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 auto tariffs for europe.

happy with -- >> i think for as long as a little bit of a twitch, yes, it makes sense. what i like to look at is what works when you get one of these moves. we, obviously, are just reclaiming that last hour of losses yesterday, not even coming close to doing that just yet, but it's big tech again it's not -- it wasn't the car stocks driving us higher at this point. it was basically we like when we're in the buying mood, when we think the market has had enough pain for the short term it tends to be the large growth stocks that's offsetting weakness in the banks today. that to me is a little bit of a tell of where maybe the leadership still has to be >> so auto tariffs were worth 150 points in the dow, but i'm still trying to figure out what is this crummy economic data out of china and the u.s. mean for us i mean it field feeds into the global deflationary story again. it feeds into the lower global growth story, feeds into the global earnings, lower multiple

story, but for china, you know, china rallied on this. you know why everybody said oh, that means they will have more stimulus, like back to where we were four years ago for the united states. bad news is good news over there. some people seem to be mistakenly believing it may make china willing to make a deal both sides walked away from a trade deal and made a decision that overall, it wasn't worth for them to make a deal. so now everybody is going to say will these weak numbers make everybody more amenable? i don't know look at the front that we've got against china. it's not just the tariff thing the campaign against huawei, weapon sales to taiwan, everybody fighting over the belt road initiative. u.s. saying it will make countries essentially. this is a big front we're fighting against right now. >> where is the narrative? it doesn't seem like there's much benefit in reacting incrementally to a tweet or a bit of data release or anything. things are just kind of all over the place.

i don't know that the trajectory of everything has really significantly changed. >> it hasn't really. there's not anything right now that you can kind of crunch the numbers on at least not easily in terms of what's the effect that's going to flow back into the corporate profit situation for the rest of this year. which is why, i mean to bob's point, the macro numbers matter to try to set that context a little bit and say are we looking at kind of a, you know, negative sum game on growth for the short term between the u.s. and china where the u.s. does relatively better in a negative sum game and we can be resilient within that or are we already slowing fast enough that this is going to be the perceived thing that all of a sudden gets us into that bad news cycle i don't think we know. >> you sound like lloyd bla blankfein and his tweet, talking relative strength. >> if that's the game we're playing. >> what i am alert for is the moment we've seen hints of this when we're trying to detach the day-to-day market action from

this entire story. because you're going just give up trying to handicap it and stretch out the game theory. >> both sides decide it's not worth a deal right now you see the discussion between tom friedman and bannon, that was really remarkable. two kreers ago who would have guessed you would even have those people nodding at each other instead of yelling and there was a remarkable degree of consensus between them i thought it was extraordinary and really wonderful television to watch and see how far the political discourse -- >> about the coming war? >> well, i'm telling you, would you have bet that kind of conversation would have happened two years ago? i wouldn't. >> yeah. and it does seem like you can add lloyd blankfein to this, there is a growing consensus, bigger, longer term trajectory beyond trade deficits between the u.s. and china the macro data and the impact that could have on the market given some of the data we have seen you can make this argument about the gdp number for the first quarter and some of the numbers we saw today including the empire state number,

inventory levels the end of last year into early this year we saw a big pull forward on inventory because everybody was expecting the tariffs to go to 25% and it didn't and we're working through the inventory numbers. what does that mean in terms of u.s. growth? >> that's still a problem. obviously that's going to not enable people to add to the inventory levels much and slow production down a little bit the question is, we were expecting a bit of a bounceback in the second quarter over the weak first quarter that we traditionally have we're not seeing it particularly if the early numbers so far, at least the april numbers, and so that leads it to the question about the global growth story. that's the problem that we're facing here. that retail sales number was rather remarkable down 0.2% versus up 0.2% that's a wide gap. you and have i talked about this, about the confidence numbers, but this is a very wide miss overall and a bit of a surprise. >> yesterday you tweeted a chart of stocks during the russian cold war. >> yeah. >> which was a nice chart.

i mean, your suggestion we can do this again. >> a little bit tongue and check but to say that it's not necessarily an ongoing issue for an economy to be able to adapt in a market to be able to perform over the very long term if you have this radical rearrangement of a relationship between powers i guess my other point is, there's nothing new about serious, high stakes global rivalries that are just kind of part of the backdrop of the economies and the markets. the difference is, the economic entanglements we have with china versus what we didn't have in the cold war i'm not saying we're off to the races with some run like starting in 1949 for stocks at this moment, but just to say don't get necessarily believe that the -- the tussle between the u.s. and china, even if it is a long-lasting one, is going to be the thing that determines what happens in the economies or markets. >> global rivalries are not new, but the intricacies of the

global supply chain are new. they're much different than it was 20 years ago a lot more things get disrupted here when you have super power rivalries than 20 years ago. >> why it doesn't get to that point of being a complete disengagement because we are already too much in our -- >> let's hope so if you look at that multiwar front, the tariff wars, campaigns against huawei, efforts to counter the belt road initiative, weapon sales to taiwan, this is a big list here. >> we didn't mention iran or north korea. >> the markets not good at pricing in real time. >> right >> guys, thanks. good stuff santoli and pisani more tariff news out of washington kayla tausche has more on that >> on capitol hill the treasury secretary just said that the u.s. is close to an understanding with mexico and canada on removing steel and aluminum tariffs i've been told by a senior administration official that trade representative, ambassador bob lighthizer, plans to float a proposal at a meeting today with

canada's foreign minister chris tia freeland that would chart a path forward on the new nafta deal that would include a process for removing steel and aluminum tariffs canada and mexico said the removal of these tariffs is necessary to move the deal forward and members of the republican party on the hill have also said they would not be voting on this deal until those tariffs are removed. what's unclear is exactly what the remedy will be we have heard administration officials talk in the past about a potential quota but they've received criticism from republicans on that being the remedy i'm hearing from industry executives that a potential remedy could be an enforcement mechanism that is a better way of policing some of the over supply of steel and aluminum coming into the u.s. via canada and via mexico we'll see exactly what this fix is and whether it's something that the foreign minister chris tia freeland agrees to and finds

sufficient in the meetings today. we expect she's not only meeting with the trade representative lighthizer but with members of congress on capitol hill, and we expect to hear from her later this afternoon we'll bring you more there when we have it it would be a major development in moving this new nafta deal forward. >> wow yeah, kayla, major development and really just speaks to the fact when you're talking about u.s./china trade talks it's not a binary situation you have to look at these other trade dynamics including a wholistic way as well. >> that's correct. lighthizer said if they can't get usmca done everything else will be a footnote this is their top priority right now. >> kayla tausche, thank you for bringing us the latest one earnings mover this morning is alibaba, with shares up about 1% right now. deirdre bosa is live in san francisco with more. hey. >> hey, morgan alibaba did beat expectations this quarter, but revenue also represented the slowest pace of growth since early 2016. speaking of the trade talks,

executive vice chairman brushing off trade tensions and saying that issues will be resolved as interests between china and the u.s. converge. have a listen. >> the trade talks put alibaba on the right side of all of the issues on the table. the vexing issues in the trade negotiations will resolve themselves as the chinese economy is already evolving to close the gap between the interests of the united states and china. this means in the future there will be bigger chinese domestic consumption, more foreign imports, continuing focus on enhanced i.p. protection and further dij tieization of industries driven by participation of the private sector >> this is an optimistic way of looking at the trade war and a point that many analysts and economists have made but as we know converging interests and economic dependence doesn't necessarily mean that this will be resolved any time soon. and as chinese consumers demand

nor goods tariffs could hurt alibaba's ability to supply them with or without american goods alibaba is becoming so embedded in china and has expanded its ecosystem which now covers payments, logistics, entertainment, brick and mortar, and a booming cloud business this quarter its cloud revenue rose 76% to top $1 billion according to gardner it's the number three cloud infrastructure provider and moving beyond asia to battle amazon in europe guys, trade tensions may not matter as much as they used to for the company and its outlook, but alibaba tends to trade as a proxy for china so shares have fallen more than 10% since trade tensions reignited this month. already giving up some of its gains today after that earnings beat back to you. >> yes, indeed deirdre on the guidance too, thank you. sticking with china, tariff concerns continue to worry investors. apple down about 7% over the last week alone. china's global times news outlet tweeting, the expanding

china/u.s. trade dispute will put apple at a disadvantage as chinese consumers are likely to take a look and see attitude towards its products and even boycoter of msa capital and chris, apple and semiconductor analyst. good morning ben, i want to start with you. when it comes to just the situation in china and how companies are responding to it, alibaba seems to talk about these trade tensions, to my ear, almost kind of like a fact of life at this point, talking about how they believe the inevitable dynamics will benefit them in the future is that the way that companies really have to talk about this now, like there's not going to be any dramatic move any time soon >> obviously depends on the business alibaba is very much dependent on importing u.s. goods. they are dependent on also a

global customer base things like ali express now posting over 120 million users around the world their interests to expand ali pay globally they do view themselves as an integral wheel in the global trade balance and, therefore, feel that they are very much affected by the trade movements and then as you see in joe tsai's statement trying to put themselves on the right side meaning whatever side is the most applicable to each one of those verticals, so protecting i.p., protecting -- digitizing the chinese economy through some of their partnerships with things like starbucks and olama and then, obviously, improving the trade deficit. they are probably the most vocal on this, but i think you will start to see more of a trend here. >> chris, we're seeing estimates now on the impact to apple if we do, indeed, get these new tariffs, 25%

i believe you're calculating an 11% hit e ps, jpmorgan has 14% what do you think apple will do particularly around iphone pricing passing that along or just taking the margin hit and what should they do? >> it's a great question and i think that's kind of been one of the biggest challenges right now. the two scenario analysis we did one where apple absorbs the cost and no pass along to the consumer in other words, their costs goes up by 25% because of the tariff. the second situation we assume they pass it on to the consumer and in that case the risk is there would be some demand destruction where consumers will be turned away by the fact that the pricing of the iphone has gone higher. obviously what is interesting is in the first case, where apple absorbs the cost that is the biggest hit to earnings per share compared to the point where they do pass along, even some modest demand, let's say 20 person, i think it will be interesting to see how apple does go with it.

the other which you highlighted earlier in the program how the chinese consumer will react if the trade wars continue, most of our focus was on how it impacts the u.s. base and the u.s. consumer base where the tariff really flows through for apple >> ben, you're joining us from beijing. in terms of the sentiment on the ground there among the investment community, they're also in addition to all the talk around tariffs and what this means in terms of a bigger, more impactful trade war, there's a crackdown in terms of investment by chinese investors, chinese companies into u.s. companies. what is the sense there? >> certainly taking its toll i mean fdi has crashed this year chinese investment an on venture and growth stage technology into the u.s. has essentially collapsed. factta and scfius are facts of

life for chinese firms especially those that have u.s. dollars provided by government entities, soe-backed funds we've seen now a shifting of a lot of those dollars going more towards domestic investments within china, as well as expanding into other emerging technology markets like india and southeast asia so i think today the view is that some firms that already were very mature investing in the u.s. have seen kind of the way cleared out for them because they have good government relations teams and understand how to navigate the regulatory landscape as it shifts beneath their feet, but those that were a little less sophisticated are essentially blocked in investing in the united states, especially those with strings attached to their money and so they're seeking markets elsewhere. >> finally, on apple, in china, at what point does an extended trade dispute hurt apple's long-term prospects there as we go through 5g transition and competitors are trying to grab share? they potentially have an opportunity to do it and lock it in, when does that happen?

>> it's a tough one to handicap at this point. you know what we saw earlier this year was in january, there was definitely a little negative impact for apple iphone sales in china, maybe part of it because of the huawei read through from what happened, but at the same time, you saw a pick-up in february/march when during chinese new year apple gave some good pricing discounts. that kind of actually like rejuvenated the iphone sales on a go forward basis it feels like the trade war will have a negative impact. it's very hard to quantify it. once we get into 5g, which is sometimes scheduled for later next year, hopefully by then maybe the trade war abates, even if it doesn't abate it's going to come down to how the customer views iphone and the price point at which the 5g i phones come in hopefully by then it's eased itself even under the last three months to six months scenario we have seen, things are fluid and they

change on a month-to-month basis if not day-to-day basis. >> yeah. hour-to-hour even. ben and chris, thanks. >> thank you. still to come on "squawk alley," a look at luckin how the coffee start-up is trying to disrupt starbucks' dominance. >> cnbc's annual disruptor list is out the ceo of number 22 clear is going to join us the dow is up 31 points after being down triple digits earlier in the session we got big shows straight ahead and back after this break. feel that? that's the beat of global markets, the rhythm of the world. but to us, it's the pace of tomorrow. with ingenuity, technologies, and markets expertise we create the possible. and when you do that, you don't chase the pace of tomorrow. you set it.

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we are just days away from another major ipo here in this country as chinese coffee start upluckin prepares to list shares on the nasdaq friday eunice is in beijing with an inside look. high, -- h first serious local challenger in the china mark it means luck and fortune. the logo a deer native to china and the company boasts a localized menu you can get your americana with

orange soda or fruit tea with cream. the founders are tech people, not food people. they come from a car hailing app. they end up -- they've been pushing a lot of technology for their company. you don't use cash in any of the stores and their reasoning is young people in kooin pay for everything using their mobile phone. all the mobile payments and payments and all the orders are done on their app. now, the company also is only 18 months old it currently has about 2400 stores and by the end of the year they hope to have 4500. the strategy, though, is quite different from starbucks they've been pushing and investing a lot in what they describe as pick-up stores, essentially coffee counters with very few seats the reasoning they have is that they say that young people more and more want to pick up and go when it comes to their coffee or

have it delivered, as opposed to really sitting down and chilling out in a cafe. the company's coffee is significantly cheaper than starbucks in china the retail price for a latte or, for example, a grande latte from starbucks costs about 5 u.s. dollars and the retail price of a similar sized from luckin is 25% cheaper. the company offers discounts and coupons that the actual price is a lot less for example, one of our colleagues at the beijing bureau ended up downloading the app yesterday and she got nine coupons and we used one of the coupons today and got that same latte for 64 cents so i think between the rapid expansion as well as the heavy discounts, that's probably why the company is burning through a whole lot of cash and the operating expenses when you look at its sec filings outpace revenue. jon? >> wow yeah a challenge for investors to

value their interesting company. thank you. meantime restaurant brands hosting its first ever investor day in new york with alternative meat options on the table. take a look at beyond meat, up more than 9% on the news kate rogers has more kate >> hey there, jon. that's right we are here at restaurant brands international first ever invest day. see behind me company executives are laying out their plans for the company's three brands, burger king, popeye's and tim horton they plan to get to 40,000 locations around the globe in the next eight to ten years, up from 26,000 locations today. they also announced this morning a partnership with beyond meat which you mentioned and tim horton's for breakfast sandwiches which are currently testing in canada beginning today. the company also announced yesterday an expansion of its impossible whopper that will be available in four different markets across the united states i got chance to sit down with rbi ceo jose silva this morning

and asked if he's concerned about competitors teaming up with beyond meat or impossible foods in the future. >> our sector, the quick restaurant service sector is very competitive i have no doubt others are looking at this. we're going to keep focusing on making sure the product does well in test, profitable for our franchisees and it's operationally feasible so we can deliver it consistently to our guests day in and day out. >> we also asked him about the u.s. consumer in china he's not too concerned about a potential economic slow down here in the united states in the year to come and the company's continuing to push into china. it has over 1,000 burger king locations there, just a handful of tim horton's. he says they're building a brand there for the long haul, kind of echoing similar sentiments of other companies operating there in a big way like starbucks. even as all of these trade tensions unravel and continue to develop. back over to you >> kate rogers, great stuff. thanks for binging it to us.

interesting to see if impossible and beyond meat can ramp up their supply to keep up with the demand global stocks have turned around down 190en the dow this morning. we're now up 108 points. seema moody joinses n us now wia breakdown of today's market action. >> yeah. similar intraday reversal across europe we're seeing that. all moving to the upside stocks reacting positively to reports that trump administration's decision to potentially delay the imposition of tariffs on the auto sector, seeing names like porsche, daimler, volkswagon, bmw up significantly on the day also worth knowing the data out of europe today has been encouraging. the growth data specifically, numbers out of germany narrowly avoiding a recession for now, so that has been encouraging for markets as well. turn to earnings, sal vador, the shoemaker posting a strong set of numbers including an 18% jump

in sales in mainland china city analysts say results represent an inflection point in the turnaround plan. that stock up over 10% the results lifting shares of other luxury stocks. analysts caution that a further drop in the chinese wan could complicate performance resulting in the consumer there pulling back we have to point out it's basically flat against the dollar but hovering a 2019 low back to you. >> all right thank you. >> to rahel for a news update. >> here's what's happening at this hour. former secretary of state john kerry joining a meeting of world leaders and tech company representatives in paris for talks dealing with on-line extremism. >> the idea that violent

extremist videos and conversation, you still have videos of shootings that are available on the net that's inexcusable, and unacceptable what you have to work out is a way to guarantee you're not censoring legitimate discussion. >> ford is adding 270,000 fusions to a recall in north america. this is to fix a gear shift problem that could cause the vehicles to roll away unexpectedly it covers the model years 2013 to 2016 and fusions with 2.5 liter engines. the company urging drivers to use the parking brake until repairs are made. pope francis treating eight migrant children to ride with him on his pope mobile they came from different nations including syria, nigeria and the congo you are up to date that is our cnbc news update for this hour. now back to "squawk alley. i'll send it back to you >> all right thank you very much. when we come back using facial recognition to disrupt airport security the 22nd company on the cnbc

annual disruptor list clear will join us at post nine the markets overlooking this morning's weak data and applaud something of the trade headlines, dow up almost 100 back in a minute in just thea

couple headlines the u.s. delays a decision on eu auto import tariffs and the journal says the u.s. is close to resolving some steel/aluminum

tariffs with mexico and kooin, go -- china. >> disruptor 50 list is out in which we rank private companies and startups whose innovations are changing the world at number 22 clear, which you've probably noticed at airport checkpoints around the country the company aiming to streamline security screening and user identification through the use of biometrics. joining us here at post nine, clear chairman and ceo caryn seidman-becker and julia boorstin, the mothers of disrupters good day to both of you. my family just became a member and i was amazed how quickly and easily i was able to skip the line and move through and get signed up. how quickly is the company growing right now? >> so, i was telling julia earlier, we are up almost 100% year over year in both volume and membership it took us seven years to get

our first million members, 8 1/2 month to get our last million members and 11 1/2 months to get the ones in the middle the hockey stick when you map out when you start a company is happening. >> go ahead. >> facial recognition, which is the basis of what clear does, is very much in the news. san francisco just approved the ban on government's use of facial recognition technology. what does this mean for you as you try to grow the use of biometrics in airports and also in stadiums and other locations? >> we start with the premise that biometrics makes homeland security safer, customers safer and brings you a frictionless experience biometrics is not only facial, fingerprints, iris, face, voice, is coming. we're all about trust, that customers opt in and know what they're opting in for. now that we've moved to facial from a biometrics perspective, we being a lot of people are using facial versus fingerprints, it's easier to be passive than active.

it's important that people know what they're opting in for and what their experience is going to be and where their data is. >> you have so much data about your customers how do you ensure the data is safe and not hacked? with you work with the department of homeland security, but can you reassure your customers that in this day and age of hacks all the time that that data is really secure >> when you buy a bankrupt company you're starting at a low base and in our dna and in our culture and the fact that we're a qualified anti-terrorism technology with the department of homeland security means we have built everything focused on security from day one. it is in our dna of our company and this is what we spend all day doing. security, securing data, protecting privacy we have been very public about it. >> not that anyone want this to happen, but what is the liability if a bad actor uses the platform to do harm? what happens then? >> so one of the really important things that we tell people is we don't have their fingerprints and their swirls, right. this is ones and zeros encrypted in every which way at the

highest level of cyber security and it's not only focused on securing it, but understanding all the different firewalls and if anything got into your system >> to follow up on that, i think carl was asking, what happens if somebody who is a clear member actually is a bad actor? what's the liability for the company then >> one of the important points is that the security is about multilayered approach, right, this is one layer, not the only layer. being a qualified anti-terrorism technology and the safety act certification indemnifies both the company and our partners from liability and that's a really important thing which is that your company is reviewed under rigorous review by the government in order to ensure that your systems are up to par. >> is a bad airport experience driving demand for you is that a big part of what it is, why that has spiked as the lines have gotten longer for various reasons over the past year? >> so, i actually think that the great word of mouth on the great

clear experience is what's fueled things and i think people now expect frictionless experiences in the -- outside the airport, right you can call an uber or a lyft versus waiting outside for a taxi and that feeling of control and that expectation of a frictionless point and click world we all live in i think is fueling the desire to have that in so many different areas from airports to sports stadiums to building accesses. so many different areas. so i think it's the word of mouth and the fact that we're delighting people in building trust. >> your business right now is primarily in airports and car rentals and stadiums what's the next leg of growth going to come from payments what's the significant driver of your revenue beyond airportses >> we believe any place you're whipping out your wallet and taking out your card to prove you are you is a place where clear has big opportunities. look at payment, biometric, at the seahawks, sounders, mariners, your age and your credit card and then someone is handing you a beer

safer, easier transaction. think about health care and you think about all the places you are taking out a health care i.d. and clint board. >> convenience stores, youth trying to get beer or e-cigarettes >> think about the age validation in e-cigarettes and beer and on-line gaming. geolocation, those are crucial to help create safer, easier experiences. i'm sorry to out the 21-year-olds >> no industry standards all the convenience store chance have different levels of accountability for their workers and so forth. >> point of sale systems keep evolving and age validation is an important point for many transactions we think there's huge opportunitieses there. >> thank you for joining us today and congrats on making the cnbc disruptor's list. >> it's an awesome list. >> julia boorstin, thank you for being here as well. >> thanks. >> coming up later today, the founder and ceo of phononic. which is -- all right.

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the top of the hour. tariffs and the slow down and tensions with iran, can stocks rebound and resume their rally as long as all of those remain front and center we'll debate that key question plus, the price hike to a popular internet name is our call of the day. the investment committee on the case there and we've got both jon and pete today, unusual activity coming up with everything else at noon. jon, we will see you in about 15 minutes. can't wait to get started. >> all right see you then, scott. for now let's get to the cme, rick santelli has the santelli exchange. >> good morning, thanks, jon you know let's briefly touch on the data interest rates. long dated treasuries are testing some really key levels all the january 3rd lows if you look at a year to date chart, 10s, 237, look at 30-year bonds, 281 and it's based on a closing basis, at least my interpretation, so we haven't yet accomplished that like the short end has. this is really important to monitor for a variety of reasons

over the next several days we'll look at some of those big patterns that auger in the higher rates, a lot of that will change should we start to trade and close much lower than current 2019 lows. now, top dog or boiling frog this is the big question on trade. deal or no deal. and the more i look at all the variables like today weak retail sales, chalk one up for empire, inventories unchanged, yes, the home builders index was pretty good, some of the important data on the weak side but ultimately my guest today brought up a great point for those trying to handicap how trade will play out in the markets when i said top dog or boiling frog that is no exaggeration because at the end of the day, whether it's bannon or some of the ghaeuest we've hd on cnbc as of late, is this a break in what already has been an established trade war, we just don't know it's an economic

war? or are we making progress and it's very hard to tell boiling frogs never know but if that is what markets need to grapple with we're looking at a longer runway. finally too tight or just right? i had steve on this morning and a regan senior adviser in another time and he continues to monitor money supply and his conclusions are that it's just too tight out there with respect to our fed but if trade is the big deal here is the way i think we should think outside the box we are the biggest customer in the world and that works to our advantage during the trade talks so we are not the boiling frog and ultimately should we ease a bit, the first place i think you would notice it would be in the dollar maybe the dollar is too tight and maybe money's figures are constrained too much at the end of the day we draw all the attention of the global exporters, whether it's europe, japan, or china. i think in the context of what we are dealing with, it would be

better to make an assumption that the more they stimulate on their waves for a while while ongoing talks on trade progress. morgan, back to you. >> rick santelli thank you. as we head to break, take a look at major averages. a big reversal this hour with the dow up 108 points, after being down as much as 190. best day for the dow since february 15th. tech and communicati sck inthe way.s we'll be right back.

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facebook again under pressure after or was after adding restrictions on its live streaming futures. it comes amid calls to break up the social network and limit mark zuckerberg's zuckerberg's influence but is breaking up the company even possible our next guest thinks not. joining us at post nine today is former ftc commissioner and former advisor to facebook, good to have you back thanks for coming in >> thanks for having me. >> it's been a crazy week, of all these headlines out of reuters, the chris hughes treatise and his appearances everywhere is there a consensus on what happens now? >> well, i think there's going to be a new consent order and i think the elements of it will be a fine, a pretty hefty one it will have to be some sort of behavioral restrictions, probably moving privacy further up in the food chain in the officers who were in charge of that at the company because the

company's now a lot bigger don't forget the original privacy consent was 2011 and activities that took place starting in 2008, now the company has 30,000 people. it's a very different place. now, the real question is, that have been hearing about, is whether -- is an internal dispute at the commission whether mark zuckerberg is named personally or not. >> this is what the "times" highlighted a couple weekends ago. >> right and it is interesting. that's a very rare kind of action for the ftc and it's usually most appropriate if someone is personally involved with a decision that violates the law. i'm not sure they can get that here, and i'm not sure it would be particularly effective. >> we've actually had lawmakers in the last week, week and a half on our air who have made that argument, that zuckerberg should be held personally accountable, if you see a breach like this moving forward in the future if not the ftc could you see something like that become legislation around tech regulation in the future >> that's kind of hard you know, it's very interesting, the naming and shaming power of

the ftc, when you're naming someone personally liable, it's one of the tools, but on the other hand, is that the most effective way of getting at the problem at facebook? i would think that the behavioral remedies that they're talking about, about having someone in the c suite who can decide on privacy, that's probably a lot more powerful >> you're an advisor to facebook during the time when they got into this mess or at least this mess was discovered and came up. what's your take on how they are handling it now and the extent to which they are bringing down legal if not regulatory doom on their heads? >> well, i think that they -- there's one thing that's happened here with cambridge analytica. it was how -- shined a spotlight on how facebook is handling third party use of information since the time of -- that was 2011 they've closed a lot of those doors, but it also highlights the fact that they have to be a

lot more careful in monitoring who they share information with. if they're not in control, who's in control and for what purpose that's the real challenge here, and it's a challenge not just for facebook, it's for everybody else in the information chain, whether google uses your information or amazon or apple or anyone else, that's what's most appropriate for a legislative fix, not necessarily a corporate fix because i don't think it would really solve the problem. >> i'm not hearing you say that a break-up would do anything >> one of the problems with a break-up here, i've heard a lot of people talk about this, it sounds like a political answer to me, in the sense that i've been around to see what happened with microsoft and what happened with at&t, and this is not an essential service. this is not -- this is not like the phone company putting a phone in your house. >> some might disagree, but okay >> well, maybe if i'm 14, it might be an essential service. but i think it's important to say that there are other competitors out there. there's a lot of competitors out

there, and so in order to get to a break-up stage, which is, when you look at the antitrust laws, which is the very most radical end, you have to get to a lot of stuff before then. now, let's also remember what the ftc has before right now is a consent order that's based on its consumer protection jurisdiction it's not a complaint that's based on antitrust >> that's a key point. we've got facebook restricting live features and cracking down on some of the types of videos or, you know, misinformation, violent content that could be used on that feature on the flip side, there's been this brewing debate that seems to be getting bigger around cracking down on misinformation, cracking down on harmful content versus censorship. how do you think about that, and how does a company like facebook actually address that in such a way that's fair? >> well, this is a very difficult thing to do because i think a lot of what i hear in terms of break-up and other things is really about content regulation >> yeah. >> and we -- it's also a problem

here because we have a first amendment in the united states which you don't have in other countries, so on one hand, facebook is caught in the middle on one hand, people want them to censor more. on the other hand, people want them to censor less, so there -- and we have no regime in the united states that allows censorship at all, so they're really in new territory here and to say what the balance is, what the middle of the bell curve is going to be, it's hard to say. but that, i would say -- submit has to be more than just facebook it has to be discussion with a much broader group of people >> yeah. >> come back, mozelle. thanks for the help. "squawk alley" is back in sthr mutes nothing comes easily. that's what happens in golf and in life. i'm very fortunate i can lean on people, and that for me is what teamwork is all about. you can't do everything yourself. you need someone to guide you and help you make those tough decisions, that's morgan stanley.

they're industry leaders, but the most important thing is they want to do it the right way. i'm really excited to be part of the morgan stanley team. i'm justin rose. we are morgan stanley.

let's get back to kayla tausche. >> the treasury secretary appearing outside the senate appropriations committee where he testified on his department's budget and he answered questions from reporters on trade talks with china, next steps for the u.s. mca and also those repeated requests to get the president's tax returns. >> what i said was we were trying to resolve the tariff

issues as part of an agreement with usmca and that's something that we are focused on. >> reporter: will that be a sign that the administration -- >> reporter: still confident in the china agreement? >> hopeful i wouldn't say i'm confident >> so, trying to clarify some comments that he made in that hearing where he said the president had instructed him and ambassador lighthizer to find a solution with canada and mexico and then, of course, our reporting saying that ambassador lighthizer was expected to float a proposal with canada's foreign minister today guys >> kayla, thank you. those two stories obviously outweighing the negative tone that was driven by not just the china data overnight but our own retail sales and then our own industrial production. we've hungon to 2,852 here which would sort of hold the opening intraday high or intraday high from monday when we started this whole adventure. we'll see if this holds this afternoon. >> we talked about how well big tech has been doing in this morning's rally. alphabet is up 3% and facebook

also doing pretty well, up 2.75%. >> yeah. keeping an eye on the big industrial names as well we've got deere reporting earnings later this week and some of the other retail names >> walmart tomorrow morning is going to be a big one and deere on friday. for the time being, let's get to the judge and the half >> thanks, carl. i'm scott wapner weak global data, the trade war escalating, tensions high with iran, can stocks really rise in the face of all that it's 12:00 noon, this is "the halftime report." >> announcer: big developments on trade have the markets moving again. a prominent voice backs the president's china tariffs. will the support push the administration to go a step further? retail numbers, weak is the great american consumer faltering and why? and a big call of the day on a prominent member of f.a.n.g. the halftime investment committee is ready to weigh in it all starts now. here's scott wapner.