headquarters in san diego, california, it's 11:00 a.m. on wall street and "squawk alley" is live. ♪ i fought the law and the law won ♪ ♪ the fought the law and the la won ♪ ♪ i needed money because i had none and i fought the law and the law won ♪ ♪ i guess my race is run ♪ she's the best girl that i ever had i fought the law and the law won ♪ good wednesday morning welcome to "squawk alley." i'm carl quintanilla with morgan brennan and jon fortt at post nine dow down 93 points on a busy day, mnuchin and china trade or the story right here, qualcomm. >> yeah. we're going to begin with that on pace for its worst day since january 2017 shares falling you can see down almost 11% on the news that federal judge lucy koh ruled the company unlawfully

hindered competition in the mobile chip market using its dominant position to charge excessive licensing fees the chipmaker responding it will seek a stay and appeal joining us pat morehead of moore insights and strategy. good morning i know that you thought that qualcomm made a strong argument in this case, called it a clown show, i believe. the judge felt differently and specifically on a couple of points that you brought up in your criticism of the ftc's position, she said that documents showed that they did kind of push a no license, no chips strategy, that their -- that they weren't credible in how they presented on the stand. of course intel has dropped out now of the 5g chip market. does that change things for you and how you view this case >> so jon, i've been covering

these things for about 30 years, and i think it's a bit of a travesty here and i think primarily is the ftc and the court didn't show that anybody was damaged -- consumers, chip set makers, and even handset makers certainly apple is making truckloads of money. there was a lot of competition in there until intel dropped out, and quite frankly, we've seen costs for megabyte go down 10x. i'm surprised and it seemed like in the 230-page report, koh was regurgitating what the ftc was saying, and the issue, though, is that she got a lot of her facts wrong. i mean, even basic stuff like qualcomm creating device-level licensing. that's factually inaccurate. ericsson created that. the star witness, carl shapiro, the economist, who issued a

theoretical base, wasn't even cited in koh's reaction here what this all means is, i think there's a very high probability for a stay and an appeal here. >> so you think qualcomm's got a shot on appeal based on -- you think they have an argument on the facts here >> oh, absolutely. the facts of the case, that are in the report, the lack of even bringing in the offense, the ftc's star witness, who was carl shapiro who just talked theory because to be found guilty of this you have to not have a theory you can be anti-competitive but actually show harm. facts were that nobody actually got on stage and said that qualcomm didn't ship us chips because we didn't have an agreement. i think this is going to be very quickly appealed qualcomm's already trying to appeal it. i think they will get a very

quick stay and i think this will be overturned. >> pat, would this depending on how all of this shakes out, if there's an appeal, would this spur more competition? >> so i actually don't think it will one of the remedies that koh had put in there and the ftc wants is to have -- get away from the device-level licensing at a chip level. what that's going to do is benefit only the larger handset makers the smaller handset makers are going to have a lot harder time ash traiting with all these licenses instead of it being simple with a device, i now have a device for the chip i have a device for the license and some of the devices for the telecommunications equipment to me this is going to lower competition for decreased competition for the handset makers because it makes their life a lot more difficult. >> i guess you could argue that if the market looked

differently, if qualcomm had conducted its business differently, maybe intel could have made a better go at it, say in 5g. granted they're still in lte 4g chips, but i guess you could argue that market entirely would look different if qualcomm had conducted itself differently, couldn't you >> so i think it's a little bit of a stretch i think we have a unique situation in tech where the company qualcomm was so far ahead because they're investing so much more in research and i don't want to conflate research and development, they're different. qualcomm has high r&d and they spent in research to invent these technologies and therefore i see it as punishing the person who is ahead by multiple years there's no other company making the investment that qualcomm is. jon, i don't think this would have been brought more competition into the market. >> well, for more on the

regulatory and political angle to this story, let's bring in aei fellow and cnbc contributor james. good morning >> good morning. >> what's your take on how this is likely to go from here? the trump administration seems to be trying to protect qualcomm >> i thought qualcomm was supposed to be our national champion and great global 5g war. probably doesn't feel like the national champion today, which makes it really odd. this was a case that started 2017, things -- this is two years later. things have changed. where now we kind of view ourselves in the middle of this tech cold war, particularly as it results to 5g, and so this ruling is very much at odds with how the administration views tech companies like qualcomm >> yeah. jimmy, to dig into that more, especially this idea of a tech cold war between the u.s. and china, how would this, if this ruling were to stand especially if it goes through appeals and a similar, you know, outcome is reached, how would this affects

u.s. policy for 5g >> listen, i -- pardon >> in terms of 5g? >> right, right. so, you know, the administration sort of needs to figure out what it wants to do there's this perception that we're behind running through these ideas, some of which involve nationalization of some sort or create something sort of new kind of market for the spectrum, but certainly at the core of this is a belief that u.s. companies should be taking the lead and that companies like qualcomm really should be, you know, spearheading our effort. i wonder if, you know, that -- if we would have done this -- if our view of this cold war was the same two years ago, as it was today, if we would be here right now. i don't think at this point, even though the administration has kind of attacked big tech more generally and companies like amazon and facebook, it also views tech as key to combatting china and key to

extending our influence in technologies like 5g where we want to be the ones leading in technology and creating the sort of standards that are important tomorrow >> pat, i want to get back to you on the risk that investors should be factoring in here. what do you think of the chances that apple and others now come back and say okay, we've got these deals, but we want to renegotiate? >> yeah. i do not think that apple is going to come back and renegotiate. my understanding is the agreement with qualcomm is rock solid, independent, literally factoring in anything, and i think the number one thing to apple is they want to not be a year and a half or two years late to 5g any mucking with this contract could interfere with that. the other thing as part of the settlement was that qualcomm and apple independently dropped all lawsuits around the world. there were literally 50 different ip lawsuits which qualcomm had won i don't think apple wants to go there. they made a very public

declaration that they're in with qualcomm for at least six years. i do believe they're working on their own modem. i just don't think that's going to happen. now, huawei on the other hand, this is interesting, i do believe the ftc and judge koh handed huawei and china -- gave them a gift today, and i do believe that huawei, who hasn't been paying qualcomm everything they should have, they're paying these small little payments but not in totality, i wouldn't put it past huawei to start messing with the payments to qualcomm, even though china's ndrc had been fully approved and the books have been closed on that >> yeah. it certainly does add a wrinkle to probably trade negotiations guys, pat, james, thank you. we'll see where this one goes. >> you bet. >> thanks. up next, legendary tech

investor bill gurley, his latest venture, uber ipo, silicon valley sentimentnd m aore coming up on "squawk alley" after this break. -driverless cars... -all ground personnel... ...or trips to mars. $4.95. delivery drones or the latest phones. $4.95. no matter what you trade, at fidelity it's just $4.95 per online u.s. equity trade.

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just this morning announcing a new round of funding joining us is benchmark general partner and board member bill gurley and samere, the ceo and co-founder of instawork. good to have you >> thanks for having me on. >> we love when you share your ideas and talk about what's important to you how does instawork fit in? >> long time ago one of benchmark's first investments was ebay which helped connect people with goods that were dispersed across the country and, you know, people didn't know exactly where they were and by providing that matching, you were able to create money out of nowhere. you were able to allow people to have trades that they wouldn't have had otherwise you know, many years later, with uber, you had the same thing you have a bunch of drivers and cars sitting around and people that need rides but until you have that layer and fabric that brings them together you don't really unlock the wealth and stude opportunity for both sides to benefit. what samere built is something

that does the same thing with the labor force. you have these events that represent business opportunities for the workers and a bunch of workers looking for jobs but they don't have the information connectivity that allows them to all thrive with intawork on both sides of the marketplace, not unlike the other two examples i gave, are thriving and seeing more opportunity as a result of using the service. >> yeah. samere, anybody who knows someone who runs a hotel or owns a restaurant, knows exactly how this would fit with their needs. how long has it been benefiting from the tight labor market and what happens when the labor market is not as tight >> well, if you own a small business, if you own a hospitality business, the labor market is always tight turnover for hospitality businesses can be as high as with 100% a year and so we're grateful that the partners that use us trust us to help them in situations where they're

staffing up, for example, to manage their uber eats deliveries during lunch time or if somebody calls out sick, no option at all, and so we're grateful to have the opportunity to service our partners, deliver them well qualified professionals in a fast and convenient way. >> bill, instawork is four years old and used to be companies that age were looking at going public are companies staying private too long >> you know i've had that point of view for a long time. i certainly think in the past year with spotify and dropbox and now uber and slack, that people have come to realize that the right path to a mature business is to actually go through the public market, so i think in silicon valley i think the temperament about stay private forever is kind of over and we're kind of back to realizing that that's the right path it's been a long time since people went public in three years, so that reminds me more of '99.

>> to dig into that more especially in light of what's been at least from a retail investor standpoint, weak public debut also it's lyft or uber, sounds like you thinks the pendulum is swinging and we will see more companies come to public, go public sooner rather than later now i guess what leads you to believe that >> well, i think that for, i don't know, the past five years, there's been a sentiment in silicon valley that you should, you know, stay private forever, but i think that once again, with the leadership moves that were taken by drew and daniel with dropbox and spotify and then that's now been followed by so many and we know others are in the cue, that puts pressure on those other people who can't deliver liquidity for their employees and i think we're going to see a shift >> sumir, do you view an ipo as something to be put off as long as possible or do you view it as

something else has your view shifted over the past few months as you've seen some of the market action? >> well, you know, we're not focused on financing i think they're merely a means to an end. our vision is to create economic opportunity for the millions of hospitality professionals who are working very hard across the country and small business owners, caterers, restaurant owners, golf courses, trying to simply staff in an unemployment climate under 4% >> yeah, but used to be going public was -- used to be going public was a part of that, raising a profile of your company, getting capital, kind of instilling necessary discipline to fulfill that mission and it seems like lately we're not looking at going public has been a way of a start-up saying we want to stay private as long as possible so we don't have to have that scrutiny, i wonder if you think that perspective is shifting >> i would just look at bill's comments on that matter. we're excited to have $18

million from spark and google ventures to help us move forward on our mission and i think we're always going to look for more ways, whether it's capital or hiring great people to move one step forward every day in acheefk our vision. >> bill, i don't need to tell you how much has changed since the last time you were on, whether it's so much has happened in semis, people now are using words like the digital iran curtain in the dispute with china, how do you think this is going to play out over the medium term and how is the valley viewing all of this >> yeah. look, i'm -- i'm a traditional free trade capitalist. i think that when you open up borders and open up trade it lifts things for both sides. i think you would have to ignore most of modern economic history to have a view otherwise i think the longer it plays out, the more negative it is. i think people will start to realize all the secondary and

ter sher rarely ramifications of that and hope they find a solution soon. not all of our companies -- instawork as an example works specifically in the north american market and not all of our companies have exposure. certainly a lot of the big ones do, and i think there are a lot of, once again, secondary ramifications that will be discovered later that are not going to be positive >> bill -- >> what do you pemean by that what would be discovered later that would not be positive >> just like, you know, supply chains that have to transition and how long those will take and, you know, people just ha haven't unpacked all the different changes that are going to happen if we go to a completely closed border with the second largest economy in the world. >> what would it take for a pitch right now to you, that would involve being exposed to china? what would it take for you to get to say yes >> i don't think i would

consider it right now. >> just across the board. >> yeah. i mean, we don't -- we haven't historically been an investor in china so it would be a better question for one of the firms that has businesses in both countries. >> the other piece of this when you talk about borders, sumir is immigration, a hawkish stance on that with the current administration, despite the fact that you have actually seen higher allowances of h2 b visa are fos this year, how does that play into your business and ability to match workers with companies? >>. >> well, i'll start off by saying, you know, immigrants and immigration is a very important topic here in silicon valley, obviously my family, you know, we're immigrants to the u.s. and a lot of our employees at instawork are immigrants, but, of course, a very big portion of the hospitality industry, the pool of professionals that make restaurants and catering companies successful every day

are immigrants i'm always personally excited about opportunities to bring really talented, awesome folks from around the world to the country, not only to help stainwork in our mission but to help our partners as well with their staffing needs >> bill, what is silicon valley's impact on labor when you look at instawork and uber there's a lot of criticism rising that the worker and worker wages haven't had enough leverage how do you view your investment affecting the labor market >> well, as i have spoken out before, you know, within a very short window, uber created 3 million jobs around the world and i don't think there's been a precedent for that for someone creating that much job growth that quickly the piece that's always missed and if you have traditional companies on, i would love you to call them out on this point, whether it's uber or instawork,

everyone goetsz chooets to chood where they want to work every day. they don't have to come in on tuesday if they don't want to. if they want to take a week off they can there's no job on the planet that has that flexibility. you can't go to starbucks monday, tuesday and then take four days off. you can't -- you can't you can't do that at mcdonald's or walmart when we talked to the people on both of these platforms, that matters to them a ton and so there's an economic value that comes with that freedom and flexibility which is why they're opting in. we have record low unemployment and these services are thriving just that kind of reality so say well is what these people saying really true. that flexibility point we hear time and time again in all the survey work, and so when people compare to a traditional job and say it should have x, y, z because a traditional job has it, i would push back and say a traditional job doesn't have this other component that's

really meaningful and powerful to these people. i'll let sumir make another comment about the wages on instawork. >> well, i just want to highlight in that spirit, our professionals make on average 150% of minimum wage in our two earliest markets, the bay area and l.a., and 80% of our gigs get picked up within an hour we have an industry leading insurance program to support our professionals, so in addition to the freedom and flexibility that bill mentioned, we are simply offering tremendous economic opportunity for all the great professionals that choose to be on instawork >> and finally, bill, i remember you coming on with me and jon either a couple summers ago we talked about uber, we talked about the checks that people would send in when they sold their cars, reflections on the ipo? even though we're only a couple weeks in >> the first thing i would say, i do reflect back on a time two years ago and if you would have told me that i would be sitting

here talking to you about uber being public i would have been thrilled you know, we've come a tremendously long way from that point in time. i think dar and his team have ton a tremendous job of getting the company in a different place and solving a lot of the issues that had existed at that time. so, you know, just -- part of it is just a huge, for me, appreciation for what he's done in terms of bringing the company to this place. >> bill, thanks. congratulations on the funding round. we hope you will come back sumir, appreciate it very much and bill gurley joining us from out west. take a look at the worst performing stocks in the dow so far in today's session cisco, goldman and apple dow is down 75 points right now. right near the lows of the day a lot more "squawk alley" straight ahead i'm working to make each day a little sweeter. ♪ to give every idea the perfect soundtrack.

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european markets set to close momentarily on a see-saw day. seema moody joins us with a breakdown. >> sort of a mixed picture across europe, germany and the uk higher, france, italy and spain down on the day. banks dragging the markets lower. the stock 600 bank index sitting roughly 4% below its december low, but sharply over the last couple weeks amid growth concerns across europe the italian bank index falling below its 200-day moving average and down today pivot to tech too. the sector is higher but the huawei fallout continues as the u.s. is considering black listing more chinese firms two of britain's wireless carriers are halting the launch of huawei phones on their 5g networks softbank owned armed holdings is reportedly suspending business and two japanese firms

softbank's y mobile, kddi, have said that they're postponing the release of huawei's newest phone scheduled to launch later this month. there are some potential winners which i don't think we're discussing enough. since the trump administration first announced these plans to crack down on huawei, european telecom providers that are working on 5g are up substantially. you can see ericsson up about 10% and nokia up nearly 8% back to you. >> seema moody, thank you for pointing that one out. let's get over to sue herera for a news update. >> hello, morgan and everyone. here's what's happening at this hour house speaker nancy pelosi says democrats in the house believe president trump is engaged in a cover-up she spoke to reporters following a meeting of house democrats >> it's important for the -- to follow the facts we believe that no one is above the law including the president of the united states, and we believe that the president of the united states is engaged in

a cover-up north korea labeled joe biden, quote, a fool of low i.q. and an imbecile as a human being end quote after biden called kim jong-un a tyrant and accused biden of insulting the country's supreme leadership surveillance footage from australia showed what was believed to be a meteor lighting up the night sky as it crashed down to earth. residents on social media posted images and videos of the light phenomenon the astronomical society of australia said it was a piece of space dust about the size of a marble which is amazing if it can cause that kind of reaction as it enters the atmosphere. that is the news update this hour i'll send it back downtown to you. carl >> that was a feel good news update thank you. >> got it. >> as we go to break, get an update on shares of qualcomm down double digits on pace for worth day in a couple years. although the dow has been all erheapdo 3potst ov t m, wn5 in a the moment

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welcome back to "squawk alley. china and the u.s. battling over tech and how will recent trade tensions impact competition the key question steve bannon telling the south china morning post saying the next move we make is to cut off all ipos and pension and insurance companies that provide capital to the chinese

capitalist party joining us to discuss this in the broader market, msa managing partner, ben and early stage fund angel investor gwen ben, your reaction to comments like that? we've seen private capital in terms of the flow between u.s. and china dry up dramatically in the last year or so? >> it's something we worried about from the chinese side as sif fees you came into play more so on the u.s. side there would be rep percations on tblocking the u.s. investors most in china you see, the alibabas and emerging ones, if you look at their cap table many of their largest investors are venture capital firms backed by u.s. pensions, endowments and et cetera many of these griptsz owned by the american public. our view is the chinese might cut off some of the flows and a lot of other people willing to

pick up that mantle. the sovereign wealth funds out of the middle east, southeast asia, are very much interested in increasing their exposure to the market. >> gwen, the nasdaq has said in recent weeks when you look at the ipo pipeline in the u.s. quite a number of companies are expecting to go public are chinese. do you think comments like this and the broader stance being taken in the midst of these trade talks and issues with huawei, et cetera, that could change >> i think there are two things at play here one is, the spat over huawei is not just over a cell phone provider it's one of the biggest network equipment providers globally a third of the global market share, twice that of qualcomm, so the fight is over both the dominance in 5g infrastructure >> ben, how much of this damage is permanent and how much of it just sort of evaporates if

there's a trade deal >> certainly there's a sentiment some of this is a bargaining chip in that process but i do worry about a lot of decoupling that's gone on. from a u.s. context we're trying to decouple american supply chains from china, the chinese are trying to do the same with us and view this situation as generating an environment where the u.s. is no longer a reliable counterpart for them so as you see a reduction in imports of u.s. chips, if huawei does make good on its, you know, commitment over the last two days where they've showed their hand and said they developed their own operating system and own domestic chips, today china is 40% of the global chip market, only 10% is domestically produced, everything about the growth of chinese tech over the last few years has bucked all trends in terms of the timelines that we thought this would have evolved. while they don't have the domestic chip industry today events like this over the last ten days will accelerate that evolution and if we don't have american chips flowing in there,

they will develop them elsewhere and if we don't have american operating systems, android systems in the phones like the huawei phones, they'll develop their own which might -- >> sounds like made in china 2025 >> gwen, this was sort of the topic of an op-ed yesterday and we've had analyst at our desk in the last 24 hours arguing depending on the type of chip that your 'talking about when it comes to huawei and communication chips, they have built enough ahead of steam where they could develop supply chains, is that true >> so they have sort of stocked up three months of supply, huawei has, and they've been developing their own operating system for months, maybe years by now, but still haven't made that gap between when google andro android sort of stopped servicing them the other part is cifius which is an acronym that stands for committee on foreign investment in the u.s., stopped two deals

last year and financials acquisition of money gram and the bid for qualcomm the interesting thing it's reached back to divest past deals, so technology in beijing has agreed to divest grinder by next year, so it's interesting that blackmail risk is now part of national security risk. >> gwen, if memory sefrves you'r in the process of raising a new fund yourself, would you invest in china or companies with exposure to china? >> it's important nowadayses to keep in mind capital does not flow freely across borders cifius reached back to block two deals. not only is it important on the investment side, but also it's important to look at who your lps are. in 2017, cifius blocked two deals for u.s. companies

it's important both ways >> all right thank you both for joining us today. i suspect we'll be talking more about this in the days and weeks to come. ben and gwen >> what to expect from amazon's shareholding meeting that starts not too long from now. first, rick santelli, what's on your mind today? >> of course i'm paying close attention to interest rates and after an interview with dr. shelton on a similar topic today, we're going to discuss is the mechanism by which all central banks seem to play and change rates is it good tethbrk.e alter it afr e ea

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because when it's decision time... you need decision tech. only from fidelity. here's a look at what's coming up. one of the best known strategists on wall street before going on his own, adam parker is back with us for the hour today on all things markets. we're looking forward to that. new fears about apple earnings and a price cut for the stock debating where shares could trade and our call of the day puts suds in the spotlight is budweiser your best bet right now? one firm says yes. we'll find out if our investment committee agrees we'll do it at noon on the half. about 15 or so away. we'll see you then >> all right see you then let's get out to toronto and deirdre bosa at the collision conference with a special guest. >> good morning, guys. that's right we've got palmer luckey, founder of oculus, acquired by facebook

in 2014. left a few years later and started your own company, a tech defense start-up called andrill. i want to start with the sort of tricky space of tech and government contracts today you have the amazon shareholder meeting, seeing backlash against the facial recognition technology, google trying to win government contracts as well, but a backlash from its own employees. what happens if american tech can't work with the government on some of these contracts this is your space you're operating? >> we lose and china wins. that's why i started the companies because northrop grumman and lockheed market they know how to build submarines and fighter jets but don't know how to build autonomous systems. you have big tech companies have scooped up the talent in the country, the best and brightest that america has to offer and refuse to work on national security problems for the most part you know they will sell them cloud services or operating systems but don't want to build tools partly for pr reasons and

ideological reasons and shareholder ideology reasons and so like i started this company because i wanted to have a place where smart people could work on these problems if we don't have more companies joining us we're going to have a bad time. >> now do they refuse to work with the government or so politically sensitive here and something you worry about yourself or andrill as you get bigger and particularly as they go public and somewhat near future and has more scrutiny on this area for startups, not just big tech >> i don't worry about it from my company because we're focused on building autonomous systems for the department of defense. nobody is going say you're helping the military, how dare you, that's the point of my company. the other problem with companies in the united states, for the first time the biggest companies in america are ones that think that foreign markets like china might be their biggest business opportunity in the future. imagine if they had been in world war ii or the cold war, biggest companies during the cold war said the u.s. is okay but our biggest business opportunities are going to be in the soviet russia place.

we have this misalignment of incentives where tech companies are thinking how can get into china and make chinese government happy and then on the other side our government saying the chinese are our biggest threat to our way of life. >> are you seeing that change a little bit amazon has retreated from china and google >> for the better part of a decade these companies are been entranced by the idea they're going to make their mega bucks in china you are starting to see them come around not because of any ideological change but the chinese are so resistant to let them operate there they're getting a reality check. the chinese will never let us in and if they're never going to let us in why are we doing this good stuff for them. that's one of the reasons you're seeing a turnaround on huawei with google and microsoft they're turning around partly because they're starting to see the threat and partly because china has been so restrictive in their market controls that they blocked too long and tried the game too long. our big companies are figuring out china is never going to play

fair with them. >> at the same time it's not just, you know, china needs to get into the u.s. and there's been a history of huawei operating here at least with the world carrier, how do you reverse that >> china has been -- we've been happy to have the chinese sell us stuff all day long and let their investors come into the u.s. to let their technology companies come into the u.s. you're starting to see more people realize it's not a fair dynamic. you can't have a one-way street where they steal our stuff and bring it to china and sell us our stuff that we invented >> you're excitinged about it and think there's enough government contracts so why aren't more startups in the defense technology space embracing this >> there's a few reasons first working with the government is really hard. there are only two unicorns,

investors are willing to invest. china has tons of companies, look at the top 100 companies most are new companies not old companies. >> tech involved there too morgan brennan who is an expert has a question for you in new york >> palmer and dre dra, great to have you on the program and talking about this i would push back and is say you're starting to see more investment in commercial space which you're seeing more contracts in the defense area, but i'm curious on sort of the rules of the road around artificial intelligence, facial recognition, some of the other new technologies, definitely an active conversation in silicon valley but definitely an active conversation in the pentagon and other areas of the government. what do you think that needs to

look like? >> so first of all you're right. commercial space investment is a really healthy sector and i wasn't taking that into account. not many other unicorns yet. on the artificial intelligence side i think that united states is broadly speaking the most moral country in the world, the most moral military in the world and i think the way for us to set norms, ethical boundaries in a.i. is to lead. not let china or russia lead the people who say we don't fund a. oorjts and let other people lead they need to realize the only way dictate the terms of a.i. if we're the leaders. imagine if we told russia how nuclear power would work we wouldn't have nukes. we have to be the leaders to have a seat at the table. >> while we have time left i want to get to facebook. you're with the company about three years. >> yes. >> >> you worked alongside zuckerberg and they fired you.

>> yeah. >> a part of the "new york times" op-ed he said i'm worried mark has surrounded himself with a team that reinforces his beliefs instead of challenging them do you agree with that >> i think that's true for almost the whole of silicon valley that's one of the reasons i left i haven't been in facebook a new years now. i don't know what the executive situation is i'm long gone from that world. but i do think it's a little simplistic to push it on one person this is a cultural person in the valley of a mono culture where everyone thinks they're doing the right thing for the entire united states and they often aren't that's bigger than any one person. >> zuckerberg is unique in that he runs one of the biggest companies in -- the biggest company in social media so you worked alongside him what did that look like while you were there how does he lead and are you confident that facebook is doing the right things and taking the right steps now? >> again, i think these companies are so huge, tens of thousands of employees, it's easy to pin it all on one person when you're talking about it from the outside, when on the inside you realize replacing one person isn't going to change the

way that things work i mean, i'm not even sure that would be the right thing to do a lot of times rule of the mob can be a lot worse than one person. >> surrounding himself with the right people, there's been a number of important of important people that have left. >> i left because i got fired. >> why did you get fired >> no reason at wul. california's an at will state. they can terminate you for no reason or any reason at all. i gave $10,000 to a pro-trump group and i think that had something to do with it. but at the end of the day i'm not convinced that getting rid of mark is going to solve the problems >> you don't facebook needs to be broken up >> i mean, i lean libertarian so antitrust is rarely the first way that i look. regulation is rarely the first way that i look. i think there's a lot of other things that can be done and if you break up facebook you're going have the same problems arise in other companies and i don't think we can afford to just go breaking up companies willy-nilly and sheryl sandberg did make a really good point and bringing it all back, if we break up our biggest tech

companies, break up our biggest economic success stories, china is going to have all the juggernauts and we are not going to be able to get china to break up their companies, that's for sure >> it all leads back to china. >> it all leads back to china. >> palmer, thank you for being with us and being so candid. back to you in new york. >> deirdre, thank you and our thanks to palmer luckey as well. we got a lot more "squawk alley" straight ahead we're back after a quick break

flurry of headlines from the president a few moments ago,

largely about the mueller investigation, which he says was a takedown attempt, adding, i don't do cover-ups, essentially it seems -- any hope with democrats over infrastructure or even drug pricing as he says he will not work on those until these investigations come to an end, adding that there's danger in the "i" word and by that, he means impeachment. market didn't react too violently to that but we're closer to the lows to the session than the highs let's get to rick santelli in the santelli exchange. >> just to add to that quickly as carl pointed out, losing a bit of ground in stocks and you know it seems like when stocks go down, interest rates pay close attention. when they stabilize or do better, not so much lately we dipped under 240. calibrating interest rates, you have the market, you have central banks. and most people's opinion that are affluent in markets, they think it should be a combination of both. but really lately it's been much more on the shoulders of central banks and we know there's a couple of vacancies on the board of governors for the u.s.

federal reserve and i spoke with one of the potential candidates to fill one of those spots it was dr. judy shelton. and one of the main issues she brought up is the idea, the mechanism that the central bank uses to move around interest rates, basically interest on excess reserves. the issue as i see it is that, you know, a central bank should be like an umpire or a referee in a sporting event or a guidance counselor or even kind of a, you know, there are financial psychologists right now in many ways, they always try to give us guidance and talk us through kind of complicated issues it sees down the road but at the end of the day, the main issue is inflation and maximum employment let's put maximum employment off to the side. on inflation, i agree with what dr. judy said today, that if you look at the notion of central banks trying to be this slayer of inflation or get it to grow, look no farther than japan

they've tried every trick in the book there aren't really a lot of tools here and they haven't really made any progress and if you look at what happened since the credit crisis, we have now metastasized things in policy that never really were used before, like interest on excess reserves and that many issues we still don't understand about something like this. but the point is, i think thinking outside the box would be a good thing, but like i said, you don't want to see major u-turns with big old line institutions so i am hoping that jay powell, who is unique fed chairman in his own right who's made pivots who seems to be a type of individual that's open minded to try to let markets determine more of the rate structure. and that may be the key point i'm trying to make, that at the end of the day, we need a ref. we need a little guidance, but we need the markets to do the heavy lifting and we need somebody brave enough to get us on that path carl, back to you.

>> all right, rick, thank you > quk leh. >>"sawaly" is back in less than three minutes. don't go away. there is no "my" in team. what did you think of... our idea? your idea? it's a winner. keep up my good work. servicenow. works for you.

>> announcer: is best buy the right buy for investors? first word in analysis on the numbers from the retail giant on "squawk box" tomorrow, 6:00 a.m. eastern. tons of movers today i know morgan was just looking at target up 9%. that's the best day at least

since november of '17. >> yeah. big moves on the heels of earnings with lowe's and nordstrom also down. >> and pure storage down more than 22 on the miss and lower guide. fed minutes going to give us a glimpse. let's get to the judge carl, thank you. i'm scott wapner, as goes apple, so goes stocks, shares falling again today, new warnings about the company's exposure to china. are earnings now at serious risk it is 12:00 noon, this is "the halftime report. >> announcer: apple's china trade war troubles just how much risk is in store for this stock, which is down 10% in a month plus, the return of morgan stanley's former chief equity strategist, adam parker, who believes that trade war is not priced into the markets. and wait until you hear what he has to say about the state of the grea