okay, make sure you join us tomorr tomorrow it does not get any weirder. >> thanks wolf thank you melissa. make sure you join us tomorrow, "squawk on the street" is coming up right now ♪ good wednesday morning, welcome to "squawk on the street," i am carl quintanilla with david faber, cramer is in san francisco. future is stumbling a little bit, largely disappointing u.s. sales down prosecute xi speaks for the

first time since the tariff rates. our road map begins with global slow down, disappointing retail sales and weak economic data weighing on stocks ahead of the open >> alibaba delivering an earning speed. the current u.s./china trade talks. macy's showing its push to mobile are paying off. shareses are are up in the pret weighing on futures, a surprise drop in u.s. retail sales, down 0.2 in april data from beijing showing weaker growth in their retail sales and industry and fixed asset investment and shanghai 2% over night shows that stimulus are

back >> i am reading the alibaba situation up 5 at one point. you got good consumer spending over there seems like we have a lot of good consumer spending here i don't know, i am trying to figure out april a lot of retailers told me it was good. this is so out of whack is what i am hearing from retails. >> i think we are awaiting walmart tomorrow, david, there is been -- q-1 is coming in ahead of estimate. >> with walmart, you wonder of the cost the next dictatorshay shipping t the cost would be and incremental but it will be interesting to see what it reflects no doubt about that >> jim, of course we have the comment from xi over night, efforts to shape other nation is disasterous and foolish and

civilization will lose vitality if they continue to go back to isolation. we heard bannon on "squawk" today that a trade deal is no longer the consensus end game as you have been saying a lot >> no. the unity of freidman and bannon this morning that was incredible. listen, this is a war we have to fight. so president trump loves this it is interesting with president trump and the commerce chinese sound very much alike. i don't think the party knows what to do with trump. >> interesting some of the you know we are paying more attention to these sears who seemed to have our connection with the chinese leadership over there. part of the deal verses one per

tracted war and there seems something they can exhaust us overtime they think of in terms of decades. >> that's at thought for some time they can out last whether the 2000 elections private citizen, the chairman ceo of goldman sachs, lloyd blankfein. sort of adding his own view. well, he makes his point we have a number of time. the bannon's view of the world is not, he may be out there on certain issues but on this one seems to be shared by many

to what extent lighthizer reflect, u.s. has in terms of negotiations and a lot more than we have said than just numbers in terms of coming back and forth, maybe the president is focused and many others are focused on the longer term implications making truing strul changes. it will be difficult toll ma mat happen >> this was not a trade deal this was a truce in an economic war. and he echoes what "the washington post" has today which he did not see trump backing down on this >> trump can run on this for 2020 he found an issue that everybody likes and he found an issue that like bannon, america's first the voters like that but except for the farmers, they're getting hurt they'll pay off the farmers.

that's what the republicans will do it is one of the united issues i think the chinese makes some massive calculations here. they have been thinking of the election, we should understand, we are going to put 300 billion up for tariffs and i don't care whether they have a two-year plan they can't handle that they're going to be in much more trouble than we are. we keep on hearing inflation come on. 2.3% on the ten-year, i would not worry about inflation, that's deflation >> a lot of the sales side commentary has taken an inflationary view of tariffs goldman and deutsche with the report looking at how at this point, u.s. consumers are abs b absorbing more of the impact of the chinese. we'll see. as jim suggests inflation

expectation and cpi would argue otherwise. the bigger question is whether you are going to be moving employment back to the u.s., that's unclear of the case and you may source from different places in the world but you are not necessarily going to be adding to employment here in the u.s. in a significant way, are you and trying to bring jobs back and there was a biggest story of craftsman tools today, we are doing robots >> what i am seeing is the president does not care if it is made if mexico or guatemala or canada i think that's the exception we'll start paying less for number of companies that still do business in china and it is pretty clear that if you continue to do business with china, i think people are going to send your stock down like ralph lauren yesterday if you move production, i don't

care where, they're going to send your stock up >> what if it is from say harley, for example? >> i will tell you this and i am sure jim, you will have similar conferri conversation, this is a real focus of corporate america trying to make a determination is this going to get resolved in the near term or will it extend well beyond what we expect will trump win in 2020 do we have a four or five year plan we have to think about here in terms of how we source goods. yes, some companies had been thinking about this is for some time and obviously it is not new but they really are focused on it right now is what i am hearing and a way they have not been previously. we'll see the implications and ramifications of those decisions. and yesterday's survey, the biggest problem for small

business, labor quality, record high 24% is their biggest single problem. >> thatalibaba is better than expected numbers as we look at some earnings today, revenue up 51 as for china trade, take a listen as joe tsai did address it >> the trade talks, all the issues are on the table. the issues in the trade anyw negotiations will resolve itself chinese is closing the gap between the interests of the united states and china. in the future, there will be bigger chinese domestic consumption and continuing to focus on protection and further digitalization of industry driven by participation of the private sectorsectors.

>> the trade talks put alibaba on the right side of all the issues on the table. >> they come back to this theme as you expected of the idea that there is a transformation going on in china and the next, the one that's going to consume more and more and therefore alibaba would benefit from that as it has been benefiting from it with its increasing membership and increasing use of force or those using mobile devices to access to marketplace itself. it is increase 51% and overall revenue and annual active customers. it also seen as a proxy for where things stand for china the stocks have been down. you can see all fairly strong and well received. i want to say one thing that may have knocked the stock down a bit at least, it did appear and early on it is going to be up.

this has to do with a product recommendation fee that they recently launched or not long ago launched, this recommendation is making platform more attractive to online advertisers and become agnew reserve new string for alibaba. on the call, they did say that they're not going to expand the monitorization of recommendation fees in the coming fiscal year that did seem to disappoint some who saw perhaps as a significant growth or generator of growth, management of a new increase during the quarter they said they're making progress on the recommendation feeds and enhancing recommendation algorithm, not going to expand it in the coming fiscal year.

now you can see up very little at this point. that will may have tamper expectations a little it >> i know they meant a lot of their cloud business jesus, it is very small table. i was surprised how small. consumers a lot and well if luke you look at the number governor -- one good thing is alibaba when you read through it, it actually reads like a u.s. release a lot of the chinese company have becoming public, they don't read like anything we have i do think the amazon web service business is much stronger than alibaba web service business i think people expect more of what could come from the 47% that amazon -- 47 in growth for amazon these guys have fast growth but

david it is not a lot of money >> what do you mean what's not a lot of money >> they don't make a lot of money on the web services business di did you see that number? >> yes it is not nearly equivalent of the evident that amazon has here in the state they have 721 million monthly active users i think another 104 million annually almost all of them in china uses the service once a month to buy something. >> the american, a lot of american merchants want to sell in alibaba and want ton sell team wall. why? because of the number you just gave that's unbelievable. >> if it does become a

consumption of the economy any time soon but if that transition continues the way tsai talks about it, it only grows in terms of volume. >> whose number should we trust and this number shows that retail is accelerating, which is right do you think >> do i have to answer that question >> carl, which is radioiight >> i will go with alibaba. >> all right let's settle that. that has been really annoying gauging the difference >> we'll get industrial production in a few moments. if you miss the data earlier today. retail sales did come down 2.0

let's get to rick in chicago >> we are expecting the number that's basically unchanged we did have retail sales, maybe the most important aspect think back in february which is weak on retail sales, january and march made up for it we'll have to see. as for industrial production, we like down 5.10 this is also a miss and our utilizization rate we lost 78.8 to 35.5 77.9 is going to take us in the way back machine a little bit. that's the weakest level since probably right around february of last year, 2018 not a very good number

interest rates right now if we were to close here would be chosi closing at 2.37 if you want to monitor closely. it is the level that's most important. that's going to make us a bit nervous everyon if it is more td with issues in europe. production are pushing buyers lowering rates carl, jim, david back to you >> rick santelli, we'll see you in a little bit. macy's is doing nicely on an earnings beat and take another look at the premarket here as we add to some losses we'll be back in a moment. this is loma linda. a place with one of the highest life expectancies in the country.

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the problem with macy's is people don't want department stores the numbers are good but people do not want anything that sells into the mall. i got to tell you, this is discouraging for the retail group that the stock is not buying this. >> they point to flat 1% for their guidance in 2018 >> not enough, david >> not enough, jim we are talking about a low multiple and i guess it is going to stay low. >> the balance sheet is really good now people still don't believe in the yeield, it is incredible >> yield almost 7%, 6.93 at least yesterday's close. to your point, stock is not going to be up too much. >> yeah, it is pretty

surprising, very subdue. indeed of what we are seeing in the future, you have to watch apple and caterpillar and boeing today as phil lebeau gives you a different story and macy's is another one you have to watch. it is not good enough. >> boeing has multiple headlines. no order for the 737 max last month. the journal with more stories of faa officials and whether they were not involved in the safety assurances, arguments with pilots, not after the second crash but after the first crash which the pilots were begging for a fix and extensively did not get one. >> just read so badly. phil lebeau had it all this morning. this question keeps oncoming up, would you ever fly on any of these? people say they would not fly in this boeing is -- it is going to

weigh on the dow definitely. >> we are seeing futures negative this morning. close to the lows of the session, we'll get cramer's "mad dash" and count down to the opening bell in a moment as we are coming off a bit of a bounce yesterday, japan reopens with its first day up since april 25th, they did have a week off more "squawk on the street" from the nyc straight get it.

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futures is not good, a lot to cover from trade to politics. opening bell is moments away

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welcome back to "squawk on the street" as we count down to the opening bell on this wednesday. let's get a "mad dash" in across-country ge is the focus for you. this time about ge's market share in gas turbine on what may appear to be but really is >> this is basically saying all that you have heard about how power may be turning around is untrue tusa is saying ge is losing a huge amount of share this flies in the face where a lot of people are hoping positive data. this is supposed to be the

division that larry is working hard he says it is not turning. it is a negative piece >> how is power expected to return to significant profita e profitabiliprofitabl profitability any time soon. this note from tusa we both know does not seem to give up questions of their claims and in terms of market shares >> yeah, you know tusa does not trust ge accounting when it comes to power if i were larry culp, i would say this is untrue they really believe power is tru turning. i don't know, i know that tusa does a lot of homework if he says there is a lot of share loss, i have to believe him. all right, jim, let's get to the

opening bell here at the cnbc realtime exchange. planet fitness at the big board today celebrating their initiative, creative reality, provider of digital marketing of technology there is going to be a lot of names this morning they outline some plans. >> i love what alex gorsky says. may was saying hey where are the goods and alex says it is going to happen. i can't imagine the stock is going to run i like what he said long-term. >> meanwhile the sector of course as you know very well,

jacksonvil jim, healthcare is broadly speaking company like j&j and all under performing >> you think the slow numbers we got and you think with bonds we keep on hearing single pay pr >> there is as ton of geo political news as well the u.s. embassy in iraq did order the evacuation of non government personnel, the consulate as well as we continue to wonder how -- >> what does it mean >> i saw that. we have overlooked that. >> we can't overlook this

anymore. to me we have to put the stock on the radar screen. it is not something anyone would think about. i got to tell you it is sure not helping. >> oil is not necessarily reflecting it today, closer to 61 now but the ia did cut their forecast by about 200,000 barrels a day for the quarter by 400,000 which is pretty a significant cut. >> look, if those are true, where are those premium that oil could have gone. we are pumping about 12 mills a day, those number don't -- >> speaking of oil, guys, having visited chevron and occidental for a while, chevron bow out of the bidding for anadarko goldman sachs, one of the advisers there read, adding a

conviction list following their decision to bow out. they have 144 price target occidental keeps going down. occi visiting lows, i don't think it is quite some time actually >> you are totally right >> 5.78% yield, it is covered and they have a lot of cash flow the stock is down 5 since we saw chevron go away. >> yes >> do we think -- why do we think that's the case? vickie holub makes it a compelling case where this is an asset they'll do good things with why are investors responding y y sell sng. >> i think it is buffett's money. i know a lot of people are s

upset. there is the 8% and people didn't want -- i think the mark market is saying that money should not have been taken the interest rate is too high. >> a bunch of things to watch in financials, the worst performing sector down more than 4% portion of the curve inverting once again today the two-year at 214 earlier this morning is the lowest in 14 months i assume that's what the banks are sprondiresponding to. >> we got cut numbers. companies are doing a lot of business in china and got cut numbers that are in fin but not fin tech >> what do you do with the financials here?

>> all right it means they'll keep going down >> yeah. >> i know. when you see the retail sales, you must think lending is going down a lot of things are happening in the broad market and macro numbers, do not draw it with the actual company with this yield curve it is very hard it is easier on paypal and square >> cannabis obviously going to get some attention today after tilray reported of adjusted loss revenue though was above i think they made some comments on our air last night, jim obviously we know what happens since the stock went public. >>. >> a medical use in europe

he's a sales man he's one of the great sales man but the stock is not reacting to his sales pitch. it is going down >> david reference the chevron note have goldman. deutsche on alphabet takes their target on 1400 on what they are calling on improved pipeline and advertising and this new discovered fee could add 7 billion a year overtime in a bold case. that's an aggressive target for a name we know has been challenged coming out. >> i got three pieces that i am holding up that are all incredibly strong buys because of investors they had. deutsche bank are amazing. this stock could fly it has no chinese exposure people are raising numbers maybe it is the fang it is incredibly bullish these notes are amazing. >> wow

>> apple share is down again as we may expect given -- well, i don't want to say renewed focus, the continued focus on relationship between u.s. and china. a bit more than the s&p loss right now which is down 1.5 of a percent. >> it is amazing in america apple will tell you they have more than 2 million people in some form or another by apple. in china, they have 2 million people, 2 million people on both sides, you would think some of us would be switzerland. it is low. it is one of the biggest job creators in the united states and china. i have to ask you guys, why does that make them more immune tha they are >> um -- i don't know? keep asking me questions i can't

answer >> i am trying, man. these are good questions, i think. maybe we make it rhetorical. how can the stock keeps ongoing down even if they create all these jobs we'll make it rhetorical >> among other things that are working. we got some retail macy's is hanging on its game. i do see a lot of pepsi and kimberly-cla kimberly-clark this is a traditional defensive day. >> yesterday, we decided the economy is strong and stocks and tech stock and today we decided the economy is really weak and we are selling those down. this is nonsense $300 billion worth of goods, if you want to own stocks, remember that's going to happen because it is politically -- stocks everyday, the economy is strong or weak. the economy is fine. how can people be so stupid? >> well, all right, let's break that down really quick aswe have been through this a couple of times this is week.

is it about the firm number on the dollar goods that are being tariffed or is it about a protracted trade war where both sides are going to exhaust each other, how can anyone argue that s&p numbers have to come down or come down big? >> i think they have to come down definitely. we are seeing it right now if you relie y for china, your stock is going to sell for less. facebook, why is their stock up? it is not a china's stock. and alphabet it is not a china's stock. has it moved or has it gotten out of china so all these years that we sat here and ask executives of their plan for china and growth ambition in china, we are excising that from the conversation and say you don't have it, it is good. >> yes >> plain and simple.

>> then the company talked about how they make sweaters in china. sweaters and some footwear had they not said that the stock would have been up you are losing retail because they still do business in china, not so good. yeah, the market stalls here that's why yesterday -- i believe our economy is strong. we are not going to go in a recession, it is clear that it is china, non china. if you get out of china, your stock is going higher. >> carl mentioned at the top of the broadcast, we got different numbers and automotive retail sales are down in may. i do know shares of tesla are down over 2%, revisiting recent lows which is down almost 32% this year, of course, it had a

successful capital raise a week or so ago. >> where is the margin call level? you know that elon musk borrowed a lot of money is there a margin call is that a rhetorical question? >> how about lesley pickerson on naked shorts >> uber is up again. 1%, who knew >> how is the most important stock in the market, beyond meat, how is that doing? it is down four, what do we do >> dow is down 169 here. >> we are back to that familiar 2820 let's get to pisani. good morning bob >> good morning, guys, it is all about the disappointing economic numbers, global economic numbers, disappointing numbers in china and the united states

and u.s. industrial production retail sales are lower than expected and the mirror image bizarrely in china china's industrial production is disappointing. the quality so you got the bond mark moving to the upside. this has gotten everybody talking. we are sitting at the new lows in the bond yield. so the stock market, what do you think is weak today going into the open here? how about bank stocks having some problems. retail sales numbers are not helping and we got issues with the trade war as well and industrials are weak and dollar is stronger. all emerging markets resill down and utilities are up this is a standard reaction when you get weak global economic numbers here

retail revenue is up 45% year over year, that was way ahead of the estimate revenue guidance, year over year growth, way ahead of the number. what's going on here they are capturing the bigger and bigger share of the market even as the economy is slowing that's apretty neat trick. you can see alibaba which has been down. trading to the upside today. about the ipo market, a little bit of frame here, not too badly, we did have an io that was postponed. we'll let that one pass, we did have a downsize ipo as well. it is going to be trading here, post realty trust. this is another read postal service, that one was downside, 4.5 million shares at $17. that was below the range they had here 19 to 21 was the price talk

there. there is a downsize i feel we'll have today we have some big one pricing we have avantor. and starbucks of china let's give these three a chance and see what we have before we start seeing the ipos market is going down >> bond pit as well, rick santelli has a busy morning this morning. >> morning, rick >> i feel well get busier. better credit counter part in the form of bund yield february of 2018, two-year note yield. here is 215, as we move down the curve, you can see what i am

talking about, december 2017 for ten-year last time we close at this level and i do remember of 237 is the current low close of 2019 now, we have not closed yet. we are below that at this point and that's significant let's see what's going on on the longest. 30 ye 30-year bond, they're hovering at 231 that's their low yield close january 3rd, so it is hovering right at that level, of course, should it change this chart shows you all the way back to december, it would be january, a couple weeks difference in the tens a10s and. let's go to bund yield, i took it all the way back so you can see. i took ait back to january of 2016 and july of 2016 with the lowest yield curve ever.

that was minus 19 bases points italian 10s, they are bucking the trend. it is overwhelm by the notion of what's going on. deficit to gdp putting their rates more to the upside, of course, they have not been on a closing bases at 276 level since about valentine's day of this year and finally the dollar index, you don't need to charge treading water, the yen and the dollar index both benefit for some safety issues here. at the end of the day, we have more to point out, i can't express enough how retail sales could win even though there may be revisions and february's first quarter turned out really strong carl, jim, daifvid, back to you >> jim, i don't know about david but i am dying to know how you

are operating because you had a late night last night. >> look, the warriors were once in philadelphia. don't hate me for wearing that shirt. >> omnivoh my god, really >> don't hate me benioff, it is so weird. at 9:00 it is like wow, that was it yeah, we had some fun. curry is amazing curry is amazing he's a machine that's from the jumbo-tron >> i like that >> katy spencer. >> they're all amazing >> heartbreak to the sixers and you are onto a new team, is that is how it works? >> will chamberlan, he plays for the warriors

>> if i had to leave my home team, i would go straight to the bay area >> he's rooting for the warriors now, come on i mean -- >> i never said that >> you are >> i can switch. >> you are a dollar sign man as well >> jim, great stuff, we are glad you are having some fun because you have been working your butt off. >> never takes the tie off we'll see if we can get some nimbling here. s&p is down 9. s&p is down 9. don't go anywhere.

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a look at weak retail sales in china we'll get stock trading with jim in a minute. how do you gauge the greatness of an suv?

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getting hurt tariffs. if they enact the next tariffs, is not misguidance, going to hurt the company you can't have a company in retail mention that anything about china that is negative and that's what turned macy's around, those quotes about china. >> glad you mentioned that, jim. the stock had been up, of course, prior to that. how many more comments like that are we going to be getting in the days ahead when we hear from -- >> it is beleaguering. everybody imports from china you can't sell -- look, we spent years building up these supply chains going to take longer than just a year to be able to budge >> jim, what's on "mad" tonight? >> well, i mean, we have cisco, not that much china, and by the way, kelly cramer, the cfo with mr. robbins. we have roku and then we have goodrx, they're a disrupter, we're in on disruption

we're disrupters too >> all right, jim, obviously a big night. a good lineup. hurry home we got two more days is today wednesday >> the questions are rhetorical, david. the questions are meant to bring out ideas. >> i know. but when you're here and ask them, we handle them better. instead of there just being this transcontinental silence as i look at you going, i don't know. >> i am an actual person >> yeah. >> like a video conference call that everybody can listen in on. dow is down 13 we're back in a moment creatin. so, every day, we put our latest technology and unrivaled network to work. the united states postal service makes more e-commerce deliveries to homes than anyone else in the country.

♪ ♪ i'm the only one of me baby that's the fun of me ♪ good wednesday orning. welcome to "squawk on the street." i'm carl quintanilla with sara eisen and david faber at post nine of the new york stock exchange macro data disappoints both in china and the u.s. but obviously full day ahead >> that's where our road map begins for the hour. the trade war fueling global

slowdown fears, disappointing retail sales, weak china data and stocks falling. shares were up after the retailer beat estimates, but some weak commentary on china has shares down. we'll tell you what former goldman sachs ceo lloyd blark fi blankfein is saying. >> we have two pieces of economic data crossing the tape. to rick santelli for the numbers. >> let's see if we can turn the numbers in a more positive light. home builders housing index is a surprise to the upside, finally today. it is 66 we're expecting the number more like 64. 66 not only the best number of the year, it is the best number since october of last year business inventories, this is a march number, this is really important. march is a first quarter number. if you recall, the first month of the year we were up .9 in inventory. that's the best since 2011 what do we get now, unchanged on

business inconvenienventories w' bad. last month stays in the rear view mirror. .9 for january, .3 for february and unchanged for march. this may not have any significant impact on first quarter gdp revisions, which, of course, were slightly over 3%. we're hovering at key levels, ten-year note yields now hovering at the lowest yield, they closed at on january 3rd for 19 and 30 year bonds, one basis point above that, 281 is the january 3rd yield close. we want to pay close attention to the levels, carl. back to you. >> rick, thank you rick santelli. markets lower this morning with these ongoing chin k ing china tensions weighing on investment. china relies more on trade and loses more as in the labor strike where management and workers both get hurt. the process may demonstrate

relative strength and resolve where compromise needs to happen former white house chief strategist steve bannon weighing in on the president's tactics today on "squawk box." >> president before him, clinton, bush and obama have all blinked. trump didn't blink he could have cut a deal that made him look like a hero. he said we're not doing this this is what i need. lighthizer, you told me you're going to get this, let's power through this >> joining us to today, alan ruscan and jim la camp good to see you both thank you for the time can you think of a period of time that we can start using as an analog? do we go back to the '80s in japan or something else? >> it is possible to go back to -- i don't know if it is the '80s as much as the early '90s where japan was under pressure particularly the auto sector under a lot of pressure to either export less or bring production to the u.s. and

actually we saw production brought to the u.s., quite effective. e exchange rate under a huge amount of pressure as well right now we're seeing the reverse, the chinese currency is weakening. >> so how -- i mean, how can we think about how markets behaved during that time >> yeah, i don't want to take it too far in terms of markets. we went through a fairly unstable period in the mid1990s and through the latter part of the 1990s where trade was a big issue. i think the way markets are trading now is very consistent with the whole china story look at the fx market and everything you expect to be stronger between the yen and the suisse is stronger, even commodity currencies, chinese currency weaker, credit, equity markets trading accordingly, i think everything is very consistent so far. >> your best trade ideas in that context what trend continues >> i think it is going to be very little gain without

additional pain unfortunately. i think pain in terms of the economic data, pain in terms of the financial markets is what is going to drive this bargain really, drive the two parties to the table. so things are going to get worse before they get better just strong opinion on that. it is more of the the same as far as a lot of what's going on in the fx side probably weaken a little bit against the yen, but be stronger against pretty much everything it is going to be very, very interesting to see whether dollar china starts to break higher what the chinese do there will be very instrumental in terms of how destabilizing these markets will become. they hold it below 7, a little bit more comfortable, shall we say, than if we start breaking through 7. >> so, jim, can you buy the dips in this stock market on days like today with the market so vulnerable to every tweet from the president? >> you know, i don't recommend people try to trade the news here i think we may have some more pain before we have some gain.

i don't think we'll have a lot more pain, though. because of where the level of interest rates have gone if you look at 199 -- if you want to look at the past historical references, 1990, 1995, 2000, a real fed funds rate between 3.8 and 4.7 now the real fed funds rate is about 5.9% we have negative interest rates in much of europe, we have ultra low interest rates around the world, so from a strategic standpoint u.s. stocks still look pretty good but your question was about the tactical, do i do it right now i think we are going to see more -- a little more volatility remember, we had a v bottom in december we had a big rally to where wall street had missed everything we were up higher at the high at about 15% on the s&p 500 than anybody had predicted for the year so it is natural now we're in this may through october time frame, historically little more volatile, now we have this news, it is a good reason for equities to start to

adjust and start to consolidate and correct. but if you look at the trade wars, and let's assume we're going to go all out, and put tariffs on everything, you're looking at about 1% on gdp maybe. on earnings looking at maybe about 5% correction there, that implies 10% correction in the market, we're already somewhere around 5% depending which day you look at it i don't think there is a tremendous amount of downside here, sara, but i do think it is time maybe just to maybe derisk a little bit, and not be too aggressive on the buy side, be patient in the summer it timefr. >> you're more bullish than that >> we have an investment bank, he's on the investment bank and then we have the chief strategist in -- on the other side, he's at 2950 you can pick and choose there.

now, in terms of where i think we are, maybe i'm a little more bullish because of the real level of the fed funds rate. if you look at the historical precedence, we had a much higher fed funds rate where are you going to put your money? with a ten-year treasury yield at this year's lows, you don't really have a lot of attractive asset classes to choose from in here we could correct some more, but i think at the end of the year, we'll be higher than where we are now. >> to that point, we have seen some conflicting opinion about whether or not a tariff driven world is inflationary, drives the fed hike or disinflationary and drives the fed cut where are you? >> i think assuming the short-term that it is risk negative enough, it would lean towards the cut. i don't think the fed will get pushed all the way to a cut. but the markets are pricing in two rate cuts, so it is clearly thinking in those terms.

probably gone too far. but certainly that's the way i would be thinking about it it could be slightly inflationary in the short-term, as a one-off really, but it is a little like a supply shock that wears itself thin and the growth negatives are more what's bullish from a rate standpoint. >> feels like there is a big debate now about whether the new tariffs are going to last long enough to actually hurt our economy or whether they'll hurt our economy at all whether we can handle it what is your view? the data is coming in a little soft, retail sales today the latest example. >> i think it is all a question of making a judgment on how long this will last if we get to the third wrung here, if we, for example, come to the end of july and all of chinese exports to the u.s. are subject to tariffs, i think that will be a whole other stage and i think we'll have a direct impact on the consumer, the consumer is certainly the bastion of strength at the moment in the u.s. economy we had a little bit of a weaker

number now not clear what is going on if you get tariffs at that point, we could push us over the edge where we get somewhat weaker data going forward. the good news is the u.s. economy is going slightly above trend. it is not starting from a particularly weak point in the initial stage. >> guys, i wish i had more time with both of you, but please come back, alan, jim la camp, thank you. time for our etf spotlight retail losing earlier gains, down big since friday when the tariffs took effect. also have retail names declining last month as americans cut back on spending after a big jump in march. also have macy's, off its highs of the morning, following an earnings beat and six straight quarter of comp store sales growth on the conference call, jeff gannett spoke about u.s./china trade tensions saying a new wave of tariffs could hurt that company. stock is kind of flattish. up a third of 1% if you dig through the numbers and the analyst notes, they're

not that impressed they definitely beat macy's did off weaker expectations. and certainly on the bottom line, whiches with a welcoline which was a welcome sign but lower margins, higher inventories, not a ton there to get excited about in terms of a turn around. a tough environment for department stores and we saw that in today's retail sales number. >> pointing to flat to up 1% still comp store sales guidance for the remainder of 2019 as well to your point, not bad maybe a bit better than some hoped, but not exactly growth. >> right >> all right happening this morning as well, some news about the house transportation committee holding a hearing on boeing 737 max and the faa's aircraft certification program. our phil lebeau is monitoring that for us. >> that hearing is just beginning on capitol hill. and what will be interesting once we get past the prepared remarks from both lawmakers as well as the head of the faa and the head of the ntsb is really

some of the details they might get into and specifically this question, why did the faa fail to more effectively scrutinize the mcas situation with the 737 max mcas is the control system within the airplane which pushes the nose down automatically that a number of pilots, including pilots for american airlines in audiotape that has just come out over the last couple of days, they said, we didn't even know this was on there. so if we didn't know about it, why did the faa not more effectively scrutinize this important component within the 737 max? so, that's going to be the key focus today as well as whether or not we get any indication about when we might see a recertification flight from boeing they have indicated that might happen perhaps before the end of the month. take a look at shares of boeing, keep in mind, we're going to hear from the head of the faa and the head of the ntsb, the

inspector general will probably talk about what documents or notes they have regarding this process. but you will not hear from boeing executives. and increasingly, guys, this is the drumbeat we're hearing from lawmakers in washington. where is boeing on all of this where are the executives publicly coming out, aside from the prepared remarks, whether it is at an annual meeting or out in seattle, washington, where are they in terms of getting a frank commentary about what happened with the 737 max >> phil, cbs obtained this audio recording which i don't think has been independently confirmed by nbc where a pilot says we deserve to know what's on our airplanes and the official from boeing says i don't disagree you particularly moved by that >> well, look, what they said -- and i reviewed the transcripts here, we have not independently confirmed this conversation that was recorded, but what stands out to me, carl, is that what we

heard from boeing executives on that tape is similar to what they were telling not only reporters but other airlines and other pilot unions at that time. which then raises the question, wait a second, did you truly not fully understand or grasp the severity of the situation and if that's the case, that opens a whole other can of worms in terms of mcas and what role it played not only with the lion aircraft and subsequently in march with the ethiopian airlines crash >> phil, i can't think of one positive bit of news that has come out yet in terms of the perception of boeing or the -- over the last few months since this crisis began for the company. if you're on that board of directors at this point, you have any sense at all what they are dealing with there, what they're thinking about when it comes to the management and/or the fault? >> well, i think my suspicion is and they have been -- they kind of -- as is the case, they circle the horses a little bit

and they make a tighter rein in terms of what they're showing the outside world. my sense is that the board wants to first get the plane recertified, get it back in service, and say, look, it is safe and then go back and address where did we go wrong? now, clearly they're asking those questions and looking at those questions somewhat complicating this is the fact that there are criminal investigations going on. there are authorities who are looking into, wait a second, is this -- does this go beyond simply an accident with a plane? was there negligent here there has been no indication there was any intent on boeing's part to hide the mcas software, et cetera, but there are definite questions about whether or not they were negligent in terms of saying, okay, we think, you know, using one sensor from the angle of attack, that is okay we don't need to have a redundant system here.

all of those questions, i think that's why we're not hearing as much from boeing >> phil, you've been reporting a lot about boeing's lobbying dollars, what, 5 $15 billion last year, one of the most active lobbyists in the market are any of these lawmakers, recipients, are they going to give boeing a tough time >> well, they are recipients that brings up the question, why haven't they called dennis muilenburg, any of the key executives we heard from the faa at the en of march and they said that's why this system is set up this way. we have yet to hear from dennis muilenburg and boeing executives on capitol hill. not only that, there are lawmakers who requested documents from boeing, they haven't received documents and i'm sure that boeing would say, look, there is a criminal investigation, our legal counsel believes this is what we should be doing, and how we should be handling this. but increasingly i think that's

why we're starting to hear from more in washington, d.c. saying, you need to come forward it just can't be the comments for 10 to 15 minutes after the annual meeting or out in washington, d.c. >> all right, thank you very much, phil lebeau on boeing. what a story it continues to be. we got a flurry of headlines now and that's why you're seeing the market s&p just gone positive as bloomberg is saying the president plans to delay imposing tariffs on auto imports. that's one headline. themnuchin on the hill, still a lot of work to do but he's likely to go to beijing at some point in the near future we'll watch all that aomt.t"s ckhe stree iba in men the wifi that set the standard,

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hulu and operational control and talking about all the different contracts you assumed were in place that would give comcast the ability to thwart any plans that disney had. seems like you were right. now they have that operational control, how important is that for them >> well, it is pretty important. i don't think disney is quite yet the mouse that roared. but it is getting closer to that in the streaming world this was vitally important to them the rest of the world was not very focused on those issues, but disney was cheerily very focused on it. and as you say it was because comcast clearly had its hand on disney's throat in terms of globalizing hulu and that was key to making the streaming apparatus transformation come into place the question i have is why did comcast do this deal now brian and steve are masters of negotia negotiating leverage and i think their leverage would

have only increased six months, 12 months, 18 months from now in terms of disney having to do this deal. comcast got a fine deal, perfectly good deal, hats off to kevin mayor for getting this deal done quickly. it is curious to me that as comcast leverage would have increased over time, that they did this deal so quickly obviously for disney it unleashes their ability to be a much bigger player >> take hulu internationally to share ad sales technology across the platforms, data sharing, so many different things. >> bundling espn plus and disney plus, which was critical >> so it does give them that flexibility that will add only to the growth profile of hulu. you could make one argument, the sooner we start with disney here in terms of doing the deal, the more we can hope that value increased to hulu over time, helping us at the end. >> yes

and comcast got a good deal on that respect they have disney who has to invest heavily in this now, more heavily because they'll be able to globalize it and the most important provision of the deal is that comcast can't be diluted below 21%, meaning it will be an enormous amount of disney investment that they will benefit from that they can't be further diluted than that. it is a very good deal for comcast in that respect. but comcast had really blown a hole in disney's globalization strategy by taking sky sky has the european rights to disney and fox programming they had a further ability to restrain disney in terms of any global ambitions with its hand on hulu's throat and they let it go and this is speculation on my part i have to believe that there were some regulatory rumblings with comcast having gotten out of the consent decree that

allowed them to have a vote in hulu that unleashed them in certain respects and it may have been that they felt that regulatory heat could come back if it was being alleged that somehow they were restraining disney from being a full fledged competitor to netflix and wasn't that worth hassle so do the deal now instead of waiting. >> what about -- let's talk a bit out in the future now, three years hence, comcast can pull its content or a lot of it from the hulu platform as it develops its own streaming service beginning next year. where are we going to be in terms of so many of these offerings where it would seem they're compelled to create their own content. does everybody else put up their own walled garden with their content. >> great point, david. and this is where the fox transaction really becomes important because disney clearly knew hulu case and point, they would lose third party content and having the fox content

particularly globally was really, really important hulu doesn't have the global rights to the programminging it gets its whole pitch to networks, programmers, was, hey, sell us your domestic rights and then make the best deal you can selling it off piecemeal globally hulu is sitting there as a domestic service, the fox deal becomes that much more important as it thinks about its global expansion. having said that, remember, fox called all its programming from netflix in 2017 and what happened, it didn't inhibit netflix growth at all, didn't accelerate hulu's growth at all, so you can't overestimate the value of any single library, but this transaction with fox becomes that much more important as hulu will globalize. >> on netflix, it is up front week and i've seen some projections on the number of shows they're slated to brow in the next few years you're talking four digits is that even possible? can you do that?

>> the hit rate that netflix has had as a newcomer to this is astonishing. and anybody in the network television business ten years ago if you told them that they were producing the number of shows they were, they would say it is all going to be crap, none of it will get watched and obviously that isn't the case. clearly you begin to strain creative talent out there. we haven't hit that point yet. and i think netflix's model in terms of how it has been able to create be creative in foreign markets and bring great international series back into the u.s. is part of why this is a global game, part of why needed to get into a global gain and getting creative talent from around the world contributing is so important >> cnbc contributor tom rogers, thank you. >> i like that market following every trade development, making moves here, breaking news out of washington. kayla tausche has the update for us >> we have learned from sources that the white house later this

week plans to exercise a delay in a decision on auto tariffs. now, under the law by which the white house actually initiated this investigation into whether the import of cars posed a national security threat, the white house can utilize a 180 day deadline to actually make a decision on puttinging tari into place so long as it is negotiating with the other counterparts that would be involved with this we know that the u.s. is in negotiations with europe, we know that they are in negotiations with canada and mexico as well as japan on trade issues and according to an administration official, a source briefed on talks and two foreign officials, this is the course that the white house is expected to take ahead of a saturday deadline that was initiated earlier this year for the white house to make a decision on these auto tariffs so the short headline for now is there will be no auto tariffs in the near term so long as this is the decision that the president aligns himself with over the

next couple of days and doesn't change his mind and that there could be a delay of as much as six months for that decision to be made. guys >> all right, kayla, that's big news the market on a net basis likes the delay. s&p has gone positive. 2836 going to check on where some of the other major averages stand dow narrowing its losses now to 28 after opening i think session low was down 170 plus. we're back after this. ♪ ♪♪ ♪♪ ♪♪

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stocks were down sharply at the open, coming off the lows, s&p popping into positive territory. headline crossing as kayla tausche brought us that the administration plans to delay the auto import tariffs. it is also having a move in the bond market, the yields, lower all day, lower off the weaker retail sales report,he fact thap administration is going to delay the auto import tariffs. again, this is a much broader issue than just china, would affect our european trading partners, a lot of cars from

europe, japan, and u.s. automakers which import a lot of their parts and their cars dow also going positive. so we're 3 for 3 now. today, we're unveiling cnbc's 7th annual disrupter 50 list our ranking of the private companies whose innovations are changing the world and disrupting the status quo. julia boorstin has been working on the list since its inception and joins us with more big day here. >> very exciting the 50 companies on our disrupter list were selected from over 1200 nominees using a combination of quantitative and qualitative metrics. the companies on this year's list tackle a diverse range of industries from retail and travel to health care and biotech. some are working in entirely new fields, such as drone delivery and the internet of things now, this year the combined valuation of the 50 companies is over $266 billion of over 36 of them as -- they're worth over $1 billion each together they raised over $46

billion in venture capital, with the median of 400 million raised there are 17 companies that are new to this year's list, and only two companies have been on the list all seven times airbnb and palintear there are eight companies that graduated from last year's list. two were purchased, get hub by microsoft and orris by johnson and johnson. we do expect a number of companies from this year's list to go public in the coming year or so, including airbnb casper and robin hood find our entire list on cnbc.com with a closer look at each of the companies as well as the trends driving the disruption be sure to tune in the next hour and we'll sit down with karen sideman becker, ceo of number 22 on the list, clear, that's coming up on ""squawk alley".

>> so many companies are finally going public. >> it is nice because we have had a lot of change on the list. we did see so many big ipos. a lot of the top companies on the list from the last couple of years have left. but i think what is interesting is it is so easy to find disruption in every different sector one thing that is particularly fascinating about this list is that over half of the companies for first time are coming from outside the silicon valley san francisco area so we're seeing really broadly distributed disruption coming from both china as well as different cities and states across the u.s we're also seeing disruption in different categories so ag tech, agricultural technology company is number one on the list showing how we're seeing technology infiltrate every single industry across the world and it is really not just about mobile apps anymore. >> all right, julia boorstin, thank you. let's get over now to rahel

solomon for a news update. >> here's what's happening at this hour. as tensions mount between the u.s. and iran, iranian leader khamenei said his country will not negotiate with washington and calling negotiations with the u.s. poison. that said, he does not expect war between the two countries. now to oklahoma city, emergency crews there are responding to two people trapped on a lift. the two are believed to be window washers they were on the lift when it became loose and started swinginging out of control the lift struck part of the devin tower building breaking some glass. two sight-seeing planes that crashed in alaska collided at 3300 feet. that is according to the national transportation safety board. six people were killed a preliminary report is expected within two weeks amazon breaking ground in a new $1.4 billion air hub at cincinnati northern kentucky international airport. this is going to allow the company to further control its own shipping

the ceo jeff bezos there getting on a john deere front loader saying afterwards it was a lot of fun to be on. scheduled to open in 2021. not something you see every day. that is our cnbc news update for this hour. i'll send it back to you, sara. >> good news for cbg, thank you. when we come back, president trump's new tariffs could be about to kick sneaks near the trade war. we'll break down how companies from nike to adidas are bracing for a potential impact and we're a little over an hour into the volatile trading session. things are looking up at this hour really just after that headline that the president is going to delay the auto tariffs, facing a deadline this saturday of about whether to go through with them. it turned the markets higher s&p up a quarter of a percent.

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major averages have all turned positive. in last few moments or so, after kayla tausche brought us that news that the trump administration is going to delay imposing tariffs on imported autos into this country. we got a quarter percentage point rise in the s&p 500 now. we started off with sharp declines i would note there is some sector divergence, financials and industrials, for instance still lower. but you got some tech names, communication services, consumer staples, all moving up the nasdaq up about .6%. there is the dow and there is the turn around that i just mentioned. let's bring in wells fargo global market strategist samir samana and steve liesman to process some of the news was the market starting to price in these auto import tariffs >> no, i mean, which is why it is a little surprise they reversed on that news. wasn't a headline because they hadn't made any real decision on it that being said, they delayed it that means we got it deal with another six months so for us, probably the biggest

takeaway is there willing be uncertainty for some time to come. >> maybe, steve, it helps to put it in context of what that kind of move, if the president were to go through on the auto import tariffs were to do to the economy. this is pretty -- this could be a pretty big hit, right, steve >> potentially, sara, i kind of get the feeling that wall street is coming to terms with the idea that tariffs are here, here to stay, and that you can count on there being more tariffs rather than fewer tariffs in the months ahead. you'll notice my understanding is that the canadian and mexican tariffs have not even come off despite the fact there is a trade agreement. so the appearance the administration gives and this is something that is a little jekyll and hyde here is on the one hand, these tariffs are a negotiating tool, on the other hand, there is an idea that we have talked about for the past, don't know,several months or so, that maybe the administration wants a permanent

tariff regime in order to protect u.s. industries. so i think wall street is beginning to sort of understand that idea. >> yeah, there is also this debate, samir, about just how afraid of tariffs we should all be there is no disputing economics that tariffs are taxes and hurt growth they hurt growth in other places more than they hurt growth in the u.s. so how should investors take all this news? >> sure, so we have a little bit of a barbell approach where we continue to take most of our bets on the emerging market equity side. we think eventually there is a trade deal now it may not be the grand bargain we were hoping for, there is some type of short-term deal, both sides have a heavy incentive to get something done. the tricky part is on the other side you got u.s. small caps which are struggling a little bit because the u.s. economic cycle is maturing. we're playing a barbell and we also like cyclical sectors, technology, financials, industrials, consumer discretionary energy, we like all of those. >> yeah. also raises a question about

when if at all it does impact the data on top of some unexpectedly weak data we got this morning. >> i think it is already in the data and the idea is that maybe other data, the other strength has sort of papered it over, otherwise made it harder to see, there is little doubt that if you raise prices on something, you create a cost there that somebody is bearing. you had a lot of noise in the data because of the tariffs, for example, some quarters we get huge amounts of imports as importers try to get ahead of the coming tariffs sometimes you have right now you have the industrial production data that fell in part because some economists think we're working off the inventories that were bolstered up in the first quarter because of the tariffs so a lot of noise in the data to try to figure out exactly how it is -- you raise prices, you otherwise hurt growth and take spending away from other places and who knows, maybe some of the weakness in the retail sales

number right reflect that today. >> all right, session highs on the market, samir and steve, thank you both very much from autos to the next potential victim of the trade fight, sneakers. the trump administration we know is readying tariffs on the leftover $300 billion worth of chinese goods that enter this country. that would hurt if you're buying sneakers here is the breakdown. nearly all sneaks that we buy in this country are imported. and 72% of those imported kicks actually come from china $11.4 billion worth of footwear was imported from china just last year. if we do see a threatened 25% tariff on those sneakers and it is still very much and if, the fdra, the footwear distributors and retailers of america, says that would cost americans $7 billion in additional higher shoe costs per year. so take a pair of $150 running shoes, that would go up to $206.25. pair of basketball sneakers would increase in price from

$130 to $178.74. hunting boots would see a nearly $60 increase as well now, on the plus side, the major players, nike, adidas and others have been diversifying factories across asia. many wound up in vietnam in recent years according to nike's interactive factory map, china accounts for 21% of nike contract factories and only 13% of factory workforce. adidas tells us 18% of their total footwear volume was actually produced in china last year 42% produced in vietnam. under armour says their total volume, 15% currently sourced from china, less than 10% actually comes to the u.s. these companies have been diversifying, but there is no denying that a lot of sneakers are still made in china, a lot of the apparel is still made in china, you have to move quickly to move factories elsewhere.

we talked to matt powell and he said maybe they could move it to the u.s. and produce sneakers here he said no way, no chance, the labor costs, not even close to -- >> that was -- i was going to ask you, are there any sneakers? >> new balance is domestic. >> nike has been experimenting with 3-d printing technology and fly net technology that's a small portion of the overall market the other problem sneakers face, they're subject to a lot of import duties. this compounds that and adds a lot more. >> easier to move a sneaker supply chain than consumer electronics supply chain, right? >> i guess so. i guess so china still is such a big manufacturing home for this industry, for the apparel industry in general and i think that's why all of these companies are sort of holding their breath, holding that next $300 billion doesn't go through. >> yeah. >> some big numbers. >> yeah. >> get your attention. >> get your sneakers now for your kids, right i'm sure your son is into them.

>> they're expensive. >> front loading at the faber household. >> could be paying up. >> i make him pay himself now. >> the with allowance. >> he has to get a job. >> tim horton's chain testing breakfast options with beyond meats meatless patty it is expanding to 40,000 restaurants around the world from current 26,000 over the next eight to ten years. stock is bouncing on all the trade news though. look at the dow, up 11 s&p up 7 to a single defining moment...

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one strategist says investors are ignoring two events that could have a huge xtwoct on the markets in the ne t months. find out what that is on tradingnation.cnbc.com more "squawk on the street" coming up.

welcome back to "squawk on the street." special guest today steve hanky, former senior economist under --

with the reagan administration steve, thank you for joining me today. i want to jump right into it everything is all about china, deal or no deal. and you pair that and there is obviously a correlation to global weakness, we have global sovereign rates moving down the cycle low yields, bund yields of half a dozen basis points away from the most negative they have been in history. weigh in on your thoughts. >> well, the first thing is to look at the fed and the fed is relatively tight, actually, right now. if you look at broad money, so-called devisa m-4, the year over year rate of growth has fallen to 4.4% for that broad money indicator. and that tells us where the nominal gdp is going in the united states.

and it is tight basically. so that's the quantity of money. if you look at prices, most important price in the world is the dollar euro rate my comfort zone for that is 120 to 140 the dollar has been getting stronger a year, down to about 112 right now. so that's tight. that influences everything, and it slops over into prices of commodities. you look at the commodity prices for most indices they're down about 15% year over year, oil, twi is down about 11%, even gold is down about 2% over the last year now we flip into china because this is related to china and the currency all the currencies are weak because the dollar is so strong and the fed is so tight. then you look at money and china

and we see the picture fairly clearly in this so-called wan weakness is weakness in the chinese economy. the trend rate of growth in m 2, their broadest rate of money, has been 15.4% since 2004. now it's currently 8.5%. so we've had almost the slicing of half of the rate of growth in the money supply in china and, of course, the trend rate and domestic demand in china is very weak the trend -- >> steve, let me stop you there, you're giving a compelling case that there's a lot of central bank metrics and foreign exchange is really playing the music the markets are dancing to we're almost out of time, my final question to you is, do you think the central bank needs to be more pro active, considering

all the issues brought up in the context of no deal on global trade. your final answer, make it a short one. >> yes the fed is too tight and they should be loosening. >> i got you steve, thank you for your thoughts david faber, back to you >> rick, i'll take it. thank you very much. send it over to jon fortt, get a look at what's coming up on "squawk alley. jon? >> davidmowsell thompson a former ftc commissioner and former facebook adviser and hieh breakup and the legal issues behind it might surprise you that's coming up on "squawk alley. let's build a better world for investing. let's always put investors' needs above our own. as investment management professionals, let's measure up. cfa institute.

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welcome back to "squawk on the street." i'm seema moody. stocks hovering near their best levels of the morning, still seeing some relative weakness in financials and industrials the second best performing group so far this year behind tech stocks also want to draw your attention to individual video game makers,

activision blizzard all up about 2% sending it to you downtown >> i will take it. thank you, seema well, time to turn to sara and ask, what else is coming up? what will be coming up will you be talking about beyond me on the "closing bell" >> insane. more than 60 times sales now. >> yes. >> highest valued food company maybe ever we'll check the close for beyond meat and the entire market and talk to mark thompson, ceo of the "new york times," the stock up, exclusive interview for "closing bell. gary locke, former u.s. ambassador to china will talk about the latest flare-up and tensions between the u.s. and china and whether we're working toward a deal. cisco earnings after the bell today. currently the top performer on the dow. >> very big day shaping up we'll see you on the "closing bell" this afternoon "squawk alley" is coming up next we're all over the market volatility as stocks are aiming

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good morning it is 11:00 p.m. at alibaba headquarters in china, 11:00 a.m. an wall street and "squawk alley" is live ♪ ♪ good wednesday morning welcome to "squawk alley." i'm carl quintanilla with morgan brennan and jon fortt at post nine we got an upside reversal, stocks turn around in today's session. mike santoli here to break down the move that got started a few minutes ago when we got word out of kayla tausche's reporting as

well that it looks like we're going to delay any decision on