♪ i fooled around and fell in love ♪ >> this is "squawk box." >> good morning. welcome to "squawk box" here on c cnbc becky and andrew today let's begin with the markets where stocks have been clawing their way back from monday's selloff. the major indexes are 1% away from erasing monday's losses taking check on how we're setting up on this thursday morning session we will see that we are higher across the board the s&p 500 looking at 5 at the open the dow jones strilt average up by 52 poins where are yesterday's comeback, if you can call it that, mike, seemed a little bit anemic because we did close off the session highs. we'll get to that in a little bit more overnight in asia, taking a look at the picture there we've got the headache singe just about flat here shanghai composite finishing higher by .6%. that weak data yesterday stoking hopes that there is more stimulus in the works.

this is the real focus it continues to be the focus today, and those are tread e treasury yields. yields around the globe are down and the ten-year note is a 2.373% we did hit the lows for the year 2019 yesterday. at the close here we'll be watching this. also, we did see overnight currently if not currently some inversions in the it 2-5 spreads if that's your cup of tea. >> we were down 190, though, in the first couple of hours, weren't we i didn't see a tweet i didn't see that things are going well tweet >> you did in the 10:00 hour no oaudit. the market takes that as fine we can set aside the trade thing for today. we don't have to surf every headline you didn't buy auto stocks

you bought google. it was buy the big growth stocks when yields are staying low. i mean, triple b corporate yields, lowest end of investment grade back below 4%.

>> it's amazing. blankfine and friedman yesterday with -- that was -- that was surreal enough seeing those two guys it's like people thought we photo shopped those two. >> the new data is taken positively i do think, though, you can separate out how the market is going to digest all that in the near term. >> looks like the markets are uncertain about the whole entire thing right now. even yesterday we were making the point that it wasn't a convincing rally off the lows that we saw in the group market session. we did lose a lot of steam >> the past two days >> we're talking about 25% on every chinese product, and we're about 3% from the all-time high that we just set >> in that context, sure >> it has not been -- it's been a little like this, but we have not. we're going to have guys on today.

fuhrman will say it's the worst thing in the world we have kyle from the tax foundation these are the worst things in the world. >> we have ubs strategy just lowered his year-end price target to 2550 >> you had the other report that people have a problem with it. it's called a cpa report, which is for prosperity. it's not cpas. it sounds good it's like, wow, these guys are accountants. that's not what it means they said it create jobs 25% creates jobs over a period of time. did you see that sflort. >> no. >> you saw it, sfliet 1.3 -- no? and, actually, the guys that we're having on are going to poke holes in the analysis it. there are certain people that point to the first quarter gdp in the import-export chain, and that added >> i don't know how much you want to hang on that i mean, nominal gdp in the first quarter. nominal, was the lowest since 2016 less than 4% it was a really low inflation reading. partly lower import prices

plus, yes, inventory build, all that >> and less imports. >> so that -- that's a number. it's just not necessarily something you want to base the -- >> the people that aren't ready to just categorically disparage the tariffs. there are some saying it's what we need to do for leverage for china and it's long coming, and there are others that say the actual effects are not necessarily what people are saying >> it is overlapping >> liesman is going to come on and talk about this. this is the biggest tax hike in history, and then we're going to have jason fuhrman who will say this is just -- that's what we're going to do today. we have eric cantor hopefully coming back. the guy that push the him out is

gone busy day ahead for the markets, finally. we're going to goat this a quarterly report card for wal-mart is expected at 7:00 a.m. eastern we'll also get pinterest for support as a public company. on the data front we'll get the latest jobless claims, housing starts and a key regional fed economic indicator stocks to watch. cisco reported better than expected third quarter results also issuing an upbeat sales forecast for the current quarter. the company says it made changes to its supply chain to minimize sales exposure to china helping to cushion the blow from the trade war between beijing and washington, and jim had the cfo and chuck on last night. they were both pretty -- i think i just was impressed with their answers to a lot of these. >> i think the most important take-away at least for me from that report is that the guidance for the current quarter includes the impact of the new round of the price hike, right? it's still upbeat. people are going to grab on to

that and hope that is going to be the read-through for technology, although who knows if that is the case. >> meanwhile, i think i looked for the first nine months of the fiscal year. cisco has bought back $16 billion of stock that's a constant part of the story because of the strong cash flow we're following a major developing story out of the white house. president trump effectively black lists chinese telecom giant hua wr ei. here's more. argen. >> well, huawei came out the blocks with a strong response saying if it continues to be blocked from the u.s., the u.s. will lag behind in 5g technology, and it said president trump's move also raises some serious legal concerns i want to dig into what kind of impact this is going to have on huawei the business in the u.s. is very small. the americas region accounts for 6.6% of its revenues, but the majority of that, nearly all of that is, from latin america. it's been absent from the u.s. for so long.

the bigger concern is around the supply chain because huawei has been pout a government list known as an entity list. essentially any u.s. companies that want to sell components or products to huawei must get government approval, and huawei relies on over 30% supplies rrks relying on compoen frents smartphones and networking equipment as well. any disruption there could have a big impact on huawei oert big concern is what this does for other countries president trump and his administration has been pressuring other countries to block huawei from 5g the likes of japan and australia. in europe there's a lot of disagreement with the trump administration stocks in huawei, germany says it will allow it to be the u.k. hasn't made its mind up yet. that's going to be a serious concern qualcomm and intel and other semiconductor players are also suppliers to huawei

will there be blow back today in the trading session. i spoke to a couple of insiders at huawei this morning they told me it's business as usual. there's no doubt senior management and the top bosses that will be racking their heads thinking about what this means in the long-term for the company. guys, back to you. >> all right arch arch arjun we're both -- we're just thankful for you this morning. thank you for that report. i mean, you -- >> we were all -- >> three of us coming up, big hedge funds falling in love with the fake stocks all over again. we'll show you the big money moves. maybe they're renewing their vows somewhere we're whale watching next. as we head to break, here's a look at the biggest premarket winners and losers in the dow and we've got an oil stock,

retailer and tech stock. we'll be back.

>> here's a few money moves just disclosed in regulatory filings. you go with winners, right they've been the best stocks repeatly >> yeah. zoo how are you going to beat

the averages >> and the difficulty for hedge funds is the winners have really been beta exposure, the big names. we'll get to that in just a minute among the biggest highlights from the 13des moines filings, another winner, burke shire hathaway disclosing the size of its stake in amazon. the firm bought 483,000 shares during the quarter, worth about $900 million at yesterday's closing price. warren buffett told becky quick last week or a few weeks ago that he was not the one purchasing amazon, but another one of his portfolio managers was behind those purchases in addition to berkshire disclosing its stake in amazon, many high profile names added to their, joe, fang positions david tipper's appear loosa increased its stake in facebook by 40% to hold more than half a billion shares soros in third point has new positions in netflix it decreased stake in google

parent company alphabet. soros dissolved it altogether. among the other findings in yesterday's filings, appear loosa dramatically boosting its stake in pg&e. it's unclear if david tepper sold it especially after last night's news that cal fire is attributing the catastrophic campfire to pg&e's electric transmission lines a reminder that the 13f filings only detail positions through the end of march and may have shifted in the six weeks since then >> i do like that berkshire just says a place holder position buy me 1% of amazon. >> just a place holder just a drop in the bucket for them >> doesn't move the needle for them >> exactly >> all right, thank you, leslie picker coming up, groucho marx said i don't want to really belong to a club that would have a person like me as a member, but it might be worth making an exception if you get into this new club nexus. we'll tell you about the new venture with some big backers,

including joe louis, tiger woods, ernie els, and justin timberlake that's next. sfx: [phone ringing]

you still have service? call the insurance company it's them, calling us. it's going to be a week before they can get through on these roads

shhh, sorry, i didn't catch that. i said ask how soon they can be here not you. right now? what's now? he says they're surveying our property now they're probably at the wrong house i don't see any hovering his name is hovering? look up? by using machine learning and analytics to automate claims, cognizant is helping insurance companies advance how they serve even the hardest-to-reach customers. cool ♪ [ slow dance♪music plays ] sfx: record scratch music (plays throughout): [ 'watch me walk' by spencer ludwig ] yo dj, can i put in a request? ♪ don't have no sass about this ♪ ♪ i'm on my way i'm on my way ♪ ♪ can't take no class about this ♪ ♪ i'm on my way i'm on my ♪ like this! ♪ this is a moment you plan for. to start your investment plan, find an advisor at massmutual.com

sfx: [ mnemonic ] >> right now we want to tell you about a new private membership club in manhattan located between tribeca and the

financial district nexus club of new york join us now, doug mcmahon, managing director at cavastock group which owns nexus, and just a little bit of background a lot of people have heard of tavastock. they remember, as i did, the lake known in the owl worth where tiger lived. i think where he lived at owl worth or something, and then a lot of the other guys -- >> we had about 25 offers in both of our communities. >> poulter lived in one of those places it's all over the place. they have a lot of different private ownership of a lot of different entities of which nexus is one is that correct? >> yes so joe's investment vehicle is tavistock group. joe louis has been a prolific investor and really an entrepreneur in 2010 we opened albany in the bahamas, and albany has joe louis as a shareholder as well

as tiger woods, ernie elss and justin timberlake, and albany so successful over the last schl years it gave us a license to create nexus, the nexus luxury collection albany is the cornerstone asset of that, and our success there with families really fromle 15 different countries and a concentration from the northeast here inspired us to open ae club here in new york city. worry opening this weekend nexus club new york which is a private members club downtown as you describe is really has something for everybody. >> 34,000 square feet. it's a new facility designed by this architect, that's fairly -- >> morris, who has done some properties, some buildings for us in the bah hauma, and he is a modern architect, and it's urbane midcentury chic with some warmth if you tour the space with us, you'll see it has eight or nine different physical personalities, and that's because we have a gym, we have a spa, and then we moved to where

we have a central cafe and a kids club and place for teenagers, and then you move probably more sophisticated elements where we have a champagne bar, large club room, and a pretty cool shelby bar that justin timberlake worked with morris to design. the name is because justin is from shelby, tennessee very cool space. then a beautiful restaurant called loma for breakfast, lunch, and dinner, and we hope just fantastic brunches on the weekend. >> did you not mention dillon's? >> yeah, dillon's candy bar. >> i love the gummy -- >> we have them. >> and i was joking. they said they've done this for obama care kids up to 40. >> the membership is all family. these vertical memberships we have found in our ownership of clubs make them enduring successes. parents join or couples join if every. if they have children, their children are members under their same annual dues up until they're 40, and if the kids want to join, they don't pay a joining fee.

they start their own vertical membership >> how much does this cost >>en awal dues are 12,500 a year for the whole family with the amenities i described, you have plenty to define that then we do have a joining fee right now. >> what's the capacity i was wondering. it's interesting in looking at apartment buildings in new york, there is a big premium on those that have some kind of space, amenities, gyms, this kind of feel zbloosh no question. two things on that one, it is a theme that's definitely happening in the city, and ours is a little bit different in that it's 35,000 feet, and then it's really who you aggregate and what amenities you offer. ours is a real club. one of the things about capacity is we've attracted people already. we have 300 families that have already joined the club. those are folks that work downtown, live downtown, and then people like myself that visit the city it's interesting we can calibrate that. i think we can probably definitely double or triple in size depending on that composition. >> i think having a household as

a member, as a unit, is very interesting. how does that work out what's the profile of your typical member, so to speak, in terms of how many members fall under that $12,000 a year membership fee >> family sizes are what they are. you know, if you look at that, we welcome if you have -- i have four children. all four of mine are welcome there. if you have one, if you have ten. that's just sort of something that has been really appealing it says that this is for your entire family. we create programming then to serve that rkt market, too. >> if you have ten, you are out of your mind, to start with. >> just stay there >> that might be so. >> you play golf >> yeah. >> you're excited about what's going to happen today, and then because of tiger >> sure. >> also, jordan spieth could complete his grand slam, right then we also have brooks kep ka. he could win, what, four out of seven or something crazy the nexus cup is this the

inaugural nexus cup at liberty national >> imauto glad you talked about that we're doing something neat we have such a neat group of members and 300 families already. tiger is hosting his inaugural nexus cup in september, and we'll have 18 foursomes for a four ball. it's to raise money for his charity. the firemen family has collaborated with us, and they're members of the club as well it's already sold out, and it's going to be, we hope, an annual event every september where we get to do something pretty special, and tiger is excited about it the firemens are excited about it, and we're certainly excited about it >> cool place, liberty >> it's beautiful. we think already just with the golf clubs down there at liberty national and even bay owned there is a lot of cross po pollination about memberships there, and people are excited about what's going on downtown it's one of the three or four hottest neighborhoods in the city >> good move for the pga, don't

you think, for today to move it into -- after the masters? >> absolutely. >> don't you think >> absolutely. the calendar, you know, movement -- >> it's always my least favorite of the majors, and now i don't know >> everyone is talking about it. it's going to be a long, hard course >> who is your top three to finish >> i don't know. i'm a little obsessed with tiger right now. i have to admit. i am a friend and a fan, and what happened at augusta with his mental and physical toughness, i have such admiration for him, and i hope he has a great week. >> there were a couple of majors last year that he was -- there was only one guy br brooks was one not on one guy ahead of him and a couple of those. >> absolutely. >> and once he has a notion that nicklaus -- he needs three now, right? i mean, i think he wants it more if you think he is going to let up after augusta, i don't know >> i couldn't comment directly, but i know he is one of the most competitive people in the world. >> he has won at pebble. >> yes, indeed zoo that's coming up

it were doug mcmahon, thank you. sounds great we all get -- >> nice complimentary memberships. >> as a household -- >> but you have to be under 40 i qualify. >> he has adopted us >> we'll have you down to nexus. would be great thanks for having me >> coming up, preparing for a ubs strategist with a new call on the s&p 500 a price target of 25.50 by the end of the year. that's next. as we head to break, a look at yesterday's s&p 500 winners and losers

. good morning equity futures are even better than they were last time for the dow up 125 points this morning after kind of an interesting snapback yesterday, i thought. we were down 190 on the open and ended up getting back another 100. still trying to make up the ground from that day we had on monday when we were down over 2% equated to, like, 600 plus points what have we gotten back now 200. plus 300 another 100 a day, we would be at 400 >> for a high we've gotten back one-third or a little more >> of the 600 on monday we've gotten back with that today over 400. >> yes 617 on monday. >> still not even. the s&p has indicated up 13, and the nasdaq indicated up 44 trade tensionsco weigh heavily on a unicorn looking to go public wework reporting at $264 million loss last quarter, but this is a big but, rev new uz more than doubled. the company's ceo telling cnbc that investors should look at those losses as, in his words,

investments. last year wework lost $1.9 billion. that's more than uber lost those losses aren't stopping wework from coming public. it filed confidentially for an ipo back in december i don't know they are pointing out the differences between this and uber >> i thought you meant between losses and investments >> they are just -- they're not the same they also said yesterday that their business model of shared work space is a proven business model, and imauto not sure what they mean by that exactly considering they're losing so much money in this business model. >> a record high in zootic it's selling its skin care business to a group of private investors for more than $10 billion. business includes brands such as pro active and cetaphil. it's focussing more on coffee, pet care, and consumer health. let's talk more about the markets and what's working

carmel welsa, janus capital and -- strategist at ubs with a call-out this week targeting 2550 for the s&p 500 year-end. welcome to you both. francois, i have to start off with you that's 300 points lower from where we are right now what is the path there >> well, trade is obviously dominating the media, and the day to day volatility. what i'm trying it do is remind people that there is this other story behind the scenes, and it's that we still have to digest what the fed did, the lagged effects of rate hikes they take a long time to weigh on the economy even if trade goes away, we still have a bit of a slowdown to contend with, and that's i think the bigger story >> so some people will say i thought that we've been seeing in terms of the snapback from december 24th lows that that was the impact of the markets digesting the fed's pivot, and so why are we thinking about the rate hikes that took place prior to that at this point in the market's life span some.

>> slur every sure because it takes -- i think the biggest misconception in this industry is how long it takes for interest rates to show up in the economy. stocks are leading indicators of the economy at the end of the day. historically it takes almost a year and a half. you got to wait a year and a half past the peak in rates for the data to fully reflect. that last rate hike rrks you know, late in the year, we're talking about it's not going to show up in leading indicator's of the economy until basically the spring of next year. >> if i listen to ubs and if i sell everything right now because i don't want to be in -- go to 2550, and it goes to 3300, and i say ubs told me to sell, is that a fair statement do you speak for ubs >> well, i'm the equity strategist at ubs, sure. >> the one >> the u.s. equity strategist. >> no one else has a higher -- >> well, i'm sure you'll find plenty of people with opinions listen, at the end of the day -- >> do you speak for ubs on this?

>> i do, yes >> so ubs is saying get out of the market >> i don't think that's the message at all >> what is the message if you're 300 plus to the down side? >> listen, if we hit the 2550, the s&p will be up 2% for the year right? we're down 6 last year put that in perspective. i don't think i'm describing a scenario that the end of the world where everybody has to get out of stocks. i just don't think it's what consensus. >> why wouldn't i get out and buy it being bah at 2550 if -- >> if ewe a short of it term investor and -- >> that's not short-term that's avoiding a 12% loss or whatever it is is that -- >> for most institutional investors, it's going to be more about positioning their portfolios appropriately for a slowing economy. >> i thought we had other ubs analysts that were more constructive on the market >> i'm sure you'll find different opinions >> that's the house view the house view is 2550 >> correct >> carmel, where do you see the markets? >> i think they're up from here. let's take it at the very basic

level. in the united states we have an election coming. we've already started all the talk that kind of leads up to that i think that trump and even the fed looks at the stock markets as a sign of how the economy is doing. they're going to do what they need to do to get that up. i think that the trade tensions right now are temporary. we'll get some resolution. i don't know if it's next week or if it's in a month. it's in china's best interest as well to get this taken care of, and they've got their 70th anniversary coming up, and so both leaders need to look strong heading into those political events they're going to do what they need to do to get it done. >> i guess what is the back drop against which they will be trying to do that? of course, we can't say that they can magically make it all happen, but in terms of just the trend in growth and how assets are priced relative to the growth >> if we take a step back, look at what's happening in the markets. when we're talking to companies -- so on we do fundamental analysis it is on the balance much

stronger things are stabilizing in asia they're accelerating in europe you've actually seen that in the macro numbers. we're digesting a big stimulus in that market what's the one thing that can derail it? it's the trade talks now, both of these two leaders can actually declare a victory if they go back and, you know, with he can have on our side trump saying, look at all these huge tariffs that were slapped on us. we took them down to zero. even though it's net no change it will still be a victory, and look positive going into the elections. and valuations, i hear a lot of people saying they're too high right now, but low interest rates, i think the next -- the next move down is -- we're flat to down from here. the next interest rate rise at low interest rates, valuation should be higher it isn't as cyclical in any of the sbeks as it used to be there's been a big shift towards noncyclical secular winners. >> does the ten-year yield tell

us anything at this point? a lot of people are making a lot of the fact that the ten-year yield is at the lowest of the year we've also seen some inversion parts of the yield curve overnight and so i'm wondering if that's an alarm bell. i guess maybe everything is with 2550 on the s&p. >> again, it's hardly the end of the world. interesting sb rates are doing what they normally do at the end of the fed tightening cycle. they're starting to price in the other side of the story, and i who say that's very consistent here i'll give you very simple stat if you look at the last eight fed tightening cycles, 8 out of 8 times what followed was a slowdown irrespective of what you think -- what your view is here, you know, even if you think the market is going to 3300, i think you have to take that into consideration and admit that a fed induced slowdown is a risk to equities here >> i'm sure people throw the kind of one exception in the sense of how the fed is navigating this, which would be the mid 90s. very heavy tighterning cycle did get a pretty steep slowdown

in 1995 and then a quick easing no recession and then the late 1990s with the magic >> that is the one of the last 12 tightening cycles that is the one exception, of course that's the one everybody is gravitating towards. you know, who doesn't want that scenario >> and so you think simply because of the odds of it not happening again. >> well, i don't see anything that's behaving that way i see things that are behaving like the other 11 episodes, if anything >> all right thank you both carmel and francois. >> all right coming up, the global art market isn't showing any fears of a slowdown or trade war. we'll bring you the details on the latest money moves in the art scene, and wal-mart is set to release its latest quarterly numbers at the top of the hour we'll bring you the results and the instant analysis stay tuned you're watching "squawk box" on cnbc >> i'm courtney reagan trade talks racheted up on the 6th.

retail etf down as much as 6%. they are scrambling to adjust. moving manufacturing out of china, negotiating lower costs, and absorbing some tariffs brks ut higher prices are inevitable adding $767 to the average u.s. family of four's purchases this year furniture sellers, among the hardest hit. tariffs ramp up from 10% to 25%. william sonoma is working on mitigation strategies, and there will still be some price increases. m macy's ceo say it's hard to find a path that wouldn't impact consumers. analysts say big retailers selling food and consumable goods like wal-mart and coco, st are in a better position to negotiate. what do advisors look for in an etf? i tell clients, etfs can follow an index, but which ones target your goals? it's not about quantity. it's about quality. no trendy stuff. i want etfs backed by research.

is it built for the long-term? my reputation depends on it. flexshares etfs are designed and managed around investor objectives. so you can advise with confidence. before investing, consider the fund's investment objectives, risks, charges and expenses. go to flexshares.com for a prospectus containing this information. read it carefully.

onmillionth order.r. ♪ there goes our first big order. ♪ 44, 45, 46... how many of these did they order? ooh, that's hot. ♪ you know, we could sell these. nah. ♪ we don't bake. ♪ opportunity. what we deliver by delivering.

. >> it sounds -- this is just robert frank music it's not about art we just play this -- >> then you have to say -- how do you say sotheby's again >> sotheby's sotheby's. robert frank, biggest week of the year for art sales has wrapped up, and he is like a

monet. a splendid look today. he joins us now with the highlights this is not art music. this is frank music. >> maybe more like jeff koonz rabbit as opposed -- >> do you believe that he is alive. >> a piece of art. >> there's an interesting name involved that is well known to our viewers. market swings in china tariffs did not stop wealthy collectors from bidding up the prices of over $1 billion worth of art this week and setting a lot of new records. last night jeff kuhns stainless steel sculpture of a balloon animal called rabbit sold at christie's at $91 million. that was the highest price paid at auction for a living artist the winning bid ers of robert m mnuchin. he is the father of our treasury secretary steve mnuchin. that was sold by the estate of cy newhouse. he is the former chief the other big event last night was robert rauschenberg's who has a shot of kennedy from his famous buffalo beach

that went for $88 million. it's been a strong week overall. a few works have failed to sell. many went for more than their estimates, and the bidding was fairly broad despite concerns about chinese buyers staying on the sidelines. sotheby's said they had a lot of bidding from china and asian buyers, but the star of the week was a 130-year-old painting of a haystack wur one of monet's painting was one of eight left in privatehands sold for $110 million. that was twice the estimate, and that set a new report for an impressionist piece. now, sotheby's kicks off again tonight with another $325 million worth of art, including a rothko this could go for over $30 million. you love the rothkos >> that one is worth more because instead of just two colors with a line, it's got three. >> three times as good >> you pay extra for extra

color. >> pay extra for the -- >> what's interesting is that coons used to sell commodities, and there's a lot of wall street trader dna if that deal where. >> he has been in the art business for a long time >> he has. he was a collector before he was a dealer, but we don't know who the client is. a lot of money >> you have a fun -- it's fun. >> it is fun that painting has -- that sculpture has grown on me quite a bit. >> in person i have to say i was very -- in person it's mesmerizing. you can't stop looking at it to your point earlier this week, you always see yourself when you see. you see yourself three times >> can you see where the guy had the tripod set up to take the picture. you can see in the reflection. >> you become -- >> you can see him right there >> you are always part of the work >> the detail on the -- to do that in stainless steel is pretty -- >> it's even got a little nozzle on the back where you are supposed to blow it up

of course, it's 250 pounds of stainless steel. yeah >> that's cute >> it's incredibly heavy it's solid yeah, jeff koons still alive and making a lot of art. $90 million. >> too bad he doesn't get that i don't know what he got for it originally >> he does well. he does well >> he does okay. >> he has that deal with louis vuitton and everyone else. >> he could afford that suit, i don't think? >> i think he could afford many of these suits >> thanks to robert frank. coming up, the acting faa chief testified in front of the house yesterday. we'll tell you what he said defending his agency's certification process on the boeing 737 max next. a quick check of what's happening in the yourp even markets right now. green arrows across the board. stay tuned you're watching "squawk box. through the at&t network, edge-to-edge intelligence

gives you the power to see every corner of your growing business. from finding out what's selling best... to managing your fleet... to collaborating remotely with your teams. giving you a nice big edge over your competition. that's the power of edge-to-edge intelligence. i can't tell you anything about myself. as someone in witness protection,

but believe me, i'm not your average consumer. that's why i switched to liberty mutual. they customized my car insurance, so i only pay for what i need. and as a man, uh, or a woman with very specific needs that i can't tell you about- say cheese. mr. landry? oh no. hi mr. landry! [ grunting ] liberty mutual customizes your car insurance so you only pay for what you need. liberty. liberty. liberty. liberty. ♪

airlines that fly the max or

flew the max an have ordered the max, they're all meeting in montreal next week, the same day that the faa and global regulators are meeting in ft. worth. at that meeting in montreal, guys, they'll be talking about when the max comes back, how do you convince people they should get on board that's going to be a big hurdle for all airlines >> pretty amazing because you think about boeing's long-term reputation for safety, phil. >> reporter: yep. >> it's hard to think of any company that has a more pristine reputation this is a real stumble. >> reporter: exactly. >> a real outlier. makes me think when it's all said and done and look back on it and they do handle it effectively. i'm pulling for them i'm hoping for it. >> reporter: joe, what you're talking about, joe, is the reason why more and more people are saying you need someone independent, outside of the company to come in and to say, look, we've checked things out what the company says and what

the faa says, that is correct. it is ready to fly again because it's going to take somebody other than the company saying, we're good to go >> is he on record with any of this glad i'm out of there wr we have not heard from jim frankly not heard from a lot of long-term boeing veteran i think privately none of them like what they're seeing happening at the company right now. but because -- this is a mess, guys it still needs to be sorted out. everybody is waiting for the smoke to clear before they say anything. >> you get to go to new orleans. you got it going on now, phil. >> reporter: hey, man, nothing like being at canal street at 5:00 a.m. >> came straight in, didn't you? that's fine. that's good. you were just sampling gumbo thank you, phil.

coming up, our guest host for the next two hours is home depot founder ken langone. coincidence andrew is not here with ken here? we'll get his thoughts on tariffs, markets and much more walmarts and instant reactions. stay tuned "squawk box" is coming right back

♪ earnings alert walmart rolling out quarterly results. the numbers and instant market reaction straight ahead. a developing story the trump administration blacklisting chinese telecom giant huawei. and plus a cnbc disrupter 50 the company and its billionaire founder are using artificial intelligence and machine learning to revolutionize online shopping fanatics michael ruben will join us as the second hour of "squawk box" begins right now. ♪ ♪ go big or go home >> announcer: live from the beating heart of business, new york, this is "squawk box. ♪ go big or go home >> yes

yes. good morning and welcome back to "squawk box" here on cnbc i'm joe kernen along with melissa lee and mike santoli. becky and andrew is off today. they are off today but andrew is off today and our guest host again, ken langone, coincidence, ken >> more than a coincidence. >> he is co-founder of the home depot. author of a book called "i love capitalism". >> amen. >> hence the empty seat. >> amen. >> mike is in it >> yeah. >> sorry not quite empty. andrew is not. >> he's in the chair, though we got to worry. it might be contagious >> he tends that way a little any way. >> does he a budding commy, not a full bloom. >> he wants to have the conversation >> i do. i hear andrew calling him comrade all the time >> all right much more from ken over the next

couple hours walmart results are expected to hit the tape within just a few minutes. take a look at shares ahead of the release of the earnings report there, higher by 2% and quick check of futures setting you up for thursday's sessions you see green arrows across the board. s&p looking to be up by 14 in terms of the walmart expectations, courtney reagan is here on set with us. i would imagine that ecommerce would be a big one. >> yeah. we always want to watch those ecommerce numbers, right it's just u.s. but still, it's a really good gauge. last quarter i believe we saw about 43% for the year they've got about 35%. i would expect to see somewhere in that range when we get those numbers for the ecommerce again that's a net number. >> yeah. the stock having a little bit of a decent run, although it's felt like it's been around 100 for a really long time here. and it's interesting how the story used to be about weather

the u.s. consumer, now about the corporate strategy, the amazon arms race. >> earlier this week they just announced next day delivery. >> really amping that up walmart basically said, look, the whole time we had this planned. >> got the results we got the results >> there it is. >> okay. here we go we're seeing these initial stock reactions here let's go through this, walmart first quarter adjusted earnings coming in at 1.13, that's 11 cents better than the street's consensus estimate revenue, 123.925 this is difficult for wall street to figure out at 1.9 billion. still we call that a miss for consensus. walmart's u.s. comparable sales slightly better than analysts expectations, 3.4%. >> very good. >> that's the 19th straight

quarter of positive comp growth. traffic also up, that's 18 quarters in a row for positive traffic. sam's club just up marginally for comps impacted by decision to pull back on tobacco sales at certain locations. and of course, we know they have also changed their age requirement, but that wasn't impacting this quarter now u.s. net ecommerce sales up 37% for the quarter strength in home and fashion helping to lift some of those margins in ecommerce, that's been part of the plan. and i did get a chance to speak with walmart cfo when it comes to the on going tariff discussion the company is closely monitoring the developments and bigg said, look, as we said before, our goal is to be the low price leader we want to manage margins with customers and shareholders in mind we have mitigation strategies that have been in place for months, but increased tariffs will increase prices for our customers. now walmart sources two thirds of its goods domestically due largely to the big food business the remaining third is many countries but of course does

include china. walmart's inventory is also up about 5.9% in the quarter. and bigg says he feels okay about the levels he explained there was some forward buying, some for tariffs but really for what he calls mirroring. getting merchandise for ecommerce but closer for the end consumer lead to higher level of seasonal merchandise. harder to sell patio and bathing suits when it's still winter coat weather outside. >> i think about walmart and home depot to great retailers. >> thank you. >> you may know how some of this op rats. you're moaning at how great you think doug mcmillen is doing >> i think he's spectacular. i think the whole -- when you think about the disciplines, logistics, merchandising, supply chain management, go right down the list of all the things

125, $124 billion in 90 days staggering number. >> the guy who founded it would only passed away -- to do that in your life time. >> sam passed away more than -- >> ten it was in his life time we saw him do this. >> but i think the remarkable thing -- >> 1 million employees before he died. >> the youth it's demonstrating at that size to move the needle of a company with those kinds of sales plus that drag on sales i'm guessing weather had something to do with it, too. >> exactly. >> they do sell live goods they do sell outdoor furniture and of course we all know what's going on with the weather. i'm not rationalizing this because next week depot releases their earnings i don't know what they are this is a hell -- boy, did they address amazon and i got to give amazon a lot of credit. amazon woke us all up. all of us. anybody that says that we weren't influenced by what amazon did and is doing is not

squaring >> that's true did change consumer expectations. >> question on the tariffs in terms of increased prices for consumers, is he specifically referring to the latest round of tariff increases or the next potential round or both? >> basically all of it. >> no matter what we'll see higher prices. >> walmart is working on price investments. trying to lower prices where they can and want to be the low price leader that can only go so far and in certain categories and certain tariffs and especially if we get that fourth round, that will be a big issue. also with us to talk walmart, charlie o'shea, walmart analyst at moodies charlie, what's the relevant take away at least initially from an investor's perspective. >> we have to be happy we're seeing validation of the strategy the company laid out three and a half years ago it will take time, make various investments but the payoff will be a good payoff and it's been better than good

i think what you see with these results is the u.s. business is just chugging along, 3 plus percent comp growth. i think when you look at walmart and look at the international business and the international business is transitioning right now which is leaning on the u.s. business a little bit more i would compare this to the reliance amazon has to put on a.w. west as the u.s. retail business in the international business kind of bounce around a little bit with their investment cycle. so the u.s. business for walmart is really going to help things out over the long hall as they move international forward. >> speaking of international, i did actually get a chance to ask brett biggs what is going with the unit in the uk the grocery business we're not pleased with the ruling we got from cma we'll continue to do what's best from a competitive position. they continue to do a tremendous

job. they mentioned the potential of an ipo and it is one of the things we would consider >> where do you see margins going? already margins were expected to be under pressure this year but in terms of additional tariffs, how much more pressure could there be >> they have to come down a little bit more. >> yeah. >> as we've seen, amazon and walmart are in the cage match. market share and price we're in third year of that investment price cycle for walmart. i think you're going to see more squeezing on the margin side walmart's advantage obviously size, scale, importance to vendors, there will be collaboration with the vendors to try to keep the price impact to the consumer as low as possible as minimal as possible it's something that will develop. >> the market has given credit it's a haven within retail they have the fire power, the resources and the breath to

whether the tariff thing what's left for investors at this point you're looking more from a credit angle at 20 times earnings for retailer at this point >> look, walmart i think is doing a remarkable job of validating what they believe in. everyday low pricing having it in stock having location. the last mile, that critical last mile. they got it all. and i think for this company to demonstrate nimbleness at its size i was just doing a quick calculation. what do you figure sales will be for the whole year >> 525ish. >> 3%, 15 billion and let's assume the pre-tax margin, let me exaggerate that margin comes down to 20% of that sale, so you got $3 billion of additional pretax income. that's a staggering amount these guys -- they're not good they're fabulous they are really fabulous and they've demonstrated their ability to adapt and they're

going to continue to do that >> does it feel like a 3.2 gdp consumer or can we glean those things from walmart, not necessarily, right >> joe, that's tough because one of the things that's interesting about walmart over the last several years is how much farther up the income demographic the company has been able to go when they had that epic meeting three and a half years ago, doug mcmillen put the slide up, i think it's high 20% of our customers make over $100,000 a year. >> we don't want dollar tree and dollar stores doing well that's an indication when things aren't quite as good, right? >> u.s. consumer is always looking for a deal. >> yeah. >> and the dollar stores fill up. >> look, everybody wants a bargain. everybody wants to brag about the great -- >> some need it less than others. >> we have a costco store near us in florida. i love to walk in there. hell, it's a great place for me

to meet a lot ofmy neighbors they're all in there. >> and the samples. >> how you could make a meal out of a sample. you don't have to go to dinner at night by the way, their house brand chocolate covered raisins are the best kirkland look. >> i'll have to try those. >> the whole team out there, execution and being on your market but the point is, everybody wants a deal >> you won $10 i'm still hearing about it $10. you still have it, too >> the important thing is that's the last match we had so therefore i'm the reigning champion. >> you still got it. that's the scary thing. >> i'll never let go of it >> charlie, thank you. >> thank you for having me. >> thanks, charlie nice to see you. >> how about what's the guy's name, brett biggs. i like that. >> it's a good name. >> doug mcmillion and brett biggs. >> good names. coming up, raising the

stakes in a trade war. trump administration blacklisting chinese telecom giant huawei the names to know when "squawk box" comes right back. the latest innovation from xfinity

isn't just a store. it's a save more with a new kind of wireless network store. it's a look what your wifi can do now store. a get your questions answered by awesome experts store. it's a now there's one store that connects your life like never before store. the xfinity store is here. and it's simple, easy, awesome. here is what's making headlines at this hour fang stocks are back in favor

with high profile investors according to the latest round of quarterly filings. tiger global management boosted its stake in facebook by nearly 65%, increased netflix stake by 43%. and as warren buffett told cnbc this month, berkshire hathaway bought amazon shares for the first time cisco shares are higher. quarterly profit of 78 cents ashare is 1 cent ahead of estimates. cisco gave up up beat current quarter revenue guidance which included the impact of the most recent hike in tariffs stanley black and decker moved more production back to the u.s. the company is spending $90 million to pen a new plant in texas that will make various craftsman branded tools to help avoid tariffs and the plant will have new, more efficient, automated equipment to bring manufacturing costs down. >> you know how we get a lot of times you get like viewer requests and stuff like that, i

think this is a good idea to do this with you today on twitter ask ken why he doesn't tweet why don't you tweet? can you imagine if ken would tweet what the world -- >> i don't tweet i don't text >> why don't you tweet an old dog can learn -- >> i don't want to learn you know, there's a limited amount of capacity in each of our brains. >> i think maybe elaine should look at what you tweet before you send it, but you should be allowed to compose it and let her see it and let it pass muster with her. >> if elaine was left with that task, poor elaine. >> you know what you have to worry about, though, twi, tweeting while intoxicated that's something -- >> i don't drink that much. >> no, but it is something you get fired up if you on the weekend, santoli, have you said you know what, that th may not -- >> why can't i just email? >> you know how many followers you would have immediately a million followers, immediately.

>> how do i convert that to cash show me to convert 1 million to cash -- >> why don't you want cash you just give it away. >> why give away my knowledge away to a million people for nothing. >> social capitalism. >> hold on let's talk about one thing, do you realize the productivity gains nast not counted into the economic numbers from the cloud alone, it's staggering you know, believe it or not, eds was the cloud 50 years ago it was it was a data bank and a facility where everything was going into that and it came out. this is 50 years later, but think about the fact that no service, no data storage devices, this is a staggering accomplishment that we don't give any credit to in terms of productivity gains in america. stupid. >> holding down inflation, all the benefits that are accruing. >> i'm going to tell you right

now, i don't know what the hell we do with this inflation number it's scary because guess what, we do need -- there was a guy who was a professor at harvard university, an economist and back in the '50s he made a statement a dynamic economy needs inflation of 2 to 3% a year we're not getting it. >> no. so all the things you're just volunteering right now, you had to get that off your chest about the cloud. why not do that in a tweet everyday there must be 100 things, the world was benefit. the world would benefit. >> no, that would be arrogant on my part. >> you just did it here. >> i'm giving you a one on one tutorial trying to help you develop your mind. >> i think you ought to help -- >> terrible work he's doing. >> i'm not kidding coming up, we'll head to washington for the latest battle in the u.s./china trade war. first as we head to break,

check out oil prices up again today up 1%. low is monday just about $60 a barrel stay tuned you're watching "squawk box" on bccn it. do i use aflac when the kids get slime in the plumbing? no. that's home owner's insurance. slime in my motorcycle. no. that's motorcycle insurance. slime everywhere? ughhh nooo, there's no insurance for that. do they help when i have bills health insurance doesn't cover? yeah! that's it! aflac! gross guys. get help with expenses health insurance doesn't cover. get to know us at aflac.com

get to know us at aflac.com what do advisors look for don't just track an index, help me meet a client's need. is the fund built to sell or built to last? etfs are only part of a portfolio. so make it easy to explain. give me a quality fund that helps me get clients closer to their goals. flexshares etfs are designed and managed around investor objectives. so you can advise with confidence. before investing, consider the fund's investment objectives, risks, charges and expenses. go to flexshares.com for a prospectus containing this information. read it carefully.

welcome back to "squawk box. take a check on futures right now. we are still indicated higher across the board s&p 500 looking at 13 at the open, nasdaq looking to be open by 42. let's head to washington for the u.s./china trade fight we have the very latest. >> good morning. the trump administration is unveiling a set of actions against chinese telecom huawei they let the department of commerce ban any foreign adversary from buying or building telecom equipment in the u.s. and then shortly after the release of that executive order didn't name any countries or companies, commerce named huawei and 70 affiliates to a blacklist that severely limits its ability to do business with the u.s. arkansas senator tom cotton called it a death penalty for china's spy companies. trade sources say the actions had been shelved in earlier negotiations to give a chance.

but this is clearly a change in that tact. toward allies the resolve is softening. officials in mexico and the u.s. saying a deal is close to revolve steel and aluminum tariff and move the new nafta deal forward canada's foreign minister declined to say when that deal could be reached >> we don't believe in negotiations it's ever wise to talk about timelines, to predict the future >> but still expressing some optimism and then there's auto tariffs we learned, joe, from four sources that the white house is expected to delay a decision on for up to six months we'll see inwhat fashion they choose to announce that delay in about a day, but certainly seems to be a positive move for the auto makers and for many u.s. allies >> kayla, thank you for that report if you're able, we're going to get langone to weigh in on all things trade and tariff.

ken, do you think if this point if we were to poll whether the u.s. public is in favor of taking on china at this point, do you think the numbers have moved into a majority with some of the anecdotal stuff we have seen lately? with your finger in the air, does it seem like people are like let's do this or not? >> let me tell you why i love the american people and america. we're at our best. we're at our very best when we're challenged don't ever sell us short let me back up a minute. we have been talking to the chinese for 40 years in their time frame, it's 1/10th 40 years we said, that's not nice, fellas you got to be cooperative. you got to work with us. let's talk about it next year. if i have a great deal with you, i want to keep pushing off any change that deal because i got a great deal look, i know this is not popular

to say trump is doing the right thing it's got teeth he's saying to them -- by the way, china wants to worry. they want to worry about vietnam taking advantage of this they want to worry about stanley black & decker taking advantage of this. china might find itself where it loses by effectively of what they're doing, they're price fixing we're saying, we want you to make it fair not just trade, but if we have a dispute with you on a patent, there needs to be a court system in china where i can adjudicate my client. they don't have it and i think i had breakfast with bob lighthizer in january, he's tough. he's mart and got resolve. he's not going to come back with a hallow deal and not going to come back and say we did it.

this is the first time we got their attention. whether they do anything, i don't know but in the meantime, people in vietnam, people all over the world say, hey, wait a minute. i can get into that business because that business is up for grabs. >> did we have any resource other than tariffs >> i guess we can put the military someplace come on. we don't have any other. >> we should have gotten our allies >> tariffs are hard. god forbid if this is a permanent thing. i don't think it is. i think it's a tactic which is important in a negotiation i give lighthizer and trump a lot of credit for backing them up now, was there some theatrics in trump saying last sunday because they were coming over the end of the following week, who knows. but i know this, the only way you're going to get somebody to the table for a negotiation is when they have something to

lose so far on the record, on the record, the chinese have every reason to believe delaying works for us against the united states because these guys come and these guys go. >> right. >> part of that bet right now i think is that trump will make it for a second term. i think that's a bad bet for them what am i saying right now on the record with what's going on in the economy and by the way, i heard freeman yesterday, i said wait a minute, these guys are on the team. >> tom freedman, lloyd -- yeah >> these guys are on the team. what do i say about the american people the american people deep down in their heart is going to say what's right for america is right for me at the end of the day. i believe that that's the genius. that's the strength of america that's why we are without question the greatest country on earth. >> if i just broke down what you just said into 120 character-like tweets, you could do this on any -- here is the latest ken needs to understand there's

a war on for the soul of america. and he needs to get engaged. think about it just think about it. what you just said could be put out -- >> i am engaged and pay my taxes and keep working to make money to pay more taxes. okay i cry when they raise the flag out of gratitude for being an american if i could -- if i had to bend down and kiss the ground every single day to be here, i would do it. i'm doing what i can i'm doing the best. >> you are >> you tell that person we all have to do it our own way. >> maybe he can just tell you what he says and you can put it on your twitter. you can be the conduit >> i am not twittering let me tell you about passwords. within my rolodex i got a word that says passwords. i need an index for the password section. it's crazy. >> what's your most important

password >> elaine. >> i didn't want an answer much more from ken. >> it's a valuable rolodex. coming up, cnbc unveiling our disrupter 50 list this week. making the cut, fanatics uzing machine learning to revolutionize online shopping. founder michael rubin will join us in studio take a look at u.s. equity futures. we're higher across the board. s&p looking to be up 13 at the open you're watching "squawk box" on cnbc [knocking] ♪ ♪ memories.

what we deliver by delivering.

the wifi that set just raised the bar again. introducing xfinity xfi advantage. it comes with everything you love about xfi. the best speed, coverage and control.

but it doesn't stop there, you also get enhanced network security, safer browsing, and more. plus it helps to optimize your network's performance. giving you the best coverage from attic to basement. so you can focus on streaming your favorites. not finding a signal. make the best wifi even better,with xfi advantage. simple, easy, awesome. why some economists say new u.s. tariffs are ekwif lents to one of the largest tax increases in decades. plus, we'll be joined by former house majority leader eric canter. first, dress like a champion michael ruben is making his way to the set fanatics making the cnbc disrupter 50 list. we'll talk about the game-changing business when "squawk box" comes right back.

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

the disrupter 50 list is out coming in at number 25 is fanatics ♪ last month star wide receiver odell beckham jr. was traded from the new yoorew yorks to the cleveland browns. seconds after the news broke, fans could buy beckham's junior on the browns site and they were one of the most popular teams on fanatics.com it earned fanatics a spot on the disrupter 50 list for the second straight year. a cloud-driven ecommerce it's now $4.5 billion company with the reported $2.5 billion in annual sales and counting earlier this year, it became the exclusive provider of licensed sports merchandise on walmart.com. and it sees major opportunity for growth overseas, especially in china

>> he'll be here at 8. joining us now is the company founder and friend of "squawk box" michael rubin, fanatics founder and executive chairman your chin is up. you're good. what a great run and that ball, as it was bouncing around, i thought it might not go in. didn't you >> well, to be honest, i haven't said this yet, it's embarrassing i got up and screamed in excitement when it bounced out i was sitting across the court i was sure it didn't go in and i had like four -- i had a few seconds of pure happiness until i realized the ball had gone in and i was completely confused so it was -- i'm not having any more ptsd. >> we're talking about philadelphia 76ers kawhi leonard. >> he's fierce. >> he is and you were in your normal spot, i assume. >> i was across the court. so i thought i had a good view of it not going in that's why you play the sport. toronto is an incredible team. we had a good season but not the outcome we wanted.

you have to hand it to toronto they did a great job. >> joel played through some -- he wasn't feeling good for much of it. >> joel played through tough games. here is the thing i'm excited about. our team will learn and grow from this. we have a bunch of young guys. they're complete winners this is something that will make us stronger. obviously you play each year to win the championship you don't win the championship, you're never excited i feel like we took steps forward. certainly the teams will be stronger next year result of it. >> our buddy wes good game. >> by the way, i have never rooted for somebody more in my life i hope milwaukee takes them apart. i have become somewhat friendly with drake he's a huge raptors friend we have daily banter it's more like hourly banter about it. >> what's the name of this company, fanatics? >> i just talk when joe kernen calls me, i come. >> i know the feeling. i know the feeling >> any way, things could not -- i don't know how you figured all this stuff out

he like sells things and keeps these little stubs that they think are worth $100 million and they're worth $4.35 billion. >> truth be told, you've made that joke to me before >> you did do that. >> when we bought fanatics in 2011, it was like the zappos of looirnsed sports and completely changed the business today it's the largest what we call vertical commerce retailer in the world it's got a completely different business model and more than ten times the size it's been a fun eight years. just getting started but we have a lot to do. >> as far as we know about sports and content and media and everything else. that was the sweet spot, wasn't it >> yeah. look, our belief and this is something growing important, i believed as an individual for probably 15 years, i thought from the early 2000s that both amazon and then i added alibaba to that list they were going to own retail they had such disruptive models. if we didn't have a completely

differentiated business you would have no way to exist so many people didn't think how they could be completely differentiated our strategy was to sell merchandise we design, develop and sold directly to consumer to best satisfy the fan and have a bunch of products that wasn't available at other online marketplaces so that differentiation fueled us to go from $250 million company in 2011 when we bought the company to 2.5 billion this year. >> how does a.i. and machine learning factor into this? so many companies say we use a.i. and machine learning and they're buzz words they're cool. >> everything is based on data there's so many things that happen in sports on a daily basis. we have 40 or 50 million cumulative fans that buy from us we know what they have bought, what team preference is, we know their browse data. it allows us to really personalize the experience for them so i saw the example of it was

odell beckham went to the browns, we knew the people who were likely to be browns fans so we could best service those fans a business built around technology and then the ability to customize the experience together with the whole built to order manufacturing supply chain that can satisfy the fan is why we have grown so much. >> you now anticipate jerseys based on the draft lottery, the nba draft lottery at this point? are you prepared who will go first and second >> we prepare for every scenario what we do -- we have a big domestic printing capability where we bring blank jerseys in from around the world. take the nba as an example, we have every team lined up and every scenario lined up. as soon as something happens, we immediately personalize those jerseys to the specific team and allows us to really capture demand that years ago wasn't captured when lebron james went to the lakers a year ago, think about when zion ultimately goes to which ever team he goes to, you

know, people didn't take advantage of that demand because you didn't have the blank jerseys available with the engine that could capitalize on that now we capitalize in realtime. >> do you have any involvement in the jerseys that are sold in the nfl to fans? >> yeah. we actually starting april 1st of next year we make every nfl jersey in the world. >> let me tell you what, you're going to make that out of recycled water bottles. >> yeah. >> my company supplies the yarn, unify and they're doing on field tests now to make sure they don't tear but hopefully in the next year or two all of the on field uniforms will be made of the same thing. >> i like it next joe will get in for the commission, right? >> commission on what? >> on facilitating that. >> let's squeeze him out we don't need a middleman. >> that's a whole business direct to consumer >> for example, virtually everything sold in the way of clothing at an nfl game is made

with recycled water bottles. >> absolutely. >> it's unbelievable yeah >> and we have had our business if you think about, people say to us all the time, hey, you already had so much growth, gone from $250 million to $2.5 billion, you made it already we look at it we're just getting started. we think there's so much growth ahead how to innovate product, grow globally, what we can do in the college market we're just getting started as a company. >> who do you have your eye on i didn't see exactly where you came down on the lottery as far as the 76ers. >> yeah. so 76ers are -- >> you don't know, too far down. >> yeah. it's something that would -- >> the knicks are crying do you think barrett is -- do you think they'll pick rj? >> i don't know who the knicks will pick. i will tell you a joke that i probably shouldn't tell and get in trouble for telling but you'll love this so, drake is known to be cursed. the last remaining curse in sports whatever products he wears ultimately that team is jinxed

so he wore sixers shorts the last game. texting pictures of him in the shorts the entire game i have tremendous hatred for him toward that. yesterday -- >> that's why he did it because he knows he's a jinx. >> he knows he's a jinx. >> that's low. >> we had a back and forth he was going to wear knicks products all day that's how we knew they weren't going to get the first pick. he's learning to manage his curse. >> you didn't want the knicks to get the first pick >> sixers. it's a competitive league. >> i think even the three will be good, don't you think >> you know, you always rather have number one. lot of knicks fans thought they were going to get number one. >> well, i didn't know you were on this disrupter. you should be. ken, what was your first company that you sold to ebay? >> i started gsi commerce. >> sold that for 2.35 billion. they didn't want these crappy things he turned into 4.5 billion. >> we have completely evolved

the business from where it was when we bought it in 2011 to where it is today. the difference is being the leader of vertical commerce. it's a complete differentiation from amazon and alibaba. >> we have to get together we have some business to do. >> i like it. >> come on i'm not a contributor like welch. i don't get paid to come here. i come here out of the goodness of my heart. >> i'm a negotiator. we have to start working on a contract for him >> i'm serious we have stuff to talk about. >> the only twitter people get contributing. >> i'll call you sometime today. thank you. when we come back, our new u.s. tariffs same as the big tax increase we'll debate that coming up next at carvana, no matter what car you buy from us,

you get the freedom of a 7-day return policy. this isn't some dealership test drive around the block. it's better. this is seven days to put your carvana car to the test and see if it fits your life. load it up with a week's worth of groceries. take the kiddos out for ice cream. check that it has enough wiggle room in your garage. you get the time to make sure you love it. and on the 6th day, we'll reach out and make sure everything's amazing. if so... excellent. if not, swap it out for another or return it for a refund. it's that simple. because at carvana, your car happiness is what makes us happy.

the latest inisn't just a store.ty it's a save more with a new kind of wireless network store. it's a look what your wifi can do now store. a get your questions answered by awesome experts store.

it's a now there's one store that connects your life like never before store. the xfinity store is here. and it's simple, easy, awesome. i'm jon fort in new york in the days after trade talks between the u.s. and china showed serious science of trouble, apple stock took a dive, down more than 10% the reason is twofold, trade tensions had been bad for the iphone demand in china already the stock had popped after earnings after tim cook said those tensions were easing and as that optimism evaporated, well, so did those gains now, there's the threat of new tariffs actually hitting apple's hardware jp morgan warning that might slash the profit margins for iphones and other apple hardware made in china but sold in the u.s. they estimate 14% hit to eps cow wen puts it at 11%

apple might hike prices. passing tariff cost to the consumer, that would mean fewer iphones told. president trump lauded tariffs for bringing billions of dollars into the u.s. treasury, where do the tariffs rank among other revenue measures or tax hikes? steve leesman has been crunching those numbers. where do they come out >> if the tariffs are tax hikes would rank among the highest the past several decades president trump created one of the biggest revenue increases in recent years here is the numbers. look at the first year of different revenue measures from treasury department data the $72 billion in estimated revenue by the tax foundation from the tariffs equals 0.34% of u.s. gdp. the first year of the 1993 budget act under clinton to find a larger revenue increase in year one according to treasury department data. some of the other measures, 1990 kwuz bigger in year one.

'87, '86 tax reform was a big one, was bigger in year one. now we look at subsequent years of tax hikes where they sometimes go up. the trump tariffs would be the second largest after the 0.43 estimated have been raised by the affordable care act in year four of course there are key differences between the tariff and straight tax increase. for one, there's a debate about who pays companies and consumers can substitute over the medium to long-term. most economists and academic studies say however at least in the short-term consumers and u.s. businesses end up paying. tax measure, there would be a host of analytic studies by the impact of the cbo and joint tax committee. estimate the tariffs will cost u.s. median household $550 annually finally, this is far and away the largest revenue measure enacted that was not specifically approved by congress i was looking back to 1968 at all revenue measures 30 revenue measures only 11 of

which have been tax hikes. almost all of them have been tax cuts looking back over that span of time. >> although earlier in pre-income tax days i would imagine tariffs were important part of the government revenue. >> they were substantial part of the government revenue before the income tax of course those would be enacted by congress. congress seeded a lot of its tariff authority through three or four different measures to the president. so he has this right to put these on, which means he can do substantial revenue measures outside of congress's authority. >> are you supposing that these tariffs are going to be around for a long time? >> we can't do it, ken it's really interesting because when you do a tax hike, joint tax committee gets in, they do dynamic scoring, up or down depending on the minute. we don't know what year two looks like year two you could have a situation, i'm just throwing this out, canada and mexico should fall off. you may have the extra revenue from the $325 billion.

who knows what happens with auto import tariffs which the president said has backed away from you can't do this as a program the way you would model something over five, six or seven years. >> you also don't have the more enduring benefit of supply chains moving to the united states if that is happening. in moving away from china which is an enduring cost to china when they lose those companies because supply chains have been redirected when you model all these things in it's interesting to look at the direct impact. >> it could go to vietnam, the united states, mexico. you can also just substitute away from the product entirely. >> true. >> it's a very dynamic change that happens there's dead weight loss of companies who are spending time figuring out where to get this stuff from now and how to keep costs down it's a very difficult thing to figure out. >> you know, it's risky to guess what president really thinks, but i believe like everybody

else he agrees and believes tariffs are not good okay this is a mechanism, in my opinion, to bring about a successful negotiation we have no other choice. what other pressure can we put on them? we're not going to go to war with them militarily, so i think what's happening here is entirely rational. okay. >> can i push back i know -- very quickly i want to throw this idea. if you're the president and what you believe is that you want to bring industries back to the united states, does a temporary tariff get it done for you or do you have to erect barriers over a period of time -- >> i'm not sure i want to bring certain industry back to the united states. >> okay. >> i'm not sure of that. what i am saying is, i'm very interested in overall -- the overall economy and the growth of that economy. and i would much rather trade a very basic industry for a dramatic business like an amazon where its enormous growth unless you come to new york city unless the screw balls say we don't

want you which is a tragedy. i think in his heart of hearts the president doesn't want tariffs. but if you sit at the table with somebody and the guy tez says what are you going to do about it nothing. the guy has no incentive. >> let's bring in tax foundation chief economist into this discussion, kyle i guess the understanding question is should a tariff be considered a tax be it on consumers or corporations? >> yeah. i would argue that it should be considered a tax if i were to tell you the government was going to impose a 25% tax on all the goods sold on the shelves at walmart, you would consider that a tax. a tariff really is that. it's just on the goods that are coming from china. >> so, we shouldn't then just to follow this through consider price increases arising from tariffs as inflation that's separate? >> yeah. well, whether the taxes pass

through as price increase or passed back to the chinese and they have to bear the burden and it falls on workers and shareholders back there, it's still a tax. this is how we analyze all tax policies if you look at the corporate tax in the united states, that tax can fall on americans, it can fall on foreigners, but it's still a tax at the end of the day. >> hold it hold it. a retailer will absorb some of that increase. how much the source will absorb, we don't know. but if the guy wants to be competitive, he's going to have to -- so to say that a 25% tariff results in a 25% tax is totally unreasonable we at home depot may decide, on these items we're buying from china, we're going to absorb it all because they got other items we don't get from china where we're making a good margin and that's your blended rate so, with all due respect to these studies and these analyses, i think we've all got

to get behind this and say, okay, whatever it takes to get it done, we've got to fix our -- do you agree, steve, we can't keep our relationship with china going the way it was the last 40 years? >> no. i don't agree. i think you got -- >> keep doing what they're doing? >> i think you got the time period wrong there's been periods of tremendous progress and periods of less progress for example, i think china entering the wto created a huge decline in tariffs in china. >> right >> and china's agreement sometime in the mid 2000s to let the juan float we make a mistake giving up on negotiation. look the president gets this done and gets it right, more power to him let me ask kyle to follow up -- >> negotiation that's a life cycle for those people. >> that's your take. >> did we lose kyle? >> i'm still here. >> one quickly. >> one last question. >> i know we're up against the clock. what about what ken said, you can substitute away.

it's not a tax because the retailer can absorb it >> i didn't say it would be 100%. >> right >> some amount, in my opinion, that the source country will absorb some amount, the retailer or the distributor, the consumer is not going to get impacted as much as you would think they will >> so i agree with that. this tax could be shifted either to the consumer or it could be back to the source but that doesn't change whether it's a tax that's just changing who is bearing the burden ultimately. >> kyle, thank you good to see you. >> thank you coming up, walmart shares bouncing around this morning after mixed quarterly results. we'll talk about retail and the state of the consumer. one-millionth order. millionth order. ♪ there goes our first big order.

♪ 44, 45, 46... how many of these did they order? ooh, that's hot. ♪ you know, we could sell these. nah. ♪ we don't bake. ♪ opportunity. what we deliver by delivering.

president trump going for a choke hold on huawei the u.s. administration targeting china's telecom giant and its ability to buy and sell around the world. walmart stock on the move. dow out with mixed first quarter earnings we'll tell you what they mean for amazon and the retail sector at large. uber in the rear-view mirror are the other unicorns too spooked to go public former house majority leader eric canter will join us for the rest of the show as the final

hour of "squawk box" begins right now. ♪ ♪ might as well jump i've from the most powerful city in the world, new york. this is "squawk box." good morning and welcome back to "squawk box" here on cnbc live from the nasdaq market site in times square becky and andrew are off today we have two guest hosts for the last hour, former house majority leader eric canter is here he's currently vice chair and managing director and ken langone, president and chairman and co-founders of home depot. what's the name of that book -- >> "i adore capitalism". >> the name is "i love capitalism". >> an american story, though remember an american story. only in america.

>> i'm with you. you know that. i'm the choir, you're the preacher. futures indicated up about 104 points nasdaq indicated up 32, s&p up 11. treasuries this was weird yesterday who would have thought, down below 240 again on the ten-year, 2.386. but compared to germany, it's like you're rich >> but oddly the spread between 2s and 10s is steeper when treasury yields were higher. it's sort of an interesting tradeoff here. >> back steepening the front end. >> exactly. few stocks move this morning. walmart posting mixed first quarter earnings results so the retail is adjusted quarterly profit 11 cents above forecast but the revenues came in just below estimates largely due to currency related head winds. comp store sales rose 3.4% beating consensus of 3.3%. cisco, top to bottom line, third quarter earnings the networking

equipment maker saw adjusted profit of 78 cents a share beating estimates by a penmy cisco gave a better than expected current quarter revenue guidance accounting for the recent tariff hike pg&e is trading slightly lower according to a determination by california fire investigators. pg&e transmission lines caused the state's campfire last year that killed 85 people and was the deadliest and most destru destructive wild fire in california history. the u.s. is taking the pressure campaign against chinese telecom giant huawei to a new level throwing not one but two monkey wrenches into the business operations of the company. aimen javers joins us more with on that. >> reporter: good morning. this action yesterday took two parts. one was an executive order from the president, the other was a statement from the commerce department so take a look at the executive order from the president here is what it would do ultimately according to the white house. it declares a national emergency with respect to threats against information and coms technology and delegates authority to the

commerce secretary to prohibit transactions they say have an unacceptable risk to u.s. national security. aides at the white house i talked to yesterday were at pains to say this executive order doesn't single out huawei, the chinese telecommunication company is not aimed at any specific company but then about an hour later we got this statement from the commerce department which does specifically mention huawei. here is what commerce is doing they're creating an entity list and they have an entity list and adding huawei to it. that effectively prevents it from buying american parts unless it has u.s. government approval, they say it's because this company is potentially contrary to u.s. national security or foreign policy interests. so, they are definitely targeting huawei with the commerce department action the commerce secretary will have a lot of discretion here on how to approve and process all of this huawei, for its part, put out a statement yesterday. here is what they had to say huawei is saying, restricting

huawei from doing business in the u.s. will not make the u.s. more secure or stronger. instead, this will only serve to limit the u.s. to inferior yet more exspencive alternatives leaving the u.s. lagging behind in 5g deployment and eventually harming the interest of u.s. companies and consumers. now, guys, aides were at pains also at the white house yesterday to say that this action against huawei and also in general against foreign telecommunications companies doesn't have anything to do with the breakdown in the chinese trade negotiations that happen in the same week they say they have been working on this for a long time. it was just getting through the legal wrangling and procedural stuff behind the scenes. it just happened to fall in the same week that those trade negotiations broke down. you can imagine there will be some in beijing who don't see it that way, guys, though >> yep all right. thank you. we have a couple guest hosts to kick this around at this point. let's bring in someone we haven't spoken to yet, former house majority speaker eric canter is alongside me here on

the set. you can talk about huawei, eric or using tariffs trade and whether at this point it's something that -- you're in the private sector and the private sector a lot of people not enthralled with tariffs. you okay with tariffs? >> let me just tell you in the past i don't think we have seen a president that has stepped up to take on china the way that president trump has. and i think that you've got to give him credit for doing it. >> absolutely. >> and again, all the years, ken, when you and i used to talk about this, when i was on the hill, there were a lot of people reticent to take on the business community, myself included hey, we're going to keep trading. at this point i think he identified a real problem. now, my issue is this, i don't think that we ought to be fighting the tariff war with mexico and canada while we're trying to take on china. i think we saw yesterday the

white house indicate that the potential auto tariffs on the europeans, japanese and others that that is going to now be put off for another six months. >> that's a great signal to me. >> exactly. >> he's not going to fight the world all at once. >> exactly that's what my point is. that is exactly right. i think as long as we are all rowing in the boat in the same direction to take on china and its unfair practices, i think we'll be in a good place >> we haven't gotten to this point, ken, even with our previous discussions i'm just going to reference some of the comments of steve bannon yesterday who was on with tom freedman which was crazy enough to start with. but, bannon's take on china is that they have benefitted so much from -- and especially members of the communist party i mean, they're able to excel in the world by stealing intellectual property in a large part they're not going to give up they're going to be dragged kicking and screaming into this. >> it isn't going to be easy. >> but they're going to try to

dissemble and cheat. >> it's not going to be quick. but their risk to me is encouraging other countries, vietnam, thailand, india to say, hey, here is an opportunity here i can come in and make deals with the american people and i'll ship what -- china might be losing some of its market. that's what it wants to worry about. >> that could even -- >> go to vietnam now, it's booming. my daughter-in-law -- >> supersede -- even though they have been on this great roll based on all these policy -- egregious policy. >> we're building a textile plant in vietnam the world is changing. china is no longer the lowest course producer. the prosperity that china has had in the last few years has resulted in among other things a better standard of living which costs money. china's risk to me is giving the opportunity for an opening to other countries.

>> that does raise the question of where this is happening within china's own economic strategy and development they already wanted to move away from being the low-cost producer in the world they want to be more of a consumer economy their exports to the united states is a smaller percentage of chinese gdp their currency can go down to accommodate a lot of these policies you wonder where that brings us in the way of how much leverage and how much this can hasten change in china. >> we're not going to know it until we see what happens after we do it. >> listen, this huawei move on the part of the administration is a big deal, too we're struggling we're trying to get our allies on board with us because as our national security strategy pointed out almost two years ago, we are in a great powers competition with china and we ought to have all eyes focussed on that they obviously, mike, you're right. they're changing their focus and we got to be very concerned about that the problem is they have a lot of money they're throwing

around and that's something that we're not able to go and put together these packages for all these different countries to sort of allow them to come in. >> eric, the returns aren't that good so far. this belt and road thing, it ain't happening the way they thought it was now the question is what happens when they put all this money into a country for a dock facility and it doesn't generate the revenues to pay off their debt. >> the debt, right >> do they go in with the army and say we own that? >> right. >> to me that's invasion. >> right. >> they don't do that, they're going to sit there with debt that's not being serviced. >> ken you said they can last -- they make plans based on 500 -- >> years >> so trump -- there's an election coming up in november of 2020. do you expect these tariffs to hurt gdp and to hurt the stock market so that he needs to worry about 2020 where as over in china xi doesn't have to worry about any of that. can't they last longer over there? they're not going to want to give into this. >> they have a choice. not us versus them

us versus all these other countries that are going to take advantage. >> you think we can get something real out of this >> honestly, i don't i think the president -- we have all guessed him wrong. >> right. >> we have all thought that the conventional wisdom was, oh, the market is going to tank. he's going to have to go in and concede and make a deal. i don't believe it look at the market today in the implied open already so i think ultimately he is going to stick to his guns i think that the chinese are going to be hard for them to go in and demonstrate any kind of concession i think we'll be locked into this for a while. >> there's a difference between a 10% hike on tariffs concerning half the imports that we bring in from china versus a 25% let alone a tax on every single stick that we import from china. isn't there? at some point it catches up. you're the private sector guy. what are companies saying about the prospect of taxing everything from china? >> listen, in the king that's in the home depot consumer

business, i mean, it's going to have an impact, for sure. >> sure. >> but i think politically we have seen this president going go and navigate these kind of issues in ways we never thought was possible. >> but it creates opportunities. stanley black & decker building a plant in texas the tax dollars -- we nailed them unify filed a complaint on dumping. and we nailed them by the way, a big difference in the trump administration, we would never have gotten the cooperation we got out of either the obama or the bush administration they would have keep let it happening. we would be hallowed out by virtue of these very unfair trade practices. this is where trump doesn't get enough credit. what he's doing with regulation in the government is staggering. >> this is what gets me too. we're going to talk about the impact of the tariffs and the trade and then all that and sure we'll discuss the tax bill and somehow the tax bill -- you know, it's all of that it's regulation. it's taxes

>> exactly. >> it is just the mentality that has come into play as you say. >> it's a mindset that's changing this is good >> yeah. >> this is good. now we have to make sure we follow through it doesn't just happen when trump's out it's over. by the way, eric, i don't know where you stand on this, but to me the only ultimate answer we got to have term limits in america. it isn't going to change if we don't. look at the circus going on down there right now with these hearings i mean, this is nuts by the way, barr is a fine, fine gentleman. they loved him when he was appointed. how about rosenstein can you believe rosenstein all of a sudden they hate him now. >> the guy they brought in from connecticut, that's the nuclear weapon they're terrified. >> we don't really -- i love it. >> you're not a politician anymore. we don't like to talk politics >> he's a straight shooter >> mark cuban told scott that

none of these dems around will probably beat trump. but that's before bill de blasio -- that was before de blasio why are you laughing >> because i just looked at the new york post front page. >> the daily news is worse they put trump in a clown outfit can you fit 23 people in a clown car? >> unbelievable. we're going to have to see how this plays out. >> i'm a cynic >> you >> sometimes in this case i am. how much of what these people are all jumping in, the senator from new york state, i can't believe her, she's running for the presidency give me a break. >> gillibrand. she has a lot under her belt. >> absolutely. >> not seriously. >> how much of this gives them some name recognition to help them raise money. >> no downside that's the thing very little if any downside. >> it's a three-ring circus. they're all performing. >> downside. there really isn't any. >> no. only i remember she ran for

president. >> right. >> it's currency >> i'm going to stream my haircut, live stream my haircut at the end of the day. beto did that yesterday. i think katie couric did that. >> i think beto is finished. >> it's like biden/kamala? >> who biden who? >> kamala harris >> that could be a powerful -- the most powerful formula for them but i still at this point the way that they're veering left ward in this country, i just don't think it's going to make -- >> 14 months until the primaries. we'll talk about it everyday so we'll figure it out all. coming up, inside walmart's latest earnings. we dig into the mixed first quarter to find out what's driving sales and how it can beat amazon at its own game. shares of walmart trading higher, 2.2% a nice move as we digest those numbers. you're watching "squawk box" on cnbc my ideal cloud?

it has to work like air traffic control. it's gotta let new data integrate with data from our existing systems. ♪ ♪ be able to pull from reservation platforms built 20 years ago. and also be able to use apps to book super-personalized trips on shiny new phones from the future. plus, i need freedom to move my workloads wherever, whenever - but manage it all from right here. and that's the cloud i want. simple, right? expect more from your cloud. ibm cloud.

futures right now on the dow up 107 the s&p indicated up 10 and change nasdaq pretty good session

pre-market up 23 almost 24 points. walmart out with mixed first quarter earnings earlier this morning. the stock take a look at this up 2.3% joining us now with his thoughts on the quarter is michael lassar, retail analyst at ubs. michael, great to have you with us. >> good morning. thank for having me. >> what was the biggest highlight of the quarter for you? >> our overall take is that there was more good than bad from walmart's first quarter with three important points. first, while this sales results in the u.s. walmart business were slightly low r than what was hoped for the ecommerce growth at 37% was really solid to the gross margin in the u.s. was a clear highlight of the quarter, up six basis points the first increase in recent memory. and that puts them on good footing as we confront a host of head winds in the quarters ahead, like tariffs. three, in the company's prepared remarks they published this morning, they came out forcefully talking about how they're going after the ecommerce business on several

fronts, such as next day shipping and burgeoning advertising business those are important points. >> i'm wondering if you get the sense from walmart they would be committed to defendingmargin and i mean that in two ways in terms of raising prices on consumers as a result of the impact of tariffs but also on the ecommerce business for a lot of bricks and mortar retailers who are really pushing hard into ecommerce, they're willing to make less on margin for those ecommerce dollars than they are for the dollars they bring in the store. >> let's uncouple those. first on the tariff front, that remains a big unknown. it will depend in part on what happens in the marketplace we suspected a lot of these are going to be passed along to the consumer in the form of higher prices they're also going to go work with their vendors overseas and try to negotiate better terms. so, that remains an unknown. on ecommerce front, what they're going to have to get right is the mix. they did -- they said this morning they did better in home and apparel which are higher margin categories.

so that's an encouraging sign. as it becomes a larger portion of the total, it will be a drag on the overall profitability and that's something they have to manage through. >> you got price of 105. three bucks away from that, michael. if you keep it here, it's like saying the stock is almost dead money for the year for the next 12 months. >> yeah. our call is that we think the stock is nice defensive play in an uncertain time but its valuation is full trading at more than 21 times this year and if they grow earnings slightly maybe 20 times next year so those two factors are going to offset each other the most likely case is that the stock remains range bound from here >> michael, edlp, walmart is buy nigh kal about they want the consumer to know that product after product after product overall you go to walmart and you're going to get your best deal

the tariff situation to me is more a question of what are their competitors going to do so that walmart maintains the image in the consumers mind. edlp is all about that you can be sure in and out over a long period of time you'll get a better deal at walmart. >> everyday low prices. >> everyday low prices, correct, michael? am i wrong on that conclusion? >> no, you're right, ken they're going to maintain price leadership for sure. they referenced that in their published remarks this morning it just makes the situation a little bit more complicated as prices are going up. they will maintain their lead. that's incredibly important part of their business model. >> in your coverage universe, which retailer is the most vulnerable to tariffs? >> we think the most vulnerable retailers are those in the home funnishing space for two reasons. one, a lot of their products are subject to the tariffs and two, it's a very competitive space. there's less pricing power than

other areas of retail. >> michael, thank you for joining us >> thank you very much. >> you can't believe the amount of furniture that's manufactured offshore that's to me all gone. >> all the brands like stanley, like all -- they're all made over there and just slapped on. >> we made a deal many years ago, 27 years ago, they had a plant in paris, tennessee, that sears shut them off just light that we went in and negotiated with them and they gave us a brand for products other than plumbing it was a plumbing. >> right. >> professionals line. >> they have shut that plant because they went to china but i think walmart's got the edge because they got buying power. they got critical mass. >> they are the ones. coming up, what did president china tariffs weren't temporary but permanent. is there really a chance they'll

stick around for good. if so, how much can they hurt the u.s. economy we'll debate this with jason furman and ask him if it's already too late tavo oid some of the worst fallouts from these tariffs. stay tuned

coming up, breaking economic data several key economic reports are due out in just minutes, including how the latest reads on housing stocks and jobless

claims don't go anywhere. "squawk box" coming back after a quick break. as someone in witness protection, i can't tell you anything about myself. but believe me, i'm not your average consumer. that's why i switched to liberty mutual. they customized my car insurance, so i only pay for what i need. and as a man, uh, or a woman with very specific needs that i can't tell you about- say cheese. mr. landry? oh no. hi mr. landry! [ grunting ] liberty mutual customizes your car insurance so you only pay for what you need. liberty. liberty. liberty. liberty. ♪

♪

welcome back to "squawk box" on cnbc live from the nasdaq market site. we have just enough to read this get a fresh read on jobless claims and housing stocks. rick santelli has the numbers for us rick >> reporter: yes initial jobless claims fell 16,000, 16,000 from 228 to 212,000 continuing claims moved down from 1.688 to 1.66 million. april housing starts, up 5 plus percent it look like close to 5.75%. 1.235 million seasonally adjusted annualized units up from slightly revised 1.168. if we look at permits, what's down the road, up a little more than half a percent.

1.296 million seasonally adjusted annualized units. that's up slightly from 1.288. so these numbers are pretty good and the most recent read, this is a may, philly fed outlook and that is coming out -- well, i still don't see it do we see philly fed anywhere? no, we don't don't see philly fed showing up, gang so i'll have to hold off on philly fed for the moment. but, the residual effects on the interest rate complex, we are still hovering just above what was the low yield close in the long end 10s and 30s this is important. intra-day levels violated slightly but closing levels are always the most important. dollar index has been very much a staunch supported area with regard to sectors. maybe the reason is everybody seems to want dollars. seems to be the best place to invest at the moment not to mention that the fed --

okay philly fed out 16.6 hey, that was worth with way may read is 16.6, that's the second best number of year, only outpaced by 17 for the first month of 2019. melissa lee, joe and the gang, back to you. >> rick santelli, thank you. we just saw a slight -- ever so slight move in the pre-market session s&p added just about 1 plus steve leesman is here with more on the numbers steve? >> you know, i could only think of this counting crow's tune "a long december" there's reason to believe this year may be better than the last. we have been waiting for the housing starts to rebound. we had good employment we had good wage growth. then we had low interest rates we also had new home sales were good and there was this break with the new home sales and the housing starts this was very expected i don't know if it was quite as strong as expected as it was, but this is good news. and it's interesting

mike and i were talking before the break, the home building stocks have anticipated this. >> yes. >> they had to come back and. >> what you didn't see at the break is pom poms saying go home depot, go home depot this is good for those stocks as well. >> it's always about home depot. >> either way, right if you're remodelling it's good. if you're building new houses it's good. they get it coming and going. >> you need pills, go to home depot. we don't carry but at least we get you in the store >> claims numbers and the philly fed number, look, everybody was standing around waiting for, anticipating darn sure about weakness in december and that weakness did not materialize. you got a little bit of weakness in the underlying numbers of the fourth quarter growth, right, because you had the real final sales number was a little bit lower. we have the inventory and trade stuff, but it was still stronger than expected. and now our cnbc rapid update is

running 2% i wonder if we're going to factor in a bit better on the housing numbers and maybe we're going to ratchet up gdp more because of this number here and the claims number speaks to -- sorry, to a jobs market that is not quitting almost at all. >> right. >> we don't know where people are coming from. >> thank you, donald trump right? thank you. thank you. thank you. >> you're not going to get that here any way, let's -- for more, let's bring in former counsel of economic advisers chairman jason furman also professor at harvard's kennedy school jason, i'm looking at your -- and we've got a good relationship, i think, all things considered. and you know i follow you on twitter. >> you're buying me lunch at the oend f this year, i believe. >> not again. >> i'm trying to combine you and austin, kill two birds you know that guy. he's like avoiding me. >> he's always right he's always right. >> jason -- >> like a stop clock right twice a day. >> oh, boy jason, are tariffs justified and your answer was if they were

temporary and got a better deal from china, they might be justified. you're worried that president trump is actually starting to like the tariffs and they could be semipermanent and that you couldn't go along with have i got that right? >> i don't think there's an obvious economic answer. i think everyone agrees these tariffs are bad for the u.s. economy. but we're trying to get something good for the u.s. economy in the form of a better deal with china. >> well said. >> and you have to balance those two. i think the badness is half a point off our gdp growth i have seen very few convincing evidence of the goodness of what we're going to get out of a better deal with china i think it will be a slightly better deal. i think this strategy might work i just don't know that the difference between what china was offering us and what we're going to get is so great that it's going to outweigh the hit to growth. by the way, the markets seem to agree with me. when they do their present value calculations they seem to think the strategy is a net negative for the u.s.

>> so, jason, we had a general man on earlier from i can't remember one of these tax institutes or something. and he actually referenced this study from the coalition from a prosperous america i know you probably seen it. which they take a counterview that it's possible that instead of losing jobs that if we -- if some of this stuff works that you could actually gain jobs from the tariffs but i think the previous gentleman you have to make some assumptions that some people won't make like we could have 3% growth for five years things like that and they call themselves a cpa, which is, you know, they sound like accountants which would be bad. but that's not it's a coalition for a prosperous america it's a bipartisan group but a lot of manufacturers and people that have been hurt over the years from some of these policies from china, is there any way there could be an actual net benefit to job creation from tariffs? >> no. that's like -- >> impossible? >> that's like saying the earth

is flat. >> i've heard that. >> your former colleague larry kidlow would have exactly -- >> i heard him i saw the interview with larry that you're referring to, yes. >> yeah. your former colleague larry kidlow sees it the same way i do tariffs are like a tax increase. they're done in a sort of random, stupid way they raise costs for american consumers. they also raise input costs for american businesses. and when you get retaliation, they hurt our exporters and farmers. so this is not good for the economy in and of itself it's only justified if it gets us something better. >> the pickup industry in the united states is dominant some people think because it has that tariff protection for, i don't know, 60 or 70 years >> oh, sure. it can help certain industries absolutely but it hurts other industries. and the net is a negative for the u.s. economy >> so jason, i want to ask, though, you say it's not good for the economy. i think i come from the same

point you do but long term, long term don't you think it's an economic benefit if we're able to extract the kinds of concessions from the chinese on all that they have been requiring in terms of limiting market access, the ip theft, the tech transfer, forced localization these are the things that the administration is trying to achieve. ultimately that is a benefit to the economy, correct >> absolutely. and i think the question is, how much of a benefit is that compared to the cost now you would expect short-run pain in gdp and a long-run benefit in gdp. the market, though, should be forward looking. so you don't see the market saying, wow, we're so excited he's toughened up his stance on china. this is going to increase our long-run profits that's going to more than make up for the short-run pain. every time you ratchet up the trade war, the market goes down. they're saying they don't believe what you just said

matters. >> jason, we're just -- we're a couple points off an all-time high in the face of what people that -- i know people. every time we get a one or 2% drop in the dow, they're so quick to point at the blame at trump for his tariff moves it just simply hasn't gone down. it's always the counterfactual with a lot of people in the business we're two or three points off an all time high in the face of 25% tariffs on everything from china. so, that -- the market is acting well go ahead >> no, but tariffs -- have you ever seen a day where the market went up on news of an escalation in the trade war because they thought -- i haven't seen that happen. >> i have seen a december low where we saw a 17% bounce off where the tariff and trade war was going on and all the fed had to say they were patient and got

20 gain on that. >> insofar as the market has been rendering a verdict on short versus long run they seem to be rendering the verdict that they think the gains aren't worth it. >> i don't buy that. >> can we agree on one thing that the tariffs make china less competitive in america yes or no. >> absolutely. this is going to hurt the chinese more than it's going to hurt us. >> that's a good beginning the fact is i don't think anybody with half a brain will say tariffs are good tariffs are not good we learned that the hard way we learned that in the '20s and '30s and learned that lesson and it stays with us the fact of the matter is, you're dealing with a nation who believes in time periods significantly longer than us meanwhile, frankly we're being hallowed out by their behavior, disrespected patent laws, i can go down the list of things i think we got to take a pause

here on not trying to measure every single thing we do this to me is an negotiating tactic this is what this is right now okay china, you backed off. you're not going to do this. you're in the going to do that we have to do something, china you're not going to get a free ride as they have many times in the past. leader canter, do you believe this is a negotiating tact or do you think there's a more permanent idea in the mind of the administration about erecting tariffs to help u.s. industries capture some of the business back from china >> i think this is an absolutely negotiating tack tis to get and achieve the end to get a level playing field again. >> exactly. >> we have been playing in an inimbalanced context i think the administration absolutely is focussed on extracting the concessions from beijing they said they are and then get us back to a world in which there aren't tariffs but we have a long way to go. >> exactly >> how long? >> i said earlier, steve, i

think we're in this for a while. >> years >> it's not easy. >> does it bother you as the former leader of the house that a major revenue bill has been enacted that congress did not specifically vote on >> well, as you know, the president back in the '70s, the congress gave him -- >> but it's never been used this way. never been used to this extent. >> hold it. >> you tell me, ken, what is the constitution say about revenue what does it say >> i also -- >> what does it say? >> i also said earlier, if we got an existential question in terms of threatening our national well being and security which is our economic security, that it is incumbent on the president to step up. >> i don't disagree with that. i don't disagree with that. >> jason furman, thank you. >> from the people's republic of cambridge. are you up there today, jason? >> i'm actually down in washington today >> d.c >> the other same difference.

the beltway. all right. good but you do spend a lot of time up there you live in fresh pond, jason? where do you live? >> sort of near that direction near harvard square. come visit, joe. i'll take you to lunch. >> i got a lot of places i love. >> i can give you a tour >> clothing store? >> great chinese restaurant. >> not sure. >> it was when i went to school. >> thank you coming up, checking out uber's ipo in the rear-view mirror about a week into its life as a public company we'll ask our guest host for their take on uber's debut and what was hailed as one of the marquee ipos of the year will uber be ever be able to nail the equivalent of a five star rating on wall street stock up a little bit from yesterday. we'll discuss when "squawk" returns. -driverless cars... -all ground personnel...

...or trips to mars. $4.95. delivery drones or the latest phones. $4.95. no matter what you trade, at fidelity it's just $4.95 per online u.s. equity trade.

here is cnbc one market. what's been a red hot year for ipos stumbled as trade tensions ratcheted up in early may driving markets down in the days ahead of uber's ipo. one of the most anticipated ipos in years quickly turned into a major disappointment declining nearly 20% in its first few days of trade. ride sharing rival lyft continued its downward trajectory, down nearly 20% as broader markets got nervous. shars of other newly public unicorns were hit, too, but they have been far more immune to trade jitters, firmly holding on to gains from their ipo prices

zoom shares have more than doubled from its ipo price, same for pager duty and pinterest holding on to gains of more than 50%. beyond meat shrugged off jitters entirely as it continued its march upwards and has more than tripled from its ipo price. let's look at the latest unicorn to go public and that would be uber. fares now have the ability to short the stock but is there demand to do that? leslie picker joins us with more >> hey, melissa. really interesting uber stock is one of the easiest and cheapest ipo to borrow and sell short short sellers are paying fees around 2.5% to short uber, according to data by ihs market. at this point, after lyft, traders were pay 100%. brokers were charging 40% and twitter and snap were each in the mid teens days after their debuts in 2013 and 2017. so what's driving this lack of

beari isishness around uber? a lock up in uber will assure lyft is ahead and uber, of course, has far more long investors than lyft does uber also has a much larger float or number of shares available for trading, only 7% is out on loan to be sold short compared to two thirds of lyft's float. uber shares plum meted out of the gate as well and still haven't found their way back to that ipo price and it may just simply be that more investors want to bet against the number two player in the ride hailing space. that said, one big hedge fund manager i spoke with was bearish on the uber deal from the very beginning but he's too nervous to short the stock due to all of the volatilities surrounding the name and of course the stock price so far >> and the fact that it already fell from its ipo. it seems like it took its hit, didn't get inflated there after with a pop. >> exactly it wasn't sure if some of that was some short sellers pursuing borrows on locate that was

helping push the stock price down out of the gate but it appears that now that we know the numbers, now that the ipo itself has settled there isn't has much demand as a lot of recent ipos as we have seen. >> 8 billion stock to go around. >> facebook had 16 out of the gate. >> facebook ended up making money. >> eventually. >> facebook looked better on its balance sheet when it went public which is a big difference from uber. >> they went out at $100 billion valuation and six months straight down and nothing but winning for the most part. >> $8 million a is lot a lot of money. it's a lot of money. you have to give them credit that somebody put 8 million -- $8 billion into it that's worth attention but, what you're talking about here is trading two pieces of paper. nothing to do with the underlying business. >> right. >> nothing. >> right >> and i think that's where there needs to be some focus. >> does this close the window, eric, in your view for ipos? >> no. listen, i think there's just been a lot of noise around this

particular company i think ken's right. the underlying company is the issue here, and i know that if you look at the broader sort of market and what we're seeing at our company, there was a slow start to but m&a is slightly up but really because of big deals. i think a lot of volatility has impacted this. but i think more so in this instance it's about the company itself >> look, the fact of the matter is some people had $8 billion that they were willing to throw under this thing apparently the more money you lose, the higher your stock goes they have $8 billion to lose, off to the races >> 25 billion before that in the private market >> look, you know, i'm old-fashioned. i like dividends you don't get dividends unless you get earnings, okay i don't understand this dynamic. the more you lose, the more

valuable you become. >> maybe this is the turn. >> the trouble with these ipos, it comes at a time when vision fund wants to raise money for another fund how does it do that when it has these -- when it has uber? we want more money here. >> right that's the question, where do you put it how does the supply/demand dynamic of this fund-raising and cash around silicon valley inflate the values if you could call uber's ipo a reckoning, how does that translate into the private market activity and potential valuation resets >> one thing it confirms is that money is cheap look at interest rates the question is if you tighten up on the money supply what will happen here? at some point, you have to earn money. i don't know when that happens maybe there's another 100 billion out there. keep losing it how much more do you need to lose we'll keep giving you the money.

that's what we're looking at here i'm not smart enough to know the fundamentals of the business how many cars will be around no drivers the other night a friend of mine gave me a ride, we get into this uber car, the guy couldn't speak a word of english. it was the most frustrating thing in the world we wanted him to change direction, where he was going. my god, it was a nightmare maybe we'll learn to suffer with that >> you have to go back into the app and change your destination. >> the driver couldn't tell us that my friend understood it. >> for the next ride >> we will get out to one of the united states of cramerica, which is california. if ken did tweet, jim, he would have seen your earlier tweet which is getting attention and

retweets and likes jim tweeted i think that ken's view about china will soon be the view of all of those except those who are bought and paid for by the chinese so jim was watching. you would see that if you're on twitter. you're not >> jim, my apologies for not being on twitter try the telephone. mine still works >> wouldn't he be great on twitter? >> oh, pointed pointed. ken is pointed i'm listening to ken we don't have a choice we have to fight i love what ken started with, don't challenge our democracy and think we'll roll over. i keep hearing a communistic dictatorship is more powerful than us. remember when it was the soviet union? >> remember that very well >> remember how powerful they were they were taking a long game, ken. the soviets. who has a longer view than brezhnev >> keep going, jim

your wife is doing a great job on the board of trustees at bucknell >> she's trying to hold the costs, jim that school is so great. >> all right we want to hear more about china and what we'll do. that's all we talk about we get -- we are not all on the same page, jim i have to tell you >> no. not yet. >> give it time. >> you think >> give it time. >> what if it's permanent? >> pla -- >> no, people are worried that trump likes tariffs so much, he wants a permanent tariff regime in the united states that's what i'm hearing from some people. >> i think walmart is not going to be hurt -- we're making too much of the tariffs. the strong dollar and a supply chain that is flexible is going

to make it so that we won't notice it at walmart we can continue to say walmart will be hurt walmart shareholders will be hurt or look at the numbers they're generating they're extraordinary. i care more about the numbers. i think these tariffs, we're overblowing them in the media when it comes to what the consumer is going to pay versus what the consumer is willing to pay. >> you had that fabulous interview last night with the folks over at cisco. those earnings demonstrate there is a power to companies who plan ways to get around china and get around the impact of the tariffs. they had been working on shifting the supply chain for six months do you think this story of cisco is transferable to other tech companies? do you think this gives me hope maybe the impact people are so worried about when it comes to tech may be overblown? or is it cisco specific? >> thank you for that. i thought chuck robbins showed you we're doing duel track, we'll explain to the white house, what the impact is. in the meantime we'll franticly

get out and not be hostage to the chinese. obviously the huawei news today, all those stocks are going down. that's unavoidable chuck robbins is not going to sit there, take it and get hurt like some retailers have been saying walmart will keep prices low and still deliver for shareholders, which is why that stock is up. the stock is up because walmart thought about this, too. some companies are pro active. others are just letting themselves get hurt because they didn't think trump would have the resolve and that proved to be wrong >> i like that ceo/cfo combo if i was chuck, i would do that a lot. chuck was like yeah, what she said a couple of times >> kelly kramer is fabulous. >> nice seeing you, jim. good to see you, ken >> don't miss a ceo exclusive tomorrow on "mad money." jim will speak with pinterest

chief executive ben silbermann "squawk box" will be right back. you should be mad at non-seasoned travelers. and they took my toothpaste away. and you should be mad at people who take unnecessary risks. how dare you, he's my emotional support snake. but you're not mad, because you have e*trade, whose tech helps you understand the risk and reward potential on an options trade it's a paste. it's not liquid or a gel. and even explore what-if scenarios. where's gate 87? don't get mad. get e*trade and start trading today. ♪ creating the perfect night... just takes a little creativity. the light beer you've been waiting for has arrived. lower carbs. lower calories. higher expectations.

corona premier. 529 plan? a 10-k? what's an etf? an ipo? 401(k)? where do i start? empower yourself with the free tools and resources on investor.gov. before you invest, investor.gov.

. want to thank eric cantor, melissa, mike santoli.

ken will be answering tweets directly after the show. >> no. >> you won't be doing that. >> keep faith in america we're the best >> that was 120 characters characters, #usa i will teach you i will teach you how to do it. join us tomorrow "squawk on the street" is next ♪ good thursday morning. welcome to "squawk on the street." i'm carl quintanilla along with david faber. cramer at one market in san francisco. as we look for another day of gains. the e-con data much better today than yesterday walmart with the best q1 in nine years. we pay more attention to huawei as a potential trump card in trade talks. watch yields philly fed