watch last night's final episode. it's monday, may 20th, 2019, and "squawk box" begins right now. live from new york where business never sleeps, this is "squawk box. good morning, everybody. welcome to "squawk box" here on cnbc we are live from the nasdaq market site in times square. i'm becky quick along with joe kernen and andrew ross sorkin. our guest host is ian shepa shepardson thanks for being here. let's start with the u.s. equity futures. things are slightly down nasdaq off by 36 points. s&p 500 down by 1.5. dow futures are up by about 9 points this comes as the dow has tracked four weeks in a row of losses take a look at what happened

overnight in asia. the nikkei ended up by a quarter of a percentage point. the hang seng and sheng high lower. trading is taking place. there are red arrows taking place across the board the cac off 10%. italy, stocks off at 2%. if you take a look at the treasury yields here, the treasury market here in the united states, ten year is sitting just above 2.4% to 2.403. >> we have some news this morning and it's big google looking to hang up on huawei suspending key business activities for the company's future smart phones. this is a major blow google had pulled the company's license. president trump signed an order banning sales to huawei saying

their equipment could be used to spy posing a national security risk google's move means they can only use the public open sourced version of android they won't be getting the updates, for example, from android. they can't access google, youtube, that's a big set back wa was has developed its own technology as a backup we should tell you other tech companies as well, intel, broadcom, xilinx is suspending shipments to huawei. you'll have a huge impact across the board. the question is does this slow huawei down? that's effectively what's happening here, at least seems to be what the effort is by the administration. >> i think the most interesting thing you just said was that

huawei has been working on a backup plan for a couple of years assuming something like this might happen. >> if you don't have -- right now if you don't have access to android, you don't have access to i0s, there is no operating system samsung has tried to build its own operating system the question is how much does this slow huawei down. also raises the question as to whether what we're trying to do is slow huawei down not just here in the united states but just everywhere. that's the goal. it's not clear whether it's a national security issue or a bigger fight of who's going to own and run 5g. >> do you think any of it is connected to the trade talks >> i think it is possibly related to the trade talks we'll get viewers who will tell me i'm wrong from everything i understand we are woefully behind on 5g. we are dependent on eriksson at the moment they are the only hardware

provider on this unless we are to accept huawei inside our systems. we aren't. the question is what is this about? i think it's how do we get back? i don't know we are so far behind we don't have that technology of our own. we will see. for more on the trade war between the u.s. and china, i want to get over to eunice yoon in beijing eunice, good morning what's the reaction here to google pulling out effectively >> reporter: the foreign ministry said they protect companies and legitimate rights. huawei has said that it's going to continue to support their own smart phones and their own devices. i had heard from one source who closely follows huawei, they say that huawei only has about a

year's supply of the components from the u.s there's definitely a sense of urgency from huawei that the business could be affected separate from that, what we were seeing was something pretty interesting. i think if you were to sit down for a movie night in china over the past couple of days, you would have thought that you were in the middle of a throw back to the 1950s. that is because the state broadcaster changed its primetime programming lineup to air three anti-american movies that showcased china's triumph over america during the korean war. they talked about it explicitly saying on their social media account that the programming change was to, quote, reflect the era of our times and these movies now have been discussed in the state media, the communist party's global times newspaper said that the china-u.s. trade war reminds us

of the war in korea when the perfect systems -- operating systems were slowed down this is a way to prepare the public for a very long protracted trade war sources told cnbc late last week that the u.s.-china negotiations were in flux today the foreign ministry said that the only hope for a break through would be if negotiations progressed with, quote, mutual respect. within the chinese business community, i've been talking to a lot of people especially in the tech industry, a lot of people are very pessimistic about whether or not a trade deal can be done people are telling me to watch for june if we see a -- if we don't see a trade deal by june, then their expectation is that things are going to be a lot worse between the u.s. and china. >> eunice, without google is the

software -- how -- have you seen any of this huawei software? is there a sense that they have an o.s., operating system that will be able to compete effectively? >> i think that at this point a lot of people think that huawei doesn't have the technology to be able to survive and compete effectively for a very long time they have a huge r&b budget. a lot of their components and their software are from the united states. so they really rely on the u.s., which is why it's seen as such a major blow to huawei at this point. >> okay. eunice uueunice eun, thank you. good to see you. president trump tweeting about trade last night, in this case in reference to our farmers saying monday our great farmers can begin doing business again with mexico and canada they have both taken the tariff penalties off your great

agricultural products and that's the easing as things got worse the trump administration backed off on some of the other tariffs. that helped the markets a little bit a couple of times last week. i don't know about this. president trump also tweeting a warning to iran, his words, if iran wants to fight, that will be the official end of iran. he has bombers in the region that's been moved -- seemed like it was more serious, less serious. tensions have been made with more conciliatory comments. >> right. >> saudi arabia. making comments through all of this too. ian, what do you think in terms of what you've seen so far from the trade dispute? fri any of these other sort of

issues that have popped up has it had an idea i kind of think if there's no deal there and the rhetoric is bel belicose, then they'll eventually do a deal the tech thing is definitely a complication, the huawei thing really, i don't think it's at the core and i'm still pretty hopeful that there's grounds for a deal this end june summit, if nothing has happened, they're going to worry. >> do you think this upsets those talks though, the huawei piece? even though it's a separate issue, it gets worked into these conversations given how important it is to the country >> sure. it goes on very badly with china's leadership

huawei is a piece but not a gigantic piece this talk about chinese ability to disrupt, you know, european-us networks has been bubbling i can't imagine it came as a total surprise. >> i remember british telly cte pulling some of the huawei stuff out. >> it was not a complete surprise they were planning on it for a couple of years. >> they must have been they don't have an operating system to go. >> in europe now that's what we have are they going to sue google -- >> you can't sue google. they're following what the s. is saying. >> it's difficult if you just spent $1,000 on a huawei phone. >> many wrinkles i think that will continue. in the meantime, no spoilers here for the "game of thrones"

finale, just surprising statistics according to a harris pole, 10.7 million americans will miss work after staying up late to learn the fate of westeros the hit series has cost companies about $3.3 billion in productivity by the way, that's still less than the estimated 17 million who skipped work following the super bowl. and how many people are shopping online every day doing all kinds of other things, checking their facebook spoess while they're at work. >> more than 3 billion pull that out of the air i don't know a lot of people probably were watching this one sports and a little bit of a nail biter at the final round of the pga championships. brooks koepka had a seven point lead he said it waekt nerves, he was not nervous, he was in shock he had four straight bogeys. he held him off finishing eight

under. he's the first wire-to-wire winner since hal sutton in 1983. third straight year of winning a major. something achieved by only seven others since the masters began in 1934. that includes tiger, phil, tom watson, jack nicklaus, arnold palmer he's been in second place on all four >> this was something. >> this was his fourth major, right? >> yeah, back-to-back pgas and open dustin johnson had 150 yard shot he can hit a six iron 240 yards with the wind in his face, uphill one of the few courses, that cracks me up, big sign on the first tee, did you see this?

warning, the black course is an extremely difficult course which we recommend for only highly skilled golfers. that's what you don't usually see. that's where you see on a ski slope. but on a golf course it's like, honey, pass me a tee you don't think -- >> you might want to break your neck. >> you don't think if you break on to this course. this course. every par 4 seemed like it was almost 500 yards and you had about that much of a fairway and watching the greatest -- i mean, you watch the great pga professionals, you watch anybody yesterday shooting -- carol varner iii who had no bogeys shot 81, 82. it was so difficult yesterday. brooks koepka, if that course

scares him it was another great moment. did your husband watch >> yeah. lots and lots. >> i saw a video of your son. >> oh, yeah. he's taking golf lessons only had two lessons so far. >> matt said a chip off the old block. i said, must be becky's swing. >> how old is he >> seven. >> isn't it a nice swing >> much better than your husband's. they weren't these -- he hits these dead quales. he's a tennis player >> i don't golf so -- >> well, neither does he. >> but -- >> neither does your husband coming up when we return, a lot more on "squawk," some of the brightest minds in economics will join us on the set after this could be the future fed officials. they could be working for you

soon they're in town for the national economic challenge and we're going to put them to a test at the break. dow futures slightly higher. just 14 minutes ago. now they're f of78 points on the dow. back in a moment ♪ you should be mad they gave this guy a promotion. you should be mad at forced camaraderie.

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come to new york city and compete in the national economic challenge. i'm going to be hosting the finals later today students from across the united states and china are tested on their knowledge of economic principles and apply it to real world examples joining us are two students participating this year. vanecia and, joe, are you okay >> smooth. just like slick. >> thank you, sir. >> you're welcome. good morning to both of you. >> good morning. >> you're a senior. >> yes. >> you're a sophomore. >> yes. >> have you been preparing for today? >> no. >> is there practice that is involved in this or it's everything you've learned? the cumulation of knowledge? >> it is a combination of both learning in a classroom environment and practicing out of school like sometimes with my team so, yeah, we prepared in both ways. >> yeah. for us, i think it's quite

similar from hers. >> what got you interested in economics? >> for me it was like the happy medium between the analytical thinking that went into more of the s.t.e.m. area and the real world applications that the social sciences offers and i think that interdisciplinary nature of economics is what appealed to me the subject. >> for me it's more towards the real world applications, like how the economic principles apply to real life. >> is there a textbook that you would call the textbook or an author is samuelsson something that you read do you have favorite economists, historical economists? milton freedman. >> or john maynard >> i'm more towards adam smith. >> yes >> yes yes. you can stay here. we could use you here for a while. you could guest host instead of

joe stiglets or paul krugman i use economist in the loosest sense of the word there. >> we want to do a little quiz. >> i saw the questions. >> do you want to participate? >> no. you have molecular biology questions. >> they're not the easiest questions. >> no, they're not. >> you're the professional supposedly >> this is question one. question one, what -- are you ready, guys? what market structure is characterized by interdependence and what is market power and. >> oligapoly and the herpa inbe decks. >> that's exactly correct. >> good job. >> that's what we talked about we have talked about that because it's antiquated to use

it in -- it's net neutrality, herfindahl. >> it was said that to go back to 1931 or 1932 to figure out how to do net neutrality have i got that right, ian >> it was devised for goods markets. >> exactly >> doesn't work anymore but liberals try to use it to whine about net neutrality. >> we will talk about politics. >> we already did. >> question two, to minimize the inefficiencies associated with taxation, the demand and supply curves should exhibit what elasticities >> i will say inoelastic. >> bingo and question three, blackberries that grow in a public park are picked before they are ripe. >> becky still has one.

>> no, i gave mineup. >> no, these are real blackberries. >> never mind. >> this is an example of what kind of problem. blackberries that grow in a public park. >> free rider. >> i agree with that. >> both of you going with free rider? should we show the answer on the screen >> tragedy of the commons. that's true. >> look at that. >> tragedy of the commons. >> public park no one replenishes it. >> that makes sense. >> what do you think of the -- do you feel that economics has become politicized >> yeah. yeah i don't know if there was ever necessarily a time where it wasn't politicized, you know it is a big indicator of what they say >> if you say na makes me think you look around in the current

milieu and you think what the heck is happening here right? in 1776 we knew a lot of this stuff about an nvisible hand and market forces and the most efficient way the capitalist treat it and here we are debating it again. you look at it, how many of them may or may not believe adam smith is correct on the left to hear the socialism card being played again even though historically we've seen it doesn't work when you say adam smith, what you were implying? >> the free market capitalism and how the government works and how government should not intervene in the economy and the invisible hand. >> i don't know what happened to the rest of the millennials, but i have hope for the next -- i do something skipped the

millennials. >> thank you i will see both of you today stanley is in the finals. >> i believe it, you can see why. >> anyway, we'll have a lot more today's economics challenge, we will bring you there. >> take him aside. >> give you some advice. >> just a couple of things. >> little education. >> yeah. >> thank you very much, both for coming in. stanley, good luck today. >> who are you, alex trebek. i wonder how much alex knows. >> i'm alex. >> he always acts like he knows. he has the accent. >> fwaus i have the answers in advance. >> i know. i know when we come back, the grounding of the 737 max is costing airlines millions of dollars in lost revenue and that's not just for the carriers that had to cut routes we will tell you about what ryan

air said about the fleet that's next up on "squawk box. down 80 points s&p few tours down 13. nasdaq off by 81 "squawk box" will be right back. ♪ ♪ 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.

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experience amazing at your lexus dealer. welcome back, everybody. we've been watching shares of ryanair. stock was down as much as 5% in

the u.k. but has bounced back a bit. the company reported a decline in full year profit despite a 7% increase in sales. ryanair blaming a 6% slump in average fares and costs associated with the acquisition of an austrian carrier guidance was muted by the grounding of the boeing 737 max. ryanair flies mostly older planes the carrier has pushed off delivery of 47 max planes until at least october pending regulatory clearance as a result of that delay ryanair says it will carry a million fewer passengers which equates to $41 million in lost sales. it expects compensation from boeing ceo michael o'leary will be joining us. coming up, stocks on the move ahead of the opening bell what's driving the trading in the week ahead the futures must be here because

they're down 93. on the dow, the nasdaq, down almost 90. the nasdaq down 14 and change. as we head to break, here's a look at yesterday. yesterday wasn't a whole lot of winners and losers here's friday. the cloud i need? it has to keep up with sales, supply chain, inventory - ♪ ♪ it needs to track it all, from cincinnati to singapore. ooo! ♪ ♪ and protect it all. customer records, our financials, they better be secured. but i also need easy access, to manage data across my clouds - no matter where it lives. ♪ ♪ so if an auditor shows up, i can be a step ahead. that's the cloud i want. is that to much to ask? expect more from your cloud.

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♪ ♪ welcome back you're watching "squawk box" live from the nasdaq market site in times square. good morning it is a big week ahead for your money with a lot of data coming out, like housing data, fed minutes, a number of retail earnings also durable goods this friday u.s. equity futures have finally reached triple digits. rebounded already.

euro down 100. the s&p down 12 and the nasdaq, the worst of the bunch down 82 let's get to the broader markets right now with scott nations, nations share president and chief investment officer also our guest host this hour, scott shepardson what are you thinking? there are lots of reasons you could see the futures down do you think it's concerns about iran the china trade talks? or concern about how far we've come how quickly this year >> i think, becky, given what's happened and largely that it's happened in the last few minutes, it's largely china trade. we were halfway back until we saw this selloff the china trade issue is spreading. it's no longer just a trade deal, it's now google cutting off huawei and qualcomm telling

their employees that they're not going to sell to the company until further notice so i think the market is afraid that president trump has so many balls in the air when it comes to what's going on geo politically that one of them is going to drop and i think that that's the real concern. also, the fact that for a large part as far as the s&p is concerned some sort of favorable resolution is baked in i think if it were to get ugly, then there's plenty of down side unfortunately, if you look at option prices, you know, the vix is not very high not anywhere where it reached in december and so there's just not enough skepticism. also, an index that we've created measures the cost of crash protection that's actually near a 52 week low. so people are not reaching to buy those sorts of protective puts. >> have you looked at -- is tesla on your radar screen today, scott >> tesla is not.

it's an interesting company i don't think it colors the broader market. >> not talking about the broader market that's not far from a one handle on tesla it's been in free fall it's one of the most beloved storied stocks that also the teslarians if you said anything bad about it at 3 or 350 you heard about it they're not quite as vocal in recent days. ian, you brought it up you're an economist. i don't know why it's on your radar screen you brought it up. >> yeah, they faced a climb like kill low man jarreau. >> that's the problem with the tech businesses that don't make a lot of money, you've seen how uber's performed since the ipo

and lyft in a nervous market environment, people ask harder questions and they don't like the questions. >> have you bought a bmw electric car >> it's a larius. >> what's the model? >> crossover suv >> i don't know what it is it's short and tall but it's mostly like running around town. you wouldn't do it for a long distance it's fun. >> how many times have we talked about when bmw and mercedes -- >> scale. >> scale, yeah >> get into this business. >> in the u.k. for the price of gas is good. >> as the price continues to go down, i was looking at the estimates. >> 420 >> no, not 420 there were numbers speculated

around 232 $232 based on -- about $800 million in loans we'd obviously have to dig into this because we have to go into more public filings. he has a huge space in spacex and that has a huge valuation. it's always possible you could pledge more spacex collateral if in fact the bank is calling him. they want to continue doing business, it's starting to look look around inverse hockey stick. >> the interesting part is the demand part. used to be they had a supply problem. now there's not enough demand. >> that's a worse problem. >> that is a worse problem. >> that is definitely a worse problem. >> over the weekend somebody was suggesting tesla needs to

advertise. >> he went online and said we want to save the money and use it for product but if nobody wants the product or not enough people want the product, you have a problem. >> a lot of great products didn't ever make money because nobody knew they were and his history, what we're looking towards. >> all eyes on -- >> just keep an eye on -- i mean, it could get -- right? if it really gets serious. >> i don't know. it's still early in california if that's where he is. >> 200 -- eventually there will be questions just raised a lot of money >> right they have runway >> was there a stock offering, too? what are people under water on that >> on the snok. >> yeah. like we talk about lyft and uber just unloaded some shares when

people add what? >> $650 million. >> those are less. >> it was a $10 million. they will participate. 1.35 billion aggregate total it was on may 2nd. >> look back at the chart there. >> look at the date. >> with crude oil back about 63 you would think they would do really well right now. shall. >> scott, i think -- no, there you are. they're back you see -- >> buying the tsh there's a higher -- >> he and charlie are convinced the balkan is a huge place. >> scott, in terms of what could happen next, you think that this june meeting that we've talked about, that this is going to be

the important thing for the markets, to see if anything gets done there, later june or not? >> you mean as far as -- >> for the trade talks with china? >> we have to see some progress. we're desperate to see some progress because, again, the tentacles of this problem are spreading and we're operating on several different levels we have to see progress. i will say this, president trump who's not always been very good about toning down the rhetoric seems to be -- regardless of the issue. seems to be getting tariffs for these automobiles, indicates they will remain calm. we don't see that out of him i hope that some of the company specific news is not a problem if there's a problem for china, it's that the juan is nearing

the dollar that will be a red line. they're not going to put up with that. >> scott, thank you for joining us ian is with us for the rest of the hour. >> when we return, this is one of the feel good stories a graduation surprise. we'll talk about a very big gift from a guest who joins us this year in davos here on "squawk box" that's changing lives. plus an economic story here. stay tuned

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welcome back, everybody. right now it's time for the executive edge a piece in the wall street journal painting a dismal picture of the millennial generation they're approaching middle age in the worst financial condition than any other generation. >> they're going to be middle aged some day? >> they're approaching it. they're getting there. >> wait a second. >> hard to imagine. >> they're not always going to be young. >> what does that mean for us when they're middle aged. >> i'm staying right where i am. >> they're going to lap us >> yeah, exactly >> americans born between 1981 and 18996 have less wealth, less

marriages and less children. according to the data, all of these things are what they found. the u.s. birth rate has fallen to the least level about 1/2 of millennials own owned -- millennials have record levels of education but they also have record levels of student debt now to a story that is getting a lot of buzz, such a good story billionaire robert s. smith just gave the ultimate graduation gift to morehouse college class of 2019. listen to this >> on behalf of the eight generations of my family who have been in this country, we're going to put a little fuel in your bus i've got the alumnae over there. this is a challenge to you,

alumn alumnae. this is my class, 2019 and my family is making a grant to eliminate their student lo s loans. >> smith erasing student loan debt for nearly 400 graduates. happened literally in -- virtually in the moment. made the decision on saturday. it was not on the teleprompter when he did that the value of his donation estimated to be worth up to $40 million. smith challenging the class of 2019 to pay it forward i should -- >> watch the faces of those behind him they're like, what what did you just say? >> smith is the wealthiest african-american in the united states right now he is the only african-american to sign the giving pledge interestingly enough, and you can think of others who haven't signed it. and we had him on the show in

davos. >> i was going to say, i don't remember. >> you made it home. he's a former goldman sachs guy, private equity, vista partners wonderful success story in the world of technology. >> look at the faces, what >> if you think about a class that has spent all of the times, the loans and debt they have thinking about the next decade of their life -- >> that's amazing. >> he ee erased it. >> can you imagine all the kids from the year before wait a second. what about me? >> exactly. >> he did issue a challenge to other alumnae. this is my class you guys come up with the other ones. >> goldman sachs and private equity. >> yeah. >> coming up, sectors that could make you money if the u.s. and china reach a trade agreement. we'll bring you "squawk" picks as we head to the break that i just mentioned, a quick check on what's happening in the european markets right now. we're coming right back.

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markets continuing to digest the news surrounding the u.s./china trade relationship. where can investors find value joining us for more, chris za zakarelli at independent advisors alliance. you're optimistic about the overall situation but you think it could take until june, but something gets done at that point to remove the headline risk >> i am optimistic i think the june 28th-29th g-20 meeting happening in osaka, japan, is going to be an

important time for both the u.s. and china to signal their intentions in terms of how the trade negotiations are going to be going i don't necessarily know that they're going to have an agreement at that point in time, but i think what they say and how they act through that meeting should give us a lot of ideas in terms of how this is going to play out. but i do think, ultimately, it's in both leaders' best interests to make a deal, which is why i think it makes sense to invest accordingly. >> and what would that -- what does that mean, invest how you like some sectors, you don't like some other sectors. semiconductors would benefit is that the reason for that call >> exactly, yeah i think semiconductors have been hit pretty hard. if you look at what's happened even over the last month, they've lost about a third of their year-to-date gains right now they're trading around 12.9 times calendar year 2020 erng earnings versus the market around 15 1/2 times, so that's already a 17% discount to the markets. i think there's value in semiconductors, which will absolutely benefit from a trade negotiations that start to go better than are currently going right now. >> what's -- homebuilders, that's not based on china?

>> homebuilders is more about just the economy continuing to heal and also some concerns about what's happening with interest rates and what's happening with the economy i think there's a lot of overhang in terms of capex spending you're seeing a lot of companies cut back you're obviously seeing interest rates continuing to be lower i think as interest rates start to go higher, i think that will take some people off the sidelines, look to start, you know, buying houses that maybe they're waiting to see what happens with interest rates. paradoxically, as interest rates start going higher, you actually see more people buying homes, whereas when rates stay low like they are now, even though it's less expensive, people typically tend to wait >> what about the medical device manufacturers, have they gotten cheaper based on the angst just in health care in general? >> yeah, so, in the health care side, if you look at that sector, that's actually had the best earnings growth year over year of all 11 sectors it's up about 9.2% year over year within health care, we like the medical device manufacturers it has nothing to do with the trade war, just the fact that that's one of the defensive

sectors that is less expensive and it is a lot about the political anxiety about what will happen, both within congress now and also as we head into the 2020 election cycle, so we also think there's value there. >> then you don't like utilities, why, because interest rates are headed up, in your view what about consumer staples? those are two sectors you'd avoid? >> those are two sectors i'd avoid. i think they're both really expensive. if you look at utilities right now, they're trading around 17.8 times, again, calendar 2020 earnings versus 15.5 for the market so you're trading at a premium to the market. their growth won't be as good as some of the other areas i mentioned. then consumer staples are even more expensive, trading around 18.6 times earnings versus 15.5 for the market so, both are relatively overvalued versus the market they don't offer as good growth. i think a lot of people have piled into those areas assuming they'll be defensive, because typically, they are. but as they get more expensive, that takes away some of the benefit of hiding out in those sectors, for lack of a better word. >> you had a good spring in charlotte, chris how's it been? it's been raining? >> it's been great. >> has it been rainy

>> we had some rain earlier on, but we'll have 90s over the next couple weeks. >> how many, a couple? when did it finally happen, saturday >> it's just starting to happen. >> we had rain this weekend. about to build an ark again. so it's pretty good down there. >> it's great. good living. >> weather supposedly coming up here, which is fine with me, if we get charlotte weather, eventually anyway, whoa okay, i can move i'm ready. anyway, thank you, chris zaccarelli. >> and thank you to our guest host, ian. great seeing you. when we return, more on the big move in shares of tesla and new questions about demand for the model 3. that's straight ahead. tesla shares now trading at $203.40. >> announcer: "squawk picks" is sponsored by wisdomtree, the modern alpha pioneer

geopolitics and your money president trump warning tehran that war will mean the official end of iran. the global market reaction, straight ahead. google cutting off huawei from smartphone services why this could be the beginning of the end for the chinese telecom giant. plus, income inequality,

it's a popular topic on the campaign trail, but we'll bring you surprising, new data on what americans really think about the wealth gap the second hour of "squawk box" begins right now ♪ >> announcer: live from the beating heart of business, new york, this is "squawk box. ♪ good morning, everybody. welcome back to "squawk box" here on cnbc i'm becky quick along with joe kernen and andrew ross sorkin. our guest host this hour is mohamed el erian he is al yinz' chief economic adviser. right now dow futures are indicated down by about 107 points below fair value. that's happened fairly recently, just in the last hour, because an hour ago, they were up by about nine points. s&p futures were down slightly, but now they're down almost 16 points below fair value. and the nasdaq is indicated to

open up down by about 88 points. okay, here's what's making headlines at this hour the big story, tensions between the u.s. and iran continue to escalate over the weekend, president trump tweeted a warning to iran. he said -- the tweet said -- "if iran wants to fight, that will be the official end of iran. never threaten the united states again! the u.s. recently sent bombers and an aircraft carrier to the persian gulf over unspecified threats. and the other big story that will be moving markets this morning -- google taking steps to distance itself now from huawei following the white house ban on technology sales to the chinese company. google has pulled huawei's license for its android mobile operating system, meaning that current devices won't receive any updates anymore and the future of huawei's smartphones won't have access to google's services, including youtube and gmail. so, that's going to be a very big part of potentially of this trade war. we will see. separately, tesla shares, they are lower and going lower in the premarket this morning. analyst report from wedbush expressing concern about demand for tesla's model 3 in the u.s.

market the demand says that tesla faces a kilimanjarolike uphill climb to hit its profitability goals, and that stock now at $203 it's also a big week for fed speak. will the central bankers confirm or push back against market expectations for a coming rate cut? we'll talk and find out about that steve liesman, though, says he might have the answer. steve, do you have the answer, given that you're in a field there? where you are? >> reporter: not yet. >> not yet. >> reporter: but i expect to get it, andrew, because there's a phalanx of fed speakers this week along with minutes and lots of data, all with the underlying question, do we end the week where we begin the week, which is the markets very, very certain of a coming rate cut and let me just show you how certain they are those september probabilities still around 50% probability for a rate cut, rising up to almost 60% by october, and then good darn sure in december, 74%, and absolutely certain by january, 87%.

we will see if these probabilities hold up to all of the fed speak and other stuff coming this week we have rafael bostick, the atlanta fed president from the atlanta fed conference where we're at this morning, at 8:35 just before that, harker from philadelphia will speak. we have evans from here tomorrow and rosengren in new york. bullard on wednesday and thursday, kaplan anyway, you get the point. lots of folks are talking and the question is what will they be saying? we'll have the minutes on wednesday, and we hope to learn something more about how concerned the average fed person is about inflation hfe writes this morning -- "we believe worries about inflation being too low are unlikely on their own to trigger easing, unless the data start showing a clear downtrend. i'm just wondering, guys, if this is the week with all the uncertainty about iran out there, about the trade issues,

if this is the week where the fed wants to redirect. so, my guess is we pretty much stay the course here, but we'll have to listen very carefully. and i will say, one big difference between the economists out there who are saying that they don't see the rate cut and the market is, most of the economic commentary i'm reading have pretty upbeat, and it's economic growth in the second quarter and for most of this year around 2%, maybe with a high side of 2.5%, and with the average expectation that that's potential growth. they see that as a fine number, and i'm seeing growth slow down, but i'm not seeing anything about a recession in most of the commentary, andrew >> okay. >> all right, steve. thank you very much. steve liesman. joining us right now is joe zidel, chief investment strategist at blackstone also our guest host, mohamed is here joe, why don't we start with you? and looking at all the trade tensions with china, looking at people being concerned that things really aren't going to get done, i guess i'm still a

little surprised we haven't seen more of a sell-off, if that's the case >> yeah, i think that's right, and i think there is more down side to equity markets from here i think equity investors are rather complacent about where we are right now in this phase of the trade war, and what we saw last week was u.s. stocks mostly recovered from the lows after the administration sort of walked back some of its comments on the trade war but i think the real key here is what's happening in credit markets where we're seeing credit spreads relative to treasurys continuing to widen out, sending the message that there is something to be careful of, a warning out there. if you go back to last september, you know, september 21st, equity markets peaked, then fell 19.8%. by december 24th, all throughout that period, you know, credit markets were rather orderly. you know, at least through the first couple months of that decline. so equities led credit lower, and that's a false alarm this time we're getting credit spreads widening out while equity investors are remaining complai complacent i think there's the warning.

it shows this phase of the trade war is a lose-lose for the u.s. and chin were. >> last time around, last fall, it was really probably the fed that was the bigger issue, not the trade war, right >> of course it was the fed it was also the markets at that point were, say, priced for perfection because they just saw all of these various different risks coming out with, call it favorable outcomes so it was a combination of a fed mistake, it was slowing growth and all of those other things that triggered the pullback. my only point here is that when you have equities leading credit lower, it's generally a false alarm. what we saw this past week was the exact opposite, where the credit spreads continued to widen out while equity markets remained, you know, say more complacent and recovered, and the lose-lose here is that the u.s. could face both slowing growth and higher inflationary pressures due to these tariffs if you look at the tariffs that were implemented last year on things like washing machines -- you know, washing machine prices ended up going up about 14% through the course of 2018 same with steel and aluminum, right? so now i think the risk is we're going to see inflationary pressure on these items that

have been newly tariffed and markets are not pricing that in. >> mohamed, you still think china faces a much bigger risk here. >> i do. i think first he is right in saying that the outlier were u.s. stocks, not just relative to credit, relative to government bonds, relative to stocks elsewhere in the world. let me give you an example in the last month, the s&p is basically unchanged, down 1.5% emerging market equities are down 10% so we've seen a massive divergence in the u.s. part of it can be explained that the u.s. is in a better place to deal with higher oil places and a relatively better place to deal with the trade tensions remember, we win a relative trade war. in absolute terms, we suffer, but we win relative to others. so i think the markets have understood that the u.s. is in a better place than the rest of the world. the question is can we stay there? coming to the china, i think the big realization now is this is way beyond economics this is national security. >> huawei and the rest being brought into it? >> yeah, and you're seeing it

play out, and i think that it's going to be hard to get to a quick resolution, and the markets have to understand that these trade tensions are going to stay with us. the best we can hope for is a cease-fire, but there's a realization in the u.s. that this is the time if not now, when >> how do you think the huawei piece of this plays into this? >> i think it plays in a very positive way for the u.s. because the u.s. is showing that it's not just government-to-government, but companies are going to have to follow, and that is going to wake up a lot of people around the world. >> you mean with google's move >> and google's not the only one, just getting the most publicity. >> remember your three scenarios? have you changed those in terms of percentages remember what they were? >> yeah, i've brought down -- so, the one scenario is we get -- >> let's go back to what they were >> so, 65% was -- >> we get something average. >> -- that we get some resolution it's a short-term resolution >> all right. >> then there was a 15% chance

of what i called the reagan moment, that the u.s. actually changes the global economic dynamics and that the rest is we end up in a full-blown trade war. >> just a mess >> just a mess and i think what you're seeing is the status quo is coming down and the possibility of the other two -- >> outliers, yeah? >> -- are going up. >> which went up more, getting something reaganesque or hitting the fan? >> i think we shouldn't overestimate getting something reaganesque. >> really? >> yes, we shouldn't i think that if the u.s. goes full blown, this is about national security, it can actually change the economic dynamics on the global scale it really can. >> meaning what? >> i was going to say, but china's not going to go down without a fight, right if you look at the success of the belt and road initiative summit a couple of weeks ago, china feels emboldened they had a lot of leaders from all around the world coming in there, and they recognize they're 44% of global gdp growth

at this point and will put together partnerships to trade around the united states the knock-on effect is if there is reduced trade between the u.s. and china, what effect does that have on treasurys >> the big question for me is does china go back to three old habits that would actually accelerate as problems they are, one, household sector self-insure. they don't trust the system and self-insure, meaning they save more, so economic growth slows down more. two, the government overrelies on demand stimulus and underemphasizes supply and three, the government uses the state-owned enterprises, who are incredibly inefficient if these three habits come back in a big way, then it doesn't matter what it does on the belt and road initiative, it's going to have issues at home >> in terms of what the market's set up for, i mean, you're thinking that if things go badly, that it will mean what, if there's a situation like mohamed just described it would mean potentially what >> there's first of all more

volatility, more down side in equity markets i think if you look at the s&p 500 drawdowns in an average calendar year, on average, the s&p's going to fall about 13% in any given calendar year. we haven't seen that yet in 2019 >> yeah, but we started on december 24th from an incredibly low -- >> incredibly low -- >> we moved the calendar a week. >> yeah, went up 26% from december 24th until the markets peaked a few weeks ago, but i do think we'll see the volatility the silver lining to all of this is i don't think we're at the end of the economic expansion. i think the cycle will continue on longer than most people expect, which means we could see a recovery so even if earnings growth comes in flat for 2019 because of trade and because of the strong dollar, i think there would be a recovery in corporate profits in 2020 so if we do see the volatility that i would expect, i would not use that as an opportunity to get more defensive and to move to the sidelines rather, i would go the opposite direction, which is lean into cyclicals and lean into risk, because i think we will see recovery now, interestingly, we've seen a massive rotation out of stocks

year-to-date in great -- in excess of the outflows that we saw in the fourth quarter 2018 so when the markets were plummeting in 2018, you had outflows from u.s. equities, but the outflows year-to-date have exceeded that. so, in other words, people have not really embraced this recovery whatsoever, and they're still getting defensive. i would go the opposite way. i think if we do get the volatility, i think it's a buying opportunity for both equity and credit risk assets. >> joe, thank you. >> thanks. >> good to see you >> mohamed came in here with a hang-dog look. tell me again -- >> because of you. >> well, it's because of -- >> the mets? >> yeah. you got swept by the marlins, the mets did >> rub it in. >> joe, you've qugot to enjoy that >> what was it, a three-game series >> yes two, we were shut out in the last two games, and three, we're on a five-game losing streak, and the nationals come to town tonight. >> and the reds have a better record now. >> and the reds have a better record. >> that's sad. >> i know. i know. >> we're going to break, but i

just want to ask you -- you live out there. what about the average l yells have you thought about the angels, for example? now, closer to where you live. you could go to the games. they're in second place. have you thought about that? >> i'm embarrassed to tell you i don't even know what their record is. >> what about the dodgers? don't you live -- >> dodgers i focus in postseason i'm very loyal to my mets. >> so you can't -- >> no, i'm very loyal to my mets. >> once you moved out there, that was -- a clean break would have been -- how long have you been out there because you haven't had a good season since then, have you? >> no. i've been out there since '99. >> yeah, haven't had a good season since. coming up, ride-sharing service lyft is being sued by investors. we'll tell you why like people can't figure it out. then, taking flight. the ceo of ryanair joins us as we look at his business, the broader industry, the global economy and what he's going to do in the w eenegrn deal when there aren't any more planes stay tuned you're watching "squawk box. ♪

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prospectus this might never make a profit you think they were hiding things from you? hello. read the prospectus. coming up, the ceo of ryanair making his way to the "squawk" set michael o'leary never once to mince words and we're going to ask him about everything from his company's performance to boeing's issues and the impact on the industry. stay tuned to "squawk box" on cnbc dear tech, dear tech, let's talk. we have a pretty good relationship. you've done a lot of good for the world. but i feel like you have the potential to do so much more. are you working for all of us, or just a few of us? can we build ai without bias? ai that fights bias? ai that helps us see the bias in ourselves? we need tech that helps people understand each other. that understands my business. dear tech, dear tech, dear tech, dear tech,

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welcome back to "squawk box. ryanair posting its weakest annual earnings in four years and warning investors that profits could fall some more the company's ceo, michael o'leary, joins us to talk about that and so much more. do you want to start on news that's a little more tepid than where we may be going? what's going on here >> fares in europe are terrible, which is great for our business. we're booming. traffic is growing 9%, but we are selling more and more $10 airfares across europe this summer that will continue more airlines will disappear. >> more airlines will disappear? >> yeah, yeah, yeah. >> because they're going to go out of business or get bought? >> go out of business. the guys who can't hedge their fuel as oil prices are rising back over $75 a barrel -- you see thomas koch over the

weekend. the credit card companies are beginning to hold their cash payments so it's just part of the consolidation. it happened here in the states six, eight, ten years ago. it's happening in europe now. >> so it doesn't say something about the economic conditions where you're operating, it says something about the competitive landscape? >> it's a bit of both. i mean, brexit certainly hasn't helped uk consumers booking later there's a lot of uncertainty in the uk the german market is characterized by huge overcapacity because liftans bought berlin. and if you're the lowest cost producer, ultimately it's good for our business. >> when you think about the competition, one of the things we talk about in the united states is whether there is enough competition, whether there's too much competition you think this is the model? >> you never have enough competition. so, anything that's good for the consumer but it's a bit like, as buffett says, you wait until the tide goes out and see who's swimming, who's wearing speedos and who's naked. we've got long johns on at ryanair. >> gordon bethune, former head

of continental, used to always say you can only be as smart as your dumbest competitor. are you the dumbest competitor in terms of driving everybody else out of business >> well, i'm irish, so we tend to be dumb at the best of times anyway but you know, we got the lowest costs. >> that puts pressure on everyone else. >> whether that makes us the dumbest or the brightest boys in the class -- >> toughest competitor, sure. >> we're certainly going to survive better than anyone else. profits will be down this year only because pricing's down. that's the strength of the ryanair model -- we have very low costs. be like southwest for a few years -- >> who are you trying to put out of business then >> we are trying to carry 10 million more consumers this year at ever lower prices and hey, if someone gets kind of a bloody nose as we serve our consumers with more choice and lower fares, that's tough. >> separately, let's talk about the boeing max -- 737 max jet. what's your take on what's happening here >> i mean, i think it's not unusual. boeing introduced new aircraft, they had similar issues with the 787 years ago with the

lithium-ion batteries, they were grounded for a couple months we have utmost confident the plane is great it's got 4% more seats, 16% lower fuel costs, lower noise. i think it will return to flying in the united states -- >> in 2019 >> oh, yeah, june-july it's very close to going back into service i think it will go back into service in europe maybe a month later. we have 5 we have delayed and 50 for the summer we'll take all of the planes next winter -- >> what are your pilots saying >> they've been through the simulator. no issues. and they've gone through the simulators we put -- >> so, with the new signalling and -- >> as far as i know, we're the only airline in europe that has actually the max simulator we have the first one now and two more coming at the end of the year. >> did you invest in that before or after -- >> oh, no, before. we ordered the simulators about three years ago. you need to have the simulators there, but you can put them into an existing ng simulator and

recreate the same issue. seems to be there was a software problem. i think boeing have fessed up on that they're addressing the issue i think the good thing is that pilots all around the world know what the issue is now. i think it may have been an issue that pilots didn't know what the software problem was. >> what's your confidence in boeing and in the faa? >> i mean, you know, boeing are a partner of ours. we fly 450 boeing aircraft you know, boeing have a 100-year record of making the best commercial aircraft in the world. you know, a boeing aircraft takes off every second of every day. i have utmost confidence in boeing i think they have handled it reasonably well, once there was a known problem. they've grounded the aircraft. they've come out and they've identified what the issue is i think there's learnings for the faa. maybe the regulatory process with the manufacturer is a bit too close. maybe there does to be a little bit more scrutiny, but ultimately, we have great confidence in boeing, in the faa and in the european regulator -- >> you put more pressure on the faa in terms of not doing something sooner and their relationship with boeing, as opposed to boeing itself, which i find surprising --

>> it's an interesting where we try not to kind of blame it's learning -- how do you learn and make sure the problem doesn't recur? it's about safety. and safety is always -- there's a kind of -- we try not to have a blame culture in the airline industry we try to have an educational culture, learn from the mistake and make sure it doesn't happen again. >> your stock was down earlier just on concerns, because you were expecting some of these planes this summer as a result of not getting them, your fuel costs will be higher and you're not going to be able to bring as many passengers -- travel as many passengers as anticipated. >> that's true. >> what's the economic impact? >> i think it will cost about a million passengers through the summer we would have liked to have had the first six aircraft in. also the 50 aircraft, we were due to take them starting in august, september, october, becky. we think that won't happen until december, january, february. so there's a little bit of a delay, but this is critical. we think for the next four or five years at ryanair -- we have the lowest costs in europe, but that unit cost ex-fuel will be flat to slightly down, and that's driven by these aircraft. i have never before seen a step change in technology that gives you 4% more seats and 15% less

fuel and as the europeans are increasingly focused on environmental taxes, things like that, the fact that we have the greenest, cleanest aircraft in the industry, and certainly in europe, will be critical to us trying to avoid a lot of these environmental -- crazy environmental taxes. >> boeing is going to pay you or compensate you for -- >> i think we're having a discussion with boeing i'm not quite sure we discussed it, but i think they will have to sensibly approach the losses, you know, the million passengers we've lost this year -- >> does that come in the form, do you think, of future discounts? does it come in the form of actual cash payments how do you think that's going to manifest itself, not just at your own airline, but this is going to happen across the globe at many airlines. >> look, i'm always much more interested in the cost of aircraft so you know, we have $3 billion in cash. the last thing i need is somebody else's -- i don't need cash compensation, but i would like to see some movement from boeing on the pricing of aircraft and on future orders.

i mean, you know, we're talking to boeing at the moment now about placing another order for aircraft now, boeing i don't have the head space at the moment to talk about future growth. we do. but you know, i would be -- ryanair will certainly be at the front of the queue once the max is back flying about, you know, let's talk about the next order, because we want to demonstrate confidence in boeing this is a great aircraft, and our customers are going to love it >> what do you think it would take for warren buffett to invest in the airlines in europe >> probably a quick coffee with becky. she seems to have more influence on him than anybody else um, i don't know i suspect the same kind of environment as he's seeing here in the states. i think once he begins to see, as in north america, consolidation has played out the airlines have more control over, or more pricing power, more control over their costs, and you're into a much more sensible industry, which, ultimately, europe is moving

towards. we're running about ten years behind north america then i think lots of investors will want to invest in this industry we're leaving that process -- >> but you've always been a more open skies environment then you have the middle eastern airlines, which i know there's a big debate about how much they're still being subsidized that's a debate happening here in the u.s. and i believe in europe and elsewhere -- >> that affects the long-haul market within europe or the european union, we have open skies, but that consolidation is playing itself out you're at the end of kind of the crazy capacity additions, because nobody -- i mean, ryanair in every market we operate in in europe, and we're in them all, have a $10 lead-in fare there's no price point at which some start-up or niche carrier will get in underneath us. what's happening, in terms of investment in the airline -- our confidence, we've announced a share buyback. we'll buy back shares at these prices because these have attractive prices to be investing in ryanair >> thank you. >> thank you. >> this is all about people who

fly with other people on jets. >> i fly ryanair >> what do you think the smallest the pitch can be? did you study that >> we've increased it with the new aircraft what's happening is the seat technologies, the slimline seats, our seat pitch is up to 30, 31 inches gone up from 29. you know, our seats are ridiculously roomy at this stage. i'm trying to find some way of -- >> can we tone down the yellow >> i've got to keep you awake so that you're buying coffee, vats of coffee, filtered coffee -- >> paying for the bathroom >> no, no. >> you joked about that. >> the bathrooms have always been free on ryanair and will continue to be free, becky. >> we put in a bunch of paid toilets here you didn't go in -- >> they're going to be putting in technology -- >> i couldn't afford the rates here, joe. we're a low-cost airline. >> are you going to put cameras in the back of your seats -- >> no, we saw that there's some investigation going on, congress over here, but that inflight entertainment systems, kind of a two-way -- >> two-way cameras and you can -- >> really?

>> the idea is you'll be able to press a button and order food and they'll just bring it to you. it's supposed to make everything easier. >> why do they have to see you >> because you'll talk to them it's like a skype -- >> i'm happy to say ryanair doesn't have any inflight entertainment. >> no spying. >> no surveillance on ryanair. it's only a credit card. >> it's still airline food that they deliver, though >> yes. >> why don't they work on that people, they fly with strangers, mohamed. i mean, people that you don't know are sitting in the seat next to you. it's so weird. don't try it. >> extrapolate on the experience -- >> thank you very much. >> good to see you. when we come back, the consumer in focus. it is a big week for retail with companies rolling out quarterly results. we'll bring you a list of names to watch. first as we head to break, let's look at u.s. equity futures. dow futures are down by 87 points, nasdaq down by 92 and the p s&off by 14. you are watching "squawk box" right here on cnbc ♪ ♪

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still to come on "squawk box," this morning's top movers, names you need to know as we get ready for the opening bell plus, home depot and lowe's are among the biggest retail names ready to roll out results this week we're going to talk expectations and the state of the consumer. and then, politics and your money. we hear politicians mention income inequality all the time, but what do americans really think about the so-called wealth gap? new data this morning might surprise you stay tuned you are watching "squawk box" right here on cnbc 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.

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[ screaming ] oh, it's just this weird little guy. ow! ow, ow, ow! ow, ow, ow! [ screaming ] not cool. welcome back to "squawk box" this morning dom chu joins us from the newsroom with a look at this morning's big movers dom. >> all right, so andrew, many of the movers this morning have to do with what's happening with regard to huawei, google/alphabet and everything else, so semiconductor stocks, but this is going to be a huge focus for retail, because this week, 22 s&p 500 companies and one dow component -- that's home depot -- will be reporting their results. and just to give you an idea of how this work is going to shape up, these are the companies that you're going to want to focus on, because it's not today, but tomorrow, home depot, dow component, also nordstrom, tjx companies and kohl's all reporting tuesday throughout the course of the day. wednesday, lbrands, the parent company of at least victoria's

secret and bath and body works lowe's, target also there. best buy happens on thursday and then friday is foot locker if you put all of these together, a very big pulse check of the consumer will be in play with regard to this week and becky, as we take a look at the consumer, it does kind of ask the question, or begs the question whether or not this current market is factoring in a healthy consumer or not and whether those tariffs are going to have an effect on sentiment for many of these corporations selling to us consumers. back to you, becky. >> dom, that's the big question. jan was just talking about that off camera -- what happens with the tariffs next >> we're all going to be paying higher prices. i mean, we know it, right? that's just going to be the point. the issue is going to be whether we will pay those prices and continue to do so if those tariffs are in play or whether or not we feel an effect at some point and maybe curtail some of that spending. i know for us, a lot of us out there, it's going to be an issue, but it remains to be seen whether or not it really affects my sentiment overall i still do my part in spending because it's what americans do

we like to buy things, so. >> that and golf >> yeah. that's where i spend my money, becky. >> dom, thank you very much. >> you got it. joining us is jan niffen, ceo of j. rogers niffin wwe. that's like wrestling? >> worldwide enterprises. >> jan, let's talk a little bit about what the tariffs mean, because we're heading into earnings season, but you were saying off camera, no one knows what to do at this point because you don't know how long the tariffs will last, how big of an impact they will have and what it will mean to the consumer. >> my clients are like, what are we going to do we don't know if the tariffs are going to go on in 60 days. if we put tariffs on $225 billion more, we look at it and say that pretty much wipes out retail earnings for one year as far as growth goes and so, they look at it and say, how do i judge these stocks? because the performance that we've seen so far for the first quarter in retail's coming in pretty good, and i suspect as we see the next ten or so that i've got on my list here report over the next week, week and a half,

they're going to be solid, but people are still going to look at it and go, well, i don't understand what they're going to look like once the tariffs go into effect, if they do. and my thesis is, we won't get the tariffs. and if we do, they won't be for very long and this will all work its way through. but if you got them for a long time, there would be an enormous dislocation and you'd have to start changing your supply chain. but what we won't see, which is what everybody who comes on this air talks about, is the consumer paying this, because there's a worldwide oversupply of product, and you can't raise prices we've seen falling -- if you buy a pair of chino pants right now, ten years ago versus today, the price is down 40%. >> wow. >> that's what's been happening in retailing we're not even going to pass it through. we're going to find out that the consumer either substitutes or just doesn't buy and so, these retailers are not going to say, oh, 25%, yeah, we'll just hand that to the consumer not going to happen. >> so, this is important, because you're hearing two very different narratives one is it's all passed on to the consumer, we're going to face

higher prices. the other one is, no, the consumer's going to resist, and it's the companies' pricing power disappears you're on the second >> on the first $200 billion, even though we've seen people do studies that say it gets passed through, have you seen any increase in inflation at the consumer level no the companies are either absorbing it, the chinese factories are absorbing it, and it's getting absorbed in the supply chain, but it's not getting passed through -- >> that's because it's a temporary issue at this point, too. and i think people look at this, as you just said you do, as not being a long-term effect. >> well, look what happened on the tax bill, right? we said, gee, there's going to be inflation i didn't, but other people did what happened is walmart turned around and gave all the money back to the consumer and everybody else had to follow suit and so, there was no inflation driven through because of the decrease in taxes. all the retailers basically started giving it back, either in service, in salaries, or to the consumer in price.

that just is going to be the same kind of pressure we see when the tariffs go up the guys that are most efficient, like walmart, like macy's, like kohl's, all the guys that -- home depot, best buy -- the people who are really good at what they do, they're going to just crush down the pricing and drive everybody else out of business. >> can i ask you a question? this is goldman sachs a week ago -- "the cost of u.s. tariffs have fallen entirely on u.s. businesses and households with no clear reduction in the chinese exports. second, the effects of the tariffs have spilled over noticeably to the prices charged by u.s. producers competing with tariff-affected goods. now, they look at the impact of tariffs on cpi, and they say it is clearly visible when you look at equipment that is, what they're calling the nine tariff-impacted categories they would include appliances, furniture, bedding, floor coverings, autopart materials, et cetera. do you think goldman sachs is 100% wrong here? >> i do. i read that article. i don't see it happening there's been some temporary

blips in pricing, and then it gets pressed right back out as the consumer substitutes and as the product moves -- >> what about in washing machines that seems like the one area where pricing went up not only for the guys who were importing stuff but other people were able to maybe squeeze prices a little higher, sneaking -- >> that happens to be one of the areas i know really well because i advise a company that's involved in that space, and that is one of the few places you've seen it because there wasn't substitution in supply yet, but there will be. we are going to see even that pressed out. but in everything that i deal with, like apparel, accessories, you know, handbags, shoes, all the things that are substitutable and all the things you don't actually have to have -- you have to have a washing machine -- it goes down. >> what about the argument that consumers aren't paying for it because they're not buying, that actually we're paying for it in that we're not buying, meaning that those u.s. companies and retailers in the united states ultimately are going to struggle and suffer as a function of it >> well, that's what i believe i believe what you will see is the retailers struggle, not the

person on the street that's buying product they're going to find -- >> but then we're talking -- but the person on the street is the guy potentially working at the store who's no longer working at the store. >> well, that can happen i didn't say it was going to be painless i said it's not going to get passed through to the consumer it's going to get absorbed in the system, and that means people's earnings go down. that's why i've said, if this goes on, we wipe out a year of earnings growth in retailing. >> jim, quickly, would you buy any of these stocks ahead of the earnings, having said all that >> well, i would still like to own macy's right now, kohl's right now, walmart right now i still like home depot and lowe's they're not going to get hit hard so, yes, you can still own these stocks and when they get whacked because of something going on like tariffs, they're a buy, as long as you're a long-term holder but traders trade. >> right jan, great to see you. >> what's your neck size for shirts are you a 15 1/2, 16 >> yes. >> you are >> i am. >> why >> see his initial >> i do. oh, you've got the same initials as joe. >> i mean, i could wear -- can

you leave them to me >> he wants the shirt off your back. >> i have a closet full, joe i'd be happy -- >> of jerk shirts. >> there's a ton of them i've got all colors. >> just think about it. >> they are all 16s. >> 35-35 >> well, they're not that long you'll have a little bit of a short sleeve -- >> need an extension all right. you can be jerk or ars i'm working to make each day a little sweeter.

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welcome back to "squawk box. a growing number of democratic candidates are calling for higher taxes on the wealthy, but how do american voters feel about the wealth gap robert frank joins us this morning with more on that. good morning. >> good morning, andrew. on the democratic campaign trail, the litmus test seems to be raising taxes on the risk sh but polls show that voters don't view inequality as a leading problem and views on the wealth gap hasn't changed much in decades. gallop has been asking americans for years whether we are a country divided in the haves and have-nots. the majority said no 41% said yes and the same share that says yes has been flat or falling for over 15 years. when asked to list the top issues that should be addressed by government, wealth distribution has consistently ranked last, well below education, health care, and the economy. now, the democrats point to recent polls that show the majority of americans want the rich to pay more, but those numbers have been consistent or

falling for decades. 62% said upper-income people pay too little, the same as it was in 2012 and well below the 77% rates of the early 1990s inequality itself is growing, but it's highly related to the economic cycles, the share of income of the top 1% grew to 23.8% in 2016. that's the latest-year measure but that is only slightly higher than the 2007 levels and some say recent wage gains over the past two years at the middle and the bottom of the income brackets have actually reduced inequality >> it's still a majority, though 62% -- >> it's still most americans would rather someone else pay all the taxes, of course that hasn't changed. but my point is, we had this groundswell of support or calls for raising taxes on the wealthy. it's not rooted in popular opinion and it's not rooted in any step change in inequality. it seems to be pure politics leading in the primaries -- >> should pay more of the taxes?

>> yes. >> me, too joining us now -- 62% is like, can't get much higher than that. economic policy institute research director josh bivens and center for freedom and prosperity chairman john mitchell did any of those numbers surprise you or do you have an answer to counter, or are americans just not clued in to what they should be thinking >> yeah, i would say, i don't think they're really sort of -- i don't think they're really well-designed poll questions i think as a lot of you noted, 62% is a pretty high number for people who think either wealth distribution is a problem to be addressed by government or raising taxes on the wealthy my view -- and i think a lot of people share it -- is that we cannot have an economy that actually delivers broadly shared prosperity for everyone until we actually check the power of the ultrarich and corporations i think lots of americans believe that whether or not those particular poll questions really get at that doesn't surprise me that they don't i think when you ask people what they're really concerned about, they list a bunch of things

about the economy in general i would argue a lot of those things, whether it's addressing the cost of health care or higher education or job-creation, those are all profoundly affected by inequality, whether or not ordinary americans link that, i don't know. >> josh, so, just looking at the history of the united states and going back more than five years, you say until we get to where prosperity is shared broadly, you don't think the united states has a record of sharing prosperity pretty broadly over the last 200 or 300 years, compared to the rest of the world? you know what goes on in the rest of the world. i mean, not necessarily the developed countries in europe, et cetera. but in general, you don't think that the american promise has been something pretty special, josh no >> i would say it depends on what time span i would say over the past say 30 to 40 years, that promise has mostly fallen short. you've seen the vast majority of households that see income growth far below the average growth, not just the top 1%, just below average how can most people grow below

average? it's because the average is pulled up by skyrocketing incomes at the top. >> we've exported a lot of prosperity, too, obviously we have about 600 million chinese into -- dan, you've been very quiet you've been serene, almost, i guess. what would you say >> i think the fundamental difference that we probably have is i think policymakers should focus on mobility and opportunity in growth. i think a fixation on inequality and a fixation on wealth redistribution is a problem economically, but i also think talking to some of my democratic friends on capitol hill, it's a problem politically. if bernie sanders and kamala harris and all of the rest are competing on who can raise taxes the most and who can be most spiteful toward higher-income taxpayers, i don't think that sends a good message to an american people that still believe in upward mobility and striving and the american dream. >> i mean, josh, i always have a problem -- do you want a system

that continues to lead the world in creating millionaires, or would you rather have a system that caps people at a number below that because it's some type of zero-sum game in your view, or do you want people to become millionaires in the united states? >> i think the number of millionaires is a statistic i'm not super interested in. i would say what -- >> i know, but i wasn't asking you whether you're interested in it i'm asking you whether you think it's a good thing -- >> you asked which i wanted. do i want more millionaires? i don't really care. i want most households in the united states to be getting richer steadily over time. i mean, in the long, long, long run, that leads to a lot of millionaires, but most americans are nowhere close to being a millionaire and are not on an income trajectory that's going to lead them -- >> striving and hopeful and aspirational, right, dan >> that's right, and policy should help them, rather than hamstring them like it has for the past 30 years. >> dan >> if i can jump in, i think we can probably agree on let's get rid of some of the cronyism in the economy that helps the

politically well connected i think back last decade to t.a.r.p. as a horrible example of government power being used to help rich people. i want a genuine competitive marketplace with nobody getting any special benefits from government, and i view government as something that does get captured by the rich. and so, i would think that honest people on the left and the right can come together, shrink government, create more of that rising tide that jfk talked about that can lift all boats. >> so, let me ask you both a question what the poll doesn't measure is the sense that people have that inequality of opportunity has gone up, that people don't have the same opportunities as they had before how important do you think this issue is looking forward >> well, i'll jump in on that. there are some things in life that are unfair. the academic research says if you're taller, you will earn more income over your life if you're good looking, you earn more income over your life if you have better parents, you earn more income over your life.

those are things that government can't fix or can't change. but what government can do -- why don't we break up the failed government education monopoly, have school choice, especially for people in poor areas so that they can break out but bernie sanders just the other day said not only no school choice but no charter schools because he's putting union bosses at the national education association ahead of kids so, there are lots of things that in theory we should be able to all agree on. >> dan, josh, it is a longer debate, and i know we will continue it and have you back. we want to thank you robert frank, thank you. and we've got to thank mohamed for hanging out with us the last hour. >> appreciate it. >> the hour's already done it's already done. a lot more coming up on "squawk" this morning the u.s./china trade war, the global implications. former commerce secretary bill daley's going to be our very special guest when "squawk" g urf quk x.r ck with anothe biho o"sawbo at carvana, no matter what car you buy from us,

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huawei takes a big hit google ending work with them. >> uh-oh, sounds like somebody's got a case of the mondays. >> a case of the mondays for tesla. the electric carmaker's stock

under pressure this morning after a particularly gloomy analyst take. and iron throne it is. just how many people will call out from work today after staying up for the finale episode of "game of thrones" the final hour of "squawk box" begins right now >> announcer: live from the most powerful city in the world, new york, this is "squawk box. good morning, and welcome back to "squawk box" here on cnbc live from the nasdaq market site in times square i'm joe kernen along with becky quick and andrew ross sorkin the futures right now, triple digits again on the dow, down 108 points, 109 points >> 107. >> move on, yeah it's getting worse as someone used to say, as we speak. the nasdaq indicated down 100 and the s&p indicated down about 17

treasurys had moved out of the 2.3% range on the ten-year, back to 2.4%, now back to 2.387%. a few stocks on the move this morning. tesla shares lower after an analyst report at wedbush expressed concern for the model 3. they say tesla faces a kilimanjarolike uphill climb to profitability. you can see the stock down by just over $8, $202.90 is the last tick for tesla shares. also, ride-sharing company lyft has been sued by a group of investors over its initial public offering. the suit says that lyft misled investors about its market position and labor matters and that the company's false and misleading statements inflated the company's share price. that stock has lost 25% since going public, but again, if you read the prospectus, it said they might not ever make a profit, so i'm not sure what you were caught offguard by. also, to the other ride-sharing giant, uber the company's ipo was undermined

by big investors, according to the "wall street journal." the paper says that blackrock, tiger global management and other pre-ipo investors passed on buying more shares in the offering and that some tried to sell stock before or as part of the ipo. of course, again, this is just a situation where companies wait a lot longer before going public, and as a result, they bring in some of these potential investors earlier than they used to and president trump spending the weekend, among other things, tweeting about trade, as one of his deputies hears a plea for restraint, and this came from a top chinese official kayla tausche joins us now with more, with probably a beautiful shot of the capitol. i was right. kayla. >> reporter: yes, good morning, joe. a standoff between the u.s. and china over trade issues is deepening. the rift is widening now to include other geopolitical issues president trump said in a pretaped interview that aired on fox news last night that he's okay, though, with the current state of play. >> a lot of people won't be happy with this answer, but i'm very happy now we're taking in billions of

dollars. china is obviously not doing well like us you see what's happening their economy's not great. our economy has been fantastic because they were catching us. they were going to be bigger than us. >> on saturday, u.s. secretary of state mike pompeo spoke to chi china's foreign minister, who according to state media, warned pompeo the u.s. shouldn't go too far in harming china's interests. they also spoke with iran, tehran and the south china sea as the u.s. sailed a warship just miles from the area and beijing called that a provocation. but there is escalation in huawei the commerce department is considering relaxing part of its ban to allow existing networks to avoid disruption, meaning rural providers in wyoming and oregon that have purchased huawei products may be able to stay online. but becky, this comes, of course, as google increases the scrutiny on huawei by banning huawei from operating on its android platform >> kayla, when you said that

pompeo and wang yi talked over the weekend and wang yi warned that they shouldn't do too much to hurt china's potential or its interests around the world, were they talking about huawei particularly or just the trade fight in general >> both. the pieces in state media that had the most information about this call from the chinese side mentioned both huawei and the trade fight. and keep in mind, the chinese state media have taken an increasingly nationalistic tone as they dig their heels in saying it will not give away concessions on principle to the u.s., which it believes started this war of course, the u.s. administration would disagree with that. >> kayla, thank you. >> sure. >> for more on the latest on the trade war, let's bring in our guest, former commerce secretary bill daley he also served as special counsel to president clinton on nafta-related issues bill, you've seen a lot of this in the past of what happens with trade fights, trade bickering, potential trade wars what do you think of where we stand right now, because we haven't talked to you in a

while? >> i think we're at a very different point. i think the president's decisions on tariffs is a major change in the last 25 years in the way we've dealt with trade fights i think it comes after a lot of frustration. i think ambassador lighthizer -- if you go back and read his testimony when china was allowed into the wto, his testimony in late '99, i think, early 2000 -- he pretty much laid out what he thought was going to happen with china and how to respond, and i think that's exactly what's going on i don't think this is some game that's being played. i think it's real. i think the tariffs, no doubt, it's going to hurt both sides, and i think the president feels strongly that it will hurt them more than us, and he wants to right the situation. chinese are in a dilemma much of what we want fundamentally goes to how they are structured and how they operate as a country and a one-party system, and that's fundamentally the problem, and that's the difficulty long term. i think they can meet around the g-20 in june, but we've had now

a year and a half of this -- oh, there's going to be a deal, then there isn't, then the markets all respond, then there's going to be a deal i think the tariffs that have been implemented and the ones that are coming are going to create a long-term situation with china economically that may fall over into other areas. >> you do think, though, that this is the right move for the president at this point? >> well, i think the discussions, the conversations all in the last 10 years, 12 years, whatever -- it's 18 years, really, since they went into wto, to try to change the way they operate have not worked and i think the frustration is how do you move now an economy that's the second largest in the world and a very aggressive not only economic position but foreign policy by the chinese? how do you affect that >> i don't think you should try to put him in a position where he says trump is right about something -- >> you saw it in the notes >> but i don't think we need to out him on that. he's going to get stuff thrown

at you and -- >> i just -- >> well, we're not going to hang around any of these 23 candidates if you're saying trump's right about something. >> do you hear many democrats criticizing him on this? >> no. >> >> in their hearts -- very few, because in their hearts, they want action on trade most democrats -- and this is the world that's upside down now -- >> i saw you walking a fine line and i wanted to cut you some slack and not pin you down because i don't want to put you in an uncomfortable position with everybody >> i get it, joe but there will be pain from this and many of the voters that the president depends on will be affected by this. >> yep. >> you talk about the farmers? are you talking about steel? >> farmers and steel and a lot of working people that depend upon global economy staying strong. >> and global prices. >> how do you think the huawei piece of it -- >> i think it's a big piece of it i don't know how it ends up -- >> do you think it's a trade piece or a national security piece? >> no, i think it's a national security piece and the national security people have had for years great concern about this

remember, the cfo of huawei is basically in the process right now, judicial rocess, to be brought to the united states for prosecution. that is a big deal and to the chinese, that may be a bridge too far so, we can all worry about the tariffs. but if she is extradited to the united states and it's not like that's a chip we can do in a trade deal -- once you enter the criminal justice system, there are lots of rules that just can't be thrown away like they could do in china or turkey or russia. >> do you think it's valid, the national security reasons, the national security issues around this do you think it's valid? >> from everything i know around the years and when i've been in the government or out of the government, i think it's real. >> real because you've seen something? i mean, there have been -- in truth, there have been no proof points yet that anyone has singularly pointed to where there has been a so-called breach where there has been spy software effectively inside the hardware, right? >> yes. >> that's the question. >> but the possibility for

that -- >> exists. >> -- or the reality exists -- >> i'm not saying it's not a possibility -- >> so you wait until it happens and then you say, oh, my god, this is terrible, or you try to prevent that opportunity. >> is it because of the relationship between huawei and the government in china that is the big concern? >> yeah. and the major companies in china, because of the system again, this is not some grand conspiracy >> why -- >> the system requires that. >> the previous administration -- look, 4g in the united states -- i don't know if people appreciate this -- 4g, many of the routers and cell phone towers that have different signals are running off of huawei devices. >> which is why you're not hearing about these -- >> over the last 20 years, when china entered the wto and we were all celebrating that and coming into the world economically, 9/11 happened. our focus turned totally to the middle east and terrorism. and then the economic collapse in '08 so, you had about a 15, 18-year run here where the chinese basically did what they wanted to do, and you can't blame them

for doing that and they've grown their companies, still, though, very much tied to the one-party rule. they are out there around the world doing things that 15, 18 years ago no one thought they would do so, how do we react is the question. >> were we wrong to let them into the wto to begin with or is the wto wrong for not enforcing and policing >> well, wto, even when i was commerce secretary back in the late '90s, it was obvious, it was a dysfunctional place. and to try to get results and speed decisions was impossible i think we were too optimistic about what changes would happen in china because of the opening of china and the economic opening. and we thought there would be political changes. we were all wrong. i think it's great that china is no longer a country with 1.3 billion people basically near starvation >> right. >> that's good for the world. >> right. >> and lots of things have happened in the world that are positive because of what's happened in china, but we're dealing with a very different

world 20 years later. >> just going back 19, 20 years, we thought there would be political changes, meaning when you were in the white house at that point, people thought it would be like a glass nose sort of opening the way and bringing down -- >> yeah, not that there would be some collapse because the chinese always worry about it, like the russian model of a total collapse, but there would be fundamental change in the system in the way they operate and the state-owned enterprise companies that really are run, if not totally run, they're owned majority by the government and they're a big piece of the country. >> given everything you've just said and all your concerns about how this is going to be a much more protracted, longer battle, what's the best-case scenario for the markets' perspective >> i think they get used to it i saw your guest a few minutes ago on the retail. i think there will be certain sectors that are really hit, no question about it. but i think we will get to a new norm and politically, the president now is so far out on a limb.

for him to get a deal that looks like a victory for him with only 18 months to go before an election, as he's gotten everybody pumped up on this, it's very hard for the chinese to give him what he needs. >> if i could get a bill daley -- if i could get any daley to endorse me as a democrat, i'd be excited because of who you are who's going to get your -- >> i just lost an election, so -- >> have you endorsed anyone yet? >> no, no. >> are you leaning towards -- >> i've known joe biden for 35 years. i think he's a great guy -- >> is that your guy? >> well, i think joe has got everything that could beat trump, represent the best of the democratic party, and maybe begin, albeit very difficult, to change this sort of craziness of no one even wanting to talk or be seen with somebody from the other party. joe is the opposite of this new politics now, that may stop him in a primary. >> is there enough energy with an establishment democrat like bid biden? >> but joe, if you look at who

won in the general election in november, congresspeople in purple districts, they were not the people they're chasing today -- >> you haven't endorsed joe biden? >> no, i haven't. >> you have not endorsed donald trump at this point. >> no, that ain't gonna happen. >> that's not going it happen? because i see you as a man without a party -- >> no, i have a great party -- >> you've got one guy out of 23, that you could -- >> no, that's not true. >> well, who else? >> not your mayor. >> do you think democrats can run on the economy >> i think donald trump has made this election and made the presidency about him this will be about him it's not the economy because he -- everything is about him. so, the idea that he's then going to say, oh, elect me because of the economy -- his whole tenure, his whole personality is about him it's going to be about him. >> secretary daley, thank you. nice having you. >> slam the guest here >> coming up on "squawk box," it's been less than a week since the president put a target on the back of chinese telecom

giant huawei and reverberations are being felt, not the least for the rollout of 5g. we'll be joined by craig moffett to talk about this and where at&t goes from here now that hbo's "game of thrones" is officially over. it's all ahead u'un ted yore watching "squawk" on cnbc and manage my portfolio. since i added futures, i have access to the oil markets. and gold markets. ok. i'm plugged into equities. trade confirmed. and i have global access 24/7. meaning, i can do what i need to do. then i can focus on what i want to do. visit your online broker today, to learn more.

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welcome back to "squawk box. the futures right now down 108 points it's his problem the nasdaq down 89 the s&p down 16. and let's take a quick look -- no, we're not going to look at treasurys. nothing going on 2.39% on the ten-year. the battle for 5g supremacy increasing as the president placed a blacklist on huawei and we learned that google is moving to stop licensing its android mobile operating system to huawei, which would have a huge impact on the number of huawei phones here in the united states, europe and the rest of

the world. craig moffett is founder and senior analyst at moffettnathanson good morning. >> good morning. >> you're bearish on 5g in terms of how quickly it can get rolled out in the united states relative to a lot of the speculation that's been put out there. >> yeah, i am. and what i said on the show last time is i'm not bearish about 5g per se i'm bearish about millimeter wave spectrum or very high-frequency spectrum as the basis for 5g and right now that's where the u.s. has placed its bet. so it has some catching up to do because very high-frequency spectrum will be super fast. it will deliver the promise of 5g, but only in a few places and what you need is lower frequency spectrum for everywhere else. we're not close to that. >> i know everyone's going to think we're in the weeds, but i want to just -- indulge us in the weeds for half a second. >> yes. >> because if you have low-frequency spectrum, you can actually send the signal much farther. that spectrum is currently reserved for the military. u.s. military is using that right now.

>> well, a lot of uses, but that's right. >> high-frequency spectrum is shorter, and so you need a lot more cell towers to make work, and therefore, more expensive. >> exactly so, here's the problem for 5g to deliver on the promise of super, super fast speeds that everybody gets excited about, that led at least is the most -- that's the consumer application that people get excited about -- you need super wide blocks of spectrum >> right. >> there are only super wide blocks of spectrum in very high frequencies, and it's just not economical to deploy. >> so, overnight, google announces that they are no longer going to license their operating system, android, to huawei that is going to have an impact how on huawei, and therefore, on us >> it is a very global -- so, it's probably not going to have a big impact on us it will have a big impact globally, because remember, what we've done so far -- and this has gone on for now a number of years -- is we have cut off the customers from huawei in the united states. so, years ago, sprint and others had to agree not to use huawei

equipment in order to be able to qualify for government contracts. >> but just to put a fine point on it -- there are 4g routers and other networks in the united states today that are operated by, or rather, manufactured by huawei >> not much. so, again, because we had already separated huawei from its u.s. customers in order to qualify for government contracts, that part of the equation was largely already out of the mix in the u.s. and you know, sprint and t-mobile in their merger promises, agreed not to buy -- >> and just so we're clear, really, those were replaced by ericsson devices. >> that's right. >> there's nobody else that makes this stuff. >> essentially ericsson. >> where is cisco? >> so, cisco is in the router business so, cisco is a player, too but for the real heavy part of the telecommunications equipment and the radio access network is largely ericsson or huawei >> okay. >> and so -- but what's happened this time now is we're not just cutting off u.s. customers from huawei now we're cutting off u.s. suppliers from huawei. and that hurts huawei globally.

>> do you think that this is tied to some competitive situation with 5g? do you think it's tied to trade talks? do you think it's really just national security? >> i think it's much more national security, but you can't escape that it also has implications for -- this narrative that china is beating us in 5g is politically a very cogent argument, right and so, to the extent that we can limit the expansion of the 5g network elsewhere by cutting off huawei from its important suppliers helps that narrative. >> you call it a cogent narrative. is it an accurate narrative? >> i've never quite understood this argument about we're in a race with another country over their 5g network we want to make sure that there is a robust global 5g ecosystem and supply chain outside of huawei >> economic impact today on u.s. companies that are no longer going to be selling their services and devices to huawei

so, this morning, is there an economic impact on google, for example, or were they providing android for free is there a real economic impact on qualcomm? i imagine there's got to be. >> the qualcomm impact is probably larger. i cover the service providers rather than the equipment. i don't think it's likely to be material for google, but it will be material, i would suspect, for qualcomm, but i don't want to get too far over my skis in how large because i don't cover qualcomm. >> and is there anybody waiting in the wings, you think, that can actually provide the hardware that we in the united states may ultimately need to actually build out -- to build out this 5g network that isn't huawei and maybe could compete with ericsson? and from what i understand with ericsson is way behind huawei. >> i don't know that that's quite right, that ericsson is way behind huawei, but i'm not -- it's unlikely that that's suddenly a business. that's a real scale business with generations of r&d behind it there are a lot of small players

in that, in all the pieces of the radio access network and elsewhere, but the idea that one of them is going to scale to be a real viable competitor to huawei or ericsson, hard to see. >> can i just ask you -- there is a headline just crossing now -- the fcc will not formally approve the merger between print and t-mobile on monday because it must still draft order. this is according to reuters, a source that they have there. it is moving the stocks. you can see sprint is up by 6.8%, t-mobile up by 2.7%. what do you think? >> i'd have to see what they're going to approve there have been reports all weekend that sprint and t-mobile have been getting closer in meetings with the fcc to a formal proposal that you'd have to believe they wouldn't be announcing unless they had come -- is a separate process and it's not entirely clear from anything i've heard so far where the doj is

everybody always assumed the doj, not the fcc, was the bigger hurdle, so that's what we'll have to wait for. >> ultimately you think this is a good deal to be done >> i try not to have value judgments like that. it's good for the company, sure, but -- >> it's good for the country and competition in the market place and the ability, by the way, to roll out more 5g, or in a quicker, better way to make us more competitive, which is the argument >> to a degree i'm not sure i ever entirely bought that argument there is some merit to the argument that sprint on its own wouldn't have been able to do this they just didn't have the resources. you probably would have had to financially restructure sprint, if the deal doesn't get approved and again, it's still not clear that it does and remember, you also -- even if the doj also approves it, you still have to get through the state attorneys general and the california public utilities commission. >> we didn't get to talk about it, "game of thrones" last night. it's over. implications for hbo implications for its parent company, at&t. >> i think they've done a good

job trying to use the lead-ins to promote a bunch of other shows. some of them look really promising. but there is no way to sort of bottle the magic sauce that is something becoming a cultural phenomenon it's hard to replicate so, it's a big loss for them and the bigger problem for at&t is not hbo it's, whatever you do with hbo, how do you keep the revenues that they get from turner and warner brothers studio at the same time? >> and all these people hating on this series finale and this whole last season, does that have an impact on potential prequels or sequels that hbo may develop around this franchise? >> i doubt it. you know, look, if people are talking about it, they're emotionally engaged. >> watching it, right. >> that part to me seems a bridge too far. >> okay, craig great to see you, sir. >> good to see you. >> thank you for coming in. when we come back, a special first on cnbc interview raphal . they are focusing on artificial

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to start a college savings plan, find an advisor at massmutual.com ♪ welcome back to "squawk box. take a quick look at futures right now. let's show you what's going on ahead of the market open in just about an hour from now, the dow looks like it will open down about 135 points off, nasdaq off about 108 points, and

the s&p 500 looking open down as well, off about 20 points. coming up, we're going to get you ready for the start of the trading this week with a rundown of this morning's biggest stock movers, individual names. plus, the signal that markets are heeding that you need to hear about market technician chris verrone from strategas research partners with information every trader will want to know. stay tuned at comcast, we didn't build the nation's largest gig-speed network just to make businesses run faster. we built it to help them go beyond. because beyond risk... welcome to the neighborhood, guys. there is reward. ♪ ♪ beyond work and life... who else could he be? there is the moment. beyond technology... there is human ingenuity. ♪ ♪ every day, comcast business is helping businesses go beyond the expected, to do the extraordinary. take your business beyond.

♪ welcome back to "squawk box" on cnbc live from the nasdaq market site in times square. how quickly can you find out >> you mean -- >> is it a universal >> give me a second. here are the stories investors will be talking about today. gasoline prices are down by 3 cents over the past two weeks. according to the latest lundberg survey the average price is down to $2.93 a gallon >> i don't know.

john wick, chapter three parabellum topped the weekend movie box office it unseeded "avengers: endgame" for the top spot, bringing in $57 million in american ticket sales. it's the most successful opening weekend of the three john wick movies which i just can't take the guy from "bill & ted" seriously as like an action hero. i'm sorry. i mean, i see him and -- >> don't forget "the matrix," though >> i'm thinking of the hair in "parenthood," half of the head was shaved do you remember "bill & ted" >> i never saw that. >> enter saw any of them >> no. >> i'm stuck it's hard for me -- but he was in "speed," too -- >> and he was in "the matrix," which was -- >> that wasn't real, though -- >> he was a surfer, too. >> "point break.

all right, but it's not universal, so i can make fun of him? >> i don't know. who's lionsgate. some welcome news for boeing -- >> john malone. >> okay. reuters reports that boeing has won an order for wide-body jets from new zealand, following an 18-month competition with airbus air new zealand is said to have chosen the 787, the boeing dreamliner, 787 dreamliner, to replace eight older jets. now to a story that is getting a lot of buzz. billionaire robert f. smith just gave the ultimate graduation gift to morehouse college's class of 2019. >> on behalf of the eight generations of my family who have been in this country, we're going to put a little fuel in your bus now, i've got the alumni over there, and this is a challenge to you, alumni -- this is my class, 2019.

and my family is making a grant to eliminate their student loans. >> he's like, what >> wait -- >> see those guys behind them. you've got to show that again. right when it happens. watch the guy -- >> looking at the guy on the left. >> on the left screen -- >> wait, i wasn't listening. what was that again? >> what was he saying? >> he said he's erasing the student loan debt for nearly 400 graduates. the value of his donation is estimated to be worth up to $40 million. watch. here comes the face. what >> wow. >> it was a surprise it wasn't in the teleprompter. smith actually challenging the class of 2019 to pay it forward, but i wonder how many commencement speeches he's been asked to give next year. >> yes >> and by the way, how many billionaires who are going to be now invited to give commencement speeches next year. >> hint, hint. >> hint, hint. oh, we are just a few weeks away from the fed's next meeting with no shortage of debate on

whether the economy needs a rate cut or a rate increase whether we're likely to get anything other than the central bank holding steady is another matter altogether. let's get out to steve liesman right now. he is joined by a very special guest with some very unique insight into those questions steve. >> becky, thanks a lot i'm joining you from the atlanta fed's conference in amelia island with president of the atlanta fed, raphael bostic. thanks for joining us. >> it's really good to be here thank you. >> i could do worse than start with becky's question. i think i'm going to follow her lead a lot the question in the market, is the next move a rate cut or increase, and how will we know >> i actually can't tell you what that's going to be. from my viewpoint, there are risks in the marketplace which would suggest the economy may perform worse than we'd expect, and in that case, it'd be a cut, but there are other risks that would suggest the economy might actually do better suppose that the trade negotiations end up in a way that is beneficial for the u.s. economy. we might see a lot of the uncertainty be viewed as going

away, which could trigger a lot of investment and really heat up the economy quite quickly. >> let's go through that one point. that's obviously a broad range of issues. but how does the idea that the trade problem could go away in a tweet or some kind of deal that would be made change your ability or affect your ability to address it? >> well, let me walk you through this. >> yeah. >> it will affect, in my view, how businesses view their future potential. >> right. >> and when that becomes clear, then the trajectory of the economy will become clearer to us, which will then affect how we expect the economy or how i expect the economy to move forward, and then that will then, in turn, suggest what an appropriate course for policy might look like. i talk to business leaders all the time they tell me, i don't know what the rules are going to be a year from now, so i'm just going to wait and if things go one way, then there will be this course of action if they go another way, then

there will be a different course of action. and so, right now i've got to just be open to the possibility that businesses can do either, and that has different implications for what the right course or policy would be. >> the message you're hearing from businesses is this is putting a damper on investment >> for the long term, certainly. there are a lot of businesses that are standing on the sidelines just waiting to see how this resolves. and then once that happens, then capital will be deployed in ways that should increase productivity and production. >> let's talk about your base case i know it's hard to sort of say, well, if this doesn't happen -- but if you said, what is the most likely outcome for the u.s. economy this year? >> so, my base case is that the economy will continue to perform in a very solid way with solid growth last year the economy grew over 3% my base case is that it's going to grow less robustly than that, sort of on a trend to get back to a long-term sustainable level, which in my model is about 2%, a little less than 2%. so, this year, 2.25% to 2.5% is something that i would expect to see happen

and in that space, you know, we should just let the economy do that >> okay, so a base case outcome requires no response away from the fed? >> so, base case -- it depends, right? so, all of the -- i'm an economist, so it always depends. >> you need both hands and a few more. >> exactly but in general, my view is, as long as we don't see inflation running away, that would be the sign that our policy is basically at a neutral level we can sustain that for a long time and we don't have to move so i'm really trying to keep an eye on what's happening in terms of pricing pressures to see if there is evidence to suggest that we might be providing some extra stimulus in our policy position. >> talk about inflation. one thing we heard was that the chairman believes that the low inflation is potentially transient. how concerned are you about the fed's long-running inability to hit its 2% target? >> so, i'm not super concerned about that today, and mainly is because when you look at inflation expectations, they

haven't started to trail away in a significant way away from our target, which has been in the 1.8%, 1.9 range. our target is 2% if i started to see a trend moving down to 1.5 or 1.25% for inflation expectations, then i'd be concerned but right now i don't view our lack of hitting that target exactly or even going a little bit above as being a material failure. >> i've got two more things i want to ask you about. first of all, the market seems substantially priced for a rate cut. i'm sure you watch the probabilities. 50% probability of september, up to 87% in january. is the market offsides here relative to the fed and your expectations >> well, the market is ahead of where i am so, i would say i'm not expecting a rate cut to be imminent, certainly not by september. things would need to happen in order for that to play out so, i'm just -- i'm taking a wait-and-see action. my view is that people should have an expectation, for my approach to this, that i'm open

to moving either direction and right now i'm not really tilted to the cut side as opposed to the hike side. >> do you worry that the market gets too far away from the fed and the median expectation of the board? >> so, i do worry a bit that there is a momentum in psychology, that sometimes the data doesn't completely match, right? and so, i try to stay as much as possible grounded in the data that i see, in the information that i gather. and the information i'm gathering is not suggesting that we're going to have significant weakness in the economy, which would really warrant a cut in our rate >> when i look at your district, it's every piece, everything that's going on in america is in your district -- tech and banking and agriculture, trade, everything that's going on give us an idea of how the district is doing relative to the u.s. economy >> well, as you said, our district is a real microcosm of the u.s. economy we're one-sixth of the u.s.

economy, and the distribution of sectors almost exactly mirrors the distribution of the country as a whole so we really do represent the country. i will tell you that in my going around, businesses are confident, they're excited, they're pleased with how things are going. they're not expecting it to grow as strong as it did last year, but they're also -- i have not heard from anyone the idea that there is a material weakness that's happening consumers haven't changed their approach to the economy in a material way so we're just sailing along in the sixth district and my hope and expectation is that we will continue to do that for the rest of 2019 >> president bostic, thank you so much for joining us. >> it's good to be here. >> appreciate it guys, back to you. from amelia island, florida. >> nice place for it, steve. and that gives us a lot to kind of run through the idea that he's open to a move either direction steve is going to nod i don't think he hears me. but yes, he said a move either direction.

it would be surprised to see a rate cut even by september anyway, when we come back, we've got your biggest morning movers we'll get you caught up on what's making news ahead of this monday market open and the latest technical signals that traders are watching closely market technician chris verrone, st ted ayun you are watching "squawk box" on cnbc my time is thin, but so is my lawn. now there's scotts thick'r lawn 3-in-1 solution.

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welcome back to "squawk box. a lot of spoilers anywhere you look on "game of thrones." i'm just going to tell you -- did you see they found a water bottle >> that i did see, but we talked about a coffee cup they found a week ago -- >> after that, they found a water bottle it happened again. >> two water bottles. >> shocking. if you have a tv series that people are paying that much attention to, that's awesome. >> do we know for sure that they didn't have plastic water bottles? i mean -- >> they had flying dragons. >> flying dragons, zombies that come back to life. i mean, they had, you know, she walks in fire -- >> but you can't suspend your belief for a water bottle? >> the guy came back to life -- i don't know you can have a stupid plastic water bottle if that other stuff is possible. sork sorkin >> no. >> and iphone i don't think they have >> anyway, the futures -- but they're not worrying about the spoilers, the papers or anything i'm trying to avoid all of them, but stuff is jumping out at me about what happened on "game of

thrones" that i didn't really want to know, deaths and all kinds of stuff down 144 on the dow. the nasdaq, this huawei stuff really hitting technology hard, down 113 points. meanwhile, telecom stocks are on the move after a reuters report said the fcc is preparing to announce an agreement on conditions for the proposed sprint/t-mobile merger the fcc won't formally approve the merger today because it still has to draft the order, but you can see that there are some big gains across the board in some of the telecom players today. okay, we are now less than an hour, maybe less than 45 minutes until the opening bell opens on wall street and dom chu is back in action, joins us with some of the morning's biggest stock movers dom. >> i'm not moving so quickly because i did watch the "game of thrones" finale last night, as to your conversation. >> did you spot the cup? >> it was a water bottle this time but yes, i mean -- it's amazing when the show can do whatever it can do to make everybody mad at

the same time. anyway, i won't say any more for joe's sake shares of target are up just around maybe 0.5% or so, roughly 1,500 shares of premarket volume reporting earnings this week, getting upgraded by morgan stanley, now equal weight, prior underweight. they're keeping the price target at $67 they're citing some improving trends in profit margins, also that shares are priced with low expectations on said margins they call target a retail survivor alongside names like amazon, walmart, and costco, so those shares on the move right now. also shares of general dynamics rising by around just maybe a percent or so on very thin premarket volume the builder of tanks and nuclear submarines, corporate jets, got upgraded to a buy from neutral at goldman they cited low relative valuations compared to other defense contractors as well as better margins on gulfstream jets and growth in tech services so those shares up by about a percent or so. and we'll end with deutsche bank u.s.-listed shares are down 2% or so. roughly 50,000 shares premarket.

analysts at ubs downgrading to sell from neutral. they don't think operating conditions at the emballttled lender are going to get better soon and strategic options including possible mergers are either stopped or stuck for the time being so those shares -- and i just want to point this out because joe did mention it -- the huawei/google/alphabet tensions that are developing right now are carrying through, of course, in the technology stocks generally speaking, but chip stocks the focus exile yix, qualcomm, nxp, micron and intel all moving lower as supply chains are disrupted. china a huge part of the story with regard to technology companies, specifically chips. so chip stocks ones to watch in the premarket. >> on deutsch -- i'm thinking of doug braunstein, the activist who went after them a couple months ago -- how much has that stock come down? >> we're flirting around record lows right now for deutsche bank shares the whole idea is that these

guys need to find some kind of a partner. that's the thesis for many traders out there. it was going to be commerce bank, maybe. right now it's maybe -- is it uni credito in italy could it be somebody else? the idea is that they don't stand alone, so if somebody buys them out or they merge with guyt stand alone. >> how much do you think this is a reaction to the news and donald trump the bank is not filing on the governor on him and cushnjus jad kushner. >> they level a lot of what's happening with the interest rates and environments yes, the deutsche story focuses on donald trump at some point. i am not sure if that's the primary driver for what's happening with the overall trend and deutsche >> i am wondering whether it is

the ups downgrade that's moving the stock. >> it is fair to say it is both of them at the stage right now yes. the trump's story is going to be a factor in display here with deutsche stock, just put up a one year, that's kind of crazy. >> our next guest says patience through pain here to tell us what's working is chris verome. >> the normal corrections given the move off the center lows you see something everything watches. that's a five-day put call ratio that reached negative, it gotten so high that people are betting against the market >> that's maybe indicating we

are near bottom? >> let's remember 25% rallied off the lows i doubt we are through this quite yet. when you look at what condition tend to present itself near a low, we get extreme and price and sentiment. we start to see that a little bit. you have a big spike in volume via options market people are uncomfortable secondly over the last two weeks, you see a big out flow. the picture is starting to come. what we are waiting on are those extre extreme in price i would focus on the 27 or 50 level. we want to step in and buy this market this is as normal pull back after a big move >> down to 2700 would certainly be something that would get our attenti attention, right >> from high to low would be

about down 8 in any given year the pull back is about 11. just in context of what we intend to see. >> so the segment, there are things that looked better for you here what's the leadership that you see, consumer discretionary. >> especially with home building and the lenard when you expand discretionary, restaurants are traded well. the groups that you say tied to consumer here. >> technology, today is not the day. >> we are close to a wash out. semi and particular, get that down to 15% or 20%, you will get a very good actionable over sold condition and we are stepping by

it chris verone thank you. let's head down to the new york stock exchange jim cramer is joining us are you going to tweet anything about tesla today? did you see where that thing is? >> the bonds are down badly. the model 3, talk about demand, nobody talks about demand after the pricing oing of what looks e for elon musk and bad for the people that bought it. it is a cold stock there will be people stepping in on every increment the research read very badly it is a shame because i think the story has been bunched by the fact and people are still wondering. this is the first time, we got enough model 3's that's not reflecting production, it is reflecting demand it is resonating negatively on

the street >> you see this news that's just in fcc, sprint and t-mobile set to announce an agreement on conditions with merger from rig reuters. >> this is good news i know david is working on it. look at t-mobile i think a lot of people felt that the 5g argument would not take precedent clearly our government wants us to be a leader in 5g everything we are doing huawei's negative for 5g. it is remarkably positive. we are all really negative i am not playing that way but that's what some people are doing. >> you look at some of the other ramifications of huawei. chip stocks today, we heard they are getting close to boggling

out. it is tough sledding >> it is trading that everybody is going to get it we didn't build this into our numbers so we cut numbers. do you see the stock is knocked down as much as the other stock. if everybody came at you and said listen you got to take numbers down that's how you will get abbott watchm watch momentum there are other customers besides huawei >> we'll see you in less than four minutes >> i am trying to be as negative as everybody i am going to work on it >> next me, i got some tips for you. >> i can learn to be negative. >> don't miss the big interview on mad money jim speaks with strauss zelnick. he does look good in the 60s >> i know we asked him that.

62 or something. all starts at 6:00 p.m. eastern time stay tuned, "squawk box" will be right back to inspire confidence through style. ♪ i'm working to make connections of a different kind. ♪ i'm working for beauty that begins with nature. ♪ to treat every car like i treat mine. ♪ at adp we're designing a better way to work, so you can achieve what you're working for. ♪ oh, sir. that was my grandma's. don't worry, ma'am. all of your stuff is in ok hands. just ok? they don't give two and a half stars to just anybody. here you go. what's this? it's your piano. hold this for a sec. we don't have a piano. no.. but the neighbors do. just ok is not ok. especially when it comes to your network. at&t is america's best wireless network according to america's biggest test. now with 5g evolution.

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let's take a final check on the markets today. we have seen the red arrow gets

worse as the morning rolls on. half hour of the opening bell. s&p futures down by 22 nasdaq is off by 123 points right n right now. make sure you stay tune for "squawk on the street. we'll see you back here tomorrow ♪ good monday morning, welcome to "squawk on the street," i am carl quintanilla, with jim cramer and david faber is back it will be a busy week with retail earnings and fed minutes and sprint deal. europe is not liking the tone on trade. germany is down nearly 2% and the ten year yield our road map begins with trade