i we're live at the nasdaq market site. i'm andrew ross sorkin along with joe kernan and melissa lee. becky quick off today. our guest host today is shark tank's kevin o'liarier, mr. wonderful. waking us all up this morning. good morning >> great to be sheer >> you've added an accessory, we see.

>> i know a kwie who is selling for $50. >> i want the real thipg

skpr thets not like calling -- that's not like calling someone's -- >> it's not sarkassic? is it really -- i. >> think you are wonderful >> we're happy to have a truth teller here. we have a lot of truth going on. including a truth in the market. may not be a happy truth let's start with the big sell off. the dow lost 617 points on monday every sector utilities stock got hit. five dow components are more than 20% off from the recent highs. s&p 50000 up we'll also see what happened in asia making feel feel not that much

better the hang seng off 1.5% treasury yields. roof people focused on where things stand right now the ten-year note at 2.412 talk about bitcoin just a minute because -- >> uncorrelated. that may be the beauty the crypto currency topping 8,000 for the first time since july there are several potential explanations for this rally, including positive sentiment around crypto conventions in new york this week a potential safe haven from the u.s. china trade war and greater institutional support. for example. reports earlier said facebook is building a crypto based payment system they're saying chinese buyers are using bitcoin to circumvent

the capital controls on the yuan trying to get their money out. you can't kwet in and out of it in large the receiver wants some guarantee. let's say you want to buy a piece of real estate for $10 million in switzerland >> let's just say. >> let's just say. >> and they don't want to use the traditional transfer system. all right? which is illegal, by the way you have to disclose why you are transferring $10 million into switzerland. they want to guarantee that the

value comes back to u.s. currency at ten. you have to edge had the risk p bit koij where were that means it's not a real currency that means the receiver is not willing to take the risk it's worthless >> i believe that. >> okay. speaking truth so early in the morning. >> it's true everybody -- exactly exactly. >> your boy had a bounce in the step, right? >> all the people down the block at the crypto convention have bounces in their steps compared to where we were yeah compared to where we were a few months ago it looks like the crypto winter. whatever you think, missed another one. >> thank you yes, i swore i was going to be disciplined. i thought under $5,000 sorkin family -- >> just to get your attention. i crave your attention.

in his words we'll know in three to four weeks we'll know if he is successful. what are the great twitter people to follow the reason i bring it up today, eunice, you say that china state media whipping up the nationalism over there in sfons the weekend's events we can handle this and get ready and, you know, i guess we do that here too, though. i don't know whether that ramps up the entrerjed sides in this thing, but one thing i know is you need to follow eunice to know what's going on.

it's entitled this is china's attitude towards the trade war, and then translation is negotiate. we can fight, bring it on, bully us, you wish it was also interesting that china's official broadcaster also posted a clip of its nightly newscast which was viewed over 3.3 billion times. a message to credit igs that are concerned about a trade war. to say that china is prepared.

the hard line comes as both have been escalating the tariff threat the ustr opened its comment period from 25% tariffs on $300 billion of goods china unveiled its tariffs, and that essentially means that pretty much everything that it imports from the united states is going to see extra taxes. now, the official foreign ministry today also weighed in >> you know what we've seen with u.s. mca is we can believe one thing one hour and then the next hour suddenly they're talking back together again. i wonder if we need to wait until we -- we really have to wait until june?

the market is up today i don't know if it closes wrup, if it really is mid-june, when is the meeting for mid-june? >> it's june 28th, 29th. it's not mid-june. it's late june. it's going to be i don't know. >> there's hope that there's more wiggle room because the chinese tariffs are supposed to kick in on june 1 it's, and then as we were talking about late last week, the u.s. tariffs are actually -- there's a lot of stuff that's in transit right now. there's a lot of chinese goods that haven't yet been effected

they're still -- i guess some optimists are hoping that maybe the negotiators will be able to work go something out in that time frame >> thanks for translating that board. >> i don't know. >> that would have been needed that i'm glad -- are you sure you're right about everything that you said there because u someone had to tell you that >> yeah. >> okay. >> all right we yeah, yeah, yeah. >> we don't need to sensor that. we can run that. over there you can't actually -- >> no. the chinese will love it if you run it over and over and over get their message out. no problem with that doipt you like when i try to get you followers. i want to follow you again >> it's only yoon tv, actually >> that's right.

that's right i'm joseph >> another younis yoon is getting all those followers. >> exploding in followers. thank you. >> okay. >> we've got another big loss for bayer in the courts to tell you about this morning a california jury ordered the company to pay more than $2 billion to a couple who says they were diagnosed with cancer after they used roundup, the weed killer. the jury says it did not warn consumers of its cancer risk they say bayer believes the punitive verdict is excessive and unjustifiable. bayer stock dropping nearly 6% in early trading to nearly a seven-year low right now the stock at 55.30 coming up, the fall-out from the uber ipo we will show you what ceo said to employees yesterday to reassure them about the big stock drop as we head to break, take a look at the biggest premarket winners

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>> uber's market cap down 14 billion dollars from its ipo price of $45 he said remember that facebook and amazon post-ipo trading was incredibly difficult tore these companies and look at how they have delivered since our road will be the same. marginally up. with uber, too, you could have gotten in now. if you thought soft bank had a great opportunity to get in, now you can do better than soft bank.

>> let's bring in dan ooifz, analyst at web bush securities good morning to you. what do you think? why 65 where do you get that number from it feels like everybody is pulling these things out of thin air wrien. >> our valuation how we viewed uber especially given the lack of profit ability has been when you look at ride sharing, eets. in our opinion that's the way to value. >> when you say some of the parts, meaning someone goes out and tries to beet buy the eats business, they pay x if they were go buy the ride sharing business, they were going to pay x? like that?

are you basically just buying a ride sharing business. >> do a little sum of the parts for us >> from being unable to value the ride sharing whatsoever because we have no idea because of losses, to being unable to value infantry the other things, so instead of being unable to value the thing in total, i would still think you're unable to value any of the parts and then add them up you zroint any way of valuing those as you do of valuing uber itself, do you?

>> the key den ets are these networks how does that company say we're going to make our drivers deliver tacos. andrew, i'm going to send you out. you're going to go and pick up somebody and deliver tacos at the same time. andrew says i don't want my car to smell i'm not part of uber eats. how do they make that part of the business work? zploog it's really the value of the ecosystem. we view it as $90 million consumers today. >> even though those 90 million are overland tremendously with lyft >>right now have i no cash

flow tell me if i'm wrong you burn through $20 billion building this platform of value that everyone thinks imputs value. we sort of view it as right now for the next two to three years, they're going to have to continue to burn cash in terms of investment. >> how exciting. >> but ultimately, if i look back, somehow i view that as am zplon over the last decade it was viewed -- it's a 3% penetrated opportunity for what's called a $7 trillion

market. it opens up the allegation of a monopoly in terms of the app store. this is what -- somehow they should separate the app store because they shouldn't be able to control the 30% fee that people are upset about what do you think will happen here >> it's not the fines. it's the m-word. from a monopoly perspective, especially on anti-trust, when i look at the app story today, i think ultimate will i what this could do is pressure some fees on app store that's about one-third of services from a revenue percent

bekt. the fact that it's going forward should add risk, and if i were a large retailer, i would ask myself what stops a class action on my decision of what i put in my wal-mart or target shelves? what's the difference? i don't see this could -- the apple argument was

goes through the developer, if you want, because they're the ones setting the price that's really all this case really says except underneath is a. larger issue about monopoly. >> it will take years to go through and add risk and be an overhang on apple. >> prok sis and liberal on this court. >> i think you would be gratified. the picture that you and radio your friends painted of someone idealogically doing the same thing over and over again in a drinken stuper maybe wasn't -- maybe he is actually a reasoned. >> i happen to disagree with those decisions.

>> i zsh auto. >> i'm on the other end of it. >> you are with all the nut cas wing nuts? >> i think apple is a monopoly >> and joe biden now >> joe biden is now in that pool >> he doesn't like -- >> he still wants the fly and eat the meat, which i can't -- what's app revealed a security

vulnerability. that's right after the break ♪

you should be mad they gave this guy a promotion. you should be mad at forced camaraderie. and you should be mad at tech that makes things worse. but you're not mad, because you have e*trade, who's tech makes life easier by automatically adding technical patterns on charts

and helping you understand what they mean. don't get mad. get e*trade's simplified technical analysis. >> for bad news for facebook what's app under fire after admitting its vulnerable to spyware. hackers remotely installed spyware on android and irrelevant phone devices even if users didn't answer the call and hackers could then scrub the call from the phone's log.

it can turn on the camera and microphone and reel read emails. it says pegasus is intended to fight terrorism and crime, but human rights groups in the middle east have been targeted in the past. bhaets app says it began rolling out a fix on friday and issued a patch for customers yesterday. it says the users worldwide should update their app as a precaution nso tells the ft its investigating the what's app incident fsh reportly further from an agreement than previously thought. there were reports of facebook close to a deal with regulators that would involve a $3 billion penalty. reuters is reporting a deal will not likely happen this week and could be a month away.

tariff turmoil in the market wiping out 1.1 trillion in market cap from the s&p 500 since president trump turned up the heat on china. we're going to talk about the biggest losers and potential buying opportunities we are going to do that next as we head to a break, a look at yesterday's s&p 500 winners and losers

>> we are in the green dow looking to open about 111 points higher. nasdaq looking to open higher as well 51 points higher

s&p 500 looking to open about 13 points higher. this is one of the currency commodity or whatever you want to describe it as. almost 8,000 right now >> the winter is coming. >> and i missed the winter, unfortunately. tariffs have rebuilt our steel industry we placed a 25% tariff on dumped steel from china and other countries, and we now have a big and growing industry the president tweeted china buys muchess from us than we buy from them by almost $500 billion. we are in a fantastic spogs. make your products at home in

the u.s. and there's no tariff many companies are leaving china so that they will be more competitive for usa buyers we are now a much bigger kmi than china and have substantially increased in size since the great 2016 election. we are the piggy bank everyone wants to raid and take advantage of no more. >> i you take great -- you have never seen a trade war that's not disinflationary, and you are pointing the table on that >> go back to 100 years. it doesn't happen. the reality is mathematically it

may look like there are prices that look higher, but the end result is there's less trade and less economic activity. >> that doesn't make me think it's time to buy stocks then that makes me think the fed might cut, which then when we got another fed put coming in. >> that says our view. >> the first thing is you basically until two weeks ago went up in a straight line.

to us it's the fed is going to thereby the way they change tactics in january >> we're in a -- this is a situation that's not going to be cured by the fed every day the news organizationed like market watch, they need to put out -- they need to just churn this stuff out. i half the time it's like this is just --in terms of valuatio and rationale to own stocks and the po material for few minutesing costs to be muted, things like that, there's definitely an argument that the

fed can help confidence at a minimum blsh the inflation as peck has to be trandstory because you can't really pass on that much of the cost. the valuation case isn't a bad one. if you are looking for places where maybe some pain has already been helped, has already been felt, one of the interesting places is midcaps. of a run of outperformance they've underperformed in 2017 and 2018 and already going into this year. there are pockets of the market where there's opportunity.

maybe a cut. seemds to be not such a bad scenario >> you were a big 3,100, 3,300 s&p guy. did this change everything if everything went right, we have always said china, brexit, the fed, if all stars were in align, you could overshoot the 3,400. that probability has been reduced fairly drastically >> what if everything goes >> no deal the fed is forced to cut because we got to do something about ec growth. what happened? >> if everything goes wrong, you could retrace knee the entire gands from december.

>> thank you both. see you soon >> all right coming up, delivery wars we'll tell you about a big step forward in the race for next day delivery between two giants of retail wal-mart and amazon. later, what is behind bitcoin's meet orric rise. up almost 120% that's this yoer alone up more than 40% in the last week we'll discuss that with morgan digital assets founder stay tuned you're watching "squawk box" on cnbc

. >> it was the worst day for the nasdaq yesterday this year time now for the executive edge. wall wal maurt rolling out free next day shipping for orders at $35 or more in las vegas and phoen phoenix. it's coming to southern california in the next few days, and it will roll out to 75% of the united states by the end of the year the move comes less than a month after amazon told investors it will spend $800 million to upgrade to one-day shipping for prime members. this is a major shot across the bough, right, mr. wonderful? they are being allowed by the market to do so, where all these acquisitions are large they're big ones i actually think they're going to be a survivor they and target will be able to fend off amazon. the store matters. people still want to go into the store. amazon is setting up in old

malls now. soho, can you go to an amazon store. it's a complete reversal of direction, but they know they have to do it. >> the "wall street journal" says the grounded planes might not return to service before mid to late august boeing initially expected the fix to be ready in april the planes were supposed to return to the air by next month, by june. officials say the fix that after that fix is approved, the actual implementation can take months as the update is installed and the planes are phased back into carrier schedules. regulatory scrutiny in other countries is also likely to take longer that means some international carriers could face even further delays coming up we're going to get mr. wonderful's stock picks. i want to ask you about pfizer the s&p so is far this year, he

will tell us why next. as we head to a break what's happening in european markets right now? we have moved into the green back in a moment through the at&t network, edge-to-edge intelligence gives you the power to see every corner of your growing business. from managing inventory... to detecting and preventing threats... to scaling up your production. giving you a nice big edge over your competition. that's the power of edge-to-edge intelligence.

zplush on guest host says there

are three names right now. chairman of oh shares etf and shark tank co-host is here on set. he liked dividends i dividends, so i imagin these are dividend-paying stocks. >> no, i'm now focusing on balance sheets i'm going to assume volatility i'm going to assume worst case we have a long trade war maybe it goes right to the election who knows? at points like this, maybe moving up the quality's a little better in terms of risk-taking so i'm just looking at large entities that generate a lot of cash that are reducing their debt and also are returning capital to shareholders through other dividends or stock repurchases. and when you screen the market for that, you find some really high-quality companies across multiple sectors, like a j&j, really boring stuff, melissa but when you look at how these have performed recently, you're happy to own them, because the market tends to trade back to quality when there's times of concern. and you know, i'll give you an

example, an extreme -- if you had bought uber, which makes no cash flow at all, and obviously is a speculation, you got slaughtered. >> right. >> you bought the same capital, didn't buy any of the uber, bought a basket of these stocks -- pfizer being one of them, for example -- these are really boring. and they provide security in times like this and returns. remember, the div yields on these are 1.9% to 2% so i'm getting boring and i'm protecting my capital and preservation is my theme. >> how does boeing fit into all this this is one you've liked for a long time. >> i have. >> it was a pretty heavyweig heavyweighting in your portfolio. >> yes, and it's zero now. i'm out. >> when did you get out? >> i got out the week after the concern when the max got pulled out for one concern i have, and it's lucky i mean, this was a 5% weight, zero now this is the best manufacturing company on earth, so i have to get back into this name.

the question is why? here's my question that no one seems to be able to answer when they redesigned the max, they pushed up the engines "x" number of feet on the fuselage -- >> right. >> -- because they're so powerful now, the software fix is supposedly going to correct this -- >> to compensate the nose going down because the weight of the engine. >> what happened -- this is 21% of their free cash flow. this is a big deal what happens if it's a physical change that's required what happens if you can't get the market back on just the software fix i don't know any more than anybody else does, but my spider sense tells me i can't go back into this name until i get the resolution on that where would i buy it again $288 to $300 is sort of where i learned to love the stock. could it get back there? no sweat. >> i don't think you can retrofit those things. the engine's totally been moved -- >> that's what i mean. >> scrap metal

>> the engine's been totally moved. >> boeing could survive scrapping all of their inventory of maxes. >> what about the ones that are already out there? >> they're never going to fly, under -- listen, i am -- >> that's a crazy scenario i mean, that's like -- you would say the chances of that are like less than 5%. >> i haven't found an engineer that can confirm this. i've talked to many pilots about this look, i put in a lot of work when i'm going to put a 5% weighting into a stock i have to understand the business model i have to be assured -- and i wish the company would come out and say it -- they haven't -- that i am not going to be facing any kind of change to the basic design. >> right. >> and i need to hear that and a lot of other investors want to hear it, too meanwhile, every morning in the premarket, you can watch this trade down i talked to a lot of institutional investors about it i'd like to put this back at 5%. under the worst-case scenario, stock goes back into the 200s, i go back in. >> i mean it was about fuel efficiency >> look -- >> that changed sort of the design of the -- >> why can't the company address my issue i'm not the only person talking about this >> because the old planes didn't

need this system because it didn't have the same -- >> joe, i'm talking specifically -- have they designed a plane that was never -- >> well, that's what i'm saying. the previous plane didn't have an m cass system -- >> because the engines were in the front -- >> the change -- >> they were moved up the fuselage. >> that's what i mean. >> i need to understand. please, answer that question for me and believe me, i'm not the only guy talking about this. >> so, if the answer is no, no resigning, you hear that from the company's ceo, would you then buy the stock is that enough for you would you step in? >> i would start on a waiting list, probably going to 1.5% right now. but i don't have to rush the news gets worse every day -- >> well, the trade war doesn't help either, boeing specifically. >> well, i'm not worried about -- the chinese need the planes they can't switch all of the allocation to airbus that would be really hard for them to do i still say it's the best manufacturing company in the world but can't buy it now. president trump tweeting literally as we've been

speaking -- "we can make a deal with china tomorrow before their companies start leaving so as not to lose usa business, but the last time we were close, they wanted to renegotiate the deal no way we are in a much better position now than any deal we could have made will be taking in billions of dollars and moving jobs back to the usa where they belong. other countries are already negotiating with us because they don't want this to happen to them they must be a part of usa action this should have been done by our leaders many years ago enjoy! we will see, of course, whether the markets enjoy it or not. all right, coming up, wael stocks getting hammered as trade tensions escalate. we'll tell you how the big retail names are preparing for the possibility of more tariffs, straight ahead. plus, later, is the fed focused too much on the market we'll talk about where jay powell's attention really should be, according to one market pundit stay tuned "squawk box" returns on cnbc

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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.

the trade war and your money. will the chinese sell u.s. debt? can the downdraft in stocks get worse? we break down the possible scenarios and tell you where you should be putting your money to work. retailers in flux. a closer look at the industry and impact of tariffs with national retail federation ceo matt shea. and what's up with whatsapp? facebook's messaging service announcing it was hit with spyware. we've got details and the fix, straight ahead, as the second hour of "squawk box" begins right now. ♪ >> announcer: live from the beating heart of business, new york, this is "squawk box. ♪ >> i like that i wish it was bigger >> make it bigger. >> good morning. welcome back to "squawk box"

♪ here on cnbc i'm joe kernen along with melissa lee -- >> look at you look how big you are do you think that's flattering or not flattering? >> it depends. it depends on if i hold my breath >> people looking up >> look at all those people in the street who just stopped. they're looking right up at you. >> like godzilla, isn't it >> you should do that, see if you scare anybody. >> i'm here in studio along with melissa lee and andrew ross sorkin we should all get our turn there, i think in studio, sharing his thoughts on the markets, put mr. wonderful up there that will scare a few children kevin o'leary, chairman of o'shares etf and co-host of "shark tank. >> ah! >> there it is lucky you wore that today. >> look at the acute ramone. >> i think you now need to sell these things >> maybe you're right. >> i think so. you could make them pretty cheap. >> never miss an opportunity. >> the wonder pocket square.

i could make hundreds of dollars -- >> the wonderful mr. pocket square. >> u.s. equity futures are rebounding a little, triple digits, up 103 on the dow. the nasdaq's indicated up 47 and the s&p 500 indicated up 12 points or so. okay, here's what's making headlines at this hour so much going on china's top diplomat says the u.s. and china can reach a trade deal that is good for both sides, saying that substantial progress has been made, despite disagreements that have resulted in both sides raising tariffs on each other's goods also, small-business optimism is at a four-month high the monthly index from the national federation of independent business rose to 103.5 for april, up 1.7 points from march expectations for sales and business conditions do continue to grow. and a judge has ordered hearings next month on a $69 billion acquisition of insurer aetna by cvs health. that was completed, but the judge in the case, richard leon, has been at odds with the

justice department's antitrust division he says the same judge who approved the at&t/time warner deal -- he's the same judge who approved that deal -- he had criticized the cvs approval, saying remedies mandated by the government were merely cosmetic. so, lots of people focused on that deal still. a few stocks to watch this morning coca-cola upgraded to overweight from equal weight at morgan stanley with a $55 price target the analyst says the dow component has a stronger growth outlook than its peers, setting pricing power and volume growth among other factors. and walmart will spend $800 million to expand its next-day delivery service to more u.s. homes, free next-day shipping for about 200,000 products will now be offered in phoenix, las vegas, and southern california, with walmart planning further expansion later this year. joe. all right, china striking back against the u.s. on trade and rumors are now swirling that china may stop buying u.s. debt. call it the nuclear option but would that do more harm than good

joining us now, equity derivative strategist at credit suisse and sirat, equity analyst at douglas c. lane and associates sirat is also a cnbc contributor. guest host kevin o'leary is also with us. i don't know who wants to start on this. but i mean, there was a while, just for someone to hold large balances, you actually got back less than you actually gave them, with negative interest rates. china's got a lot of money that it needs to put into investments. can you even imagine passing or not -- getting 2.45% and looking elsewhere for their cash balances >> i don't think selling treasuries is what they're going to do, but what's interesting is that throughout this year, investors have consistently underpriced the risk around trade and around potential escalation so, one of the things we've pointed out about two weeks ago was that actually emerging market volatility had fallen to a one-year low, and that was

despite emerging market credit spreads rising, despite a stronger dollar, despite obviously ongoing trade negotiations so this tells you investors have consistently been, i think, too optimistic around this issue. >> is that an opportunity to hedge positions in emerging markets, which has been a very popular trade? >> yes, right. we came out and recommended investors buy downside protection in emerging markets that trade worked out well but i think one of the things that's notable with this correction compared to q-4, i think a lot of questions around that, is that at this time we are seeing more hedging activity, right? so, q-4 investors sold stocks, moved to cash, didn't have anything to do with the market this time around, hedge fund investors holding onto stock but layering into hennidges that's what i think is interesting. >> sirat cramer said dumping treasuries means nothing it's ridiculous. they don't have the ammo, boeing, caterpillar, are you kidding? ag, please so, he was immediately dismissing those i saw other analysis, the way

that selling would affect the currency in china would make exporting even more difficult and just exacerbate the problem. so it's -- >> i think cramer's right, because it's really posturing. it's them saying -- >> why wouldn't we see -- sorry to interrupt, but why wouldn't we -- move move let's see the ten-year move, if it's really a problem. >> because i don't think they're really going to do it. >> right. >> because that's kind of the last salvo they're going to use and that's basically them saying we're going into all-out war right now tit for tat, posturing, more rhetoric we have three, four more weeks it keeps on moving the date forward, but if they actually sell the treasuries, you're going to cause these unintended consequences we know what's going to happen with rates rising, currency getting weaker, and then you've got other effects as to trade, because those will just pass more prices on but after that, then what do you do, right? then you basically use pretty much your last option. and then, you know, where do you go and i think that would be the last thing that you'd want to see, because the negotiations go on at the same time the market,

to your point, last december nobody expected it now it's kind of like, look, we know, same story again, you know, we're crying uncle until we get to a deal at the same time, our view is, you know, you buy really good companies and you look at companies that have, you know, strong cash flow you look at the microsofts of the world, the googles of the world. you put capital to work at companies that are going to survive. yes, there will be up-and-downs, but these are really good companies. >> trump just said we could do a deal tomorrow. who is he talking to when he says we could do a deal tomorrow and when china and the state-run entities are tweeting and talking about how, you know, stay tough, we're not going to be bullied are we getting further apart, or is it really possible that a phone call to president xi could bring this back? >> i think it could get done quickly. it's a question of when both sides want to get it done and what they're going to take back to their respective constituents both want to save face both want to say we did the right thing. >> right. >> you're probably not there right now, but give it a few weeks -- >> but when you say "get done," i mean, this is the time when investors like me want a real

deal. >> yes. >> i've lived with china for 15 years. they have really screwed me over in manufacturing and ip -- >> and that's why they didn't get it done last week -- >> and i'm done. i want access to their middle class, which is the fastest growing market in the world, and i want an ip deal and i want a platform where i can sue them when they breach those rules, somewhere where i can go and litigate to keep them honest i need those three things. >> i forgot that your take on this, you've been on before talking about actual life experience over there with your businesses brutal. >> i always bring a product example. this time i brought this one, the alumible this is an american innovation out of salt lake city. a monster hit globally it simply lights up a toilet bowl at night -- >> wait, what? >> that's what it does -- >> why can't you flip the light on >> because you don't want to do that in the middle of the night. you want to walk in and have your -- >> it's like a bathroom night light? >> i'm going to give this to you because you have your own boys, right? >> yeah. >> this is a monster hit when your kids see this, all their friends are going to want

it. >> where does this go? >> it slaps on the side of your toilet and you put that light inside it, and it senses your motion and lights up the bowl and gives young boys a target -- >> oh. >> moms love it. >> for children. >> your staff's going to love it the ladies that come in an clean your -- they're going to love that. >> it's a great stocking stuffer. >> when it's a bed bath & bey d beyond -- >> this will help in my family. >> and you're going to buy many more of them the minute this took off -- this is a "shark tank" deal from several years ago -- millions of dollars overnight, ripped off, knocked off, 15 competitors out of china -- >> what does this wire part do >> you hang that above the water and a beautiful light -- >> that's the light. so it's battery operated. >> and the innovation has been ripped off and stolen. >> right. >> i called up amazon myself and said, guys, this is an american product with ip. take them down now, amazon would do it, but alibaba wouldn't and i can't litigate so, i say to trump and i say to kudlow and the rest of the team, keep squeezing, don't stop, keep

going. this is our chance after all these years. i want to be able to sue the chinese knock-off. i'm ready to rock. let's go long and hard >> wow. >> it's unsettling, melissa, to turn on -- >> why do you -- >> well, i'm just explaining, to turn on the light, and you know, there's neighbors, and if it's up at like 4:00 in the morning -- >> uh huh. >> and i'm fully going to be -- and there's a window right there and i actually turn the -- the light needs to be off. >> you will love that product. >> i don't want to scare people. i don't want to, you know -- >> no, no, you're going to love it. >> i don't want to be -- >> illumible. >> i've got one. >> you already have one. >> i'm good. >> joe, you will love it >> i mean, in the middle of the night -- >> good for old guys >> good for old guys good for old guys. >> for us, it's like -- >> about 11 of those 11 bathrooms in the mansion? >> yeah, for 11 bathrooms for one -- >> sirat, mandy, thanks for

bearing with us. appreciate it. good to see you. coming up, retail stocks getting hammered as trade tensions escalate. we'll hear from the national retail federation's matt shea on the state of the industry and impact of the trade war. and facebook's whatsapp targeted by spyware. we have the details after the break. stay tuned to "squawk box.

welcome back to "squawk box" this morning take a look at futures we are in the green this morning after what's been a wild ride most of this week. dow jones up about 118 points, nasdaq looking to open about 48 points higher, s&p 500 also looking to open higher, about 14 points higher right now. facebook's whatsapp has confirmed hackers were able to remotely install spyware on smartphones. whatsapp says earlier this month it discovered attackers installed the software on iphones and android devices by exploiting a flaw in the voice call feature it can be installed even if people didn't answer and the calls would disappear from the phone's log. it is reported it was developed by nso group its pegasus software can turn on the phone's camera and microphone and read data it's intended for governments and intelligence agencies to fight terrorism and crime, but human rights groups in the middle east have been targeted in the past. whatsapp issued a past for

customers yesterday and is urging its 1.5 billion users worldwide to update their app as a precaution they are investigating the incident shares of facebook recouping some of yesterday's losses, up 1% premarket. and coming up, is the cryptocurrency boom back bitcoin soaring from $6,000 to over $8,000 in just five days. we're going to discuss the recent move and what's driving it after the break as we head to the aforementioned break, here's a look at the european markets right now, got some green arrows.

welcome back to "squawk box" this morning while the stock market is tumbling, there is one asset class surging, and that's cryptocurrencies, more specifically bitcoin take a look at this bitcoin chart, because right now we're looking, it's over $8,000, more than double from the february lows what is behind this move and how much higher can it go? joining us right now is anthony, founder and partner at morgan creek asset, digital assets. good morning to you. what is going on here? >> the bitcoin bulls are back. >> big question. >> you know, look, yesterday's cme bitcoin futures, $1.2

billion in volume. a lot of these exchanges are seeing all-time highs in volume, and i think that we've seen the bottom of the bear market -- >> but why and who are these people >> yeah, i think two things. one, definitely institutions are starting to come in. fidelity announcing they're starting their custody and trading back deadline for july, but retail also is coming in, right? and i think what you're seeing is two things -- one, it's a very scarce asset. we're about a year out from the hafening, so it's going to get about half as scarce in the monetary schedule. >> that sounds really exciting. >> so, historically, that's been a big moment in terms of it really is a price driver because it reminds people that there's only 21 million of these. >> it's just an arbitrary thing, right? cut it in half in terms of units. >> preset every four years, basically the amount that is created every ten minutes gets cut in half. right now it's 12 1/2 bitcoin every ten minutes. in may 2020, it will get cut to 6.25 so if you believe in scarce assets, that's a big moment, and we're about a year out from that the other thing is i think the trade war has a little bit to do with it, right this idea that we're watching

essentially a trade war play out on twitter you look at a nonsovereign currency and i think that there's some kind of safe haven around that. >> flip that around, though. if this trade war gets solved, does bitcoin go down >> it could. i think that the big thing here is, if you look at the macro trend, bitcoin has seen three drawdowns over 80% in its lifetime in the last decade, but it is the best performing asset. and one of the corollaries i draw is if you look at amazon's stock, right, so amazon's drawn down over 90% twice. the intrayear drawdown is over 30% on average so it's a pretty volatile stock in that sense. bitcoin's done very similar things, but what it continues to do is set new yearly lows, right? so don't look at the highs, look at the lows. and again, it's just supply and demand if you have a scarce asset and demand increases -- >> mr. wonderful thinks it's worthless. he called it garbage this morning. >> i want to explore the idea -- yeah, i did say that i want to explore the idea that there is nothing here except raw speculation. no different than when i go to las vegas and put my money on black or red on a roulette

wheel, because where is the intrinsic value inherent in deploying real capital -- let's talk realmoney here -- and put it into bitcoin as a storage of value? i get gold for 2,000 years, including the romans, saw value in owning that as an asset class. tell me why this, which is basically a digital game, is the way i look at it, has any intrinsic value? would people actually put real money into this? they make no interest. can't pay their taxes with it. regulators don't like it, which is a problem with compliance and where is the long-term value, just this idea that they're going to cut the number of units in half sounds like such a scam. like, that's just totally bs >> so, i would say two things. one is, it's disruptive technology so if you look at it from a technology standpoint -- >> but that also has an odor of bs to it. >> look, everything that's new seems different, right, in the beginning. and i think what you've got to realize is with bitcoin specifically, money is a belief system the u.s. dollar -- the only reason we use it is because we

believe it has value you give me a dollar, i give you a good or service in exchange. we believe that it has value bitcoin has value because two people who exchange it believe it has that value. and what we're seeing is the volume, right? look at people using it. that's ultimately what matters. >> what about all aof the other crypto crap? there's lots of other coins. >> i believe bitcoin is the king and will stay the king for a long time. >> i taught a class at harvard 18 months ago. young people challenged me i put $100 into coinbase, which is a wallet thing -- >> you bought bitcoin? >> i bought it all, all the crypto crap. i put $100 in. it's now worth $30 that's a $70 loss on my cryptocrap i bought them all. i think that really sucks. and i think people should understand today the hot digital is bitcoin tomorrow it could be whatever, right? >> again, i think that bitcoin -- the reason why bitcoin is getting so much attention, it's the best performing asset in the last decade, right? it's drastically outperformed

s&p, every other kind of financial asset that's out there. and the second thing is, the institutions are coming in because bitcoin is actually a better store of value. it's more transparent and more secure so, regulators, they actually like bitcoin in the sense of law enforcement can track criminal activity, right? every single transaction is done on a public ledger you can see -- >> i'm not sure that law enforcement loves bitcoin. >> i've interviewed a d.a. agent who came on, and they would love for criminals to use bitcoin over u.s. dollars and cash, right? it's much more traceable so what law enforcement is saying is they want these digital currencies used, bitcoin specifically, because of the public nature of the transactions, easier to track the criminal activity. >> after the fact. >> after the fact, yeah, of course well, u.s. dollars, you can't track it before or after. >> last time this had a big run-up to $20,000 and people started talking about assets with it, the s.e.c. was handing out subpoenas like birthday cards. >> they were doing it for the icos those are essentially people who took the concept of a blockchain or cryptocurrency token using

that as fund-raising for companies. you can imagine if you solicit funds for investors and do nefarious things, the s.e.c. cares -- >> that's basically fraud. and the fact of the matter is bitcoin's been acting pretty well in respect to the recent bad news hitting the sector. we had a hack of binance and then the a.g. bringing charges and bitcoin has done remarkably well. >> why can't i pay my taxes with it >> you can in the state of ohio, they accept bitcoin for taxes and there's other states that are working on it now. >> federally, do you think it will ever get there? >> for sure. >> wow, you're an optimist. >> when? >> when? i'm not in the business of making bets on the federal government's regulatory decisions. >> do we hit the past highs again? >> i definitely think that we will >> what sort of time frame >> look, that's the hard part. the way that i think to look at this -- it's a noncorrelated asymmetric return asset, and we definitely in my opinion have hit the bottom of the bear market and now have entered into this bull market

historically, about a year out from that halvening period that kicks off. it wouldn't surprise me to hut a bull market and 20,000 will be a blip on the radar as far as previous past highs -- >> only bitcoin, no other -- >> i'm only here to talk about bitcoin. >> you would think all boats would rise in this tide of crypto. >> in your portfolio, it's a noncorrelated asymmetric return asset that the value drivers of all your equities, everything else is tied to -- earnings, gdp, interest rates, et cetera -- >> the problem is bitcoin is not tied to anything. >> neither is u.s. dollars and how big is your cash position? >> look, i love your optimistic view of it you haven't changed my mind at all. it's still garbage and i'm not going to take real money and put it into this thing it's never going to happen imagine taking real money, real dollars i'm making in cash and putting it into cryptocrap >> agree to disagree. >> so, cryptocrap, garbage >> garbage is better than

garbage. >> right. >> he keeps saying this -- >> i think a little colorful language is necessary when discussing bitcoin there's no question about it. >> anthony, thank you for coming in this morning. >> absolutely. thanks for having me. >> come on back. president trump on a tweetfest this morning the latest is, in his words, "when the time is right, we'll make a deal with china my respect and friendship with president xi is unlimited, but as i have told him many times before, this must be a great deal for the united states or it just doesn't make any sense. we have to be allowed to make up some of the tremendous ground that we've lost to china on trade since ridiculous one-sided formation of the wto it will all happen and much faster than people think!" people are looking for a trump put yesterday. where is the trump put, and the fed put? >> secretary mnuchin came out, then trump had the pool spray and there was the put.

that's when the markets went off the lows so, there was some, i don't want to say the national team came in, but the administration came on and made some positive comments. >> the president xi put could be a real put, depending on what we see coming from there, i think what if he decides to respond to some of this stuff >> people are saying that the overnight gains in asia are in part because of the official chinese national team coming in and buying equities there. so, we might even be seeing that right now. coming up, much more on trade and your money market historian jeremy siegel talks about the recent market downturn looking at futures, we are looking at a higher open after yesterday's dismal day the s&p looking to add 17 at the open, nasdaq looking to be up 61 stay tuned you're watching "squawk box. 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

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♪ still to come on "squawk box" this morning -- trade turmoil. kayla tausche's going to break down the latest from washington. plus, the ceo of the national retail federation is our guest then later, jeremy siegel is going to join us to discuss the markets and much more. "squawk box" returns right after this ♪ it's us. millennials. everyone's favorite.

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some news just in on boeing and its grounded 737 max jet fleet. according to the "wall street journal," an internal faa review has determined that senior agency officials did not monitor

crucial safety assessments of the flight control system implicated in two fatal crashes. officials also tell the paper that boeing did not flag the automated stall prevention feature as a system whose malfunction would cause a catastrophic event and boeing employees were apparently designated as faa representatives who were allowed to sign off on the final design. this is like roaches under the sink. >> not getting any better, the news not getting any better. meantime, president trump offering a projection about how much longer the trade war may last with china. want to get over to kayla tausche, who's in washington, d.c., this morning with more details on that. kayla. >> reporter: good morning, andrew president trump is putting a process in motion to put tariffs on the remainder of chinese imports, though he says he hasn't decided whether to go through with them. the latest list of items released last night by the u.s. trade representative includes a wide variety of consumer goods -- apparel, housewares and

appliances and more -- that could see 25% higher tariffs in late june. the president tweeting "when the time is right, we will make a deal with china," noting his friendship and respect with president xi is unlimited. but last night he sounded a relatively optimistic tone. >> steve just got back from china. we'll let you know in about three or four weeks whether or not it was successful. you never really know, right but i have a feeling it's going to be very successful. >> reporter: the new tariffs would potentially take effect just after june 24th that is days before trump says he will meet with president xi on the sidelines of the g-20 for what he has called a fruitful meeting. and he is tweeting again this morning, just a few moments ago as we came on the air, saying that "our great patriot farmers will be one of the biggest beneficiaries of what is happening now that hopefully china will do us the honor of continuing to buy our great farm product, the best, but if not, your country will be making up the difference based on a very high china buy

this money will come from the massive tariffs being paid to the united states for allowing china and others to do business with us. the farmers have been forgotten for many years their time is now. so, clearly talking directly to his base in the heartland there, which, of course, is seeing increased tariffs in the form of retaliation from china announced yesterday. guys >> all right, kayla, thank you kayla tausche in washington. for a look at the impact of the u.s./china tariffs on retail, let's welcome matt shea, national retail federation president and ceo. matt, always good to speak with you. >> melissa, good morning. >> how are your members thinking about this tariff increase there was a bank of america merrill lynch note out saying that a 25% tariff on apparel, for instance, would cause retailers to raise price by about 2.3%, just to maintain gross margins. 2.3% doesn't sound like a lot, but i'm sure to a lot of consumers, it could really make a difference in terms of their buying patterns. >> yeah, well, certainly, we know that we're operating on very thin margins to begin with in the retail industry, so it's

very, very competitive out there. consumers are still very, very value-oriented i think to put it in perspective, there's wide agreement with the president and the administration on the overall objectives we certainly agree that we need to reset in a very fundamental way with our trading partners in china. but we just have a disagreement on the tactics and we have a study that just came out in the last week that demonstrates that if we go all the way to 25%, both on the $200 billion, tranche three, and then on the $325 billion, the final, fourth tranche that kayla alluded to a minute ago, that that's got the potential to impact 2 million jobs in the u.s. and cost u.s. families an average of $2,300 a year so, i think there's an incentive for both sides to get a deal, both politically and economically, and at some point, those incentives, those lines are going to intersect we're not there yet, but we are optimistic and hopeful that in the next few weeks, the parties will come back together and find a deal. >> we've heard from retailers in the past that they were able to bring in inventory ahead of

tariffs going into effect, so they pulled forward a lot of inventory, matt. where do they stand at this point in terms of where their inventories are and their ability to keep doing that because they've got a very limited window at this point >> yeah, well, you certainly heard, you know, courtney reagan had brian cornell on a number of times last year, and brian talked about being able to pull lots of levers jim cramer had laura al number on last night of williams-sonoma, and she talked about how they'd repositioned some of their workforce over the last year, sort of preparing for the worst. so, i think that retailers have done everything they can, and there's been a lot of talk -- and this is a longer-term play -- about diversifying the supply chain and maybe moving some of the supply capacity in other places the issue is, there's no new china. you can't just go somewhere else and replace china with vietnam or cambodia or thailand or south or central america you're talking about replacing the capacity of a fire hose with the capacity of a garden hose. so, i think retailers have done everything they can up to now, but when we get to 25% on this

final fourth tranche, if we go there -- you know, talking to the ceos i spoke with yesterday and end of last week and even hearing from some this morning, i think it's going to be difficult for any retailer in the country to avoid passing along price increases to consumers if we go that final 25% on that fourth tranche, because there's just not enough leverage and wiggle room left to make that happen >> what if we don't go to the final tranche? what if we only raised from 10% to 25%, which is what is in effect right now, matt i mean, are we going to start hearingretailers bring down forecast, or is that increase in tariffs already factored in, in large part, amongst your base? >> well, again, i think everyone that's out there and, you know, different people have different opportunities based on their own supply chains and what they've done historically and the size and scale matters. if you're a larger enterprise, you've got greater resources you've got the ability to maybe

work with your vendors or to spread those increases over a broader range, a more diverse set of goods if you're an independent retailer, and we've heard from many of our small, independent retailers that have a single unit, that have five or fewer employees -- you know, they're the ones that are really disadvantaged, those small businesses, because we don't have the leverage or the relationships with their supply partners and so, if the supply partner passes on a cost increase, there's really nothing for those retailers to do but pass that on at some point, they can't eat all of those expenses because they become unprofitable so, i think you're going to continue to see people be very creative, both in the near and the long term, and hopeful and optimistic that the economic and the political realities, both for the chinese and for the u.s. make it possible for us to come back together and get a deal that works for both sides. >> hey, matt, i have a question. it's a bit of a curveball, basically based on the headline that we've been talking about this morning i don't know if you saw this news with apple and the app

store yesterday with the supreme court and this idea of whether it's a monopoly. and mr. wonderful is here. and we were discussing the possibility that this lawsuit might open up the possibility that consumers could effectively sue stores and say, effectively, you need to carry something, carry a certain product, or not just carry the product, but that the commission doesn't work the way you'd think. does the federation have a position on apple and the app store? >> no, we haven't talked about that it just happened yesterday, the news, recently so our leadership will be together in the next few weeks it's kind of outside our lane, but there's been -- >> not really, matt. not really what it says is that the retailer doesn't have the right to decide what they stock on their shelves. that is the essence of what this apple litigation's going to be about. it's no different than a walmart shelf or a target shelf or even a small retailer as we're talking about. this is a big deal, i would think, to your membership. >> kevin, i think the difference is -- and we've heard a lot about this with regard to facebook in the past couple of weeks, particularly since chris

hughes wrote his op ed article and we've heard some political candidates talking about breaking up facebook -- that in the united states, unless we fundamentally restructure antitrust law, it's about whether or not there's any consumer harm. and i don't know that you could demonstrate there's consumer harm if you take this all the way to the nth degree when you talk about the diversity of products that exist both in retailers' stores, on their shelves, in the marketplaces that exist today, the opportunity for alternatives so, maybe someone could interpret this and take it all the way to saying that a big box or an independent retailer must carry a product or there's consumer harm. but i think given the diversity of retailers that are out there today and the opportunity to access those products, that's a stretch. >> do you think there's a distinction between the digital world of the app store and the big boxes that you're talking about? >> i think there is at the moment, you know, because, clearly, apple's got a different sort of a relationship with its customers and the ability to compel that -- you know, when we

have those phones in our hands, there are things that you can't take off that phone, whether you want to have that app on there or not, and i don't think that's the same thing as whether a retailer carries a product you can find that product somewhere else there are clear alternatives to that. >> and just so we're all clear, apple is nota member of the federation >> they are a member. >> oh, they are? >> they're retailers they're members. >> interesting. >> we have a wide, diverse membersh membership. >> interesting thank you, matt. appreciate it. >> great to talk to you. coming up, with the ongoing trade war hitting investors, will the fed have to rethink its take on interest rates and the economy? we're going to discuss and speak to jeremy siegel of the wharton pundit and somebody who's been bullish and right for years and years, after the break "squawk box" returns in a few minutes. 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.

welcome back to "squawk box. the fed watching the trade turmoil between the u.s. and scheina very carefully, but will it force the central bank to make a move sooner rather than later? that is the question of the morning and steve liesman joins us, hopefully with, probably a speculative answer >> well, i want to just talk around the issue and think about how policymakers -- because tariffs present fed officials with a real dilemma -- are they inflationary, deflationary, or possibly, what about this, stagflationary that is, do they push up prices but push down or weaken growth and if it does weaken growth, by how much and what if the fed cuts rates in response to the tariffs and then the next day the two sides make a deal?

ian shepard from pantheon says "the fed cannot pounce on every wobble as though it's an xi especially threat. policymakers would not want to be in the position of having to reverse a premature rate cut if a subsequent trade deal then triggered a huge rebound." it's the reason why the minneapolis fed president yesterday on this show and after that a lot of other fed officials are saying they would wait and see before deciding how or if monetary policy to respond to the tariffs markets, though, they don't have a dilemma. they believe the fed will cut rates, at least partly because of the tariffs, and do it soon here are the probabilities september now 52% probability of a rate cut october near 60% 73% for december and then by january 2020, they are good and darn sure that there is going to be at least a quarter-point rate cut, 87% for those on the radio that cannot see the column other factors to continue -- the impact of tariffs on global growth and then the impact of weaker global growth on the u.s. finally, the effect of tariffs lowering stock prices through the confidence channel, that

could reduce capital spending. and it's not as if tariffs are the only thing going on for the fed to consider. so, i think they're going to take a step back and watch this. i think the market is a little bit ahead of itself in being quite so sure this is going to lead to a rate cut you had one fed official this morning saying it's potentially inflationary so, they need to get all on the same page about the effect of these tariffs. >> okay. joseph. >> all right, for more on how the fed's watching the market gyrations, jeremy siegel, professor of finance at penn's wharton school and our guest host continues with us, kevin o'leary "shark tank" co-host and chairman of o'shares etfs. jeremy, you were recently on cnbc on may 7th, saying we could see a 10% to 20% drop in the averages if the united states and china dug in on these trade talks. we're at 5%. what do you think? 10% look likely? 20% less likely but possible

>> well, it's possible we also have to remember that the best thing that president trump has going for him is the economy and the stock market into next year's election. he cannot afford to let that slip, and i think he knows it. i think his political advisers know that. a year from now, we can't be lower on the stock market than we are, and our economy has to be better. so, it's up to trump to make a deal i mean, even if he doesn't get everything he wants, it's going to be a fantastic deal, right? we know that that's the way he's going to sell it so, he's trying to negotiate the best thing, but ultimately, he cannot pull the lever all the way up, and you know, my feeling is, it's going to be a satisfactory outcome from this war. but if he wants to push it to

the end, the market's going to continue to react. we know that it is a great source of uncertainty. steve just mentioned confidence. what is the status of the inputs that i buy and the exports that i sell is a big factor for all retailers and manufacturers. >> well, you just explained chuck schumer to me. the recent bipartisanship. he'd like to put trump in a position where he can't say, okay, buy some soybeans and i'll sign on the dotted line. schumer's kind of backing him into a corner where he's saying, you need to actually extract some real concessions, mr. president, and that would make sense, because trump probably -- at some point, if it's not going to happen, we probably would take a half win, or he would take a half win just -- >> yeah. >> -- for the election, jeremy. >> joe, how many people are going to go into the weeds of an agreement to see, you know, what is really going to be done or not? i mean, you know

trump has a history of calling things fantastic and the best ever when we look at them, we say, hey, is it that much different the u.s./canada trade agreement, is it all that much different from nafta as compared to what he first advertised it to be no, not really so, my feeling is, you can pull victory out of defeat. no one's going to look at the details. themarket wants a solution and don't forget, the market didn't really want this trade war to begin with. yes, we want to protect intellectual property. we can but a trade war to get there i'm not sure that's -- you know, let's not rock a boat that's going well the boat is going. >> don't forget, there's that big election coming up -- >> absolutely. >> no, i guess -- i guess he doesn't, does he he's going to be there -- >> he's going to be -- >> no, he does not. >> he doesn't have to worry about an election the way mr. trump has to worry about an

election. >> mr. wonderful, do you agree >> jeremy, i'd like to push back on two aspects of what you're talking about. i along with millions of others who deal with china, we are looking at the deal. we are looking at the details. i want access to that market i want ip protected, and i want a platform to litigate on when i am getting screwed as i have been for the last 15 years so, no, i'm not accepting any deal my message, along with many others, are let's get it done and let's get it fixed it's not like that this time the canadian nafta deal was already in existence and was working and has now just been reinstituted that's not the same. china has gotten away with murder for 35 years. time to fix it it's not going to be pasted over, my friend. this is going to be a fight from hell and i'm ready for it, because i want to get to the other side where i can do business there fairly. >> do you think american manufacturers or american companies are ready? is apple ready for it? >> yes, we are and my message is, if you actually live and breathe with

what these guys do and how unfair they are, you're done i'm sick of it i've been living with it for 15 years. >> what price are you willing to pay in terms of losses in the stock market or access to the chinese markets in the meantime? >> i also want to push back on this -- this is not a trade war with the world this is one supply chain country called china -- >> yeah, but -- >> we're taking them to the wall, not everybody. >> here's the complication certain american companies that are manufacturing in china have other outlets and opportunities to create supply chains elsewhere. they can go to vietnam, et cetera, and there's a flexibility in terms of being able to move somewhat quickly, months, if not a year or two then there are companies like apple, which has put effectively their entire supply chain there, and that becomes much more complicated. >> you have to look at the big picture. apple can move to india. apple can move to vietnam. they can do it they have the wherewithal. they have the capital to do it i am not going to sweat bullets for one name in an index, okay >> kevin, i'm surprised at you because -- >> why i don't live with you in this -- >> i don't hear the rigorous

cost-benefit analysis that you are so famous for in your discussion right there we have lost $1.1 trillion in market wealth. what is -- >> that's only a 5% correction >> no, no, it's $1.1 trillion in global market wealth in one day. >> what is the potential up side what percent of the total trade relationship is hampered by the ip and these other issues relative to the other benefits that we get from an open supply chain and cheaper chinese goods and inputs to thousands of businesses in the united states? i get that that's a problem, and i do not want to diminish it i just think that when you have a business and you have certain inputs that have a positive aspect and one negative aspect, you have escalated this to the top of the -- >> here, steve see this little american invasion with an ip, this little toilet bowl light? its sales are down 35% because of chinese knock-offs.

i want it back. >> agreed. >> 22 -- >> that's one item. >> okay. >> jeremy is still here. jeremy, since the december lows, in the face of the china trade war, how much, how many trillions has the u.s. stock market gained that we fail to mention as we focus on the $1 trillion that we just lost, six or seven how many do you have that number at the top of your head >> well, we're actually -- i mean, i just think a point or two below where we were -- >> since december? >> -- in september high -- >> what are you talking about? we're up 17%. >> before that big trade-off talking about trade, remember, there's two issues -- >> weren't counting on the way up, were you >> one trump is right on, one trump is very wrong on he's very wrong on, because we have a trade deficit, we're losing all those billions that could be there that's just, unfortunately, wrong economics. i won't go into it now the right part is the

intellectual theft he's conflating the two. if he was really concerned about the intellectual theft, we should have gone about this in a multilateral way europe is concerned. the others are concerned we could have applied world pressure there's a number of -- >> jeremy, that didn't work. we tried it for 20 years it didn't work we could never coordinate anybody -- >> that's not accurate >> come on. >> we went at it seriously -- it didn't work. >> let me explain. china only entered the wto in 2001-2002. so it's wrong to say -- >> so what >> because that's the beginning of the process and you know what the result of that failed wto process was, to quote somebody was a massive lowering of chinese tariffs, massive lowering over that time period, we have had some adjustment and a need for major adjustment, but included in that is a flexibility of the yuan and other things that have happened. the idea that negotiations have failed to my mind is a fiction created by this administration. >> i don't believe that at all

because i live and breathe it every single day. >> well, that's the difference -- >> and the market's flat the market is flat according to the "wall street journal" and according to -- >> since when? >> since the president launched his tariff wars, since december 2018 that's what the "journal" said in their op ed -- >> since the very beginning of it, since december. >> since the trade war started, dow's down 1,800 points -- >> no, since 2018, since the trade war started. that's what the "wall street journal" says. >> steve liesman, we'll leave it there. >> thank you, jeremy siegel. coming up, senator mike braun joins us to discuss china, drug priceing and more and boeing taking a hit after saying it may be singled out by china. it cost the dow 100 points alone yesterday. we'll talk about what that could mean for the company "squawk box" wilbeig bk.l rhtac

trade fears slam wall street futures pointing higher this morning, but after yesterday's sell-off, are we any closer to a deal with china? president trump weighing in on twitter this morning what went wrong with uber? the brightest star in the unikorengal xaey taking a beating in its first week as a

public company, so who's to blame? and walmart on amazon's turf the battle of the retail behemoths gets a new twist 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 and welcome back to "squawk box" here on cnbc live from the nasdaq market site in times square. i'm joe kernen along with andrew ross sorkin and melissa lee. becky is off today our guest host, kevin o'leary, chairman of o'shares etfs, "shark tank" host and a cnbc contributor. the futures right now are up about 140 points this morning. the s&p indicated up 16 and change nasdaq indicated up 57 treasury yields are about flat with where we've seen recently, 2.41% on the ten-year. a couple stories investors

will be talking about today. the big one, president trump taking to twitter this morning to talk about trade, tweeting "the u.s. is in a much better position than when a deal with china was said to be close this month. he says they will strike a deal, quote, when the time is right, and that america has to be able to make up ground it's lost to china since the world trade organization was created separately, walmart now fighting back against amazon, the retailer rolling out free next-day shipping for orders of $35 or more. that's going to happen in phoenix and las vegas. and walmart says it will gradually expand to about 75% of the united states by the end of the year a warning shot at amazon there the move coming less than a month after amazon told investors it will spend $800 million to upgrade to one-day shipping for prime members and some news out just on boeing, and its dwrugrounded 73x jet fleet.

according to the "wall street journal," an internal faa review concluded senior agency officials did not monitor crucial safety assessments of the flight control system implicated in two fatal crashes. officials also tell the paper that boeing did not flag the automated stall prevention feature as a system whose malfunction could cause a catastrophic event we're going to talk a lot more about boeing later this hour with a top stock analyst. stocks on the move cvs will be in talks about a merger with aetna. the deal has closed but needs court approval and t-mobile and sprint are looking for concessions for approval of their merger deal, according to a report. among the options, a separation and sale by the mobile carriers of their prepaid businesses. china striking back at the u.s. and detailing new tariffs that could hit the nation's farm industry midwestern states rely heavily on agriculture exports, agricultural exports in indiana, soybean shipments are worth about $1.6 billion a year.

joining us now, u.s. senator mike braun, who represents indiana. with what's happening with farmers and some of the remedies that the government looks at, mike, it kind of -- or senator -- it almost seems like an athima to what republicans or free-market principles would dicta dictate, but is it different this time that it's okay to talk about subsidies, et cetera, when the end justifies the means for what we're trying to accomplish with china do farmers see it that way >> well, you know, i've been heavily involved in farming. and as a main street entrepreneur, we just kind of weaned ourselves from direct payments and ldps and all that stuff. and in any market, though, the ebb and flow of what brings you to the moment, farmers are basically dealing with this is a big hunk of salt in a wound of

really poor markets. from '09 to '13, with ethanol and crop shortages, record farm income what occurred in those four years, farmers' inputs went up almost double or triple. in the farm sector, it is increasingly dominated by huge corporations that are doing pretty well. so, once we get through all the tariffs as it's impacting the farm market, 90% of the trouble is still going to be there, unrelated to tariffs that's no consolation, though, when you're going through now four or five years of overproduction, low prices, and yes, farmers did not want government coming in to help them to offset the impact of the chinese soybean tariffs. that may have to be done again it's a free market that doesn't like tariffs, doesn't like any government involvement other than create an environment like

we've done with the tax reform and rolling back regulations, which is behind this booming economy. i don't like that stuff. but the reality is, when you mix politics and economics in any market, you're going to sadly have this. farmers, though, once we get through these tariffs, still got a lot of issues to deal with, mostly with variables outside their control. >> how long does the president have for people like you representing states that have a lot of farmers how long do you think he has -- we'll give him the benefit of the doubt that you can put off, you know, having your concerns addressed for the good of the overall trade? >> something has got to start changing -- >> soon? >> -- particularly for farmers and i would say that needs to occur through the usmca. that thing is pretty well fleshed out, and that's got some things that are going to help farmers. it's not going to address the

china issue, because that's a long-term thing, and i don't know that we'll resolve that until in close to the 2020 elections or after it. but the usmca, our biggest trading partners, mexico and canada -- that thing needs to get across the finish line and i believe the administration will do that because they need to check that one off as the most important one for farmers and other businesses, because that's where most of our trade is, with mexico and canada, not the chinese. >> senator, i understand that you represent a farming state, but there will be other pockets of the economy that will feel pain when it comes to the implementation of the tariffs and their impact on prices, et cetera would you be in favor then of supporting other bills i mean, if the farmers are getting $15 billion this time around on top of the $12 billion aid package for the department of agriculture, are there other sectors that could also deserve a helping hand here? we were just talking to the

national retail federation president, for instance, and he said thousands of jobs could be on the line if we see the tariffs go into full effect for all of the goods that we bring in from china. >> i view the ag market as a little different because farmers to me are like doctors and nurses in big health care -- it's granular. they deal in markets that are completely out of their control. farm prices are set on a commodity exchange so when it comes to other places, all i can tell you, in my own industry, starting 10 to 15 years ago, when i saw american manufacturers whose products we distribute go to china, i was scratching my head then because i knew the chinese, an autocratic political system that have now become capitalists -- that had a little bit of indigestion for me then because i always look ahead. nothing is going to be the same as when you started. we've evolved over all these years where all the

imperfections of dealing with china are coming to the forefront. most businesses took, if they were aggressive, for the cost savings, moving to china, maybe ought to view this as a blessing in disguise to start spreading your, you know, interests out among other countries. i would not be comfortable if we were a manufacturer with so many eggs in the chinese basket, when i'm dealing with a government that's hard to trust i mean, stealing intellectual property, subsidizing industries, dumping the gluts on the world market, that doesn't sound like a wholesome long-term relationship, so -- >> hey, senator, we're hearing -- i mean, pretty amazing, you know, that you've got 22 people running, and then -- >> yep. >> -- you know, joe biden comes along and immediately jumps to the top because of, i guess, electability because that's really, all the democrats just want to get trump out of there but part of his appeal is also that a lot of those key swing

stat states, not necessarily indiana, but ohio or michigan or rust bet-type states, farming-type states that trump barely carried, that biden can flip those. do you think at this point, has anything that trump's done with tariffs or against farmers, has that flipped it into the -- moved it into the blue state category yet on the ones that trump won? >> only if we're very obtuse as republicans and conservatives and let that dominate the dialogue what's driving this economy -- and believe me, i've had a business for 38 years -- it's never been hotter and it's not due to trade trade is important because it's going to become more and more important every year due to the new nature of a global economy but what's driving things in this country would be tax reform and rolling back regulations that's what generated the 3%-plus in the first quarter of

gdp growth and if that continues through the rest of this year into 2020 and we are smart and tell the american public joe biden was the first lieutenant for president obama that gave us the doldrums none of us as entrepreneurs were looking optimistically into the future with the obama plan biden was 100% behind it and if you look at some of the stuff they're rolling out now with the green new deal, medicare for all, free college tuition, that ought to frighten a lot of people. so, if we manage the dialogue, we'll be okay and we'll get through trade. >> senator, let me ask you a question in the sort of larger dialogue of the country right now between capitalism and socialism -- >> yeah. >> what do you think about all the handouts to farmers? why is that not in the category of socialism >> i think if you want to be kind of philosophically pure, you can dwell on that.

in my case, that's part of government when i got here, i was tired of how this place works in general, doing that kind of stuff broadly through many industries, creating these huge deficits that we've got along the way that's part of what i'm dealing with in the short run, you know, you'll have to get through that. in the long run, you need to clean it up, because i think it is a little bit hypocritical -- >> you think long term you're going to be advocating for the end of subsidies to farmers in your state >> i'd be advocating for the end of subsidies across all categories but of course, that's probably wishful thinking we've become so dependent on government, you get into pickles like this, and it's the only place you can look to. short run, i'm okay with it and you start getting away interest them as soon as you can. >> well, senator, we appreciate it thank you. >> you're welcome. >> back to work now for you. sorry. or whatever you guys in the

senate do. you got things to do today >> we've got plenty of stuff to do >> for the american people. >> you bet >> all right, thank you. >> you're welcome. when we come back, we're going to do an uber postmortem with the stock trading down 15% since it opened on friday, we're going to talk about what went wrong with potentially the biggest ipo of the year. was it missed pricing or did a shaky market debut from lyft bleed over last week or did uber simply fall victim to a weak market hit by trade headwinds? we'll talkbo tan authat d where it is headed next. you're watching "squawk box. this is my headquarters. this is where i trade and manage my portfolio. since i added futures, i have access to the oil markets. and gold markets. ok. i'm plugged into equities. trade confirmed. and i have global access 24/7.

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check out shares of uber this morning the ride hailing company's stock is down more than 15% since opening for trading on friday, and that leaves investors with one simple question -- who's to blame? leslie picker joins us now with more leslie. >> hey, melissa. we'll see if any of those losses are reversed today, but in the meantime, investors who received allocation in uber's ipo are sitting on paper losses of $1.7 billion combined in just two days of trading. they're asking, how could the company and its underwriters get

the pricing so wrong well, there were many competing factors at play, but in focus today, the bankers morgan stanley's michael grimes famously moonlighted as an uber driver to win the lead mandate for the deal, but the firm misinterpreted the capital market's appetite for the money-losing ride hailing company. stock in setting both the initial price range and the final price toward the bottom of that range now, even though publicly it appeared the valuation was coming at a discount to the $120 billion that the banks had initially pitched, it was still far too expensive for many of the investors that i spoke with. the bankers weren't operating in a vacuum, though they had to appease a board filled i'm told to be strong personalities and hoards of private investors and employees that had acquired equity at levels far higher than the range they were even marketing. still, regardless of the investor losses, the banks were able to rake in more than $106 million in fees with morgan stanley taking home about 40% of

that guys >> leslie, want you to stick around for a little bit, because we're going to weigh in, figure out who is to blame. everyone loves to point a finger who's to blame out of the gate, at least here. "the new york times" reporter, media reporter, also cnbc contributor, who are you blaming? >> i think in terms of the pricing, it's always an alk mere, more of an art than a science, but the last private round they raised, they were raising it about $48 a share, so that already raised the bar from where it was supposed to be. and i think you could blame that, right? you can blame the last round of investing. >> the question i have is, do private investors -- and i asked mr. wonderful this as well -- do private investors somehow know something more or less than the public market? >> so, let's just consider two things on this particular deal, and look, we might as well go back to lyft you remember back in the late '90s -- i'll use one example -- toys.com i was an investor in toys.com. it went to zero. never made any money and i grew a little four-inch

charlie munger on my shoulder when that happened and he appears you can't see him, but he's on my shoulder every time i'm pitched a deal like lyft or uber and charlie says only one thing -- if it has no cash flow, just say no. and i have listened to my little charlie ever since the late '90s, and i've been right 100% of the time. this company is valueless. it doesn't have any cash flow. it's a speculation there's no different than putting your money down on red or black in vegas than giving money to one of these losers. >> or like the way i like to think about it, like setting up a storefront and selling dimes for a nickel might as well be doing that at this point. >> actually, you think about this, it's really one of the largest transfers of wealth. maybe it should be elizabeth warren should be the ceo, because every time you get in an uber -- >> they're subsidizing our rides. >> exactly, by about 30% i use it all the time. and lyft the same way, going up and down collins avenue in miami -- >> so it's the investors subsidizing, softbank and now anybody buying into the stock,

they're the ones subsidizing these uber rides, which i take on occasion -- >> you don't think there's anything they could have done? had they come in with a lower price, the flip side is they wouldn't have raised as much money and they need as much cash as possible given the losses they have. but let's say they decided, okay, we're not going to do $44 or $545, we're going to go at $40? by the way, psychologically, that might have made it worse because -- >> they don't have any confidence in the company so they're pricing it that low. >> i think all of that really depends on the initial range that you set, right? when pinterest came out, we had maybe one day of discussions about how that was coming in at a lower valuation than its latest private round and everybody felt like, oh, you know what, this is a good deal, and pinterest is up about 25% from its ipo price -- >> how much lower was it >> $3 billion lower. so, you know, a significant discount whereas you know, i think a lot of people are looking at these two side by side as various case

studies. but to andrew's point about whether the private investors were smarter or less intelligent than the public investors, a lot of people have been talking about these special spvs created three years ago for high net worth clients of morgan stanley and bank of america -- >> which were used to attract effectively uber to do the ipo with them. >> so i was able to look at those documents at the time that were being marketed to the high network individuals. they had zero disclosures. zero basically, there was kind of boiler plate language in there that said, you know, trust your fiduciary and morgan stanley and bank of america to vet these things at whatever valuation they were being sold at, which at the time i think was $67 billion. you know, trust us kind of give us your money blindly, and you should see decent returns. >> it's interesting, there was a lot more appetite for uber in the pre-ipo phase than in the post there were a lot of institutional investors already bought into the private market around uber, so that sort of sapped interest in the public market -- >> who else is left to buy -- >> exactly. >> who weren't in before.

>> i already own a piece of this. >> so, can we say it's worth at least the money they burned building this ubiquitous platform globally in the case of uber and the domestic platform in the case of lyft? so, that would get you a price of about $20 a share you burn through -- because i'm going to assume they're going to burn the billions they just raised the floor is probably $20 billion in terms of, you know -- >> so, $20 billion -- >> a third of what it is now, is what you're saying. >> this is really a situation where these two have to merge, because it's going to be like an xm/sirius satellite deal. >> but even if they merge and waymo shows up three or four years from now and says we're doing an autonomous fleet and by the way -- >> or tesla comes out with its fleet -- >> we know where everybody is to begin with -- >> you're absolutely right -- >> going to rebuild the network. >> so you back to charlie munger and what he would have said. he would never have bought this, ever, until it has cash flow then you could put a multiple on that when is that maybe never. >> what is the best argument on

the bull side as to what uber owns >> in terms of >> in terms of what its mote is. >> i think in terms of -- they came out during the road show and said they were going to be the next kind of amazon character where they'll own this whole transportation network system to me, based on conversations with investors and people close to the company, it sounds like the network itself is the best mote, just if you're able to kind of get these extranalities of having large liquidity of drivers on the system, and that in turn can bring more riders to the system because people don't like to wait a long time for their car, can serve as a mote that said, that doesn't mean that there can't be another player in there -- >> they called it a trillion-dollar market it's actually only $11 billion, the taxi business in the u.s maybe add another $4 billion to the livery service so it's not that big and i think it was disingenuous to talk about trillions -- >> total transportation market. >> that's my whole point it's like saying fedex was something really special when it came out, because it was, but now it just trades as a

logistics cash flow company. >> my question, and we talked about it yesterday and you tweeted out about it, i saw. you know, you could be -- >> i tweeted -- >> you could look smarter than softbank today -- >> by buying it now because you'd get it at a cheaper price than they paid. >> what's going to happen to future ipos? thinking about we work, which is clearly coming and there is a number of other -- by the way, softbank led and backed companies part of me wonders whether all of these softbank cash infusions actually propped and pushed up the value of these companies artificially >> i think that's a good question, and it also created behavior where you were kind of used to having this not free money, but very cheap money that you were able to use to help kind of grow your business and bankers that i speak with, you know, on background, they do say that if you're a we work and you have a business model that is just kind of burning through cash, investors are going to take a harder look at that, and you may have, you know, you may have to react to that, whether it's in pricing or timing of your deal. >> they're playing us out. >> another cash flow-no cash

flow business, netflix what does that trade, right? that trades way, way above its earnings. >> what does charlie munger say? >> little charlie would say do not go. >> when we come back -- >> no cash flow. >> this is so uncomfortable. we're going get more from what kevin's hearing from his little 4-inch charlie when we come back. with that, take us out of here. >> thank you, guys thank you, leslie. coming up, boeing's gut punch to the markets the plane maker hit the dow hardest out of any stock as a chinese newspaper singled it out for possible trade retributions. what is the long-term impact if boeing is caught up in president trump's trade war? ayun t"sawbod. st tedo quk x. sfx: [phone ringing]

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coming up, some big, breaking economic data the latest imports reads on import and export prices are minutes away "squawk box" is back in a moment

welcome back to "squawk box. breaking news! our april read on import-export prices import prices expected to rise somewhere around 0.75%, much less, only up 0.2% following an unrevised up 0.6%. and if you strip out petroleum, it drops, minus 0.6% import prices year over year down 0.2%. export prices up 0.2%. let's take a long view, year over year up 0.3%.

so, all of these pricing pressures, whether coming in or going out, are definitely on the light side, which kind of fits with the notion yesterday of some of the fed information coming out, that a lot of their surveys are showing that inflation seems to be slipping as well. we've seen ppi and cpi definitely not threatening so, there's one issue that isn't going to give you any juicier yields and when you think about what's going on in the world of trade, here we are. but we're very close to yesterday's levels across the rate curve twos out the 30s, not much different than they were yesterday, even though equities have bounced whether it lasts or not will determine whether it has a bigger effect on moving interest rates up melissa lee, back to you. >> rick santelli, thank you. we're joined now by cnbc's senior economics reporter steve liesman and senior markets commentator mike santoli steve first to you with the reaction to the data. >> you're wondering what you're seeing here. it's definitely a deflationary or disinflationary impulse

coming from the globe. you don't see tariffs showing up here, but it could be that weaker growth overwhelms that, or you could see the productivity, plus currency impacts. the united states is in a funny position it's our dollar that is the value of currency for all of this trade so, you have declines in capital goods down 0.4%, motor vehicles down 0.1%, consumer goods down 0.3%, and these are also year-over-year numbers that are negative as well i'll just give you one, capital goods down 1.2% -- capital goods prices down 1.2% year over year. you wonder, is that global weakness, is that productivity exactly what's going on. but rick had it right that in terms of the effects on u.s. inflation from abroad, there isn't any. >> right but the bottom line here is that the fed definitely from this reading on the sidelines. >> that is true. >> does it increase in your mind, even when the markets -- what is it, 50% rate cut in september? do you think that's more valid now that we've seen this

>> i think it's a little bit early yet, but i will tell you this, the way i listen to every fed official right now is when they get to the point -- it's the question i asked at the press conference -- when do you get to the point where inflation has fallen low enough that you feel you have to do something about it with monetary policy? and they're not there yet. that was what precipitated powell to say that inflation is transitory or transient, which a lot of economists, by the way, disagree with. they have taken him to town on that commentary there. they think there is more persistence to the disinflationary impulse that's out there in the economy so, yeah, that's how i'm listening to them. i don't hear them ready to pull the trigger yet, but it's what we're waiting for. >> mike, how do you add this data into the potpourri of things to consider when we're looking at these markets and the futures right now? >> i think it fits in with this idea that the markets are trying to metabolize a lower, slower-type environment. i mean, that seems to be the back drop. people keep saying, what's going to be the catalyst now, right? are we going to have to wait for

some kind of resolution? i think 5% down from a high when you're starting to get a decent flush in the markets the capital list is the context. and the context is bond yields are really low, corporate credit hasn't yet acted up very much, stocks are down enough on maybe a 0.2% swing in u.s. gdp, which is maybe what comes from this trade, and then the market will find its level and can do fine from there without necessarily getting some kind of intellectually satisfying resolution on the trade picture. >> rick, you wanted to jump in >> yeah. you know, what i find fascinating is i do believe we're at neutral, obviously. we can argue if it's a pause or neutral -- semantics but in the end, i'd like to know what the panel thinks. i think they're going to be oh, so stingy with their eases and i think ideally, of course they'd rather tighten under ideal conditions where the economy's going up, global growth's going up, interest rates go up. but you know, everywhere you look, whether it's the "wall street journal," every story is written about how it's

impossible for central banks to get rates up to a level or inflation up to a level. i won't argue about their methodology or their metrics i'm just saying i think it's going to be very stingy on giving back insurance tightenings in the form of eases. what do you think, steve >> you know, i can agree with both things you said i think one is really important. and i think the fed, if it had its way, would have wanted to be higher i don't -- i think they would want it to have stopped more like 3% than at 2.4% i think the markets, i think the economic data forced their hand, maybe some political mix in there as well. i think they would prefer to be waiting at 3% and i don't think they're going to reverse course quickly because they're worried about the xero lower bound they don't want to get back to zero so, i think your use of the word stiffeni stingy is very precise, rick. >> which brings up the question of what are the conditions, rick, under which the fed would kind of part with one of those

quarter-point bits of insurance and i guess the markets or the economy would have to look a little bit more dicey. the merrill lynch fund survey said markets say they would have to get down to force a fed ease to the december lows whether that's right or not, i think that idea is out there, that they're not looking for an opportunity to get easier. >> rick, i want to turn the tables a little bit, because everybody -- i report the fed funds probabilities, but you're the expert in them how do you take these numbers? guys, do you have that chart in the back it's still valid september 51% chance of a cut going all the way up to january, 87%. you rub shoulders with these guys every day what are they telling you about how sure they are about this trade? >> i think it's the type of scenario of traders where it's a very accurate representation of everything that they have to look at right now at this particular point in time but as the meetings get closer,

i think what you will see is, is that it will start to drift away and turn into a mist and the percentages will go lower. if that isn't the case, there needs to be i think in traders' minds a fundamental catalyst, because i also believe that they trade the percentages and they go with the momentum they like to make money. but in the final analysis, i don't really think they believe earnestly that those percentages are going to come to fruition. >> so, i think that's my observation as well, rick, that as you get to the meeting, the fed fund futures is 80% or 90% correct. and i don't know what the -- how correct it is looking out, but there are different hedges going on you could be buying the two-year and selling fed funds as a variety of ways for investment strategy that you need to do, so -- >> now you're talking. see, and that's the deal, steve, is that it gets structured into odd arrangements, where if you

just cherry-pick the statistic, i think it's a bit misleading on the bigger picture. >> but offset, i think it was kevin who asked me, are these right? i said, no, but when they get up to this level of magnitude, it's a pretty darn good representation of where the market's leaning and this is where i think there's a little bit of -- >> if you're three weeks from a meeting, steve, and you're at those numbers, 60%, 70%, 80%, that contract is really accurate really accurate. >> and the fed for some reason -- and there's debate about this -- doesn't like to disappoint the market at the meeting. there are some guys who argue -- i was talking to peter fisher not too long ago -- he said, why not upset the market if that's what you want to do? but the fed likes to go into the meeting with the market expectations correctly aligned with what they're going to do, for whatever reason. kevin, i've got a question for you, if you don't mind can the fed fix this when it comes to the tariffs is it enough, when you look at the downside potential of tariffs, is a fed rate cut an

appropriate remedy to that >> no. no, it isn't the tariff is basically a tax, a form of tax. but i keep saying, regarding this particular tariff, it is not a global tariff. it is on one supply chain called china. the impact of this is going to be far less than people think. >> so, talk about that talk about that. how do you get -- you move your stuff from china to vietnam? have you done that >> yes that's my whole point. >> talk about that process. >> great intro let's me promote one of my great restructured companies look at this >> brought that one -- >> hold on, hold on. let the camera get up on it. >> it's a card -- >> it's made in vietnam, not china -- >> was it made in china a year ago? >> look -- >> did you move it >> it was never put in china. >> never put in china. >> never and that's what's happening all over the board. >> okay. >> there's lots of new projects by s&p companies, that's my whole point, that is being moved into india, into other asian countries -- >> and that's positive for what the president wants to happen. >> trump actually has an answer

to this. i don't know what caused it, but the futures have been really about cut in half. but trump and whether the fed can do anything to address tariffs. he says, "china will be pumping money into their system and probably reducing interest rates, as always, in order to make up for the business that they are and will be losing. if the federal reserve ever did a match, it would be game over, we win in any event, china wants a deal!" so, i don't know whether he's watching, but that would have been the perfect answer -- >> he's really -- >> that's -- >> chairman powell -- >> oh, wait, there's another trump. it says his little, 4-inch charlie told him that that would -- >> let me -- >> we need to -- >> we need to go >> yeah, don't you want to talk about boeing or -- >> i do -- >> or you want to ask him about socialism or something. >> i wanted him to answer the question that steve was i think trying to get at, which is, do you think that the president's goal is to move everybody to vietnam? because i don't think that that's really what he's after. >> no, no, it's not.

but basically, all i want from the president and his team is to give me a level playing field. i don't want an advantage. i just want to be treated fairly on ip and access to middle-class market in china. that's all i want. give me that what's wrong with that is that asking too much? no, it's not and that's what he's going to go get. and the rest of this is speculation. >> that's what you want or little 4-inch charlie? >> 4-inch charlie would definitely want this, too, because it enhances cash flow, joe. >> you should have never said 4-inch charlie -- >> this is a family show. >> you are going to be living with that for a very long time >> yes. >> people. >> i'm going to get him a little doll for his shoulder. >> 4-inch charlie -- >> it explains a lot >> youshould have never said 4-inch charlie -- >> let's move on. >> we are going to commercial. >> thank you, gentlemen. when we return, boeing has a proxy for the markets and the u.s./china trade war the stock slammed yesterday, sell-off on fears that china may single it out for retaliation in the ongoing transcontinental

dispute. an analyst wl eak isilbrth down on what it means for the health of the broader markets with all that usaa offers why go with anybody else? we know their rates are good, we know that they're always going to take care of us. it was an instant savings and i should have changed a long time ago. we're the tenney's and we're usaa members for life. call usaa to start saving on insurance today.

shares of ralph lauren are rising in premarket trade. the apparel retailer reported quarterly profit of $1.07 a share, 17 cents above estimates. same-store sales increase of 1% beat expectations.

ralph lauren also raised its annual dividend by 10% it is trading lower right now. it had popped initially but down now by 2%. futures right now as you can see have come back a little. they were up 130, 140, then up about 65 or so now up 82. so, we're being buffeted a little these are all small percentage moves, though. trade tensions sinking the markets to start the week. when will we finally get good news on the resolution of the u.s./china conflict? kayla tausche has the latest >> hi, melissa it will be at least a few weeks, but the president's tweeting this morning that china wants a deal, now making a new suggestion that the federal reserve pump money into the u.s. economy to allow it to win a trade war. keep in mind, when he made this suggestion before, china miscalculated and interpreted this as the president saying that the u.s. economy was actually weak, and that is, according to u.s. officials, why they chose to backtrack on this deal so, we'll see whether there is any different calculation this

time around. but in the meantime, trump is putting a process in motion to put tariffs on all other chinese imports, though he says he hasn't decided whether to actually go through with them. the latest list of items was released last night by the u.s. trade representative it includes a wide variety of consumer goods -- apparel, housewares, appliances -- and those would see 25% tariffs as soon as late june, if they go through with it. last night at the white house, though, the president sounded an optimistic tone on a potential deal >> steve just got back from china. we'll let you know in about three or four weeks whether or not it was successful. you never really know, right i have a feeling it's going to be very successful >> trump also said yesterday he's going to meet with president xi on the sidelines of the g-20, saying that's expected to be a fruitful meeting, but these tariffs, if he goes through with them, could be put into effect just days before that we'll see if the white house chooses to do that guys >> okay. kayla, thank you for that report

one stock directly impacted is dow component boeing. already under pressure over the grounded 737 max aircraft. and in the last hour, the "wall street journal" reported that an internal faa review has determined that the senior agency officials did not monitor crucial safety assessments of the flight control system implicated in two fatal crashes. officials also tell the paper that boeing did not flag the automated stall prevention feature as a system whose malfunction could cause a catastrophic event joining us now to discuss all this is carter copeland, senior aerospace analyst. our guest host is kevin o'leary, who's had a stake in boeing, sold it after all of this. carter, this new report, does it give you any hope? not hope, but is this the floor on the story or is it only going to get worse from here >> yeah, look, i think we've been talking about this for a couple of months this is a timeline that is probably going to take longer than boeing initially intended it to. it is going to be out of their

control in many respects, and it's going to continue to generate news flow that's going to make the stock volatile so, i think, honestly, andrew, it's almost impossible to say, oh, this is a bottom or that's a bottom what you've got to ask yourself is, you know, is there a return to normalcy in some longer-term period and i think the answer will be yes, in 6 to 12 months do we conclude that the faa and boeing and other certification authorities have reached a conclusion about the way forward? and i think the answer will be yes. >> kevin has an interesting sort of theory about this particular plane and where the engines are placed and whether there is going to need to be a physical, not a software-based solution to this >> yeah, the company hasn't addressed it, at least i haven't heard it maybe i could ask you point blank -- is there a structural modification that's going to be required in the max because of the way the higher powered engines were put in place on the fuselage because that is a, you know, 50,000-pound gorilla in the room, if we have to take the

inventory of existing 737s out of the mix obviouslily, the company can survive that, but that would be a redesign of this plane what is the probability of that? >> i think incredibly low. so, if you're trying to monitor the certification activity from the outside and say are we observing anything that looks like that, the answer is no, you're not getting any indication of that and i think, you know, fundamentally, we have a lot of airplanes, mostly in the military realm, where if you look at them -- i mean, take the b-2 bomber, for example, which is a flying wing, you know you're going to have designs that have adjustments or augmentation to how the airplane flies. that's not outside of the norm, i would say. i know there's a lot of speculation around, oh, we put the engines in the wrong place so the plane wouldn't stall, but the mcas is to assist in making it handle like the mg did. so i understand th but if you'r

the faa activity and other certification activity, there i down that sort of path >> literally i don't know if you can see it on the screen we are running a headline in boeing and we have not gotten into that issue and what is happening now with china and the conversation that the administration is having with them how do you sort of, how do you think the dominos fall at this point? >> in every trade, you know, discussion that we had over the past couple of years, boeing has been front and center now. the max did not cause this to be a new issue. boeing is the largest exporter in this country. it is going to get wrapped up in any trade spat i don't think the max changes that if this issue was not here, boeing would still be wrapped up in it. the question would be how did the max issue give the chinese some leverage in terms of making certain case authorities and

have a little bit more standing in the global certification authority realm. how did this get wrapped up in the rest of negotiation? i think this is a new element to it it is not specifically related >> kevin, what's worse from the trade war perspective? apple or boeing? >> apple >> not boeing. >> there is only two manufactures of aircraft that can get the chinese for its growi growing business they should have had backup in vietnam and india. that's my take >> that's exactly right. carter, and kevin, thank you >> let's get out to jim cramer in san francisco people love to finger point. a week and a half ago, we were at new highs and we are seeing a trade warthen, too

i don't know how many new highs we have set. we were not following the train on the way out as i recall >> well, it is interesting to see how much market cap money we lost just because of the tariffs. there is a miscalculation by the market i love listening to mr. wonderful today. business people ignited when i speak to them. the chinese they'll do anything to stop us the chinese are trying to take our intellectual property. at least we have a president that's going to do something about it even if we don't like him. i keep on listening to talking heads who act like we are at the mercy of china, we need to start realizing we are at the mercy of them there is a real difference of people coming on our air with the exception of mr. wonderful, perhaps, the people who are engaged in commerce, it is a

delight to hear kevin o'leary to hear about what's like deal with them >> i feel within our vision that we can fix our problems. i have been so screwed for so long and i really want to fix it this time. i am just asking for level plain field , that's all i want. >> my father lost most of the mills that he wrapped for gift wrap what did they have to do in the end? he had to go work for the chinese. they're really nice to him he had no go to work for them. i don't know if that's so good my father -- how did the people work at the mill what did they do the answer is well they lost their jobs those are real jobs and they went away. >> did you watch the micah yesterday on our air >> i thought he was spectacular.

>> did you think he was lying when he says thousands of towns in the midwest had been decimated? was that hyperbolic? >> i think everything i heard from him and i speak to him a lot. it is based on imperial evidence of what's going on in the country. he's been honest about how it never cost more for us fuel. those who are complaining of fuel are not looking at the price. big disconnect man who ran the largest best fuel company we have verses the talking head who says listen, unfortunately we are pitiful and lost the battle and we are not as good as they are. i don't know yeah, we lost a lot of jobs in this country if they want to put a tax on u.s. tequila they can do it we don't make tequila.

it is mexicans >> jim, i want to ask you about apple. the increase tariffs, they may have to impose a 14% increase of iphones and that could take eps by 14% should we be worried >> well, i think we should have when it was over 200 we are trying to figure out where is the new price apple we know they bought $12 billion back at 167 and unlimited fire power. all i hear from apple is game over again, again, the game over thing is starting to bore me yes, there are retailer that is have to raise price. they want the business why are they going to stop chinese are companies. it is bad apple that they are using. they can't dictate to us we can dictate to them because

they don't have a market for this stuff i hear people come on and say we a paper tiger. we are not they need our business they'll have to cut prices and what they give to us why is it, melissa, that's never talked about >> jim >> joe, we are big losers and we are pathetic and we are worser than the san francisco giants. i said it. i gave you the conventional wisdom >> are we worser than the marlin marli marlins. >> jeter -- we talked to a-rod about that >> don't miss on "mad money" ghhe. t, it starts at 6:00 p.m rit re on cnbc

stay tuned, "squawk box" will be right back then here in logistic, to avoid disruptions! here in sales. even here! i'm talking about ai we can build to work... here, predicting trends. and here, wherever our data lives! and here, working with all our other ai! i think we're done here. expect more from ai. ibm watson.

a quick final check on the market before we send it over to our friends on "squawk on the street."

nasdaq opening up 48 points and s&p 500 would open up 1300 points higher. kevin o'leary and melissa, thank you, make sure you join us tomorrow, "squawk on the street" begins right now ♪ good tuesday morning, welcome to "squawk on the street," i am carl quintanilla with david faber. jim cramer is in san francisco the president both tweeting and talking about the china trade standoff last night and again this morning in the meantime, david faber has breaking news to start us off. >> we have a resolutio