live from new york where business never sleeps. this is "squawk box. >> good morning, everybody welcome to "squawk box" here on cnbc we are live in the nasdaq market site in times square i'm becky quick along with joe kernan and andrew ross sorkin. it's very good to be here with both of you guys we're all back together for the first time in a while. >> nice to see you so nice to see you >> nice to see you, too. >> yesterday's big sell-off in the markets. the dow posting its worst session since january 3rd. dropping as much as almost 650 points before actually closing down by about 473 points at the close. at the weakest level the dow was down by 2.5% s&p was off by 2.4% at the weakest level and the nasdaq was down by 2.8% at the close, utdown 1.8%. you can see 25,965

falling below 26,000 on these declines yesterday that is below the 50-day moving average. boeing had the biggest impact on the dow accounting for nearly 100 points of yesterday's drop, as you might expect, because that is a company that would be affected by any potential tariffs. interesting to see that this has had a bigger impact on boeing and pushed it to lower levels than even some of the other issues that it's been dealing with that are boeing-specific issues since those two crashes the broader indexes, technology was the worst performer as semiconductor stocks pushed the sector lower semiconductors down by 2.2%. chip stocks like broad com, micron, and nvidea as he tweeted his new terror threat on sunday. obviously, this is also a very sensitive market to any potential tariffs that might be put on >> i think boeing we were watching that 365 level, weren't we, all along? >> it's 357. >> 357 then we forgot back in december on the lows, it was, like, well below 300. >> and there are two things that really are impacting the markets that have been over the last i would say year or so

one would be the trade talks which a lot of people had assumed were going well and we were going to see a deal sooner rather than later. the other was the fed, and after the fed pi on theed back then, the fed talked a little bit last week and made it sound like they're not necessarily looking for a decline in rates and so maybe the market has misgauged both of these issues there was a long talk about whether it would cause the fed to go back to the idea of hiking or whether we really just need to keep your eye on global inflation to get your cues for what the fed does. >> i used to thinkthe former but now i kind of think the latter >> do you think growth causes inflation, but we've now seen that it may or may not be recovering i was just thinking about how we kind of -- it is kind of nice, the three of us and everything i was thinking anything u none of this is really right now trying to think of moving someone out. like the nightly news or just

arguing all the time or you got to move and, you know, there are all these -- i mean, that was ugly, wasn't it? back stabbing and talking to the new person in charge >> hold on you're not trying? >> i want to make sure we're all -- >> he will have to end his talks now. in a yin and yang way i think we cover the whole gambit >> it's got to be somebody that's ugly, right >> it was yesterday's. poor jeff, like, gosh, thanks for all the kind wishes.

>> s&p futures right now down by five points, and thin the nasdaq off by ten take a look at what happened overnight in asia. ure going to see that the nikkei actually closed down bigger than some of the -- the japanese market was down bigger than the chinese markets. nikkei off by 1.5% in china the hang seng was down another 1.25%. the shanghai composite off another 1.1% then in europe this morning you

will see that there are red arrows across the board there, too. none of the major markets are down by even a percent. >> we'll see other news that may move the markets in a big way. we are following a major developing story out of iran that nation says it will stop complying with parts of the iran nuclear deal and begin building stockpiles of enriched uranium and heavy water. both used in nuclear reactors. this comes exactly one year after the u.s. pulled out of the iran nuclear deal and iran's

president giving europe an ultimatum. either follow president trump or save the deal by trading oil with iran. any country that buys oil from iran would be violating u.s. sanctions, of course, and crude prices right now can buy a barrel at $61.19, but all of this turmoil geopolitical turmoil could add a wrinkle to china trade talks. >> there was had some solid intelligence shipping that iran was really getting involved in some other -- >> suddenly gaza is heating up there are all these things really happening in a vacuum.

wref ten years of endless war. trump has been sort of not one that -- he is credit sidesed involvement that we've had in the past. >> is that the right strategy? did that raise one of your very ample eyebrows that -- did you notice -- i mean, did you hear that at all?

i heard that, and it raised one of mine, which you can barely see, right they have to color mine. did that raise your -- >> they color your eyebrows in >> they have to. otherwise i look like there's nothing there. no, seriously. nasan had private equity did you see all that what is all that -- can you ask your investigative team over there that it is so busy with trump, can you ask them to look at some of the other stuff once in a while will they do that if you ask them, if you suggest it. are there meetings >> when they finally dpin getting the taxes, they get -- >> well, they can -- >> then they move on >> didn't you guys already do this i thought i knew all this.

it was the last article of 950 million. now it's 1.1 it's the same amount that lyft lost, actually 1.1. >> we will talk about that -- >> nobody knew it, but back in the 1980s he was already running a ride sharing company he was a little early. zh zhoo. >> we know about depreciation in real estate and operating -- net operating losses and thaul anyway, trade turmoil is front and center eunice is wondering what the hell we're talking about we're less than 48 hours away from president trump's deadline to raise tariffs on $200 billion worth of chinese goods new data released overnight showed a droop in chinese exports and a surprise rise in this imports eunice yoon joins us now with more flush with new twitter followers after yesterday. >> all thanks to you all thanks to you. >> i try to work for you >> as if investors -- thank you very much. as if investors needed more surprises, the april trade data surprised everybody.

it really caught people off guard. the exports fell by 2.7% from a year ago compared to expectations for a rise of 2.3%. imports jumped by 4%, and this is where the market was already -- was just waiting for a fall of 3.6% the talk has been that the weak orders to the u.s. and europe was the reason behind the drop in exports, and that some of the stimulus measures that china has put into place, such as the cut to v.a.t., helped to boost imports. the big thing that people are talking about is that they're very concerned that president trump's new tariffs are going to spike any chance of having an export recovery in the second half of the year in fact, i was speaking to one chinese exporter who sells to the united states who said that he is worried that the tariffs going to kill off his business another american executive who has a lot of manufacturing facilities here told me that he believed that manufacturers like him were going to be dead in the water after this tariff was put into place a lot of concern there

one of the reasons why this concept of china plus one is gaining even more traction there's been a strategy around for a lot of bigger companies, and that is don't put all of your production eggs into the china basket always make sure you have one supplier outside, but now it's really gaining ground with even smaller companies who normally prepare for this strategy who say that they are now feeling that they have to have at least one -- at least one supplier outside of china for every single critical component that they have for their business that's a shift they're not only worried about the tariffs coming from the u.s., but they're also worried and feel like there's been a shift in the thinking they're that china is not going to change its economic agenda despite all the pressure from the united states.

>> for more let's welcome in china beige book international ceo leland miller. in the past i've gotten the feeling that you kind of thought that trump wanted to make a deal so badly that we may not get one that had a lot of people in reading your comments on what actually happened, you almost seemed gratified that he did not

or lighthizer didn't let the chinese put one over on, you basically, and in your view they agreed to a lot of things, but when we asked them to put it into chinese law and to be applied administratively, they bached it was clear that they weren't going to put it into chinese law and we wanted to say this is part of what we got in the agreement. if we can't get that, we're not going to do it do i have that right >> i think for the last several wee weeks. >> the chinese decided they were going to make all kinds of changes, but the core change being that they were not going to implement the law through the normal npc -- people's congress

lawmakers procedure they were going to administratively do these laws, because they don't want to admit fault. >> when they pulled that back, that made it look like we're not going back in the structural pledge, and then this broke up the talks. >> you point out they may or may not even conform to the law. they don't always conform to the laws that are on the books anyway.

>> would tb an agreement >> it would be an agreement to enter this into chinese law. >> they aren't even willing to say that >> and set up a big building in wisconsin. >> in plez xi signed something to be entered into law, this would have been something that the chinese would have to do >> the process isn't as important as the substance, but for this it was. >> leeland, the preen i bring that up is i was listening to an analysis of what happened with fox con the other day, and a professor from harvard was saying that basically this is kind of lost in translation because the way they negotiate, the way we negotiate, it's two very different things. we think we have a deal at the end of it, and maybe that'sen the way they see that. if you get the top signature on this, that's all you really need >> you do have a risk because

this is how the chinese negotiate. over and over again. i think that the view from the united states has always been that you can't just trust the chinese to comply. regardless of who signs the documents. what you have to do is you have to have leverage over them. >> we comes here, and you think it's possible he brings a complete meaculpa and we'll have a deal in may? >> i think may is possible if he walks this back and says we miscalculated this is politics it happens in your country as well as mine

he has now forced the chinese to the table to make a tougher deal, to go back under commitments. the deal is absolutely open right now. i think if the chinese decide that they're going to soft-play this and not walk things back, this could go sideways quickly >> and you're completely convinced we'll do these tariffs if they don't do this? he is not bluffing >> he is not bluffing. >> then that will hurt it's almost -- it's everything the exported to us, anyway >> it will be damaging >> 325 -- when the 325. >> you don't think there's a better chance that we'll put this off and reset the deadline until next friday? >> there's a chance of it. usually you have whispers from the administration that here's what the president is actually thinking or here's what we would like to do this is the -- the ball is in the chinese court.

depending what they bring to town today with the advanced team, tomorrow and then, of course, president xi could make this all go away with a phone call to his friend trump that hasn't happened yet if the chinese underestimate this, you will see tariffs on thursday night >> yesterday back to the elections, so elizabeth warren yesterday was saying that this is just -- trump is stuch such a fool this is just an example of how he has been taken to the cleaners he is awful. chuck schumer came out and said mr. president, be tough. this is what we need to do this is 22 different -- this will be 22 -- >> a lot of criticism. >> people are calling it a clown car. is that a pajorative >> it is people use that to describe a very large number of -- they don't really mean that >> you took the horns and the big floppy feet. no >> no.

nope foo your next move i know all right. coming up, we're going to dig through -- >> some of them are. >> we're going to dig through a quarterly report as public company. that's stock right now as you can see, it's 60. 72 plus, we're going to talk about the day's planned uber protest as that company prepares to go public as we head to break, here's a look at the premarket winners and losers in the dow. coming right back. what do advisors look for in an etf? don't just track an index, help me meet a client's need. 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. before investing, consider the fund's investment objectives, risks, charges and expenses. go to flexshares.com for a prospectus containing this information. read it carefully. your daily dashboard from fidelity. a visual snapshot of your investments. key portfolio events. all in one place. because when it's decision time... you need decision tech. only from fidelity.

>> lyft out with earnings for a public company it's a loss of $9.02 per share on revenue are of $776 million on the earnings call lyft's cfo, brian roberts, said they expect losses to peak this year >> their cfo is brian roberts? >> not that brian roberts. >> they weren't out with their first earnings >> first loss report >> well, this is -- >> report -- the financial report yeah, it's not -- >> part of what's happening, by

the way, is they took a big hit on employee compensation that was -- >> that was what struck me >> it was a huge piece of it that was almost inevitable i think most of the analyst and investors -- >> it's almost $1 billion. $894 million in stock-based compensation >> there was something that was going to happen because this was stock that for the last four years now finally was rolling through. that number should come down hopefully over the next several -- over the next several quarters, and should definitely not get larger that's the good news the revenue number has improved. >> revenue number improved greatly. it almost doubled. the revenue went from a $397.2 million to $776 million. that's impressive. if there's a metric you are looking for that was better than expected, that was the number. what this got me back to on that stop compensation and that all rolling in, it was because of the restricted shares that were out there. that's when these bankers say don't count that in the ipo was what's coming. it needs to be counted because it's real money, and you see it quickly after a launch for the

ipo of these things, and it should happen with uber too. when people say, oh, the clean innocent is not to take the stock compensation that's just a load you have to take that and consider that that's real money that comes in to >> for better or worse, investors don't seem to be taking the loss in a bad way.

snoo overall do you think it's 20% of the -- is lyft at 20% now, 30% what are you thinking? >> is it an identical experience in your view does it make no difference whether you call a lyft or an uber i'm not talking about uber eats or any of that other stuff in california or san francisco it's a relatively 50-50 marketplace, right in new york city uber clearly has a huge -- >> like what >> nine out of ten >> maybe sech out of ten new york is probably less so there are the same drivers >> i hate when they cancel >> this is why you go to -- by the way, obviously anywhere outside of the united states, it's uber. it's unioner or something else you know, you go down to brazil. >> you need both

>> is this two uber accounts or another lyft >> i will say this, joe, and i don't know if we're breaking the terms of service here. technically uber is not -- i don't know if this -- i know it's uber. technically not supposed to take passengers that are under 18 years old by themselves. really they do all the time for whatever it's worth, the policy -- >> lyft or both? >> i know it's an uber policy. i don't know if it's a lyft policy if you are under 18 and without an adult in the car, they are not supposed to drive you.

>> we have other news. the rules -- >> the rules are made to be brokeern >> i understand. >> separately lyft announced it will soon be ofrgs rides in suburban phoenix now the reason this is important is it's operated by self-driving waymo cars ywaymo, google cars will initially deploy ten vehicles with safety operators behind the wheel for the next few months. users in phoenix will be able to choose whether they want a normal lyft car or a robo taxi waymo has been testing its robo taxis in suburban phoenix. it marks a big step forward in the partnership between those two companies, and they a step closer to bringing self-driving taxis to markets we just talked about where this

will happen, when it will happen first. obviously, there's a grid and the weather is good in phoenix meantime, when we come back, a lot manager on squawk. big news from google, google ceo, out with a new op ed in the "new york times" emphasizing his company's commitment to privacy. a lot of people have had questions about privacy in silicon valley, and we're going to show you the highlights about what he is saying negs i'm working to make each day a little sweeter. ♪ to give every idea the perfect soundtrack. ♪ to fill your world with fun. ♪ to share my culture with my community. ♪ to make each journey more elegant. ♪ i'm working for all the adventure two wheels can bring.

♪ at adp we're designing a better way to work, so you can achieve what you're working for.

tthis is where i trades. and manage my portfolio. since i added futures, i have access to the oil markets. and gold markets. ok. i'm plugged into equities. trade confirmed. and i have global access 24/7. meaning, i can do what i need to do. then i can focus on what i want to do. visit your online broker today, to learn more.

skbloinchts still to come, fall-out from trade talks. we'll talk about tuesday's big sell-off and how you should prepare your portfolio ahead of friday's deadline for a tariff hike the clock is ticking we'll get you ready. check it out one day, 17 hours and counting as we head to a break, take a look at yesterday's s&p 50000 winners and losers

when you retire will you or will you just be you, without the constraints of a full time job? you can grow your retirement savings with pacific life and create the future that's most meaningful to you. which means you can retire, without retiring from life. having the flexibility to retire on your terms.

that's the power of pacific. ask your financial professional about pacific life today.

we've been watching the markets today. stock market so far is holding up there at least relative to what we've seen the last couple of days when you look at the futures this morning the dow futures are

indicated down by 61 points. s&p futures off by just over six and a half, and then the nasdaq is off by about 17 trade fears continue to crush the markets with the dow lodging its worst day since early january. pit that in context. >> by the way, throw in this wrinkle of iran, if you want, this morning, because i think that they're going to be some people focused on that more than they have been, obviously, thus far. >> i think you're in that environment now where uncertainty is rising. obviously, the tweet on sunday hitting markets where we now have to think about the possibility of that 25% tariff step-up, and the risk of further

escalation it's in terms of sectors most hit by the tariff step-up. our work shows tech ask industrials getting hit the most, and they were leading the market lower yesterday >> what are you doing about that >> we're -- we still think there's a path forward to positive trade outcome obviously, risk of escalation rising we still like the tech sector given the growth back drop >> did you buy some yesterday? i know people who were buying yesterday. >> yeah. i think a number of investors saw value opening up for the first time in a while. this is an opportunity if you think there's a path forward >> opportunity or bust >> opportunity you know, the seconders and the groups and styles that are in strong uptrends when those take a hit, a correction bhoel growt

sparks unless we go into a recession, which i don't expect and certainly not a recession based on, you know, escalating trade tension, i think whatever was working, i think will continue to work >> so just in terms of trading this situation, first of all, you're -- are you trading the situation at all >> it just happened. we tend to be long-term players in this market just because of the size of the assets that we manage. obviously, when opportunities arise, you know, we're going to take advantage of it >> is there -- so do you think about apple in the context of china? >> in terms of -- >> the risk, yeah. >> i think you're in an environment where the u.s.-china

situation is one likely negotiation over many over the next few years, and you see p ale shifting its business towards more services growth areas, and away from the tech hardware that is, say, exposed to potential tariffs >> you were about to jump in there. >> i'm just saying, you know, when you look at the last few days in the context of what is happening over the last few months, you know, the p.e. has gone from 13.6 to 17.2, and now at 16.9. we need to just keep perspective that the market has gaunl up a lot in a straight like obviously what's happening over the last few days is trading a

little bit of an air pocket on the valuation side overall when you look at the fundamentals here, earnings season for q1 is now almost done 88% of companies reporting everyone was looking for a 4% contraction in earnings growth, and that's actually now switched over to a very modest expansion. even the narrative of an earnings recession is starting to not come true, and so the fundamentals overall remain pretty robust. you know, just yesterday triple b credit spreads went up a few basis points financial conditions remain pretty accommodative >> i'll tell you what worries me, and i know there's some irrationality to it. what worries me is that you and keith with each other, and, b, everybody who has come on the air in the past two or three weeks seems to agree with you as well, and seems to suggest, yes, there won't be earnings recession. the world is great, and they can't see -- they don't see any obstacles in front of them even with iran and china and everything else.

everybody says relatively -- if rationale minds operate, which people think they will, that some relatively smooet sailing ahead. that's usually when the waters get choppy >> yeah. well, so the bear case is that, you know, tariffs increase or this becomes a long drawn out affair, and that profit margins start to erode, and if product margins start to erode, even in a rising earnings growth environment, free cash flow is going to grow at a lower rate than it otherwise would. that's going to require lower multiples. i think the risk is that the valuation is wrong that it shouldn't be 17 times forward pe, but maybe 15 or 16, and you can have that without really the world sort of turning upside down, but at the margin things are going to be less good than they were i think that is a fair risk, and we'll see. >> fair enough thank you, guys.

appreciate you coming in appreciate it. >> coming up when we return, a lot more on "squawk box. we're going to tell you what special surprise tim cook brought it omaha from berkshire hathaway annual meeting. plus, john lonsdale will join us to talk about the wave of ipos, when wealth means for communities in san francisco and california also, want for talk to him about privacy in his op ed approval. also, as whaed to a break, honda shares taking a beating this morning after reporting a huge earnings miss overnight. again, that stock down close to 3.5% you are watching squawk on cnbc. geico makes it easy to get help when you need it.

with licensed agents available 24/7. it's not just easy. it's having-a-walrus-in-goal easy! roooaaaar! it's a walrus! ridiculous! yes! nice save, big guy! good job duncan! way to go! [chanting] it's not just easy. it's geico easy. oh, duncan. stay up. no sleepies.

it's geico easy. the ai i want? well, insurance it's all about trust and speed. i need it to guide this analyst to customize flood coverage for this house. so that this team, can inform this couple, that their payment will arrive faster than this guy. hey. ♪ ♪ so whether i'm processing claims due to this fine gentleman... (car engine starting) or suggesting premiums for this young lady... ai can help change everything at this company. expect more from ai. ibm watson.

>> alphabet ceo out with a new op ed in the "new york times" this morning he says the privacy he says should not be a luxury good. he outlines two big promises from google. in it he says it will never sell any personal information to third parties, and you get to decide how your information is used now, he finishes by saying legislation will help work towards global privacy protections. goingle isn't waiting for regulations.

you know, the interesting part about this op ed is he does make the case for all the data they do have to collect that's huge part of the op ed, which is to basically say, look, we are all beneficiaries in ways because of the data they collect not only on us individually because they can then help us figure out where we're going in temz of our mapping or this or that, but that for -- to benefit everybody, they need to collect the date kra and aggregate the data so when you are driving, for example, you get all the -- >> that's a stupid argument. i should be able to wave into that or waive out. i shouldn't -- for the benefit of the gsh to the good of the greater good, that's a dumb argument it never goes over well here >> otherwise, it doesn't -- >> that's how loif -- >> there are people that say that's like a herd or a weird argument >> it doesn't work, otherwise, though meaning, if -- >> it's not my -- i don't care >> then don't use it >> i don't i use ways

>> ways does it, too >> i allow ways to go, but i choose on ways when i use that i choose to say, yes, you can go ahead, and i will go ahead and grant you the right to do that i think with google sometimes you don't realize what you are opting into. >> so one of the things they are doing is doing -- effectively, it means you get to go without sharing. >> which is great. >> i think that long-term actually it won't be great because either everybody -- if everybody goes incognito mode, then the whole thing doesn't work >> you did that some of your web browsing don't you? huh? what's it called >> incognito mode. what are you looking at over there? >> i should be able to apt in for every single thing i want to use, every app i want to say, and i shouldn't say just by using google or the search engen that you can track me. >> no, but if you open up google maps -- >> which i never do. >> then if you don't open google maps, it doesn't matter. if are you a google maps user and you want to use it, it's not going to work properly unless everybody is sharing information. >> every single thing i think

ird get the opt in or opt out, allow me to do that on this app, on this app indication >> what if they say the app doesn't work >> i can make my choice about whether it's crucial or not. there are apps that i say forget it, it's not worth it. >> why do you share with ways? >> because ways i actually like. they're tracking my speed. they're -- >> all the ways data -- >> that i didn't realize my concern and i might stop using it at some point is this thing basically is like a governator zroo by the way, it keeps the data >> and that is something i think about on a regular basis it's something i really want out there because i'm usually driving the speed limit, but not always all right. when we come back, lyft posting results after the close yesterday. you can see the stock pop on the news before settling about even. right now it's up by about 11 cents. we'll break down the company's first ever public numbers next

through the at&t network, edge-to-edge intelligence gives you the power to see every corner of your growing business. from finding out what's selling best... to managing your fleet... to collaborating remotely with your teams. giving you a nice big edge over your competition. that's the power of edge-to-edge intelligence.

welcome back, everybody. lyft reporting its first ever quarterly results after the bell yesterday. the ride-sharing company beat on revenue but recorded a loss of $9.02 a share. >> wow. >> joining us now to break down that report is brent fell, managing director and senior technology analyst at jefferies. good to have you here. how are you doing? >> good morning. great. >> what was the metric you were most concerned about or interested in seeing >> i think it was a good first quarter, 5% top-line beat, 20% on the bottom. and they announced a partnership with google. everyone believed that waymo was

going to run over lyft with their own network, and they effectively teamed up with their autonomous cars on the lyft network, so both humans and robots driving together in harmony. and so, i think that was the good thing i think the bad thing was the ongoing losses the ipo has been tough because of the ongoing concerns over losing money they're going to lose $1 billion this year, but they did provide a pathway to profitability, so we believe over the next three years, they can turn break-even and continue to -- >> it will be three years before you think they make a profit >> we think about three years. in long term, they talked about a 20% margin. >> so, you have to be patient. you have to be willing to ride along? >> you have to be patient. you have 95% top-line growth, so there are not many tech companies growing at 95% this stock trades right around four times sales, which, if you look at the peer group, the peer group is materially higher so, we talk about it, that they are now trading the bottom

quartile of their valuation, but the top quartile of their growth and i think the concern really is just around uber. that's the big concern as well. >> can we ask about uber which is to say, why are you convinced -- when you think about profitability three years out, how you get there with those kinds of margins, given the sort of race to the bottom that both companies have been in and why do we think it gets more rationalized >> it's a duopoly today. there are questions, will goggle get in will tesla get in? >> in new york city it's not a duopoly because there's taxicabs outside. >> there is. in a lot of other markets, a duopoly in rideshare so, the rideshare industry itself and we think, again, uber is very global. lyft has said we're going to focus on the u.s we're going to focus on bikes, scooters, and cars and we're going to be singularly focused so we can get better margins in those businesses. >> can i just ask? there was an interview on npr this morning, and they were talking to a guy who's been a uber and lyft driver over the last five years, kind of one of the people going on strike

saying they haven't been treated well his point was, i provide the car, i provide the service, the maintenance, everything else that goes along. basically, all they do is run credit card applications -- you know, they're a credit card processor, and they maintain an app. why does it cost billions and billions and billions of dollars to do that >> well, it's early right now. the network build-out, right, the awareness build. i think over time it's not going to cost that, and i think that's the opportunity. again, today it's about gaining share. tomorrow it's about profits. and that's the story right now. >> but every ride they take right now loses them money, and that's going to continue to be the case if you're trying to restore to profitability, you're going to be giving drivers even less of that, and they're already ticked off. >> yeah. i think they talked about the contribution margin improving from the mid-30s to 50, and you're seeing a lot of costs decline -- insurance costs, other costs around processing. so, they're cognizant of this concern. i think what they've said is, look, this isn't going to happen this year. it's going to happen three years

out. and right now, the same thing's happening in uber. so, they're not two different stories. they're very similar stories they're on the same trajectory. >> what stock do you like better >> uber's not public yet -- >> i know, but do you think you invest in one or the other >> i think this is visa versus mastercard i think you can effectively look at both stories. they both have done well. >> thanks. >> thanks for having me. after yesterday's sell-off, our next guest says that the s&p, if the trade talks don't work out, will dip to 2,800 by next week. we'll tell you what you should be doing, perhaps, your choice w't your money. weon tell you what you need to do. that's next. plus, much more on friday's big -- demand the best. demand a cfa charterholder. cfa institute. let's measure up.

let's hold ourselves to the highest standards of ethics.

as investment management professionals, let's measure up. cfa institute. a trade deal stand-off global markets await higher tariffs coming later this week we break down the risk of trade negotiations and find out where you should be putting your money to work. rouhani gone rogue the iranian president announcing his country would end compliance with parts of the nuclear deal as tensions ratchet up in the region a look at what it means for your money, straight ahead. and time and time again we've seen ceos drilled by lawmakers over fraud, wrongdoing, and sometimes solutions to bigger social problems so, why has congress not called

boeing executives to the hill? we're going to discuss that and more as the second hour of "squawk box" begins right now. >> announcer: live from the beating heart of business, new york, this is "squawk box. good morning welcome back to "squawk box" here on cnbc i'm joe kernen along with becky quick and andrew ross sorkin u.s. equity futures are down at some of the worst levels we've seen, down 88 points now on the dow. the nasdaq indicated down a little over 30 s&p indicated down about 10. this is after a pretty rough session yesterday, although well off the lows it was down about 600 at one point, closed down four and change after the previous day saw similar numbers. rebounded all the way to down 60, so then we gave back another 400-plus yesterday, now we're down another 85 today. but all these figures are off

what are de los close to all-ti highs. lyft is reporting a loss of a little over $1.1 billion for the first quarter. the ride-hailing service reported revenue higher than wall street anticipated. it also said losses would peak this year and it saw a clear path to profitability in three years. that stock is down 82 cents. one of the early stock winners is video game maker electronic arts. it recorded quarterly profit of $1.31 a share, well above the consensus estimate of 98 cents it also reported better-than-expected revenue and raised its sales forecast and that stock is up 7.3%. and the day's most widely anticipated earnings report will happen after the bell today when dow component walt disney reports. disney's expected to report profit of $1.58 a share on revenue of about $14.4 billion disney's shares are up 22% so far this year. right now down by about 14

cents. okay, let's get to dom chu, who's looking at some of the big names that are getting hit by all this trade uncertainty this morning. dom. >> so, andrew, we're going to frame the discussion by looking at just what the s&p has done so far this year versus what one etf that tracks the overall chinese market, at least for large-cap stocks this is the s&p 500 versus the ishares china large-cap etf. spy the ticker versus xfi the ticker as you can see, over the course of the last week or so, especially at the end here, that gap has widened quite a bit, so an outperformance of the u.s. markets versus china now look at the stocks that have perhaps been the focal point of a lot of trade discussion, certainly with the market downturn yesterday, some of them dow components, but all indicative of a certain theme with regard to trade relations looking at caterpillar shares, they're down 0.7% this morning, nvidia is down 1% and nike down

0.25%. this follows on yesterday when caterpillar was down about 2.5%, nvidia was down about 3.5%, and nike was down close to 1.5%. the reason why it's important is because these three stocks are indicative of certain themes developing in china trade. caterpillar on the industrials side, nvidia on semiconductors, some say a real proxy for trade between the u.s. and china, and then nike, which has substantial business operations in the asiana pacific region and china as well. among the stocks moving this morning, joe, we're seeing a bit of carry-through futures pointing to a lower open following on yesterday's losses and these stocks may be some of the focal points for traders again in today's session, joe. back to you. >> okay, dom thanks for more perspective on what the trade setback could mean for the s&p 500, we're joined by david bianco, investment officer for the americas at dws group and mark santoli

talking about china, your problem is you don't think we get a deal for china, the s&p sells off to 2,800, which would be 5% below its recent highs, and you say xi just can't decree these changes. that's a rubber stamp, we'll do what xi says so it can be done in his view, but you don't think it will happen >> no doubt president xi is a powerful figure in china politics, but i think the issue is that what the u.s. is trying to get -- and it's an important thing -- they're trying to get more protection for intellectual property that's not something you typically find in a trade agreement. i think in order for intellectual property to be properly protected, it's a legislative matter it's one party in china, but it's a large party, and maybe they want to keep the mpc a rubber stamp and not have too much controversy on this particular issue i think the message is from china, we largely agree with you, but it's going to take time for us to get the type of

intellectual property protection reformations that you're looking for. so, this is the reason, this is the major reason why, unless trump is willing to be more understanding and patient, it's the major reason why i don't expect a deal to be struck this weekend. >> all right so, we go down maybe to 2,800, which wouldn't be the end of the world, down 5% mike, check these numbers out. so, then he thinks 2,750 to 2,950 range through the summer, exceeding 3,000 at some point, maybe not until year end 2019 or early 2020 and then he gives me all of 3,500, bianco does, 3,500 by the end of 2022. you're not even -- you're not a bull did you do the math on that? okay, so that's 3 1/2 years. that's like 3% compounded -- >> don't forget to add the dividend it's 7% -- >> not compounding it's not. >> don't forget the ten-year treasury yield at 2.5%.

>> you're not giving me anything here all you're really telling me is that maybe we go up instead of down or stay the same between now and 3 1/2 years. >> the message -- >> but you're not very bullish don't you think it could be far in excess of that or down to 2,500? give me something. >> i'm being quite constructive. >> you are 4% a year is constructive? >> so, if it weren't for the trade issue, we'd be talking about record expansion i expect the expansion to continue for a few years as well as earnings growth of 5% to occur for several more years, which is the basis of that price gain and then add 2% -- >> i'd stay out of the market if that's all i was getting it's not worth the risk. >> certainly it is when you consider the lower transaction costs of being an equity investor, lower inflation, which makes these returns higher real returns, not just nominal returns. then also, what's your alternative? >> i don't know. freights go up >> as david knows, the market overshoots, you know, whatever's

assessment of fair value all the time, so it could go wherever within that time span. i do think what is interesting about right now, like the 2,800 number in terms of a pullback range, that's what a lot of the technicians are looking at right now in terms of what might get priced in. i think we've got a volatility jolt certainly, the trade issue was the trigger, but what you saw yesterday was you had professional investors, a lot of these sort of systematic funds and things like that said okay, when volatility perks up like this, we step back and it was an across the board, we're trimming back. it didn't seem much more dramatic than that we're not coming off a particularly overstretched condition the way we were, let's say in january of last year. >> and i saw that at one point, it was something like 90% or almost 90% of all stocks were down, so this was just broad-based -- >> within about a half hour of close. it was pretty comprehensive. and that's both good and bad that both tells you, look, there's real distribution, people are taking a lot of profits here or trying to reduce exposure on the other hand, on a short-term basis, that means okay, fine, we got a little bit

out of the way. >> bianco, you've got all your money in munis >> no. >> what can you get in a muni right now? >> which is a good asset class, but -- >> can you get 2 1/2 >> yeah, 2.5%, 3% -- >> you have 5% in munis. why be in the market to get a 4.5%, 5% return between now and -- >> you have to subtract inflation from the nominal returns of any bond, but the point is i think the equity market still has attractive returns ahead. we're still navigating the market tactically -- >> sounds like fair value you think right now. you obviously think we're very close. is the market overvalued or fairly valued? >> last time i saw you i said fair value from summer to autumn 2,850 is a level from which we think we can reasonably pivot a few percent from whether the trade issue's looking better, which i thought a few weeks ago, to whether it's looking worse. so i do think we can go to 2,800. but we're not panicking. we're looking to be opportuni

opportunistic, we're picking our spots. the communication sector is having very little sensitivity to any of this, the health care sector, and there are some areas where we're concerned -- industrials and materials as well as semiconductors. >> just holding on to the 50% gains since 2016 -- >> yeah? >> just holding onto it, i guess -- >> 50% >> november, yeah, the nasdaq -- >> nasdaq, okay. >> well, okay. >> no, no, i'm just trying to figure out what we're talking about. >> is it 48% 45%? >> it's a lot. the gains are significant -- >> i guess it really hurts you that it did that -- >> no, i just feel like we're rounding up all the time i don't know what -- >> what's the nasdaq since the election >> i agree, the nasdaq's 100% -- >> okay. >> 100% -- >> you'd rather have 47.5% -- >> no, i wouldn't rather have anything i'm just trying to figure out where we're going to gauge ourselves -- >> it's up a lot if we could just stay where we are, that's the actual -- >> exactly the market doesn't kind of owe you anything from here it's performed really well it's coming off a level that has priced in generously very good profits and a good economic

situation. so i don't think that you look at it and say, uh-oh, we're deficient here on the other hand, we haven't decisively gotten escape velocity ahead of where we were trading in december or january so, we're kind of consolidating some very strong gains i think is the way to put it >> you think that trade matters more than the fed, david >> yes. >> or do you just think the fed's out? >> look, as long as the fed doesn't make any mistakes. the trade issue should matter more than the fed. and i think in the autumn, we'll get a lot of talking about the fiscal situation in the united states, which i think is healthy, but it's obviously a political issue and we've got debt ceiling and budgetsand sequester to deal with around september/october. but the point is -- >> i thought the fed would matter more, if the fed actually sounded like it was going to move one direction or another, the market would follow that far more quickly -- >> the thing is, in my view, the fed should be neutral -- >> right. >> -- for at least the next 9-12 months -- >> as long as they stay on that path. >> as long as they stay on that path, they shouldn't be a swing issue. the trade is the swing and the

eminent issue, and i think we're going to need to wait a little longer for a deal, and while we're waiting, we'll be subject to the 25% tariff. it's reason for the s&p to dip by about 5%, not worse than that. >> even if the 25% is only on the $200 billion and not the additional $325 billion? >> the addition yard line juan i'm expecting not to carry in fact, i would expect that this 25% only lasts for a few months hopefully, at the g-20 meeting in late june, that might be the right stage to strike a deal and put this entirety behind, and that would open the door to something like 3,000 on the s&p by the end of the year. >> all right, david and michael, thank you. the s&p's probably up 42 or something? >> right. >> but nasdaq probably over 50, right? dow probably, what, mid-40s? >> yeah, sounds right. >> okay. i'll make sure i get that exact numbers. when we come back, the ipo boom having an impact on real estate in silicon valley plus, google's ceo speaking out

on privacy we will talk with vc investor joe lonsdale about the ipos and the landscape. and coming up later, hearings on the hill are common for companies in trouble in the public's eye so why haven't boeing's executives been called to 'lta autsty? wel lkbo that. stay tuned to "squawk box. most of us don't know how much data we use.

but we all know we're paying too much for it. enter xfinity mobile. america's best lte, with the most wifi hotspots combined for the first time. when you're near an xfinity hotspot you're connected to wifi, saving on data. when you're not, you pay for data one gig at a time. use a little, pay a little. use a lot, just switch to unlimited. it's a new kind of network. call, visit or go to xfinitymobile.com.

welcome back to "squawk box. the futures right now indicated almost triple-digit losses on the dow, down 97 the nasdaq indicated down 33 and change s&p pulling back to the tune of 12 points this morning uber's public debut is just days away, and drivers in more than a dozen cities are planning to strike today. in the northeast, they're striking for two hours, from 7:00 to 9:00 a.m. in the morning, right in the middle of rush hour. and even longer in some cities some of their major demands include higher wages, job security, and regulated fares. okay, coming up when we return, the new wave of wealth generated from the ipo boom is putting a lot of pressure on an already tight housing market in silicon valley. plus, the ceo of google says privacy shouldn't be treated like a luxury. his comments and reaction right after the break. then later, iran's going to stop complying with parts of the nuclear deal we're going to talk about the global economic impact of that

and the ultimatum the iranian regime has made. take a look at the aflac trivia question. what is the oldest continuously inhabited city in the world? e sw wn quk" returns. aflac! but not when to use it. do i use aflac when the kids get slime in the plumbing? no. that's home owner's insurance. slime in my motorcycle. no. that's motorcycle insurance. slime everywhere? ughhh nooo, there's no insurance for that. do they help when i have bills health insurance doesn't cover? yeah! that's it! aflac! gross guys. get help with expenses health insurance doesn't cover. get to know us at aflac.com

here is the answer to today's aflac trivia question -- what is the oldest continuously inhabited city in the world? that was the question. the answer -- did you get it, joe? >> i don't know of thought -- >> damascus area. >> athens is in there, too okay, let's talk silicon valley alphabet ceo sunnedit pichai out with an op ed in "the new york times," saying privacy shouldn't be a luxury good and promises from google it will never sell any information to third parties and you get to decide how your information is used. joining us now to talk about that story and so much more, we're going it talk a lot about what's going on in the valley, in real estate and how it's really impacting people there as well, is 8vc founding partner joe lonsdale good morning. >> good morning, andrew. >> so, joe, help us here you read this op ed. you were just in d.c everyone's talking about privacy, right

that's the central issue does this, you think, placate people >> you know, i thought it was a good thing to say and a good thing to do. society has to decide what the rules with but i think we're misunderstanding the basics of what's going on here it's actually a feature of capitalism, not a bug, that when you create value for others, you can make money so we have a trade in technology you can make oftentimes where you do something for free and -- >> but i guess the issue is -- and look, becky and i were just debating it, like google maps doesn't work very well unless everybody shares their information. even if it's aggregated. >> of course that's the point, is that these things have network effects when everyone's on them and you're getting data it's helpful but it's a great agreement to make as a society that if you want to take your data back out, you should be able to do that. >> that's my point, i want to be able to opt out. and my other point is, i never

thought about doing this before because when you're aggregating and keeping this so you can't figure it out, that's one thing, but i think they've made too many mistakes. not google itself, but technology companies as a whole have made too many mistakes with data, which is now why people are pushing back. >> and i think that's a fair point, but i think the title of this article's ironic because he says privacy should not be a luxury good, but frankly, this is a luxury concern. this is something we care a lot about in new york and d.c., thinking high level about policy this is not the biggest issue facing the average person in midwest or silicon valley. >> a separate privacy question uber's going public. we were talking about lyft for example. i can see a day -- and these are companies that don't make money doing their traditional business they have enormous amount of data, right? they know that i travel from here to here and then maybe they'll know that i go to these stores -- >> they do, and they have abused it in the past, uber in particular. >> and that i'm -- but they haven't sold the data yet -- >> no, but they have threatened journalists to say they're going to look into those things -- >> yes, under the old --

>> regime. >> under the old culture, the old regime but my question from a business model perspective is, to make some of these businesses work, i could see a day where a lyft or an uber says, you know what, we are going to aggregate all this kind of data, we're going to sell it to merchants who want to know whether this guy, you know, we drop him off at delta, he's more inclined to use delta than he is to go to macy's or whatever it is, and is that a good thing or a bad thing if it keeps the price down i might be okay with that. >> it's a trade-off. so, i think they can give an option, we're going to use your data and you're going to pay this much or we're not and you're going to pay a little bit more i think that's a great trade -- >> as long as i have the choice. >> as long as you have the choice but i'll bet you 98% of people are going to say i want to pay less. >> but when we say the choice, the choice is to use it with the data turned on or off or is it to use the app at all or off because that's going to be part of -- >> that's the problem, with so many of these apps, you can't use them at all if you don't basically offer, here's complete run of my phone and every piece

of information and contact -- >> there are different ways you judge monopolies in our country. there is the rule about consumer pricing, but there is something else you're saying about maybe you should have a choice whether or not you use it because there's not a competitor you can use it because there is a monopoly -- >> but i think it's okay if you tie it to pricing and i pay more if i don't give you that i think that's a fair trade. >> i think that's where we're going to end up with this privacy talk and there's an option i'm terrified by some of the stuff in california, where they want to force companies to pay for using the data and some way the state makes up i think that's ridiculous -- >> what about the idea that you own your own data and you should be able to sell the data itself? >> i think if a company wants to enable that, i think that's fine, but i think forcing companies to do that will be really bad it's going to be really bad for start-ups because it's going to make it a lot more expensive to start things when you have all these rules. >> talking about start-ups, let's talk about the decdecacor or unicorns going public. >> it's a big year. >> it is, but you have a concern what it's doing to the culture of the valley and real estate in the valley and everything else. >> it's a mess out there right n

now. generally, wealth creation is positive, but it's increasing the demand for homes and not the supply 40% of the bay area, the land is used for grazing cattle because we're building one-third as many houses per year as in 1970 when you have an increase in demand -- >> 40% of the bay area is for grazing cattle >> yes >> what do you think is sf bay -- the entire area >> fly over it you'll notice. there's tons of great, beautiful parks. it's great i'm not against having open parks and spaces -- >> good. >> at some point, when people next to me are commuting three, four hours a day because they can't afford a house, we need to recognize the problems. >> beyond meat is going to take care of that. >> beyond meat will also take care of that, but it's really the fake environmental causes, and it's really what happened in the '70s as we said, you can't keep local development money for local uses, so now everyone's against building we have to fix the rules again so they're for building. >> i would imagine in california that's a hard thing to do.

nobody wants to do that at the moment. >> i think the tide's turning. i think you're starting to see 10,000 people leave per year because of the housing costs and all of our companies are not able to hire or scale. here's why it's a national issue that people don't realize. if we were able to bring down the prices of housing in california, wages would go up -- so many jobs would be created in the bay area that the wage competition around the rest of the country would raise wages a lot. there's a lot of studies on this so it's hurting the whole nation if we don't have -- >> hold on so, what would be a benefit to san francisco, effectively, because you're going to get all the talent -- you just said like a sponge, you're going to suck all the talent to san francisco -- >> not just tech talent, though. you create all this demand for services like, restaurants are closing down in san francisco because they can't afford workers because -- >> that's like a yogi bearism. nobody wants to go there anymore because it's too crowded. >> it's what the numbers say it's good for the whole nation if we fixed this problem it's a huge problem that we're not building houses in the

high-growth areas. >> why don't you move your companies? >> it's a network effect like with the monopolies. when you have things going and you have people there, it's easier to build there. >> what do you think of all the people who have moved to austin for example or other -- >> i am building companies in austin i am building places elsewhere you have to try building elsewhere because there's not enough inexpensive talent, basically, to do it. >> is it the talent or really just a housing issue at this point? >> i think the housing issue has driven up costs much, much more than people realize and that creates a talent issue because when people -- >> when people talk about people leaving california for texas, for example, they often talk about it in the context of taxes. but i've become convinced it's actually a housing story. >> yeah. i mean, the taxes don't help, but the housing story to me is the bigger story that's the thing that's hurting economic growth. it's hurting inequality the most because if you're poor, you can't afford to live in our economy. i think it's ridiculous. we've got to fix it. >> final question, what do you think of the ipos? uber is coming up friday. >> you know, i'm bullish on uber long term.

i guess there's privacy stuff you mentioned, but i think you're right i think their value's extremely high in terms of data they have, and i have no idea about the pricing in the near term, but i think it's going to be up in five years. >> fair enough joe lonsdale, thank you very much. >> boulder, joe? companies going to boulder if you have to choose austin or boulder, i would think boulder. >> you know, i was just talking to the governor and there are smart guys there, but austin's where i'm -- >> plus you get wasted thank you. >> joe's like, i've got to get out of here. >> there's that! >> okay. when we return, new hampshire governor chris sununu's going to talk tariffs and talk impact at the state level. he's our guest in just a couple minutes. you don't want to miss that. as we head to break, look at u.s. equity futures at the hour, in the red 91 points off on the dow, nasdaq looking to open down about 30 poin, e p tsths&500 off about 11 points "squawk" returns in a moment

one-millionth order. millionth order. ♪ there goes our first big order. ♪ 44, 45, 46...

how many of these did they order? ooh, that's hot. ♪ you know, we could sell these. nah. ♪ we don't bake. ♪ opportunity. what we deliver by delivering.

but we all know we're paying too much for it. enter xfinity mobile. america's best lte, with the most wifi hotspots combined for the first time. when you're near an xfinity hotspot you're connected to wifi, saving on data. when you're not, you pay for data one gig at a time. use a little, pay a little. use a lot, just switch to unlimited. it's a new kind of network. call, visit or go to xfinitymobile.com. still to come on "squawk," so much coming up. impact of trade talks and tariffs at the state level

governor chris sununu joins us after the break. and later, will boeing executives get called to testify in congress over safety concerns of its 737 max airplanes that's the question. they haven't been called yet will that change we'll discuss it and then later, are you ready for this the iranian leader goes rogue, announcing they will stop complying with parts of the iran nuclear deal and begin building stockpiles of enriched uranium and heavy water used in nuke rear reactors. the impact, straight ahead pnc bank has technology to help make banking easier,

like... a business borrowing solution to help get a little more space with a lot less mom. or home insight, to search for a new house within your budget. because, they really need their space. pnc - make today the day.

welcome back to "squawk box. the futures just about down triple digits, 99 and change on the dow. right now the nasdaq indicated down 33, and last but not, certainly not least, the s&p indicated down 12. we have that on the top of our board. countdown's on friday morning, the white house is expected to follow through on a threat to hike tariffs on $200 billion worth of chinese goods it's really more like thursday night is what it sort of seems like, 12:01 a.m. that's semantics

for a look at the impact on trade tensions on the states, let's welcome new hampshire governor chris sununu. governor, thanks for joining us. we'll get to that in a second, but you're down here trying to steal more new york businesses for new hampshire. you admitted that freely. >> it's like, i have a catcher's mitt, the businesses coming out of new york and connecticut up to new hampshire, it's phenomenal so, yeah, i come down and poach businesses all the time. it's great. >> that's what senator scott from florida used to talk about. new hampshire as well. >> look, we're absolutely -- we have the lowest unemployment rate in the country, the lowest poverty rate in the country. every time new york passes a law down here, it's like the new hampshire jobs act, basically. and we come down and steal more people because you guys -- the state of new york, not you per se, but -- >> no, i don't live here anymore. >> what drives business, what drives personal freedom, personal prosperity. we can offer that and we -- >> live free or die. >> that's it it's not four words on a license plate. it's really how we live in new hampshire. >> and freedom is more important

than free stuff. need to say that occasionally. >> and when you get results, you can show those results and those build on themselves. especially this day in age, businesses will leave on a moment's notice if you're not giving them a fair -- >> so, ariffs. under no circumstances are tariffs useful or a positive did you say that or -- >> i think we all -- we all oppose tariffs, but they're clearly being used as a leverage point to get -- >> are you in favor of the way they're being used right now >> no. i mean, look, ultimately, does it get us a better long-term deal with china? i mean, that's the hope, and i really believe it will -- >> you do, then. so it is okay -- >> absolutely -- no -- >> so you do like tariffs. >> no. i'm saying, if that's the strategy the white house is going to take, and i'm not going to tell them the strategy they should take, to get a better long-term deal, that could be a very good thing -- >> could we have done it without tariffs? >> i don't know. ask larry, you know. ask your buddy, kudlow he'd know better than i. but looking at the u.s./canada/mexico agreement, used tariffs in that case.

that is a good deal. congress should get off their butts and sign that thing. as a border state, our number one trading partner, it's important to get it done. >> there are republicans, including a senator we'll be talking to later this morning, who are opposed to that happening without actually seeing the tariffs come off, because there are still existing tariffs for aluminum and steel that are applied to both mexico and canada. >> at the point of ratification, my understanding is the tariffs will come off in conjunction with that. that's exactly what will happen. this idea that the white house won't live up to their agreement to remove the tariffs is silly because that would affect all their subsequent negotiations, i.e., china. so, the white house has actually put themselves in a position to say, of course we're going to remove the tariffs and we have to remove the tariffs because we're doing this with unilateral agreements across the board. that's why this agreement came first, why it's put pressure on europe and subsequently now real pressure on china. >> their concern, though, is that these were tariffs put on saying this was a situation of national security, that these are our allies, not our enemies, and so we shouldn't be using tariffs being put through the idea, through the guise of

national security. >> look, i don't like the use of tariffs. don't get me wrong i don't think any of us do -- >> i'm putting you in a position of having to defend this. >> do you believe that a long-term agreement will eventually happen with china i do do you believe that tariffs will ultimately come off? i do is that probably a good sign to buy into the stock market? yeah, it probably is so if you think long term -- and as a governor, that's my job, not to think politically, but think long term, what's going to help the economy and make trade better, that's ultimately where we want to be. >> i'm pitching a reality show where instead of like, somewhere you'd live with a different wife or something like that and see how it goes, this is going to be -- >> you're going to put someone with sununu? >> no, switch governors for a month. you're going to connecticut. he's coming up -- >> i'd love to i'd fix connecticut in 20 minutes. >> what would you do >> i'd make them manage. the problem with places like new york and connecticut and california is they don't manage themselves they don't put themselves in a position to be successful because they're worried more about the politics than what

actually gets better results when businesses scream to the state of connecticut, cut taxes, stop abusing us or we're walkin away and they did walk away. and what was connecticut's response nothing. it's insulting so, businesses are saying, we want to work with a government, we want to work with communities and administrations that actually listen to us. that's what new hampshire does tennessee, texas, nevada, utah, idaho, these are the states that i'm competing with to get business it truly is an international market. >> you've been in a lot of states that don't have big pension problems, like connecticut, new jersey, illinois, new york how do you deal with that when you're dealing with legacy pensions that have been set up for state employees? >> you reform -- you talk about whether you're going to have defined benefit plans or defined contribution plans you actually challenge yourself, take the political hit, so to say, to do the right thing when you do, the results are phenomenal, people come in, and you know, you build that, quote, political capital, but you don't do it by worrying about the politics >> if you ran on that, you might not get elected is the -- >> you can't worry about that.

that's the problem everyone worries about getting re-elected right after they get elected. when you take politics out of the equation, you take that variable off the table, amazing things can happen. you can work bipartisan. i'm from a very purple state we're forced to work together. and it's given us some great results. >> are you a net payer to the federal government or a net receiver >> we're a net payer not by too much. we expanded medicaid we used to be a net payer. now that we're part of the expanded medicaid, we're a bit more on par. let's cut to the chase, we're a very wealthy state, have high per capita income, lowest poverty. we do very well in new england we have a young population and young people moving in for the first time it's about promoting what you have i don't have a sales tax i don't have an income tax we really believe in personal liberty. at the end of the day, those aren't just nice talking points, they really matter for businesses and families. people want to see -- >> and you think you could make it work here in new york >> ultimately, of course why wouldn't it work in new

york of course it would. >> i think the costs of this and this infrastructure are so much higher than the infrastructure that you have -- >> times square, all these lights and stuff >> but did government build times square no business built times square. businesses came in, believed in a state that was going to support them and then the rug got pulled out from underneath them. >> have we peaked the opioid epidemic >> look, we're on the down side of it, but there's a long way to go. >> on the down side? >> death rates and overdose rates have come down a little bit. but make no mistake, this is a long-term play i advocated very strongly to the president and the administration, we got a bigger increase in our grant than any other state to build a whole new system you've got to tackle the opioid and fentanyl epidemic very differently than anything we've ever seen before and we're building rural access to care, wrap-around services. the whole 28-day treatment, good-bye and good luck, that doesn't work it's a disaster when you build a system like that. >> if you -- put you under oath -- new hampshire -- >> i am the governor i always tell the truth. >> new hampshire maple syrup

judd gregg says it's far superior to vermont. you will swear that that's true? >> it's not even a debate. >> ice cream's better in vermont. >> it's not even a debate. i'm sorry, what, ice cream is better in vermont? ben & jerry's? >> is it not better? >> it's a great second-place choice >> you know, maple syrup on ice cream -- >> our new hampshire is live free or die. our maple syrup -- you can taste the live free or die in our ice cream. >> who doesn't who doesn't love -- you love vermont, too, though, right? >> i love vermont, too, but i love new hampshire. >> okay. you just hate those flyover states. >> no, no, no. that's not true at all >> let's just focus on picking on new york and connecticut. let's leave vermont out of the equation. >> go for it just not jersey. not the garden state >> i just had a discussion with one of your, the folks working here the difference between new hampshire and new jersey is our snow is white. new jersey's is gray and mucky -- >> oh, no. >> ours is yellow? what are you saying? >> and ours is tarex-free

>> governor sununu, thank you. >> spent a lot of time in north conway. >> that name is familiar, sununu. >> thank you appreciate it. we've seen dozens of ceos and corporate executives testify on behalf of their companies over the years, whether it's scandal, privacy concern or fraud. so, will boeing executives be next we'll talk about that after the break. check out european markets at this hour right now you actually see the dax in germany has moved up. it's up by about 0.1%. markets still in the red, both in london and in france. "squawk" will be right back. oh, wow. you two are going to have such a great trip. yeah, have fun! thanks to you, we will. aw, stop. this is why voya helps reach today's goals... ...all while helping you to and through retirement. um, you guys are just going for a week, right? yeah! that's right. can you help with these? oh... um, we're more of the plan, invest and protect kind of help... sorry, little paws, so. but have fun! send a postcard! voya. helping you to and through retirement.

you should be mad at airports. excuse me, where is gate 87? you should be mad at non-seasoned travelers. and they took my toothpaste away. and you should be mad at people who take unnecessary risks. how dare you, he's my emotional support snake. but you're not mad, because you have e*trade, whose tech helps you understand the risk and reward potential on an options trade it's a paste. it's not liquid or a gel. and even explore what-if scenarios. where's gate 87? don't get mad. get e*trade and start trading today.

but we all know we're paying too much for it. enter xfinity mobile. america's best lte, with the most wifi hotspots combined for the first time. when you're near an xfinity hotspot you're connected to wifi, saving on data. when you're not, you pay for data one gig at a time. use a little, pay a little. use a lot, just switch to unlimited. it's a new kind of network. call, visit or go to xfinitymobile.com.

welcome back to "squawk box. as the questions about the development of the 737 max continue to mount, why haven't boeing executives been called in front of congress? that is the question of the day. and phil lebeau joins us now with that story and maybe the answer phil >> i'm not sure the answer is something people will come away and say, maybe i understand it now. but you look at these congressional hearings, and we've already had a couple that took place earlier in april, shortly after the 737 max was grounded the faa and ntsb are scheduled to testify next week and were also at the two hearings held in march, but so far, boeing ceo dennis muilenburg has not been questioned, which is a little surprising to former transportation secretary ray lahood >> are they truly interested in total transparency do they want to hear from the top people and i think there's a little bit

of doubt for the moment here why the ceo has not testified and why hearings haven't been held >> it is a little bit surprising that we haven't heard from dennis muilenburg or boeing executives when you look at the history of other companies facing a crisis. look at oscar munoz in 2017. he was on capitol hill within a month of a passenger being dragged off a united airlines plane. go back to 2014, general motors ceo mary barra testified seven weeks after major ignition switch recalls that had a lot of people saying what's going on at general motors back in 2010, akio toyoda, the ceo, flew into japan, in d.c. one month after major recalls surrounding whether or not there was unintended acceleration issues with toyota vehicles. so, as you take a look at shares of boeing, we reached out to boeing, said why hasn't dennis muilenburg testified, has he been asked to testify? the answer is no, he as not been

asked to testify they are complying with requests for documentation coming in from congressional leaders. and we should also point out that we've reached out to senator wicker, who's in charge of the senate commerce, science and technology subcommittee, or committee, and he -- they basically say, well, look, we're focused on the faa right now at some point, we may ask boeing executives to testify, and that's their intent, but there's no indication that's going to happen any time soon >> hey, phil, how much of that is just because this is so complicated of an investigation? we don't know -- >> well, that's -- >> and look, you compare it to munoz. okay, that was one situation of one passenger getting taken off a plane, within a month, i would hope you know what's happening there. this one, you might not know for a while. >> what about the gm ignition switch, becky? >> that's little more complicated. but when congress did that -- >> that was under investigation -- >> toyoda and mary barra, in both situations -- like, i felt for mary barra because she was new on the job, just trying to figure this out. and my thought was that was just congress grandstanding and they're going to call them up

and may not get answers -- >> you make a good point, is congress grandstanding, which is what you hear from critics, who say, look, nothing ever comes out of these hearings. the counter is, at least you're holding the feet to the fire in a public forum of executives of a company that are in the middle of a big crisis. >> yeah, that's true i don't think they should get a pass on it i think that should and will eventually come, but let's bring in jeff -- >> real quick, let's go back to dennis muilenburg -- or jim mcnerney with the dreamliner battery issue. >> right, right. >> they said okay, we'll testify, we'll testify he never testified other boeing executives went there, but he didn't. >> i know we've got to get to jeff, but what about the faa in front of congress? it seems to me all this stuff has been signed off by them, including this latest crazy situation with this signal that even the folks at boeing didn't understand, and then when they finally did understand, they told the faa and the faa said, oh, it's fine. >> well, administrator dan elwell, who testified back in

march, he's going to be there next wednesday and we'll be watching these hearings and see whether these questions are being asked. but one quick thing, andrew -- that is an issue that is not just an faa issue. it's also a boeing issue because remember, there is self-certification going on here so, the question is why don't you have them there together, somebody at least from boeing so you can say, why are you doing it this way? boeing, what is going on >> jeff sonnenfeld is with the yale school of management. jeff, what do you think? >> i think you guys are doing a fantastic job of all the heavy lifting. i've been agreeing with you. i think you've created an excellent map. the school teacher in me just wants to create some of the categories of what we're just talking about in this prior discussion, between you and phil there's one category, of course, which is the cynical one, which is the grandstanding one we've seen congress is usually unable to escape the bait and jump into any area of controversy. and on the grandstanding theory, is that are they just too distracted with mueller and international crises right now to have the capacity

i would dismiss that one they have a limitless capacity for grandstanding. that's not an issue here that is detracting them. but there are the other two areas that you've raised one of them has to do with the complexity mary barra is the gold standard of response here we used to always use jim burke and tylenol recalled johnson & johnson. mary's was superb, and perhaps even better in many reasons. the magnitude of that, there was 129 deaths as opposed to 3 in the case of the johnson & johnson. but all those situations, becky, as you were asking, they all were a single manufacturer that had the sole responsibility over the entirety of the product. bp was a much more complicated mess you had finger-pointed between four different entities, halliburton, bp and others in this case, you have 900 vendors, so there is the complexity issue that's a major concern. and there's a lot that the company themselves is still just figuring out right now as phil was mentioning, the m cass system safety alert, the angle of attack alert system, they thought since southwest was

paying for it for a year and a half that it was even working for southwest. they didn't realize it wasn't engaged there. they themselves didn't apparently realize that it wasn't a standard package, you had to pay a premium for that safety so, the complexity is huge but a third one has to do with the number of the regulatory agencies involved is unlike any of the others. you have, as phil mentioned, the department of transportation or the faa, but the department of transportation, guy named skoegle -- i think his name is scott scogle he's attacking his own agency, saying that the faa's guidelines are not clear. you have the national highway safety -- the national traffic safety board -- they're involved in this, too we also have a criminal investigation happening at the department of justice right now, has tied the hands of management to be able to respond, and those are just some of the u.s. agencies investigating we also have the canadians, the europeans and the chinese. so, there are 15 different agencies investigating >> point made. >> management, as this guy calhoun, the lead director said, what can we say?

we're not allowed to say anything so, that's complicated it. >> point made on the complexity. but let me bring up a point that i think phil is making, and maybe put that to you. does boeing have some sort of magical status as being such a big and important company in the united states? phil made the point that you never saw mcnerney come before any congressional hearings, eve after the dreamliner fires is that an issue >> that's a great additional point on our map i cut myself off for once, i actually censored myself from going on longer, and that is the economic impact. this is 0.2% of the gdp people are talking about here, or maybe even 0.6% in terms of gdp growth that's a greater impact than the 35-day government shutdown would have, and a lot of, i think, regulators, are actually being responsible for once and not wanting to be too alarmist to complicate things more i'd let phil comment on whether or not we're going to see these planes cleared to take off in september, but we've seen this barclays downgrade coming out in the aftermath of them surveying

1,500 fliers who are saying if it's boeing, we're not going >> phil, what do you think >> look, in regard to whether or not we see these planes flying by september, i think that's the expectation within the airline industry, although there's still a lot of questions out there about whether or not this will get through all of the regulators around the world by then one quick point, becky boeing, when i talked with them about this story yesterday, they said, look, dennis muilenburg and other executives are happy to testify, but we think that, ultimately, it has to happen after all these investigations take place if that's going to happen -- >> i'd like to know -- >> -- you're looking at something that's way down the line, a couple of years, at least. i mean, it's going to take a long time for all of these investigations to play out >> if they did testify, and i think, phil, you'd agree to this since you also cover automotive, you're uniquely capable to look at this -- is what mary barra did is she didn't pinpoint what

the problem was. she said, here's what we know, here's what we don't know, here's our process to get to those answers. dennis muilenburg could comment on that. also what mary barra did immediately, she told us who on the board had oversight. we're only learning that now with a special committee but who in top management? mary barra put together her "a" team, including three rivals for her job that she had just gotten, to try to figure out who is going to lead the investigation, who's going to manufacture the replacement parts, who's going to distribute them. >> one other thing -- >> we've got ten seconds. >> real quick. gm brought in outside investigator and they said, you tell us what happened here you probe our company. that hasn't happened yet with boeing. >> that's a good point, too. phil, jeff, great to see both of you. thank you. >> thanks. coming up, senator rob portman of ohio will talk trade, iran, and more, right after the break. here's a look at the futures, now down -- improved a lite, wn3 in othdow.tl

plants capture co2. what if other kinds of plants captured it too? if these industrial plants had technology that captured carbon like trees we could help lower emissions. carbon capture is important technology - and experts agree. that's why we're working on ways to improve it. so plants... can be a little more... like plants. ♪

stocks under pressure. trade talk confusion helping to push the dow to its biggest loss since early january. futures are pointing to further losses on the open today new tension from a major oil producer iran says it's rolling back checks on its nuclear program one year after president trump pulled out of a multination

deal we will show you how the oil market is responding. and a speed bump in uber's big week drivers on two continents striking today for better wages just days before the company's marquee ipo. we'll take you to the protests live as 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 welcome back to "squawk box" here on cnbc, live from the nasdaq market site in times square i'm joe kernen along with becky quick and andrew ross sorkin i'm hearing from certain people, why do i have bagels and doughnuts behind me and you guys have the american flag and police and all that? my shot -- >> the shoe fits you get bagels and doughnuts. >> i got the guy with the -- i mean, it's good stuff, but -- >> what are they cooking up over there? >> yeah. anyway, futures right now -- but we digress --

>> you said doughnuts, andrew's like, "where?" >> thank you. >> what's your record, eight >> on our show, is eight or nine -- >> that is a sugar buzz, isn't it >> yeah. it's not good for you. not good for you don't do that at home, folks. >> you've got such a great figure, though, still. >> thank you. >> much harder as you get older, as you'll see. i think you gain like one pound for every year past 40 >> is that true? >> i think that's true unless you work very hard. anyway, down 75 points on the dow. i'm going to do the s&p next down nine on the s&p and the nasdaq indicated down about 24 treasury yields have not been -- greenspan wants us to put the ten-year on the bug to watch all the time that would have been a mistake, although we were down to 2.43% today. but if you're looking for 3%, 4%, it hasn't happened. >> somebody said what would you put money on first, 2% or 3% >> i know. i'm doing the opposite of what i think at this point. >> what's the opposite of what you think? >> 2%.

>> yeah. >> and i don't know why. i think we underestimated the inflation -- >> i think the global picture plays such a bigger role when you've got german bunds trading at negative rates. >> well, yesterday we had the discussion you weren't here, but -- yeah, you were here. no, you weren't here. >> i wasn't here yesterday. >> i'm thinking. we had the discussion. when we hear most people say that the next move for the fed is going to be a hike, i mean, i'm fully on board with that, but if i were to going against consensus -- and a lot of times, you should -- the hardest trade to do is, like, hang onto a stock that you think, maybe i've got a great profit, i'm going to sell it, and then it triples from there, or i can't sell it now. it's down 30%, then it goes down 80%. you know, the hardest thing to do -- you should add to your position, maybe. >> right. >> and sell the stock down and for me, if they were to cut, that would be a much bigger surprise than probably what ends up happening, right? >> probably. >> but i still don't believe it. >> there's just so many unknowns

>> okay. as joe mentioned, the futures, they are lower -- >> i mentioned doughnuts, actually. >> wants to go get some doughnuts. we want to show you how we got here here's what happened yesterday the dow posted its worst session since january 3rd, dropped as much as 649 points before closing lower by 473 points that's below its 50-day moving average. now, boeing had the biggest impact on the dow, accounting for nearly 100 points of yesterday's drop then the broader indices, tech was the worst performer, as semiconductor stocks pushed the sector lower. here are the stories investors will be talking about today. iran says that it is rolling back some of the curbs on its nuclear program put in place under the 2015 agreement president hassan rowhani says iran will stop selling excessed enriched uranium and heavy water to outside countries this is exactly one year after the u.s. pulled out of the iran nuclear deal rouhani also says iran will

enrich uranium to higher levels in 60 days, unless the other parties to the 2015 deal, aside from the u.s., can find a way to protect iran's oil and banking sectors from u.s. sanctions. crude oil prices today down nonetheless. you can see a decline of about 3 cents. wti trading at $61.37 a barrel lyft is reporting a loss of a little over $1.1 billion for the first quarter. the ride-hailing service did report revenue that was higher than wall street had anticipated. it also said that losses would peak this year and that it sees a clear path to profitability in three years. also, uber drivers here in new york as well as other u.s. cities and across the atlantic in london are set to stage protests today ahead of this week's expected ipo. the drivers are calling for higher wages and better labor practices from uber. this all happens on the very week that uber is going public it could create a little bit of a problem. we'll have a live report from one of those protests coming up later this hour. okay, what seemed to outside

observers like a coming trade deal between the u.s. and china has now become a very big question mark. the chinese trade delegation is due to arrive in washington imminently, but success is now apparently far from guaranteed eamon javers is in washington with the latest. >> reporter: good morning, andrew the stakes couldn't be much higher for these trade talks at the end of this week the president suggested he'll put new tariffs in place on china by the end of the week if things are not going well in the trade conversations. we do expect some members of the chinese delegation to start arriving today and then liu he, the key figure on the chinese side, to be in washington tomorrow an interesting wrinkle in all of this, the ustr, u.s. trade representatives' office gave us the impression yesterday that they were planning to put into the federal register a notice that would begin the formal process of putting those tariffs into place as the president has threatened on friday now, that notice was never filed in the federal registry yesterday. not clear whether that's definitive or not, that those tariffs will definitely not be

going into place on friday we're going to wait until the ustr office staffers get into the office this morning and ask for the nuance behind why that didn't show up as expected yesterday. but that might be something to watch here also something to watch is the political fallout from all of this we saw some surprising, possibly bipartisan support here for the president's position on china coming from one of his chief political nemesises here in washington, senator chuck schumer. here's what he said yesterday. >> i believe we ought to hang tough. there ought to be no rush to sign something that's just a photo op if we hang tough, we can really make progress with china >> reporter: so, we'll see those conversations continue throughout the next 48 hours here in washington and then the big question is will those tariffs go into place? we're told 12:01 a.m. on friday morning is when we expect to see the tariffs. everything is a go, according to the u.s. government officials that we've been talking to we're going to have to iron out later this morning that wrinkle

about why the federal register notice never showed up yesterday in public, and then we'll figure out where we go from here, guys. so a lot riding on all this. >> yep, eamon, okay. we're going to talk more on this for more on the trade negotiations, we bring in senator rob portman, republican from ohio and also a former u.s. trade representative thanks for being here. we've been getting into the specifics of what might have happened, and we finally decided that -- we didn't decide, but one of our guests who at least had a strong opinion is that the chinese overplayed their hand in terms of actually putting into administrative law some of the agreements that we thought we had arrived on and that when they pulled back on that, that lighthizer said we've got to draw the line right here do you know exactly what happened >> no, joe, i don't, but that sounds like a plausible explanation. i think it's broadly speaking what you're talking about, which is that the chinese had made

certain concessions in the discussions, and frankly, i think vice premier liu he wants to make these changes because they're ultimately good for china and good for trade, and not just with the united states, joe, but as you know, a lot of other countries are watching what we're doing and are prepared to be more aggressive, vis-a-vis china as well. but i think he probably also has had some issues with president xi, and you know, with the leadership in china, and one might be the inability to put it into statutory language. but there is some very significant structural changes, as you know, that we're asking for, all of which are very fair. and i do hope that vice premier liu he and his team when they come in tomorrow are prepared to deal with those. we have to deal with the licensing agreements, joint ventures, the general theft of technology and intellectual property so, it's more than just rebalancing the trade deficit. >> would you have ever five years ago thought that you'd say something like, i support this administration's aggressive action to address china's inequities through tariffs could you have ever seen

yourself as a tariff person? and there are a lot of people in that position right now, too, that somehow, it's distasteful and it's not -- wouldn't be the first choice but you've finally come to accept this is something that needs to be done is that where you are? >> yeah, i am. and as you know, i have been for a while in the sense that even when i was at ustr, china was my number one focus went to the wto and won the first case against them. i had a prosecutor just for china. we really focussed on it, because at that time, they were using some of the tactics that they have only increased since then to try to, frankly, take advantage of the international trade rules, even though they were in the wto. so, yeah, it was a time of reckoning, i think, in this last year where we have finally said, okay, we've got to resolve these issues so, i have been supportive of this, even though on other tariff issues, like 232, as you know, i have not been able to support what the president's been doing but here, i think he's right and i think the hope is that on

friday, we do not have to increase the tariffs on the $200 billion from 10% to 25%, because we'll get back to the discussions and because there will be serious constructive discussions in the next two days. >> so, what do you -- i don't know who your point of contact is for all this, but do you think there's a possibility that something happens before tomorrow it's tomorrow night, actually, or friday morning, however you want to characterize it. but do you think that that's actually possible that this all gets taken back? i mean, the markets would certainly like to know if there's a chance. >> yeah, i do. i do because ultimately, again, i think it's in china's interests to resolve these issues. and i'm going to choose to look at the doughnut rather than the hole how about that, joe? >> well, you know those little holes are good, too. what are they called munchkins? >> you don't have those behind you. >> no, i don't >> the whole doughnut. >> sir, can you give us a little bit of color on the meeting at the white house you were involved in on this topic and also where you stand and where you think the president stands

on auto tariffs? >> it was a good debate. we talked about the fundamental issues of trade, you know, whether tariffs make sense or not. ultimately, the goal of the united states ought to be to reduce tariffs and reduce nontariff barriers and i think that really is the question you know, by increasing tariffs, let's say, on china, in order to get an agreement, i think you can get a lot of consensus, including as we saw earlier from chuck schumer and a lot of republicans, because we understand that there's an imbalance now, that there are some unfair trade practices going on, but that shouldn't be the ultimate goal. the ultimate goal should be they have a world where there are fewer taxes, fewer burdens, and that's in the united states' interests -- >> what you're saying is the president was in favor of auto tariffs? >> well, i think he's intrigued by the idea, let's put it that way. i'll let him speak for himself but he i think has a little different feel -- >> was that the feeling in the room, to the extent that you can bring us insides that room >> it was a spirited discussion. i'll say that. but you know, ultimately, you've heard the president after the g7, he said this -- he said it on other occasions -- that he'd like to see a world where you

have a reductions of tariffs and tariff barriers on both sides. and i think, again, we need to keep to that objective if that's the objective, i think you're not only going to see a consensus in congress, but a better economy for the united states i think long term, by increasing tariffs on both sides, it's going to hurt our economy, not help the economy -- >> if there was such a spirited discussion, if you're an automaker today hearing our conversation, should you be anxious that that's where the president needs to go with this? >> we'll see we'll see. i can't tell you i really can't tell you and i don't think anybody else can either. >> senator, is the new nafta -- usmca -- is that going to pass >> i believe it will, becky. again, i may be looking at the doughnut rather than the hole here, being a little optimistic, but let's face it, it's a better agreement in every respect for democrats in congress. for some republicans, there are some concerns about it -- things like the minimum wage in mexico for some of the autoworkers or some of the rules of origin, domestic content rules, i do think ultimately it's a better agreement than nafta, partly because it's just updated, and i

do think if you're a democrat, you're looking at the alternatives of existing nafta versus usmca -- usmca is better, i believe, in every regard logic should prevail here, right? so, ultimately, this should pass. >> i like the hole better than the doughnut i do they're still 75 calories, 75, 80 calories, those little glazed -- >> yep, they are. >> hey, senator, i'd be remiss you know, we're both from cincinnati are there glimmers of hope i'm thinking 500 ball is not that far off i see glimmers i see some runs, i see some pitching is it possible the reds are maybe going to get to .500, or am i smoking something what do you think? >> again, i'm going to be optimistic here. i went to the game on saturday night, 9-2, incredible victory over the giants. more home runs were hit that night than almost the entire season -- >> first inning, yeah. >> but it was awesome. and our pitching's better. let's face it, we've got some of the best pitchers -- >> yeah. all right, i'll start watching

bengals, forget it, hopeless, done, but the reds -- >> not a bad draft we'll see what happens. >> thanks. >> good seeing you. when we come back, one of the quarter's most-anticipated earnings reports hits tonight. disney getting set to report second-quarter numbers our next guest says that he is looking closely at the guidance and whether the stock gets a bump then at 8:30 a.m., we'll talk inflation, growth, and interest rates with former philadelphia fed president charles plosser. that's coming off an important week for the central bank. stay tuned you are watching "squawk box" on cnbc

we see breakthrough medicines getting to patients in record time. at emerson, when issues become inspiration, creating a better world isn't just a result, it's a responsibility. emerson. consider it solved.

welcome back to "squawk box. take a look at the futures right now. we are -- well, we'll show you right now, we're still in the red. dow off about 72 points, nasdaq off about 24 points, s&p 500 off about 9 points. disney's set to release second-quarter earnings after today's closing bell can the company spin some magic in the second quarter? to review all of this, or preview all of this, ben dunbar is investment group leader at gerber kawasaki, also our own julia boorstin

ben, why don't you start off what are the numbers the street's looking for what are the most important metrics? >> well, right now the most important metrics are going to be guidance. ultimately, it's not about this quarter, it's about what's going to happen with disney plus, "star wars" land opening up later this month you know, they have all these great movies slated. so it's really how they think they're going to do the rest of the year this quarter's kind of this in-between time as they're releasing all these things. >> julia, having said that, though, there's a lot of anticipation and a lot of positive anticipation. the stock's been up over 20% as we head into these earnings. >> absolutely, becky i mean, i think this quarter's important because it's really the first quarter that we're going to see the combined fox and disney numbers together, those very meaningful. we already saw disney rearrange its reporting units, consolidating consumer products in parks to sort of simplify their reporting structure and also separate out the direct-to-consumer business. what's important here is this will be first time we see those fox assets integrated. but becky, i think there are two

key areas to watch here. as we wait for the direct-to-consumer streaming disney plus service to launch, there is a lot we could hear about the film business, especially after just yesterday disney announced three new "star wars" movies and delayed its "avatar" films and also, the theme parks, remember they have those big "star wars" lands opening, the one here in anaheim opening just later this month >> ben, let's talk about the stock, because it is up pretty significantly. people have really changed their opinion on disney and maybe on espn, too. what do you need to hear in order to think, okay, this stock has more room to run >> well, it has not been an exciting time to hold disney for a while, especially dealing with this fx/fox deal but finally, we are so excited, because with all this, you have "star wars," you have julio growing their users at 50%, 20 million users. there's so many different things going on with disney right now, and we're just really excited to see what's going to come with all of it. i could talk for an hour of

everything they have excited "star wars," "avengers," "avatar," every single thing that we have coming for the next few years with disney is huge. >> sure. but how much of that is already baked into the stock and what would be a metric that would make you say, okay, this is it, this is something the street hasn't figured out yet? >> well, look, the stock has moved a lot over the past year, but what has it done the three years before that? nothing, right so, really what we are going to want to see is a slowdown in espn you know, we've obviously had this issue with espn if we can see some growth in espn plus, that would be exciting, because they own some of the best sports content but really, we're looking at what the next six months of this launch of disney plus, what eventually these theme park numbers are going to be with the release of "star wars" land this month, so it's really what we're looking forward to. >> and julia, with the release of that, they've already done things like warned people that the crowds are probably going to be outrageous, you're not going to be able to get as many of the fast passes or things coming into that, so there are high

execations about that launch of "star wars" land. >> yes, they talked about demand, but they have also increased prices for the theme parks and they've rolled those out. so we might hear a little bit about how price increases are impacting attendance, also impacting spending once people are at the parks but i just have to say that disney does not provide actual earnings guidance. sometimes we hear from iger some insight into how booking trends are doing at the parks, what their expectations are in terms of up-front ad sales we have up-fronts next week, the up-front presentations next week, or even in terms of the film slate coming up, but they do not give actual earnings-per-share guidance. >> ben, when you compare disney to other stocks, other competitors in its same industry, what do you think? >> well, the question is, do you compare disney to cable companies or do you compare disney to netflix, right with the release of all of these different streaming services, disney plus growing, espn, kind of putting all of the fx and fox

assets in hulu, i mean, the cable companies have a lot of issues here. i think there's room for both netflix and disney obviously, people will look to bundle that whole disney, but the cable companies are the ones who you've got to worry about here why still have cable if you can get all these great assets with disney, all these great shows, basically, anything you want to watch, you can get >> ben, julia, thank you both for your time. good to see you. >> thanks. coming up, it's ipo week for uber, but today is protest day for some of the drivers. we're already seeing some activity here in new york, and a demonstration in london kicking off this hour with drivers calling for better wages and labor practices. we've got a live report just a couple minutes ayuned you're watching "squawk box" on cnbc build the nation's largest gig-speed network just to make businesses run faster. we built it to help them go beyond. because beyond risk...

welcome to the neighborhood, guys. thank you. there is reward. beyond the classroom... there is inspiration. ♪ ♪ beyond work and life... who else could he be? that's what i say. there is the moment. (laughing) beyond despair... there is hope. ♪ ♪ stay safe. i love you mom. i love you too, sweetheart. ♪ ♪ beyond treatment... ♪ ♪ there is care. say hi to grandma and grandpa. ♪ ♪ beyond technology... there is human ingenuity. every day, comcast business is helping businesses big and small go beyond the expected, to do the extraordinary. take your business beyond.

[kno♪king] ♪ memories. what we deliver by delivering.

welcome back, everybody. this is "squawk box," and the futures right now are under a little bit of pressure we had seen the futures down by about 110. that's improved to down just 47, but remember, this comes after a down day of almost 500 points yesterday. 450 was it at the end of the day? it was less than 2%. you are seeing the s&p futures down by about six and the nasdaq off by 17. warren buffett and apple are teaming up on a video game, or rather, in a video game. in an homage to buffett's start as a paper boy, apple released a

new app on its app store the game is called "warren buffett's paper wizard." it was unveiled at the berkshire annual meeting in omaha this past weekend, at which apple ceo tim cook attended for the first time the app allows users to deliver newspapers, first in omaha and then at apple park in cupertino. it's apple's first gaming app in over a decade. the game is free and the goal is to try and best buffett, who tops the leaderboard with over 15,000 points. the question is whether or not it's actually possible to beat him, and andrew, i know you've been trying. >> i started playing under the table during the berkshire meeting. i don't -- i know warren watches the show i'm sorry, warren, but tim would probably like hearing that i was playing the game it's a great game. my kid started playing the game. i probably should not have let them play the game -- i mean, i should -- >> addicting >> it is addictive one note, i'm told, and i feel bad for myself about this, but you told me and others did on twitter -- the leaderboard, if you're playing this, guys, it looks like we can all get on the leaderboard -- >> you thought you were number four or something?

>> i thought i was number four on the leaderboard, just behind warren i think the leaderboard may be a little fake. >> you think >> i think i think. >> you believed you were number four with thousands of people playing? >> i thought i was number four -- well, i don't know if thousands of people were playing. i was early, so i thought maybe i had got on -- you know -- i -- anyway, i was very proud of myself for a while years ago, i actually was on the leaderboard of subway surfers, which was a real leaderboard -- >> that's cool. >> and i was really proud of myself. >> so there's precedent for you being -- >> i thought i had a chance, yeah. >> on asteroids, on the individual machine, i used to be able to -- >> yeah. >> on the individual machine. >> i could, too. and that was impressive. >> i got to where i could go as long as i wanted on asteroids. there was a way of beating the game. >> so, i think we should all play this game -- >> they have a cream for that -- >> and see if we land on the leaderboard. and warren, i want to see if warren -- i want to see warren really play the game, and i want to see tim really play the game, and then we can see how the

leaderboard really stacks up that's my -- >> competitive nature. >> -- call to action. >> well, congratulations on your number four, you know, being in fourth place >> on a fake leaderboard okay, coming up when we return -- by the way, we should tell everybody the name of it, because if you go to the app store, it's not what you think it is. it's -- >> "paper wizard" or something -- >> but you can also put in warren buffett app and it comes up, too. all right, coming up, it is crunch time on trade with chinese officials due in washington for talks this week, we'll look at what could happen one way or the other the u.s. plunged into a trade war, and could there be fallout without a trade war? former philadelphia fed president charlie plosser will be joining us. much more on "squawk."

oh, sir. that was my grandma's. don't worry, ma'am. all of your stuff is in ok hands. just ok? they don't give two and a half stars to just anybody. here you go. what's this? it's your piano. hold this for a sec. we don't have a piano. no.. but the neighbors do. just ok is not ok. especially when it comes to your network. at&t is america's best wireless network according to america's biggest test. now with 5g evolution. the first step to 5g. more for your thing. that's our thing.

hey! you still thinking about opening your own shop? every day. i think there are some ways to help keep you on track. and closer to home. edward jones grew to a trillion dollars in assets under care, by thinking about your goals as much as you do.

welcome back to "squawk box" here on cnbc is he really number four or not? >> on his leaderboard, not on mine. >> not on yours. >> but my score's higher than the one on her --

>> you're probably very good >> thank you. >> you're welcome. we're live from the nasdaq market site in times square. let's look at some stocks to watch. wendy's, shares are higher in premarket trading. the company reported quarterly profit 14 cents a share. that was above estimates of 11 cents. revenue also beat forecasts. same-restaurant sales rose 1.3%. also gaining this morning, shares of drug distributor mckesson the company earned $3.69 a share, 3 cents above expectations the company also announced it would increase its cost savings targets. and dating service operator match group reported quarterly earnings of 42 cents a share that was above consensus forecast by a dime results were boosted by more subscribers for its tinder operation. president trump spooking stock markets this week by seeming to walk back an emerging trade deal with china. we want to know if a full-on trade war between the two

countries could force central banks to take action steve liesman joins us right now with more. steve. >> becky, thanks economists are taking seriously the potential impact of new and higher tariffs, the potential impact on growth, earnings, and on central bank policy jpmorgan in a report today says the tariffs could take 20 basis points off of u.s. gdp growth this year. ubs estimating full-blown tariffs as threatened by the president could shave 45 or 50 basis points off of global growth and hit u.s. earnings so, take a look at how they do this they say here's the impact on u.s. earnings. it could be two percentage points lower if we get that first increase from 10% to 25% you stop 25% on all chinese goods, that would mean another seven percentage point decline in u.s. earnings and economists think a full-blown trade war or not can have a decisive impact on the fed's next move. jefferies says "if there is a breakthrough in the trade negotiations, a fed rate hike as soon as late 2019 would be back on the table." but at medley global advisors, they're saying "the trade war between china and the u.s. could force central banks into easing

that is contingent upon how domestic economies fare in heightened global trade uncertainty. so, here's what is definitely clear, the trade fight has introduced tremendous volatility into market expectations for growth, for earnings, and for interest rates, andrew >> okay. steve, stick around. joining us right now to talk all about this -- i hope you're going to participate in this conversation in a very big way -- is former philadelphia fed president, hoover institution visiting fellow. what does it mean to be a visiting fellow these days charles plosser, thank you for joining us you heard what steve had to say. and we should talk about, by the way, china and whether you think that's going to impact anything, but where do you stand these days >> where do i stand? >> where do you stand? >> right here on the set right here. >> i know, but what do you think -- where do you think the fed stands, or what would you be telling the fed right now? >> i think the fed's in a pretty good place right now i'm pretty happy where they are, and i think they've done the right thing so far i mean, there's some communication problems and stumbles they continue to have, as they have over the last ten

years, at least. so, i'm actually pretty happy with their position. i think the trade issues, though, are complicating the picture, but the fed's not going to react much to this until actually something actually happens. and i think that we've seen week by week that the prognosis for a trade war or not or a deal or not deal keeps changing, and they can't react to those kinds of news. they have to sort of look at the longer-run consequences. so, i think there's not much on their plate right now in terms of trade except waiting and seeing how this all plays out. >> charlie, people don't know that there are these streams of economic thought that go from one school to another. you're from the university of rochester, which is -- >> chicago. >> -- which comes from chicago, right? and the conservative thing in chicago. so, tell us -- you're a professor there -- what do they teach at the university of rochester about tariffs? >> stay away from them >> why >> well, because tariffs are a threat to say i'm going to take

my consumers in my country and i'm going to tax them, raise their costs, reduce their choices, and punish my consumers for something some other country's doing. >> but the president has tweeted that the chinese are paying the tariffs. >> no, they're not they're not paying the tariffs at the end of the day, the u.s. consumer has to pay them well, they're only paying them if they don't import. >> right if you were on the fed board right now, would you be lowering your growth forecast if these things happen? and would you be responding with policy as a result >> i would not be changing my forecast at this point i think for me, actually, the bigger issue -- look, china has misbehaved in many ways, and we all kind of know that. i'm not denying that the question is what's the right tool and leverage to use to try to get them to change? but frankly, our biggest trading is with mexico and canada. >> right. >> and i'm more worried about

the continued stress on tariffs -- aluminum and steel and other things -- that we're using on other countries, rather than just china. >> to the extent that you believe -- and i think you do -- that the trade relationship and the imbalance is unfair, still with china, right? there's lots of issues with china. what tool would you use? >> that's the big question i don't think tariffs are a very -- they're a very blunt tool. >> right. >> they can't address the specific challenges of ip theft and things like that so, i think the tools are fairly limited, and i think that it's a tough situation. we will see whether this strategy plays out and whether it's effective at the end of the day of leveraging china, but it's still a pretty blunt instrument. >> charlie, one of the reasons we got talking, it was either in san francisco or new york -- the fed's about to do this massive review about how it things about and does policy. >> right.

>> which i understand you're in favor of >> right. >> how would you -- i mean, you know, in about 45 -- what is it -- how would you change this? what is wrong with how they're doing policy right now and what are the top things they need to change >> well, i actually think this review potentially could be very valuable and useful. the question is will it really change anything? and at the end of the day, many of the reasons for this review have stemmed from the crisis of the fed at the zero lower balance -- what to do about monetary policy and that and some of these strategies that they're discussing are ways to deal with that, which is understandable but the problem is, is that the fed has had a problem in the past committing to new strategies, committing to systematic policy and reacting to things in a systematic way. and when you do that and be discretionary, you can't follow through on these so these policies to deal with overbalance, like overshooting, this and that, require the fed

to work, require the fed to make a commitment about some behavior they're going to do far into the future and if they can't commit to that, they don't work. so then you're kind of right back where you started. >> what do you make of the report -- was it yesterday, 24 hours ago? >> the financial stability report >> yes both on this idea that stocks are at an elevated level and that there seems to be some concern, at least about leverage loans right now? >> well, look, i learned a long time ago how to define what a stock is, when it's at elevated levels or not is kind of a fool's earned for somebody like me and for the fed, in many cases -- >> do you think the fed shouldn't articulate that kind of message one way or the other? >> i think particularly about the stock market i do think it's relevant for the fed to be concerned, if it is, about leverage loans and other things, talk about the banking system and supervision, those types of issues, but i'm -- you know, the fed's mandate is not about the stock market. >> right. >> at the end of the day i think that the fed gets

trapped into being much too reactive to market movements day to day or week to week, and it really shouldn't be, because it distracts itself from the long-term mission. >> how much did you guys talk about that in the room, meaning the stock market issue >> well, it's pretty hard not to, if the market drops 400 points in a day or something like that, it's hard not to -- it's hard to -- >> what we remember about fed predictions are egg-on-face predictions. >> of course they are. >> will you go back, liesman, and the yellin biotech call, do you remember that? >> genius. >> no, i'm just wondering, whek look at where the biotech etf was and look at where it is now and just decide whether they should go -- >> when is the rational exuberance how many points later was the market irrationally exuberant? >> it was just awful i don't remember, that was great. i don't remember seeing, wow, they nailed that it's sort of the other -- >> maybe lucky >> no, they didn't nail anything -- >> or unlucky. take your pick. >> just to be a little bit fair,

they're very careful in their language, joe. they say asset valuations are high relative to historic norms. >> they did predict what they would do with qe, though, and that did work. they predicted higher asset prices and wealth effect and that did happen. >> i think the reason the fed pays attention to the markets is because markets sometimes sniff out things that economists or others might take a little longer to see. i mean, if you see an instant reaction in the treasury market or something, i would guess that's important information to kind of put into it. >> absolutely. not that they ignore markets. >> yeah. >> but the information that markets, particularly the stock market, has about things that are relevant for the fed is really pretty small piece of what you can glean from the markets, maybe and sometimes the market's wrong, by the way. >> right, that's right. >> charlie, there's a lot of folks out there who don't have their own inhouse economist, don't have their own inhouse fed observer, so tell us two things here, if you don't mind. first of all, the market's trading now with a 73%

probability of a rate cut in 2020 does that seem right to you? >> no. i mean, i don't like to make predictions, but -- i think it's going to depend. i mean, they're data-dependent, obviously. obviously, if the trade war with china blows up and something -- i mean, things can happen that will change the course of events, so trying to predict the future is really about trying really to predict not what the fed's going to do, but what the events surrounding the economy are going to do. so, obviously, there are things that could happen where the fed's next move could be down, but i would say right now, the evidence on the state of the economy and its projections that the fed has made itself about the path of the economy -- given that, i don't see a huge -- the odds of a rate cut very high. >> does the fed have to address this persistently low inflation issue by cutting rates >> i think they have to address

it at some point i don't think it's a crisis. and whether or not proving to cut rates is the right answer for that is one of these things you might want to think about in terms of the strategic review. if the strategic review is all about managing inflation and the fact that the fed's challenge with hitting its inflation target is there -- you need to answer the question, why aren't they hitting why make it more difficult -- if you're not hitting it now, why create a more complicated regime to hit something that you're not hitting right now? >> you know philadelphia you probably know jeremy siegel, i guess. so, he said -- >> known him for 40 years. >> he said stephen moore -- he disagrees with a lot of what he says, but just because of the institutional group think of the fed that there should be a person put in there to shake things up, is there merit to that >> i actually do believe that a challenge to the fed is group think. and i think that's evidenced and i've written editorials about this, that the fact that

the board of governors -- there hasn't been a dissent amongst the board of governors -- more than i think two in the last 20 years or 25 years. so, why is that? >> that's because plosser's not on the board >> i'm talking like governors. >> i know. >> so, i do think that one of the things we have to be concerned about is breaking up group think. i mean, obviously, i try to do my bit for that, but i think it's important and that's part of the role of independence is preserving that. the more we centralize power in the board of governors, the less opportunity it is for breaking up that group think. >> okay. charlie, thank you. >> thank you for coming in. >> thank you, sir. >> appreciate it. when we come back, uber's big week gets complicated with potentially the biggest ipo of the year expected by the end of the week, uber today is facing major protests on two continents from drivers angry about wages and labor practices. we will take you live to london when we return as the

demonstration there kicks off. u' wchg quk yoreatin"sawbox" on cnbc

t. rowe price experts go beyond the numbers to examine investment opportunities firsthand, like biotech. because your investments deserve the full story. t. rowe price invest with confidence.

welcome back to "squawk box. let's take a quick look at the futures now. triple digits again, back down 102 points on the dow. s&p down 12 or so. nasdaq indicated down 41 and change now 42 some uber drivers are planning to strike in protest across the country today they're demanding better wages and labor practices.

this comes, of course, ahead of uber's ipo set for later this week, and it's not just happening in america elizabeth schulze joins us from outside uber's london headquarters and elizabeth, what can you tell us what's happening >> reporter: hey good morning, becky. protests just kicking off here in london. uber drivers have been boycotting the app since 7:00 a.m. here in london and in cities across the uk they're expected to tell us they have hundreds of people coming outside of london's headquarters here what they say is that uber executives are benefiting from this ipo this week while drivers remain underpaid the union workers have a couple of key demands, including raising prices for fares here on uber rides and cutting the amount of money that drivers pay per ride to uber they also want to be classified as full-time workers versus independent contractors, which has been a key issue here in london already there's been legal action related to this uber and lyft, for that matter, has said classifying workers as

contractors would adversely inl pact the business. uber saying in a statement that the drivers are at the heart of their business, they couldn't succeed without them and they will continue working with and for the drivers. i will say, we've been monitoring that pricing all morning on the app to see if there's been any surge pricing a little bit of surge pricing earlier today, but it was also very rainy, so hard to say what type of an impact this is having london is a major market for uber, and it's just a testament to how many drivers there are in circulation here so far today in this big city. back to you, becky. >> okay. thank you so very much. want to bring in an uber investor in the meantime to talk about the ipo, mitchell green, founding partner of lead edge capital. how much do you think this employment issue is going to be an overhang long term for uber, for lyft, for the whole business model? >> i think, andrew, i think very little, to be quite honest i do think it's important, though, that, look, drivers' views get to be heard.

it's obviously a very small minority of the overall driving pool that is not really happy right now, and they have the right to express their opinions, as they should but i just took an uber this morning. the driver was a mom with two kids who two kids who uses supplemental income to send her kids to camp you hear about these stories time after time. it is providing a huge number of part time people with jobs and i think they're definitely not employees. >> so you probably read editorials, there was in the new york times last week where there was a suggestion that uber represented a moral stain on silicon valley and labor is being taken advantage of you think that's wrong >> i think that's completely wrong. i think that it is a market. i think uber and lyft like air

bnb are providing people of supplement income, i think it is a general net positive for the economy overall. >> futures are up. they just jumped 100 points. >> joe was talking >> the reason for china pull back and attempted anyway gas station of the trade deal is sincere hope china informed us that they are now coming to the u.s. to make a deal we'll see, i am happy over $100 billion a year in tariffs filling u.s. confers, great for the u.s., not good for china i know, there you go, andrew can you look at the stocks

please there is what happened in the last two-minutes it is not the chinese. it is the american taxpayers >> uber idea is just like this >> all right, let's get back to mitchell on this labor issue, i know you may think it is regulatory issue. it may not be in the united states but other places. >> yes, in some countries, i think you may -- in different countries, you are going to have different regulations. we believe in the united states and other major markets that the vast majority of the drivers are not full-time drivers. they should be as contractors. they're not doing a bunch of things there is this company called fire fly that's doing -- you know on ads and taxis in new york city, they have the

billboards on top of them. they're doing this in san francisco with a lot of success allowing drivers to make mumbai becoming apart of fire fly uber is not doing it themselves because they do not want to get closer to the drivers and risk any association with this employee verses crackiontracting thing. it is super important. >> what round did you get into uber i ask because we have a couple of viewers asking about you. you are in a different position than many of them may or may not be if they were to buy in on friday >> sure, we invested around the series e there is been so many rounds of money put into this company. company raised a lot more and we have been diluted a lot more >> the valuation is what then? >> it is better to look at per share price. $33 a share. look, i am not like benchmark or

memo adventure or some of the first capital. >> and then the final question before we go is you saw lyft numbers last night and you were impressed or unimpressed >> the market liked it initially. i don't know what they are doing right now. it is flat what do i think? revenues is beat but it went public on march 31st the bottom line slightly better than expected. i think people were negative one of two things. one, there is a material revenue for common if it goes like to 54% in q2 and going down by like mid-30s that's one if you look at their guidance, it shows it continues to burn more money

three, i think investors are annoyed that they did not provide number of ride guidance and booking guidance, now, we have seen residence in the past and alibaba. if it is basically flat. >> thank you very much we'll be watching on friday. >> thanks so much. >> jim cramer at the stock e exchange i guess i should quote twitter share. trump is coming to make a deal and it was 100 points in a blink of an eye. we are stuck with twitter. >> we could just vote, we can stop programming as it is some sort of an emergency and focusing on seeing fewer tweets. on one hand he's talking about 100 billion. remember he's happy with 100 billion.

he would say face, we just part it like kremlin tea leaves, joe. it is infesta. you know i was going to give you pot belly and zale's forget about it. >> i wonder we should think about -- they would not be coming if they did not want to do a deal. we had miller on earlier that said it is possible that they realize they push too hard over the weekend and they could come with a maricopa. >> i think there are 100 pages they checked off on. they dropped 50 of the page that were neg if we go back to one week ago, it would be good it is howie mandel situation, we

try to check in with him, of course fist bump but no handshake. >> we'll see you in a couple of minutes. it will be interesting on "squawk on the street" today "squawk box" will be right back. will it feel like the wheend of a journey?p working, or the beginning of something even better? when you prepare for retirement with pacific life, you can create a lifelong income... so you have the freedom to keep doing whatever is most meaningful to you. 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.

a final check of the markets today. dow is only down by 4 points we'll see what happens a lot you better stick around for "squawk on the street" as you get to the opening bell. anything can happenfor the trade situation. that does it for us today. make sure you join us tomorrow right now it is time for "squawk on the street. ♪ welcome to "squawk on the street," i am carl quintanilla with jim cramer and david faber. futures as you can see going back and forth between the red and the dpregreen after the dow worst day in four months we get more how china backtracks on talks the president tweeted a few moments ago. the reason china pulled back negotiating of the sincere