales growth this year and beyond, along with anticipated

expansion of the overall alternative meat industry. that stock has just been, melissa, i don't even know what to say about it. >> beyond. >> beyond. >> see tiger yesterday, dom? >> i did my only thing was, the tv person in me didn't like the fact that the ribbon from the medal -- did you notice that -- was kind of flipped upside down, so it looked like he had one that was off and -- >> but as a golfer, did you hear trump? the president had -- i mean, someone who's a golfer wrote that summary of tiger's career, because there was some really detailed stuff you must have loved that i loved that get teary at all >> i did, because i'm a golfer and also i like the fact that now four golfers have received that presidential medal of freedom. >> i never knew tiger's son was named after charlie. it's great his mother, his kids -- >> and erica as well, his new significant other. >> yes, that's right everybody was there. all right, i knew i could talk you about it, dom. >> i'm always happy to talk about it, joe. >> i know you are.

>> took you 2 hours and 48 minutes to bring this up >> to bring tiger up, i know i had to wait until someone who -- i don't want blank expressions. >> what am i >> it's not the mets i know you don't want me to bring that up. what happened yesterday? >> i know, it's sad. >> yesterday another wasted -- >> it is sad the faang stocks are out pacing the nasdaq today. the stocks are offering at a two-week high. we are joined at isi, anthony, welcome. we are talking abo, how much ris there if any in the stock in terms of amp up fine or a more assertive ftc? >> facebook put on boundaries of what it could be you're quantifying the impact. i don't think there is any

expectation of this stock that it would be greaterthan five for investors, you are looking at it, that money, facebook is less than a quarter of free cash flow if facebook can put most of these issues in the rear-view mirror and you move onto the fundamentals and you have out performance on upward and positive earning revisions as long as the fine does not impact the operation of the business and the fact they can continue to sell ads on instagram and do what they do, it is largely in the narrative of facebook behind us. i don't want to be complacent about it, i don't think it will lead to break up of the company or any sort of tectonic change in the way they make money >> in terms of ads spend and use of the quarter, the last quarter was kre meacement the narrative worse is behind them that part of the occasion seems

that could ratchet higher. >> i disagree. >> that was zuckerberg's response to congress i am going to three more into private security than you think i can. it turns out they can't spend that money fast enough h.r. can't hire people fast enough to grow we'll see that margins are better and spending are more efficient than we thought. the bad news was in and that goes to the narrative of what's passed is passed >> keep in mind on the stock is that, now it is less than incentivi incentivize because the stock i

back and not showing too much results. if you look at it on a multiple, they're on their way to $10 of earnings so i actually think the fang in general are all towards the high end of their chart and it may be time for them to take a breather facebook is one we see the best value and opportunity to improve. the final point would be new products everybody is interested in telling me about ecommerce and payments and instagram check-out and other creative things and continue to grow the business. that narrative takes whole at these multiples. >> will there be a question mark over netflix for the rest of the year because of disney >> i asked my daughter and she's five and she says no, netflix and disney can coexist

i was telling her that netflix is going to burn $3.5 million and she kind of lost it. to answer your question, netflix has had a good year so far i don't think the competitive forces like disney plus are risk to consumers i don't think people are going to turn because disney exists. content for netflix will continue to go higher and the cash spent continue to have the pressure creating the next to original will procollude the company being able to get to free cash flow even. it is going to take them three years to get to cash break even. i don't hang up on netflix >> anthony, thank you. >> have a great day. >> let's get down to jim cramer. what is your tomato harvest look

like, the size is there enough in case -- can i get in on it >> can i get in on those >> you got some big ones, too, don't you? >> i have a place between s sam miguel the entire road is tomatoes. and costco is going to get hit along with something at the super market i can't make it up we had rain last weekend and there was no planting to be had. i am going to be behind trying to stop the mexican tariff >> can you tell what's going to happen in china we are like a broken record. how do you foresee this playing out? i hate to bring up steve bannon, he says this is forever and they

want to kick our -- >> well, there is an existential crisis >> they want tariffs the chinese and us are talking, we are misled. i think that ended >> really? >> it is okay, my kids say it is going to work. >> anyway, thanks jim, we'll continue with more stuff in a continue with more stuff in a couple of minutes.et a client's. is the fund built to sell or built to last? etfs are only part of a portfolio. so make it easy to explain. give me a quality fund that helps me get clients closer to their goals. flexshares etfs are designed and managed around investor objectives. so you can advise with confidence.

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♪ ♪ ♪ ♪ ♪ ♪ . i want to welcome my son's scott's class. it is a home room tv class they're done at a high level am i right >> yeah. >> do as we say and not as what we do. >> muhammad, thank you we'll take a look at the futures before we leave. we are down 172 points now we'll see what happens

it is only tuesday, is it? i got that right oh, we are back on anyway, we got to get out of here this is too much let's stop talking about me and talk about me some more. no make sure you join us tomorrow "squawk on the street" starring jim cramer and carl quintanilla and david faber is coming up next ♪ >> good tuesday morning everybody, i am carl quintanilla with jim cramer and david faber at the stock exchange. got china trade talks obviously in focus we got a downgraded boeing, too. lyft earnings tonight. euro on growth forecast can cut once again and the ten year yield back below 2.48. stocks