information on this that may that is what the market is doing with some of this. >> kayla tausche >> it is still 2.42. dow and futures is down. kayla tausche is going to have much more. "squawk on the street" is coming up now good monday morning, i am carl quintanilla with jim cramer and david faber. another monday, you just heard the chinese announced retaliatory tariffs on 60 billion u.s. goods europe is right across the board. that ten-year approaching two for one. our road map is going to begin with trade tensions taking stocks todayme china retaliates >> uber's big suffer, suffering

the first dollars loss and shares are falling again in the market was the fix in 44 states against teva and other drug company accusing them to inflate drug prices. china is striking back against the u.s. saying it will raise tariffs of $60 billion of u.s. goods beginning june 1st the president warns china not to retaliate. "i say openly to president xi that china will be hurt very badly if you don't make a deal because companies will be forced to leave china for other countries, you had a great deal and almost completed and you backed out." jim, that confirms some of the reporting that we had today from "the journal" and the "times," they were so close in discussing

logistics. >> i can't believe how little it is but then i remember we don't sell a lot into them they have to be careful. they are going to restrict boeing good luck. they're going to restrict self treasuries we are huge buy in treasuries. i can't believe how little fire power is is that really all the chinese can bring? really that's it? >> are you referring to the moving treasuries today? >> no, i am saying jesus, they're 1.2 million treasuries to go. >> that's a tweet from the editor of a newspaper that says scholar started to debate, that's not an announcement from the chinese obviously. >> i don't think there is anybody in china that's not in command and not berun by the party. that's it. they're going to dump treasuries

if trump puts out this trial balloon. it is a testament to how little business they let us do. >> you know, jim, you are obviously right when you look at the list of newly tariff goods that rim ported imported by chi. it is all agriculture or the bulk of what we export to china as oppose to what we import from the country. the bigger picture here is you got a conflict that's extended and deepening one could argue and it does not have a quick resolution and so, while we had any number of guests and i can't think of think. they expect this is going to be the new reality for a long time. it would seem it is not going to end in weeks at this point >> well, it is a new reality i mean our guests are too

optimistic it is in everybody's best interests and maybe it will be a couple of months but they'll figure it out. the election is going to start weighing more heavily on the president and his potential ford being reelected. you no e tknow the drill we are here today and next week. of course many of the same pis getting it wrong >> look, the president does not care about the dow jones industrial, he's willing to take the hit. i think that's a new reality to a certain point. i really -- the gasp here is what we do with farmers. we send them checks. i hear the farmers and i always laugh. look, other than iowa, does not really matter. the parking light the president is looking at. i can be tough he's ridiculing democrats in a

way that's really extraordinary, say like america >> well, jim, for someone there has been this notion of trump putting, now the calculus is really flipped and he wants to go into the election as a fighter at war what does that do the president's tolerance? what's that point? >> the president got people looking at the break down of it. he realizes the dow does not need china and sacrificing a, b, c, which is apple, okay, he'll sacrifice them he'll sacrifice boeing and caterpillar. he simply looked at the dow and sees more a horizon than he sees apple. he's closely fixated on this they refused to recognize how much the president cares about the dow. if he cares about the nasdaq

that would be different but that's not how he is he cares about the dow that's what he's focus on. >> it is, statistically significant and not reliable indicator. if you say so i believe you in terms of where his focus is. in terms o f the focus on both sides and when this can get resolved, guys, the next thing is the g-20 meeting at the end of june when the two leaders have an opportunity to meet. that would seem to be where the focus is going to be for those who are hoping for some sort of resolutions to present itself. >> i think we have the take numbers down >> i have william sonoma tonight from china everybody that does businesses and buys tricks that hasbro has

on it is surprisingly few and the dow and s&p is going to over react because they ared to death. >> this morning we'll talk about, i don't know, we'll have post mortam of what we know as you pointed out, jim, we sat here and watched it with that big decline about 7.6% just on friday alone jim, i mean you can blame the under writer for that.

where you did have a lot of stock and private hands and were they able to prevent it from shorting it. you had quantitative funds started sorting in the afternoon and you got larger questions which i love to put to you does an event like that even though it is not significant in of itself changed the overall tone in the market >> definitely. we had a lot of people come on and talk about how great the sla slacks are going to be here is uber, they didn't want prices so it is a dow round verses the last one that happened in the summer of 2018 david, there were a lot of convertibles and it turns out those were easily sorted against. once you had the big break down, wow, let's go short. you know what they misjudged

generators felt uber is a very big brand name we'll have people come in and very love it it was hard to figure out what retail was going to do they did not want to price this thing down through the last round. i think what we'll have is unicorn pricing of the last round, shareholders are saying let's just wait, we have capital. uber was a water shed. those that did not think it is a water shed, they should wake up and smell the coffee >> those who had the opportunity to study lyft and traded poorly. look at the business model they want to compare themselves to amazon for very good reasons. while amazon did lose money for a period of time there was a sense that it could turn off the switch and start making money it is never the case with uber i believe in any company ever. and the weeks went on and people got an opportunity to study lyft they started questioning the overall business model

>> i think you are right, david, of $8 billion in losses. we thought amazon of how great we theeneed, the more losses th better facebook, this last quarter was not that great it was a real deceleration in wall street. it kept a lot of institutions away there was an interview to andrew outside where he wanted to open a little bit of pops so everybody won. that did not happen. that was a big misjudgment by morgan stanley i don't know if they expected that morning to come in and see donald trump to say hey listen, that's the end, we are done talking against china. in the end, the 40 or 50 was too high range and it was all about china to preserve the people you were talking about there were so many rounds as unicorn since they lost so much money. the unicorns, enough, any

company, zoom was not a unicorn. we had a lot of people came out on pinterest today right now it is beyond meat and zoom wow. >> yep, that's well said, they're not unicorns and uber, the new term is under-corn, have you heard of it? >> no. >> i thought it was candy corn >> we did talk to nelson chai, the cfo on friday. >> very nice man >> we talked to him on the opening day and long-term growing its scale. take a listen. >> we have a lot of executions ahead of us. i think there was consensus on the road about where people think uber is going to end up overtime there are people on the road knew there is going to be some noise getting there. it reflects in it. we believe in terms of the platform, we can grow our

business at scale. unprecedented at scale >> there it is >> that's got to be the hope of those investing here who are potentially buying the stock today. jim, it disseoes seem like it w be broken for a while. we focus on show unusual it is and whether or not it spells a poor period for stocks for quite some time. what it is going to take way back to where they price these things we thought the emperor was wearing levi's, we didn't think he was wearing something from brooks' brothers we'll have facebook decline in a sense we'll see some momentum that revenues is building again and not decelerating. they have to make some numbers happen i don't know if they can do that david, we are talking to nelson,

that was before what we realized was there was a dramatic amount of sellers do you know the narrative changed midday it was a successful deal because uber got all its money who makes this stuff up? who changes the narrative? >> well, you got to figure something out because you can't admit it was a bundle for somehow you completely misinterpreted the after demand of the market. they did get $8 billion and they can spend that $8 billion, not clear that's going to get them the profitability but probably continue to keep up the ketel marte m ketel mar competitive pricing overall. >> what we have to watch for right here are you look at apple

this morning and broadcom and look at all the stocks that are coming by. apple is down 8. are we going to sit here and say oh i got to go buy uber when apple is going to be in there with the buy back and it does not matter >> right caterpillar and abc, i keep on talking about abc because that's what the president is talking about. >> you don't mean always be closing. you talked about that on friday. >> clara is on the tape talking inflation and leaiesman got som headlines. >> a road show, the u.s. economy are operating close to maximum climate and its price stability goals. the global neutral rate here in the united states fallen and this is likely to persist for years. the fed is more likely to be at the zero lower bound and it

makes it harder for the fed to help the company he did not talk about trade. he's going to wait and see mode on the trade effects if it can go either way and hikes. i am sure you have seen reports that have been out of many of the wall street houses saying if this goes on the way it is going, leads to the decline and growth they expect, that the fed will cut rates and morgan stanley is saying 15 bases points if this goes on three or four months like this. carl >> steve, we talk about potential for slow growth. goldman comes out and says we have not seen a drop in pricing of chinese exporters.net hawkish on inflation as a result of this trade war, is that is consensus right now? >> it is very difficult. i will give you an example the washing machine tariffs

passed along is full to the consumer but also no particular reason, driver prices went up along with it because they could. that part is net hawkish the rate of inflation in subsequent month would not go up with it more unless you have a change in inflation. there is a lot to gain out here. the political profitability of a deal or no deal. does it move onto auto tariffs and trying to figure out what the economic impact makes it hard enough with a big concern of how do equity market react. that's a big economic fallout as well >> that's what we'll talk about all morning, steve, thank you, steve liesman. coming up the worst week of the year, three straight week down for the dow.

just like last week, all indices about 2% lower for many. we'll be back in a moment. people know aflac. 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 could yyeah, of course. files? what is going on guys? oh hey, servicenow frees us up to do the work we want to do. so we're digging out from all the work we don't want to do. ugh, getting rid of so much paperwork. oh, doug. i didn't know you still worked here. i called for help but no one came.

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all right, futures is here, dow is opening down almost 500 points here. tariffs on 60 billion of u.s.

goods. jim, we have seen gap down in the 1% range any reason to think this will be different? >> bif you notice the stocks are trading on a kicker now. all you need to know is you watch the stock because they own 5g for china it is obvious that people are saying it is restricted to a bunch of companies that do a lot of business for china and that includes zylinks and you get apple and boeing and why are we selling darden's or it does not make any sense selling verizon or why are we selling at&t other than a fact that they are losing subs why are we selling a lot of retailers. the market is taking and the futures don't know any better. the market will stabilize once we see apple stabilize

it is up 25 points just watch the chinese stocks. they'll tell you everything. when they stop going down, they'll stop going down. >> dothe president got until th 18th to decide on tariffs. >> i think he does, this whole idea we saw senator hike talking about we ought to do with ttp. the president makes me feel he's going alone and he does not mind he thinks german cars should all be made here all right, we are now starring to talk. watch the dow, the dow can drop 5% or 6% because it was up so much and then feels like hey listen, we now put tariffs on everybody. let's talk about rolling them back and that's the plan >> all right, we'll see if that play book plays out, jim it is turning out to be an

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welcome back to "squawk on the street." we got about 2.5 minutes

let's do across country "mad dash" here with my man cramer in san francisco bureau what do you want to cover this morning, jim i can talk about the fact that there were seven neutrals in pinterest which was horrible for pinterest shareholders i want to talk about bed bat batbath bath & beyond. steve tamaris is out they want to negotiate the distance they are losing. it is all over for the current board. we'll see a new board. this reminds me, david, of darden >> they added five independent directors. that was not enough apparently so it is already been a great deal of change these activists have seen to

pick a target that was quite well vulnerable is the right word, jim? >> when it started, it was not like that. they dismissed the activists because they only had 5% the activists did more than 100 page devastating, just devastating. like where you fell in the end like the company is running in the ground they can save it, they're going to get to the ceo and put a ceo in who's going to change bed bad does business including the fact that they have horrendous exposure believe it or not american supply chain. they spend so much money getting their own goods. of course, they still have china, too this is not to stock to own today. it will be with the new skrceo, i am not kidding. >> interesting >> well, we talked about how

much stock does bath & beyond back >> let's get to the opening bell at the big board is empire state realty trust jim, we are back to our own way of retaliating sometimes capital markets. >> chinese and used cars, do you have one come on. i mean really, the chinese do they care anymore? this is amazing. i didn't think this take would be that bad. this is a take that's covered by 60 billion in tariffs which i

will say is that all you have. it is covered the by the fact that uber is broken down and we are seeing apple which is such a bedrock of this market, pond recognition, there goes gee that thing is ugly. we have apple and boeing and caterpillar. the dow, that's what the president is willing to sacrifice. >> apple you don't see apple as the worst s&p component but for a moment there, it was along with mylan and micron and deere is not too far at the bottom as well >> we'll talk about those generic makers as well and given the multi state lawsuits you keep on making fun to a certain extent of china's inability, frankly they don't import that much from the united states there are other non-tariff action they can take most people doubt there would be any states sponsor boycott we can expect that this thing

continues, we'll start to see more of that >> well, i think fedex, a lot of planes there and maybe they hold to fedex, the planes on the tarmac there are some companies that had been selling and truck engines will come into that. the problem is this. if you look at what china wants to do. they really have no choice but to pick one. they actually believe that the farmers control the election the senate is controlled by people who want to give money to farmers. i don't think powell is any different and schumer, he absolutely supports the president on this. so don't give tax to the farmers. if the chinese wants to sell the treasuries, the president says they need the money. the president can control the narrative, what would they do without twitter, man he'll be talking to "tthe "time" the failing new york "times,".

>> they do that, too the ft mentions the g-20 meeting and kudlow is saying there is a possibility they'll meet there hard to know >> carl, you mention kudlow, kudlow broke the rules he said that everybody gets hurt larry is my partner but wihe bey partner again? he broke the rules >> he did say both sides will pay and suffer on this you disagree >> that's not what he's supposed to say one side is supposed to suffer a heck a lot more than the other does the president allow that to happen that kind of -- i am sure david would label it truth >> yeah, it does have the ring of truth i think that's a fair statement, jim. but don't forget, there are plenty of people on both sides

of the political spectrum who supports getting tough on china and hopes the administration may not support any of the president's policies but believe it is one great importance that you have to hold out on it hoping that you will get what you are after which is structural changes the way the chinese economy works really >> well, look the president created this dynamic the dynamic is chinese takes american jobs. democrats are stuck. let's say they don't take american jobs, the president will come up with a list of jobs that are lost. democrats have no control of the dynamic or whatev what so ever. we got to get together to come up with a bill that gives farmers $58 billion. it is a little sohort of $60 billion and we send checks

to farmers and everybody is happy. it may be cynical but realistic. it is the way we plan. you are not going to giv shareholders of apple money. >> no. although they might wish they could and we'll see some complaining between farmers who grow soy verses those who grew corn asking why didn't my buddy next door get a bigger check than i did we are confident, the u.s. and china will continue trade discussions and come to an agreement that benefits both u.s. and chinese manufactures and consumers. >> boeing is down a little 3%. apple is the biggest loser right now. almost 5% decline. it is worth noting since we always do when it passes a trillion dollars it is well below the market cap now. 140 or $150 billion on the market cap of course after earnings, apple was very strong. first part, amazon is the

largest market cap company i believe -- microsoft and then amazon follows microsoft in the old market cap amazon is not as much to lose here in a potential trade war that we appear to be in. i guess microsoft also is down by about 1.3%, less than a s&p decline of 1.7% right now. >> we have to look at fang all the fang companies had been excluded, facebook, amazon and google and alphabet. those are four companies that had nothing to do with china i am noticing anything aerospace is getting hammered because people feel they can shut down at boeing. apple is the company that they can retaliate. i am told that the president, hey, listen, apple should

diversity f diver diversify more not that they are seeing it being a research department but boy do they care about certain stuff. >> specific to apple, we make this point many time apple is responsible for a lot of employment in china itself given the phones are a symbol there on high position, we know that's one of the key suppliers, foxconn of that. you do have to believe that if you impact the overall demand for that device conceivably, you will be hurting employment in china which is not something you necessarily want to do, is it? >> that's why i feel like the president feels the upper hand the tweet this morning was saying you are okay if you make things in mexico he had a couple of countries on the list if you make it there, your stock is going to go lower, why don't you make it elsewhere.

he would love apple -- to call president xi, we love you but we'll make it elsewhere. you can't just pull a switch i have william snon onoma the o day, everyone wants to get away from china the supply chain does not work if you go to vietnam vietnam does not like china. they do not like china lau laura alber expects the president to take it at 25 and she's ready at 25. rather amazing >> let's for a minute, what's ready at 25 mean you have a 25% increase in prices how do you get ready for that? you think about it who are you really hurting

unfortunately, remember they have four times the business that we do the business i the farmers are going to say we are at an 111th year low. deere is down. watch deere, i am not being facetio facetious. >> i understand the point of giving our farmers additional subsidies. we keep on talking about tariffs like a dollar amount there is a halo of confidence and worries of cap ex growth and long-term hiring and business conditions and inflation expectations that had nothing to do with the number and level and tariffs or amount that added to service >> absolutely. >> they got a plan >> well, let them sell it --

>> the president says ignore what's happening we are going to win. and if we are going to win then inflation is going to go down. we are doing more business that's his dynamic i don't think that dynamic plays out correctly. i think it elongates the trade talks so american business have more chance to move. charl, y carl, you are right. the president really sees it this way, you may think that's an alternative reality but that's because you are not president. >> this is definitely true we are not president we talked about what's not on the list of goods today. there is an item on the tape that china is looking at additional tariffs on lng. >> oh. >> i know, they can't get analogy, it is all sold out. every single train coming out of

louisiana is all sold out. honestly, they got to rethink that what happens is there are people who are willing to tell the truth about on lng can they come up with something better than that than barbie >> i would say come up with something better >> we had a border adjustment taxes and stuck with ttp, we would be in a much better place right now but that's a what if, i guess. >> in terms of actually combatting china in effective way and leveling plain field that we always talked about with so many countries as well. >> the president does not mind that the president does not want us to be down 8-10. >> he wants us the draw the line >> you are right in his brain. >> you are just like -- >> we are talking absolute >> you are deep in there, i am not sure if i want to be in

there. you seemed to be >> well, i do a lot of reporting, you know? i make calls >> i still make calls. see what's happening, this cool device that allows you to call people everyone thoun though yot there. >> you are actually out there. i am in william sonoma your wife has to order from west elm, no more nonsense. carl, we know that pottery barn -- >> 8 to 10 would take us to right around 800, is that the level that you had >> yes, it is. we'll have to let boeing being down for the year and not

worried. the president needs to come forward and say you know what, we are making progress just when he sees the market is down at that level or maybe a little bit less, he'll tweet that we'll make progress and we'll have to cover our shorts maybe he even has to make progress before he puts the tweets out >> you got a whole part of your own brain devoted to knowing what he's thinking >> my cerebellum and my cortex is saying it is down >> plenty of room there. >> before we get moving on bob uber is down it had been down almost as much as 10% an awful a lot of stocks are changing hands right now, down 7.2% 38.50. 45 we thought we were looking at

47.48 when they seem to at least, last time i am going to listen to capital market guys giving me color on a deal. here we are, jim, if you have to buy at 38.65, do you do that >> well, david, you know how i feel i think it is a little early to buy uber >> guys, let's get to bob pisani on the floor good morning, bob. >> we are in our new additional room to chat about the market, very excited about that. what happens when the other shoes drop when they drown additional tariffs s&p and futures right now, prior to the open, it was good for about 16 points of the dow side. that happens at 8:00 eastern time take a look at that. you can see right here we moved to the downside here 16 points on the downside. that's what it is worth when we had china deals announced.

typical names, rockwell and deere, they're down about 2% or 3% and apple is down about 11% two weeks ago and it is down again today. you see it moving to the downside there we were at 212 a short while ago. normal consumer tostocks are do. kraft heinz is down if you take a look at that overall these companies don't have a lot to do with china but it is not about china. it is about lower global growth expectations if we get lower trade war everything comes down and not something has to do with china people need to understand that we are looking at the tariffs in the market today and what's going on we got target agricultural targets and we have more there is a lot of other non-in

effect ups talks about increase tariffs. the point is global growth reduces global earnings expectations in the market multiple overall we talk about how expensive the market was last week we did this. 17 times forward earnings is the expectations last week today is reasonable and it is cheaper. 15 to 16, let's say we put a normal multiples in the market right now. we take it right in the middle this is how you get to 2600 quickly. you ta i can the number of forward earnings expectations for the market maybe you will get to 3,000. if you don't, put a 15.5 multiples on the market right now. you get to 26.50 that's just lower the overall multiple the important thing here is we still can have a long way to go. big sector leaders in 2019

they're all cyclical stocks. they're up really big. technology and overall numbers are up really big right now. here is a remarkable thing, folks. we are only 4% off of the old historic highs of the s&p 500. shanghai is up a lot more, it is about 11% off its recent highs one last thing, alibaba is recording on friday, there is the stock that you want to see 100% exposure to china if china is suffering a lot, you will hear a little bit more from alibaba. guys, back to you. bob, thanks very much. we have not mentioned teva or some of the drug makers. >> yes >> all involved in a 44-state the company, the generic drug makers conspired to inflate

prices here is a quote. competitors in the generic industry would communicate one another directly they maintain anticompetitively high prices, the complaint against 44 states involved in that far reaching lawsuit. for its part, teva and the other generic competitors say they have not engaged in any conduct that would lead to civil or criminal liability but teva just had a brutal run to begin with, down another 10% >> we'll keep that story in line >> jim, thoughts on what we are seeing there >> yeah. okay, the statement is very interesting because they don't expect civil or criminal of course if the justice department joins it is criminal and it is a violation of terminated trusts of ten years

in prison. do not collect $200, go to jail for ten years. everybody knows that c clemen was a great man but he did conspire, he was facing ten years. the justice department is listening. does this justice department have a sense that if this is true, teva and mylan has to be prosecuted exclusively because they are ceos. >> that's quite a moment, i have no insights whatsoever on that if you are going to coordinate 44 states, it is something that would happen over a long period of time. unclear to me where if anywhere the department of justice stands on this, jim >> yeah, i mean look, they have to hope that the justice department, we don't favor regulation, i don't know the redacting tells you they are

the justice department >> and drug prices resonate. >> wow >> holy cow. teva and mylan are in the same room, do they have tapes if there are tapes and e-mails listen, we what happens is, look, we have got evidence of collusion, if they have evidence of collusion, goes right to the justice department and if it goes right to the justice department, then the executives are in recall trouble. wow. >> obviously nowhere near that level at least as of today let's get to the -- >> i'm early, but, carl, the stocks are indicating that, well, maybe it is not a buying opportunity. >> yeah. bond traders have had a lot to juggle today to rick santelli at the cme. good morning, rick >> good morning, carl. the markets are doing about what you would think when you pit the world's largest customer against the world's largest exporter

it is -- i know that jim was thinking, you know, the president is going to cave here and come up with a tweet to try to mollify the markets i don't think so let's look at a three-day of two year note yields, down 8 basis points 2.36 from the third week in march is the low closing yield, not that far away. handful of basis points 10s down six, 30s down four we're seeing a real steepening of the curve listen, steepening is a good thing. steepening and dropping rates is a combination that maybe not your favorite if you're considering what true dynamics you want on a steepening curve most would rather have a steepening curve without rates moving up 10s minus 2s, a couple of basis points from the steepest the curve has been since december. t-bills are different. three-month bill on a 10-year are darn close to the same yield at this point in time. if you look at bunds, one week

of bunds, they aren't paying a whole lot of attention they have made their move, but it is interesting that the relationship hasn't been a little bit more downside on bunds today. finally what do big exporters do when they want to hunker down? they make their currency go down let's look at a december 1st chart of the dollar versus the chinese yuan there now is no doubt this thing is screaming, the dollar to the upside i'm sure it is at the behest of the chinese and to try to put a little fire, not only from stimulus from capital standpoint, but from an export standpoint, carl, david, jim, back to you. >> rick, thank you very much >> dow down 512, back below 255. s&p 2822 on this monday morning. we'll see if this gets met with some buying. back in a minute

time for jim and stock trading. >> talked about hasbro last summer they talked about mo moving 70% of their business is

sourced in china they have been tariff centric, trying to move as much business as they can. i think they can move it i want to tell rick santelli, i said once the market goes down that much, the president will tweet that the chinese are caving we're not caving, he's going to say they're caving remember, he controls the dynamic. he's watching apple, he's watching boeing, he's watching cat. and at a certain point he'll say the chinese called me, they sent me another beautiful letter, not talking about penmanship that will give more and more time to our people like the williams sonoma we have on tonight to move out and, tech, by the way, let tech come down, but, you know what, some tech is do not china centric including workday and twitter who i have tonight >> that's a show, jim. we'll tune in. "mad money" 6:00 p.m. eastern time jim, we'll see you tonight. >> i love it out here. but i love you guys! i love you guys, but i love it out here and one day we're going to do a show out here.

you get really nice coats. you get to do it outside >> nice. i'm there. >> jim, we'll see you later. we'll stay on top of the market sell-off don't go anywhe.er

good monday morning. welcome back to "squawk on the street." i'm carl quintanilla with morgan brennan, david faber at post nine of the new york stock exchange sara eisen has the morning off a sell-off is in progress. dow down 500 points, the worst day here at these levels since february 11th or 12th as the chinese implement retaliatory tariffs. >> yeah, that is where our road map begins look out below trade tensions sinking stocks. we'll tell you how to position your portfolio in these volatile markets. >> president takes to twitter, threatens it will only get worse. a look at what's next in getting a possible trade deal. >> and uber disappointment, the ride hailing service stock continues its fall, dipping below $39 a share this morning what went wrong. we'll discuss that but, we begin with kayla tausche in washington and the trade war latest >> the u.s. and china are punching and counterpunchinging this morning the u.s. raising tariffs on a

third of chinese goods and beginning a process to levy the remaining $300 billion that the u.s. imports from china. in response, china says it will put tariffs on $60 billion in u.s. goods in about three weeks' time that lifts largely comprised of american crops like peanuts and beef china may be sharpening other tools too. state paper the global times says it could stop purchasing farm and energy products, cut back on orders of boeing planes and possibly dump treasuries the u.s. treasury department plans to auction $237 billion in debt this week china is its biggest customer. treasury did not respond to a request for comment before air time we will let you know when we learn anything there but boeing for its part is unbowed. a spokesperson telling cnbc we're confident the u.s. and china will continue trade discussions and come to an

agreement that both benefits u.s. and chinese manufacturers and consumers. it is notable that the targets of chinese retaliation are the exact industries and companies that would have received specific benefits as part of any deal getting done. this escalation coming as plans for a next round in beijing remain unconfirmed guys >> kayla, what stood out to me was the list of tariffs and they were focused on agricultural products coming from the u.s. into china beyond that, i no know you laidu the other potential levers that could be used by the chinese to retaliate. beyond that, what else should investors be looking for if this does continue to heat up and ratchet, if we get $300 billion worth of tariffs we implement as well >> well, i think that investors should be focused on this june 1st date it is notable that china in its retaliatory list didn't say these would start tomorrow they said these tariffs on $60 billion in u.s. goods would begin june 1st

that is the date where it is expected that any goods that were shipped from china to the u.s. after may 10th that are subject to those higher tariffs here would reach u.s. shores so it has become very clear that june 1st is now being treated as this new soft deadline and i think notable that china is not putting these in place immediately and signalling that there could be a few weeks for this to continue behind the scenes >> that's a similar dynamic with the tariffs that the u.s. announced as well, right those that were not -- already in transit, not subject to the tariffs. >> correct so it was the goods that had left mainland china after midnight on thursday, midnight friday morning and those were not expected to get to the u.s. for roughly 21 days so that's why three weeks from then is being looked at as this new deadline if things keep escalating, it is hard to see how the treasury secretary and the trade

representative would find it politically palletable to go to b beijing and continue the talks perhaps that's what beijing's officials did last week when the official said i come here under pressure. >> kayla, thanks great work today helping us understand this important story. talking about the markets, head of the u.s. equity strategy at rbc capital markets. happy monday thank you for the time. >> thank you for having me. >> how much of this changes your view, if at all? >> we at the end of april put something out saying we think markets were ripe for a period of consolidation well before the trade jetters came on anyone's radar. i was surprised this was the negative catalyst. we were looking for a period of volatility to pick up. >> do you have a particular playbook here as we're caught in a game of chicken? >> so short-term, if you're thinking tactically, i want to add a little defense to the portfolio. i will say i think there is more downside here for the broad market i would be adding to utilities,

very little in terms of trade war fears, valuations have gotten better, consumer staples, there is a little bit of trade issue there, but we like the sector, it has been hated, hasn't been owned, has pricing power and is holding up pretty well over the past week. >> do you agree? >> yes i mean, excuse me, this was always going to be kind of the sell the news type of event because a resolution was priced in and now it has to be unpriced valuation is the ultimate and quickest transition mechanism for uncertainty. and obviously we now have a more uncertain future we already had some uncertainty about earn iings and when the recovery in price was going to be matched by a recovery in earnings and that's looking all right and the fed was sort of on hold. i think the bond market is now putting the fed back on notice that if the trade tension does not get resolved, that the fed will need to step in and cut rates. market is looking for two cuts

but ultimately it is about the v -- the valuation and at 17.1% forward earnings a few weeks ago, the market was pricing in a lot of good things to happen and that valuation is now coming down, down about 10% or so, probably needs to come down more i think the good news is that the market is really not as expensive as it looks. if you look at sort of the free cash flow side of the argument you know, on a pe basis, the market at the 85th percentile of valuation back to 1900 on a total yield basis, dividends and buybacks, it is only at the 28th percentile. that gives me comfort that the market is okay, but probably valuations will need to come down until this is resolved. >> technicians of course have been at work over the last couple of weekends remember that we had a trouble popping above 2820 took three times, did it, no now back to that level

>> we have looked at the what happened in the rebound trades and this kind of up until the right move we had since december 24th has been very unusual in that context if you go back to the prior rebound trades, 4% to 10% pullbacks were actually very common happened two to three times in each of those. >> we only have gotten three. >> right and we ran the math and we could see this market doing what we did back then you could go to 2750, you can go down to 2650. >> if valuations are coming down, stocks are going to continue to move lower as the lack of resolution is now being priced in here what is an investor to do? where should they put their money? >> i think a long-term investor should do what they always do, which is essentially have a good plan and not overreact to negative news flow but, again, if valuations come down in an environment of rising earnings, the price hit could be contained, right it is not like earnings are

coming down, and valuations are coming down. so like a 10% move as lori mentioned i think is not implausible, that would be a 50% retracement of the move off the december low that was a 26% rally so if we give up 300 points, you get into the 26, 2700 range, that will be down about 10% from the highs. in the grand scheme of things, it is not really that big a deal the odds of a 10% correction going back 150 years is four out of ten or one in three so it happens, and especially after 26% increase, where a lot of good things were priced in, it is not the end of the world and -- but it does put the fed back on notice that it needs to respond if needed. >> yeah, the question is in which direction you're in, goldman's point this morning is that prices are actually rising and that prolonged trade war puts a fed hike back in play despite people thinking, well,

growth will be slower. how does that work >> yeah. i don't agree with that. prices will go up in terms of consumer prices because of tariffs, of course ultimately it is a matter of whether companies can pass on their input costs to their consumers and if they cannot, then it is really profit margins that will erode rather than consumer prices going up it is still well below the fed's 2% target. so i think if the fed is going to move and it is not my base case that it is going to, it is more likely to be a cut than a hike >> lori, small caps underperformed over the last couple of months looking at your notes here, you're neutral on small caps versus large cap longer term why? >> we like the valuations in small caps, so we don't want to be underweight here.a tendency l caps to lag. we said keep an eye out for

potential catch-up trade because of the attractive valuations we had a lot of conversations this week about our -- last week about whether or not small caps, is this the catalyst to get them going higher, if the domestic economy holds up the thing we told people, margins are a huge issue here. small company companies have been seeing the margin forecasts ratchet down much more sharply than what we have seen on the large caps they can't navigate things like the trade war quite as deftly. we like our neutral for now. you could -- we have a more resilient move on the opening, might see more of that in here. >> we had some of these chinese advocates really from state media mouth off about potential for selling treasuries, one tweet today saying chinese scholars are looking at it do we give that kind of information any credit at all? >> you know, it is a nuclear option, right, to sell treasuries or go on a buying strike and even to let the yuan go below 7.0.

i think that is a nuclear option and it would be the -- if it were ever to be used, it would be the last resort i would be very surprised if those cards are played right away if at all i think that is -- that remains the nuclear as it is quite self-defeating for everyone i don't really see it happening. >> thanks, guys. >> thanks for having us. >> when we come back, what went wrong, shares of ride hailing service uber continue to fall, fell below 38 this morning after dropping nearly 8% on day one. obviously we're going to be all over the sell-off as markets respond to this retaliation from china. you got the vix above 20 s&p 2816 and take a look at some of the worst performing names, apple was the leader on the downside n'gowa open dot ay.

welcome back shares of uber continuing to fall this morning after the public debut on friday which saw the stock close down 8%. what went wrong? leslie picker joins with us more >> i think that's the key question a lot of investors are asking this morning with uber stock down almost another 9% following friday's debut of declines of nearly 8%. so investors who obtained allocation in uber's ipo are looking at paper losses that exceed $1 billion and it is only the second day the shares have been trading.

now, clearly pricing didn't match market expectations here expectation were tempered down, uber price toward the low end of the range, it still was far higher than many investors were willing to pay for uber stock. and when things did go wrong, the stock wasn't adequately stabilized morgan stanley was in charge of ensuring a smoother debut by supporting the stock they likely used some firepower to do so on friday and will probably continue to try and lift the price higher today. but so far it doesn't appear that those efforts have been successful, especially as volumes in and out of uber stock remain very high i'm told that uber allocated about 15% of the offering to retail investors slightly higher than other recent tech deals underwrites tried to minimize the retail allocation as much as possible as they tend to be more fickle than institutional counterparts and sell into declines but i'm told that institutional orders were slightly smaller than where they would be on a deal of this ilk because so many firms already had exposure to

uber preipo and at least some of those that did obtain allocations appeared quick to flip them. the question becomesth unicorns waiting in the wings are taking notes not to repeat some of last week's mistakes guys >> that is one of the key questions. leslie picker, thank you we're going to do a deep dive and closer look at uber. let's bring in barrett daniels and sam mcbride. thank you for joining us today sam, i'll start with you, a couple of weeks ago, you wrote that uber's ipo valuation makes no sense, believed to be valued around $100 billion. today with the stock trading down another 8%, market cap somewhere around $63 billion, does it make no sense still? >> absolutely it still makes no sense. they're still losing $3 billion a year i don't think it makes any more sense than $60 billion than it did at $100 billion.

>> you don't where would it make some sense >> you know, i don't think uber has any real value as a stand alone company because i don't think they have any path to profitability. the question is if they're ever going to have any appeal to an acquirer i think at that point it becomes a build versus buy question. you got to look at the capital invested at the business, we peg the valuation 20 to $25 billion. that's the amount of capital put into the business, that's where we think there is a logic to it. >> if the losses continue, still tough for somebody to buy it coming back to you for a minute on the ipo itself, you heard leslie, of course, giving an analysis of what may have gone wrong there. do you have any sense, is it simply the function of the underwriters misinterpreting the after market demand or other things that stay at play here as well perhaps that we're not aware of >> i think we may just be seeing

an issue in consumer right now at the same time, i'll be a little bit of an apologist for them they did raise $8 billion. they are a company that spends a lot of money that's a win at the same time, i think it is fair to say this isn't how anybody draws it up. so, you know, but who is to blame? i'm not so sure that there is really a specific party here the timing was obviously clearly unlucky. but also i think it is probably important to point out that this is one point in time over the long-term this is probably fairly meaningless over the short-term, it is not over the long-term there is still a lot here to be worked out. >> yeah, no. they made that point as well i do wonder, there is some unique things about uber the size of the deal, so much stock already in private hands, they tried to prevent people

from shorting it or hedging it do you think that may have played a role in terms of selling that we saw? >> i don't know about the fact that they were able to not -- to limit the shorts but i would add to what you're saying, i mean, uber is truly ubiquitous i think that term is thrown out probably a bit too much. but this is a brand that has become a verb. this is a company that my 3-year-old knows what it does. as does my 70-year-old father and everybody i know it has had such a significant impact on everyone's lives that i wouldn't be too quick to sell them off i think it is a really rare company for this day and age, certainly in the private space but then transitioning to the public markets and having an ipo of this sort of weight and excitement, i think it is hard to navigate. i think in another way it is probably a win they were able to even get out with the way

everything was going down last week >> sam, it raises the inevitable question, will this put a chill on the market for all of the pending ipos now >> i think there is a definite possibility that it will, but at the same time, you look at all these other ipos what is the option they need to raise more capital. if you look at the early investors, all the venture capitalists in uber, anyone investing in the past three years is under water now i don't think there will be a lot of private appetite for these unicorns and so they might have no choice but to do an ipo, even if that's at a disappointing valuation. >> barrett daniels, sam mcbride, we will leave it there thank you, both, for joining us today. i'm sure we'll be talking about this topic much more in the days to come. >> thanks for having me. >> breaking new oz on apple, not trade related. to deirdre bosa. >> the supreme court has ruled

against apple in an app store antitrust case apple shares are down. last time i looked more than 5%. we have reached out to apple for a comment, we have not heard back yet consumers are accusing apple of monopolizing the market for iphone software apps, and forcing them to overpay. remember, the eu is also reportedly getting ready to launch a formal antitrust investigation against apple following spotify's official complaint which complains that apple uses the app store to stifle innovation and limit consumer choice. pressure on apple in terms of antitrust and the role it plays and in its app store back over to you >> deirdre, i want to make sure i have this perfectly correct. this is the supreme court allowing consumers to pursue this lawsuit against an alleged illegal monopoly not the supreme court saying that there is a monopoly >> that's correct. it is allowing -- it is allowing consumers to look into this,

basically saying that they can look into the fact apple may be monopolizing the market for iphone software apps through its app store. >> all right, deirdre, apple down almost -- more than 5.25% this morning it adds to the sell-off this morning and some of the big movers we're watching as we just mentioned, apple, amd, cat, boeing, as jim said earlier today, abc being affected heavily by this trade skirmish "squawk on the street" back w isr th dodown 550 heading into retirement you want to follow your passions rather than worry about how to pay for long-term care. brighthouse smartcare℠ is a hybrid life insurance and long-term care product. it protects your family while providing long-term care coverage, should you need it. so you can explore all the amazing things ahead. talk to your advisor about brighthouse smartcare. brighthouse financial. build for what's ahead℠

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stocks getting hammered, looking at tech, among the biggest losers from the china tariffs. the xlk coming off its worst week of the year, down around 3% again today. one of the group's largest holdings, apple, dragging the sector down, tech giant coming off its worst week of 2019 you have that supreme court ruling against apple and app store antitrust case allowing iphone users to move forward with their suit against the company. so certainly one to continue wat

watching amidst all of this angst in the markets around ratcheting trade tensions with china. >> yeah. apple shaved off a lot of market cap in the last couple of weeks. there it is. that's bear. art cashin, how about that -- the uber ipo that went real well. >> spectacular. >> let's talk about the broader market we're down over 2% give me your insights in terms of whether it makes sense and whether we go from here. >> unfortunately it does make sense. what traders were intrigued with was the initial selling -- the opening selling wave did not take out friday's lows but we wound up with a secondary wave of selling after that and now we have clearly taken out friday's lows. that's not ever a good trading signal so they didn't go into any kind of free fall that is to be said

so everything, everything is talking about two situations, the chinese trade war, the china currency is plunging, the dollar is rallying against it that makes the trade war that much more difficult for the u.s. there is even speculation that the big rally in bitcoin might be chinese citizens trying to get money out of the kcountry an that would fit in with some of the weaknesses i'm also concerned about this iranian situation. that's why oil is up today and a little bit of flight to safety in bonds with all the military posturing, i fear that there is a high risk for a military accident. somebody is nervous and pulls the trigger when they shouldn't. that could be a big event. i think that fear may be in the administration too pompeo canceling all kinds of

things, diverting some travel he did. it is all and all a very difficult day for the stock market that having been said, you're one tweet away from a rally. that is what makes it an even riskier business >> secretary of state pompeo spoke to cnbc about everything going on in the middle east now over the weekend as well but even ahead of everything we have seen with tariffs, retaliatory tariffs and how that ratcheted up over the last couple of days, was the market overbought >> well, what you have to look at is we rally to nominal new record highs but if you really look at the chart from maybe 10 or 15 feet back, you still might have had simply a triple -- you didn't exceed the old highs dramatically so the bears are making the case that the market was somewhat overbought, but it was already stalling and it is now fallen

victim to circumstances that are just catching up with it. >> how closely are you watching the yield curve right now? >> well, i'm watching that, but i -- the thing i'm watching closest is oil because, again, i'm worried about the military situation and then other than that, i'm watching the vix got above 20, hasn't exploded to the upside yet, but it does bear watching and it shows that the nervousness is building in all of the markets that we review. >> you and i sat here, i think it was the day of the g-20 meeting when they had a pretty good bilateral and we thought this was going to come together and you said this is the beginning of the 2020 campaign >> and it could have and should have been. i believe that they were 90% to a deal but chinese came back after review by the higher authorities, not just xi, the committees, and felt that

they -- to some agree might be losing face if they did it the way they wanted. didn't want to change legislation to include it. and then that's what got trump all excited. i thought i had a deal, i was within 90% of a deal and now you guys are walking away. so he came down with one fist, now we have to see if the chinese come back with the other one. >> do you buy this notion reported over the weekend that he sees a conflict as a political play and if so, what does that do to the calculus for markets that set a deal would be the political play >> well, i was in the deal camp and i'm a little surprised, i think if he thinks he can simply get by on a conflict, he'll be surprised. the prices of soybeans are plunging, okay they had a near crash last week at the end of the week so all of these things are building up and i don't believe that the chinese will sell

treasuries, but they could very well stop buying them. and then he'll have more than powell to worry about with interest rates, things will come up heavily >> yeah. they did watch the tweets about powell and misinterpreted them as well. art, thank you. >> my pleasure. >> art cashin joining us. >> get you caught up on some of the other big stories of the morning. many of them sue herera has an update here's what's happening at this hour. secretary of state mike pompeo coming up with ways to keep the iran nuclear deal. it was expected -- an unexpected stop as he was scheduled to go to russia today. he is still expected to go to russia tomorrow. sweden says it is reopening a rape case against wikileaks founder julian assange it will seek his extradition after he has served his 50 week prison term in britain for jumping bail this could complicate matters on britain extraditing assange to the u.s. b-52 bombers ordered by the

white house to deploy to the pe persian gulf took off from a major american air base in qatar on sunday. the uss abraham lincoln has already been deployed to that region and on a sad note, doris day among the most popular movie actresses in u.s. mystery has died 6 pneumonia the animal foundation confirming her passing earlier today, she never won an academy award, but she was given a presidential medal of freedom back in 2004. she was 97 years old you're up to date. that's the news update back downtown to you busy day. >> amazing talent and did so much for animal health and a lot more so, yeah, sad to lose her. thanks. as we go to break, shares of teva plunging among 20 drug companies facing a lawsuit we're watching that space with trade tensions pushing the market lower dow down 554 we're all over the moves and

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stocks are selling off dow down 533 mike santoli has a closer look at the recent trends that we have seen in some of these big moves. mike. >> carl, so going back to the beginning of last week, this is day six of the trade influence gut check this mark et is having if you look at the start of last week, there is a pattern we have to monitor as the day goes on, which is that intraday rally or rally attempt. in each day, a big overnight sell-off, the futures are lower, into the open, and then you had some kind of rally attempt, monday, tuesday pretty flat, but end of day rally attempt but pretty much each day you picked up and closed higher than we finished this edfinished. a brief stand in the s&p 500 right around the lows from

friday as art cashin was mentioning we have broken below that. i think if you look at a longer term chart, two-year chart of the s&p 500, it is going to get to a little bit of what people are in a big picture sense slightly more worried about, startinging to lo ing ing to lo topped the same location, roughly a couple of times, slightly lower, we closed friday at the january 2018 highs more or less. and right in here, so right at just below there, under 2800 in the s&p 500, a 5% pullback just to try to scale what the damage has been, you give back, if you get to 2800, about one fifth of the rally off the december lows. it pretty much falls in the category of routine pullback after a strong rally what we're also experiencingi is it never feels routine >> don't go anywhere we want to take a look at larry kudlow's warning yesterday about the escalating tensions. >> both sides will pay both sides will pay. and these things and of course

it depends -- >> if it is a tariff on goods coming into the country, the chinese aren't paying. >> no. but the chinese will suffer gdp losses and so forth with respect to a diminishing export market and goods that they may need for their own -- >> i understand that but the president says china doesn't -- china -- it pays the tariffs, they may suffer consequences but it is u.s. businesses and u.s. consumers who pay, correct >> yes, to some extent i don't disagree with that again, both sides, both sides will suffer on this. >> mike santoli with us with a fellow at the american enterprise institute and cnbc contributor. who do we believe, kudlow with chris wallace or the president when he says first quarter gdp is helped by tariffs >> i think that's exactly the issue. larry was giving a no pain, no gain argument. there will be pain, but it is worth it to fix some of the trade issues, which have been

plaguing america for 30 years. the president's tweets really are just the opposite. he said the economy seems to be doing just fine. the tariff driving economic growth and the tariffs stay up, then all the companies they move out of china, that works for us too. that was a win-win for america argument and what i don't know is when the president tweets that, does he actually believe that, or is it purely a negotiating tactic to tell the chinese, hey, we'll leave them up and we'll be fine anyways? i don't know that. it would be great to know that. >> jimmy, if this does become the extended status quo in terms of us having all of the tariffs in place on goods getting imported from china, does it actually create that scenario? does it longer term mean the u.s. economy becomes one centered around more manufact e manufacturing and more products being made here in the u.s. are being made in other parts of the world that are actually our allies instead of china? >> yeah, i mean, i think there

are people in the white house who would love to keep these tariffs on have companies begun moving to other nations, whether it is india or vietnam, and then perhaps those countries with tariffs to then move that manufacturing back to the united states the problem i have with a lot of the static analysis we have been seeing about the impact of this trade war, i think that's what i think larry cut low is gikudlowg you need not just the immediate cost of the tariffs, but the effect on markets, the effect on business confidence. really affect on the long-term efficiency of the american economy. i don't think those things are in the model when you see it is going to cost, you know, 0.2 percentage points, that's a limited way of looking at it. >> from a market standpoint, just in terms of the sell-off we're seeing today, it is very, very broad-based things like the nasdaq 100 are selling off the most given all of those tech and trade sensitive names there. but the fact that it is so

broad, is the read through here that investors were not expecting to see this scenario that has been playing out in the last couple of days or is that really just an excuse? >> i think it is fair to say that the investors did not foresee this as a catalyst for a volatility storm at this moment. you never quite foresee that too far in advance the market's response and the handicapping of the outcomes is very distinct from what ultimately might be the conclusion of whether economically and structurally this was a good fight to have waged. i think that's another complicating factor. we can say, this isn't a big deal for the u.s. economy, but right now if it is one more thing that causes investors to say does this really compromise the global growth outlook, does it mean we have to revise down and not revise up earnings estimates for the rest of this year and what does it mean for risk appetites in general as volatility goes up, those are the things that i think can keep the market off balance in the interim even if this comes to be

solidified into some kind of status quo, trade cold war, something like that. last week the market treated this as an event that we had to get past, that deadline up for tariffs and maybe a trade deal we got past that now it is a what now moment for the markets and maybe just an excuse for a reset lower it is like brexit, we thought it would be oh, no, we're not going to know anything for so long, don't know what the new world looks like and the market kind of got past the intense worry about it and it became a new status quo. >> jimmy, mike says the one more thing dynamic, do you go ahead with -- we asked this to cramer earlier, do you go ahead with auto tariffs on the eu later this month what about japanese trade and that deal? does iran become more of a pop warner all of those things. >> i think that's what is really important. i think to the extent the president believes trade -- the tariffs are working, why not continue to apply them if you think this is an effective tool, you will continue to do it. as mike said, if this is not an

event, right, if this is a cold war, if there is an emerging trump doctrine which will apply not just to china, but to europe, and to japan going forward, the president needs to tell us this not just tweets, not larry kudlow press conference, all which we can glean information from, the president needs to tell the nation as reagan did with his evil empire speech, here is what we believe about our geopolitics going forward with regard to china that need -- >> you're talking -- you want an oval office address to the nation >> absolutely. just as previous presidents have done that, i think again of the evil empire speech, he doesn't need to call china the evil empire is this about tactic or broader reworking of our entire relationship with china, what does that mean going forward >> yeah. i think a lot of people like to see something like that and get more context mike and jimmy, thank you for jo

joining us today u.s. secretary of state mike pompeo sitting down with our own hadley gamble before his trip to brussels to discuss the most pressing geopolitical matters including iran and china she joins us now with more >> good morning. what we have seen over the last 24 hours or so is u.s. secretary of state mike pompeo canceling the first leg of his russia trip, his trip to moscow to head to brussels instead and meet with the big e-3 to talk directly about iran. this is something we have seen over the last several days as you know the u.s. military presence in the persian gulf has been amping up, bolstering that presence i asked the secretary of state, are you worried about a potential miscalculation with the military hardware in such a small body of water. he was saying, we're not going to miscalculate. we understand what we're doing but the big question going forward is could they potentially get the europeans on side here? you remember, of course, that iran again and again has sought out the help of the europeans in terms of trying to keep the

nuclear deal together. they want some help from europeans and frankly the trump administration has sent back and wondered why according to the secretary of state that european corporate seemed to understand what we're trying to do in terms of the sanctions regime. but at the same point, european governments do not i want to mention in this wide ranging interview we talked about russia, talked about north korea, china, venezuela as well, tryied to get a sense what is te trump doctrine listen in. >> what president trump has done, we have spoken the truth previous administrations just ignored china. we have called them out. they ignored the fact that intellectual property was being stolen we tried to push back against it and we will. they had force technology transfer in china, they have a million wagers being detained. previous administration turned a blind eye. we won't previous administrations saw that nato countries weren't paying their fair share, this administration has called it out. previous administrations allowed the human rights commission at

the united nations to be occupied by some of the most grotesque human rights aabusers in the world we understand the world as it is and we're working to make it better in every one of those forums >> i don't know about you guys this to me screams real politic at its best. the interesting thing about that, you talk about china and the united states, for the foreign ministers of the world, they're looking at this from a much broader lens because it is not just for them about this trade war. it is also about ensuring that xi jinping, chinese leader, actually continues to have the respect and the popularity back at home and that, of course, plays into the north korean narrative. if the north koreans feel the chinese premier doesn't have the clout he once did, that takes away a very, very big stick for the united states when it comes to tackling north korea. these things don't happen in a vacuum as you know the secretary of state seems to be on it when it comes to the iran file as well as what is

happening with china on this massive trip that he's taking from russia, of course, to brussels and back to russia to meet russia's leaders. guys >> hadley, appreciate that very much very important interview that you brought to us. hadley gamble. the bond market feeling the heat we'll go back to rick santelli and check in with him at the cme. beyond meat, a rare bright spot in today's sea of red as competitor impossible foods announces a $300 million raise in its latest funding round. that and more on the sell-off when "squawk on the street" w wn00ba ck dodo 5

after a wild week for stocks, what's the next move for the markets? find out on tradingnation.cnbc.com more "squawk on the street" coming up.

this is huntsville, alabama. aka, rocket city, usa. this is a very difficult job. failure is not an option. more than half of employees across the country bring financial stress to work. if you're stressed out financially at home, you're going to be too worried to be able to do a good job. i want to be able to offer all of the benefits that keep them satisfied. it is the people that is really the only asset that you have. put your employees on a path to financial wellness with prudential. bring your challenges. welcome back let's get to rick santelli with the santelli exchange. hey, rick. >> thank you i'd like to welcome my buddy jim

bianco it is all about china. the one thing i just can't get away from, we don't know how this is going to be resolved i think it will be one thing i know for sure, two things, china is the biggest holder of treasuries, tight with japan for that title we're the world's biggest customer, okay what iscjapan and we are the world's biggest customer what's the old add damage when you're in business about customers? >> they're never wrong >> there is some truth to that >> as far as the chinese potentially selling treasuries to go with that one, they can't. they still get trade from the u.s. we pay with dollars. every day, we send them dollars! packing stuff like a snowball! they have to buy treasuries, so i get it that pundits on tv will scare everybody that they're going to sell treasuries they can't unless they want to crash their economy by going to zero trade with the u.s., they will continue to buy. >> it's not going to be thrown out there. it's a bit of bluff. >> of course then you were right about where the customer we get $500 billion from them.

they're the vendor they have a bigger vested interest in this field than we do they can only put trade tariffs on $30 billion i think we hold the upper hand in this argument over the longer term now, politics. obviously plays into everything. it seems whether it's what products they pick on tariffs meaning the chinese even though your number of the amount is small. everything's about politics. with the 2020 election i know everybody says we're one tweet away i've agreed with that. not this time. >> i agree with you. we had 15 tweets over the weekend about this trump's position is is clear unless that tweet is i give that's it i'm calling it all off and you might as well resign at that point there is no one tweet that's going to get this resolved i think it's up to the people over our shoulder, the financial markets, to make a decision which way they want to go. do they take hard like in december to try and force

everybody to the table or do we have a brexit scenario where they me ander sideways and talk and talk and talk and nothing happens! what can we learn by the big drop seems easy to connect the dots here that we are now at the best level on foreign change against the currency all year. >> the it's a manageded currency let's put it that way. the government manages it and they want it weaker. they want to use this opportunity to put their currency in a better position for them so no surprise there are they a currency manipulator? sounds obvious there >> chuck schumer, let's hear from you when it comes to the holdings and fact they're most likely not going to sell, that issue is playing out, but it's playing out at a time where interest rates are low. your final thought

>> what's interesting about this is that we might see inflation go up if we hit tariffs. the fed might get inflation and the reaction might be to cut rates. >> markets are pricing at in more of a cut than an increase no matter what inflation does because it's not all created equal because of the economy globally invested. jim, always a pleasure david faber, back to you >> thank you, rick santelli. all right, now over to jon fortt. get a look at what's coming up on "squawk alley." >> morning, david. as we've been talking about, the markets overall down, the nasdaq down 3%. apple is down more than that part of that is china trade. part of it this supreme court decision about letting a lawsuit go forward we'll tell you what it means coming up. what's a target date fund?

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welcome back to "squawk on the street." s&p 500 heading for its worst day of trading since january 3rd. but let's drill down on the financials now down more than 7% from their highs in late september as treasury yields slipped further. big banks pushing lower.

citigroup, morgan stanley, bank of america are are down by more than 3ers. ba%. back to you guys >> "squawk alley" is up next we are obviously all over the sell off close to session lows here dow's down 572 don't go anywhere.

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good morning it is 8:00 a.m. in san francisco and "squawk alley" is live ♪ good monday morning. welcome to "squawk alley." obviously we're going to begin with the market sell offs. stocks again l