a morning it has been. the secretary of state sitting here on the set talking about the future of trade talks with china, which are weighing on the markets today. make sure you join us tomorrow "squawk on the street" begins right now. ♪ start spreading the news ♪ i'm leaving today ♪ i want to be a part of it ♪ good thursday morning, welcome to "squawk on the street." futures obviously weak a number of things working against the bulls today. more heated trade war rhetoric, weak pmis in germany and japan, europe markets are red 10-year yield lowest in about a year and a half and oil below 60 for the first time since march our road map begins with trade war jitters.

china says talks cannot continue unless the u.s. deals with its, quote, wrong actions futures point to a lower open. plus huawei's global headwinds. panasonic and chip designer halting business with the chine chinese telecom giant. more analysts warn of trouble. trade tensions between the u.s. and china sparking another global sell-off, according to a cnbc translation a spokesperson for the chien knees administration of commerce says if the u.s. would like to keep on negotiating, it should with sincerity adjust its wrong actions. only then can talks continue of course we heard pompeo on "squawk" a few moments ago talking about huawei's ties to the communist party and china as a national security risk. >> look, i don't understand in the basic constitution of china if you are a chinese company, your job is to work closely with

the security apparatus this has never been a shock. huawei has been doing this for years, it's just finally we care honestly, we never cared under trump we care. i am going to take a contrary view to what i heard about pompeo saying today. i thought he offered a path. i thought he was far less we're done with these guys look, they have got to make some changes. if they don't make some changes, there is no -- everything the chinese do is reaction to trump. they're not ahead of trump they're saying, listen, you shut us down. we're not going to talk. who in the administration wants to talk? larry did, larry kudlow. >> mnuchin may have wanted to talk. >> mnuchin >> he talked too much. >> lighthizer wanted to talk. >> but he doesn't want to make a deal he wanted that deal that was broken he wanted that deal. >> all of us leaves us where, once again talking about the same risks to the market has anything worsened over the

last 24 hours from when we were last discussing this >> europe is so not -- is europe not helping? do you know there's another story about deutsche bank. >> yes. >> trying to cut banking deutsche bank is the biggest black hole in europe theresa may -- sell her in may or in june. >> maybe tomorrow. they say by the end of the weekend we might have some news. germany down, flash pmi, 43.3. eurozone down four months. german confidence as a four-year low. >> negative rates. >> and negative rates, right. >> and our own 10-year at 2.37. >> why don't the chinese do some selling? give us some supply, for heaven sake that's contrary to what people are thinking we need chinese supply remember when we were -- we used to go out with people. i did some research for snl and a terrific guy said to me how hostage are we to the chinese bonds? i said, no, we need their

supply. >> wait a second, you did research for "saturday night live"? >> yeah. >> they were doing a skit on chinese holdings and treasuries? >> yeah. i'm the economist, chief economist for snl. is that a bad position >> no, it's funny right there. you see, you are funny you're a funny guy. >> am i a clown to you >> less funny is pompeo on "squawk" talking about china as a risk take a listen. >> you saw what president trump has undertaken with respect to china. for too long, this is not partisan, presidents from both parties had ignored the challenges that were presented to american workers, to american technology and to american national security that china presents he is pushing back in every element the decision that was made huawei had an enormous national security to it the company is tied not only to china but to the chinese communist party. the existence of those connections puts american information that crosses the

networks at risk. >> all right so also this morning, jimmy said what is the president's view of an american victory here it's no longer about the trade deficit, obviously pompeo is bringing up the uighurs and sort of mass incarceration. what do you think we want? >> it's about time people talked about that that doesn't resonate with our european allies. it's like they can imprison as many people as they want in germany they would be going nuts if it happened there. i think that the rhetoric -- you're hearing the word "communist." this is all part of that october 4th movement pence talked about. they're commune i'ves. when you hear communists, there's some people in the administration that want regime change that's a loser in my opinion. >> the fear is that both sides become more nationalistic, obviously. you keep hearing stories about korean war movies are starting to become very popular again it's one of the most popular streaming choices now. it's about the americans and the -- yeah.

so that may foment -- that's not good and then what other asymmetric responses will there be, if you want to lump huawei into the trade war, some would say it's really a separate issue. it depends on the view my world, of course, antitrust, m & a. >> where are you on -- >> that's a question i don't have an answer for you what technology company requires chinese antitrust approval we're back there ford is going to sign off on a deal where the prospect of waiting and waiting and waiting awaits you and the risk that comes along with it, it makes it more difficult so there's any number of different things that go well beyond just the back and forth between the two countries. >> one of the things we're not focused on enough, i was talking yesterday, you can blow up anything in this market. i was talking yesterday about the $2 trillion infrastructure and how it would help --

>> that's done. >> that was a bad meeting. >> which meeting >> is the relationship between our great friend president xi and crying chuck >> talk to the hand. >> yeah, it was talk to the hand. >> how about sleepy, creepy joe biden. where is he on this? can you imagine saying these things >> he called tillerson dumb as a rock this morning. >> he did? >> yeah. you didn't see that? that was a fresh tweet dumb as a rock. >> the guy was all right when he ran exxonmobil. >> there are some smart rocks. >> he bought a lot of stock back that was good. >> did he do the xo deal >> stop it, man, i once said that on air. i criticized them for paying top and they just criticized me. they blacklisted me. >> can i tell you, jim >> what? >> you were right, they were wrong. >> sometimes it's better to be wrong and have nice people be nice to me they hated me. exxon hated me. >> you've got to tell the truth,

at least as far as you're aware it exists. >> guys, to huawei's point, though, more companies are in fact halting business with them in light of the u.s. restrictions now it's panasonic joining a growing list of companies disengaging by halting some shipments of components. this comes after softbank announced it suspended business with huawei as well. >> this is the encirclement that -- god, the president is so uniquely inept at telling the story. he's actually got a coalition against huawei this is vital. you should be linking that we're not going to put tariffs on the autos to this worldwide purge of huawei >> meantime, you've got tyson reports that they're looking into investing $200 million in a plant in kazakhstan to avoid -- basically move production and recent sourcing out of china. >> boy, that hormel quarter was

tough because of the african swine flu. >> chipotle bleeded into that. >> hog prices are going up. >> when zoetta solves that, it will go right back down. it'stransient, david like the fed looks at inflation as transient i'm so tired of parsing the fed. i don't even know if they know we're parsing them. >> so when you put it altogether, jim, i've got the trade war going, you've got pmi weak, you've got the fed net hawkish, you've got d.c. acrimony, how can anyone wanting to buy this market >> the unionization of pets is a good story >> so it's extreme micro >> yeah. we're pricing in what should have been priced in a long time ago. i think a lot of us were surprised. you'd realize this is really negative for the market. now people are coming around to the hard line, these other countries. remember, huawei was the best because it was the cheapest and

it was good technology now we're discovering that it's -- we'd rather deal with samsung, rather deal with ericsson people hated ericsson but we're starting to be ready to compromise on quality and be sure that huawei is not the trojan horse huawei could be a trojan horse >> they have been saying that -- >> what will be the response to us putting out of business one of the most important companies in china >> by the way, the korean war, come on -- when he went to the communist chinese and said, listen, we're going to slaughter all of you, is that what you want we're killing all of you is that the movie they're showing? >> i haven't been getting -- >> i was asked to do a movie of that let me tell you, that would be a

bad movie. we literally went to them and said, listen, we are slaughtering all of you. we don't want to slaughter any more of you, will you please pull back? that's how that war ended? it never really ended. you went to it. >> yes, he was at the dmz. >> i went to the dmz. >> did that war ever end >> that was a year ago we were talking about detente and reunification. >> when i saw your -- i was so worried for you. because obviously to me it seemed scary. >> you guys can handle the show on your own. >> he was good >> that was some of the greatest -- >> carl is great in the field. not that we want him there all the time. >> you were in that row where the north korean soldier was. >> tourists go there, you know that, right? >> they do >> it was surreal. you have guys doing their march. >> i know those guys kind of looked like the toy soldiers. >> i tell you what's going to be interesting is going back to the olympics in beijing in a few years. >> oh, i know. >> what's that going to look like >> we're in japan next can you get a hotel room i think you can't get a hotel

room, 2020. >> they're doing a great job in tokyo. >> the chinese evidently throw a great olympics, right? a good party nobody can throw a party like the party. come on, that's kind of funny. >> that is kind of funny. >> thank you. >> that's why you're a writer for snl. >> that was good >> can we get a squeeze going on tesla? >> we'll talk about it. >> do you know ross gerber has more tweets than followers brand. >> speaking of -- >> who are you calling >> i'm not telling you. >> speaking of som of the past twelve. >> that's because elon's cannot tweet. we thought the s.e.c. was on cbs. turns out they're more active than ever. >> take a look at the premarket. dow is on pace for a fifth week lower. if that holds, haven't seen that in eight years we're back in a moment plan

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. looks like the buyers come on tesla in the premarket. shares are up. coming into the day, though, down for the 11th session in 12. tesla, of course, recently had

some issues recovering delivery concerns we know musk hasn't liked or tweeted anything in several days. >> no, no. i think one of the things that's really discouraging is that he's so levered to china. all the reports that are positive, and there are some positive, are saying, listen, it's got to work in china. it's just a very tough market to be levered to. yesterday the goldman piece about how apple's 29% -- people just said there goes the upside. i think people have been saying if you're really relying on china, look out. there's also been a lot of negative commentary about the solar project. so the long knives are out for elon and in return, he's gone silent on twitter, so you don't see -- there's no radical defenses. everyone is cutting numbers. you know what, there's just this whole skein of thinking it's either do or die, no one is in between. it's become a story about demand, not supply yesterday gabe hoffman was on

air, famous hedge fund manager, talking about the consumer reports and the 3 being shoddy right down to the paint. i thought that elon would immediately get on and say, listen, our cars have been -- we're going to take our cars to number one but we don't have any -- we. the bulls have no ammo because elon provided the ammo. >> for one thing, we're down 42% for the year, worse than any s&p name. >> wow. >> what if 4q deliveries surprised on the upside? >> well, that would be radical and it would be -- wow if that happened also if somehow the party were to say elon musk, he is exempt because he's putting all his cars there, then you have the short squeeze of all time. i don't know why the party would do that given the fact we've crashed the party. >> also we put in the context of global auto sales growth, we're now at the lowest since the great financial crisis. >> people say, jim, how did 3m

get to where it is they're a foreign auto parts supplier they also have a groundwater pollution problem. but if you're linked to auto, it's just the kiss of death. oil too. amazing underperformance of the oil stocks versus the price of oil, particularly the oil service. so you're getting a lot of like -- there's a lot of bad news being priced into the market now. >> for 12 months, energy is the worst performing s&p sector, down 18. the best, utilities, real estate and staples. >> i know. >> year on year. >> i was speaking to the fabulous ceo of ventas i was just looking at the winners, trying to find some winners in the winners wow, we are really in slim pickinsville when no sectors are up, you get a rally. >> it's funny, you remind me of

mike francesa does has a tweet we don't usually quote mike but he says the market is quickly becoming less about finding good businesses and more about managing the day's headlines. >> wow. >> to your point about looking for positive microstories. >> i know. again, when you have no positive microstories, you do catch a rally. and so i want to warn people that just when it's the darkest before dawn, i'm sure rosy feels that way even if mike doesn't. i like the fact we're pricing in all this negativity. but you really have to watch apple. apple is going to tell the story. you're going to get apple going to move first before anything good apple is like the overused canary in the coal mine. >> we will get to apple. i think bernstein has a note out on services growth ubs evidence lab has a piece. >> the evidence lab? >> yes >> csi is nothing.

>> we'll get cramer's mad dash and countdown to the opening bell a look at the premarket as all indices are lower for three of the past four sessions we're back in a moment people know aflac. aflac! but not when to use it. do i use aflac when the kids get slime in the plumbing? no. that's home owner's insurance. slime in my motorcycle. no. that's motorcycle insurance. slime everywhere? ughhh nooo, there's no insurance for that. do they help when i have bills health insurance doesn't cover? yeah! that's it! aflac! gross guys. get help with expenses health insurance doesn't cover. get to know us at aflac.com

let's get cramer's mad dash. as the parade of retail earnings continues, jim. >> let's talk about how hard it is to get an upside surprise, and congratulations to target. best buy reports a fabulous number today it is incredible how well they

have been able to pull out all this and then they talk about what happens with the 25% tariff and say the consumer is going to pay. they're trying to build in -- i mean the release was very positive they said, listen, we're going to build in the price. but the actual commentary, as the conference call goes on, not positive and so, therefore, you have a fantastic situation that doesn't work >> they did say they had been managing to offset some of the impact by buying ahead. >> yes that's why i felt this was going to go here i felt it was going to take it out. let's see. you need sentiment to be so negative before you get that moving. >> by the way, you're hearing a little applause here of course it is fleet week in new york city so you'll see some representatives of the navy, of the marine corps, of the coast guard as we take time to be grateful for all of our armed forces. >> you bet and i used to go i used to go to fleet week it's a great thing if you have kids, treat it as something that is so prideful, fantastic. >> with that we'll take a short

break here, get the opening bell in just about six minutes.

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you're watching cnbc "squawk on the street" live from the financial capital of the world the opening bell in just about three minutes. a busy morning, obviously, as we've talked about some of the weak flash pmis this morning, the trade war rhetoric, some of the problems that we've had getting legislation passed, jim, whether it's infrastructure or drug pricing that looks a lot more difficult now. >> this is a moment, i want people to focus on managed care, so out of favor now. it's very clear that if biden is the front-runner, you're safe, because nancy pelosi and chuck schumer don't want change. so that scenario -- i know it is a slim read, but if you look at medtronic this morning, medtronic was very negative. i had to talk to the ceo i said, listen, man, you're way too negative it was the bottom. they bought a ton of stock and look at that thing look at that

i mean i said, listen, you've got to snap out of it. your negativity is not becoming. but he was humble. but they have been buying stock. that's the kind of thing you're looking for. medtronic has very, very little weakness here. it's really a great thing to find there are some really good drug and pharmaceutical companies, medical device companies that are u.s. based that are really terrific. >> with little international exposure. >> yeah. medtronic is a class example nobody owns medtronic. after that guy dropped the bomb at the jpmorgan health care conference, the institution is very fearful, i think medtronic is a great company. >> we talked about best buy before the break jpm does take target to overweight, price target 100 this is their thesis now with the restrained consumer, it's all about share gain. they say what put them over the edge were share gains at home and in apparel. >> look, the target package, the

$99 package that they're using is so good i said why do i want some target guy going to my refrigerator you're in the burbs, you've got your target guy that's your bud, puts it in your fridge that's how you get plus 40%. >> absolutely. david, you've been a little quiet. everything okay over there >> yeah, it's okay we're working on some things involving one of the deals out there that we've been following, but i want to put that together before we share our specifics on it but we'll get to it momentarily. a little bit of reporting. i missed the tesla conversation. >> it was a good conversation. >> i'm sure it was. >> i'm sure you were jammed. >> i was i was jammed also trying to get confirmation of david tepper, bloomberg reporting that it's going to become a family office been trying to get confirmation of that as well involving mr. tepper

this is a larger man of assets that he'd be returning to investors. a lot of is his still his. >> but he bought a team. that is a full-time job. [ bell ringing ] >> this has been rumors about this in the past when i followed up on them, they haven't been true. this time perhaps it is. we'll look at that in a moment. >> there's the opening bell at the cnbc realtime exchange the big board, as we said, it is fleet week in new york the navy, coast guard, marine corps doing the honors at the nasdaq it's rattler midstream lp, a limited partnership by diamond back energy. what do you think about the south of 60 on crude, given the summer driving season and geopolitical concerns. >> i'm surprised i just got rusty brazil, the export amounti that we're doing now of everything, we're the swing vote we're pumping like mad meanwhile the companies that are pumping are not -- their stocks

aren't going up, their stocks are going down it will be interesting to watch because all the stocks have been so horrible. bp, the yield is almost 6. nobody cares had a great quarter. nobody cares so we're in negative -- oil is so hated that i've -- i have a new theory i've been saying millenial fund managers regard it as coal or tobacco. they just don't like oil and the millenial fund managers are determining a lot of things besides beyond meat. beyond meat is a millenial stock. >> we haven't done the taste test yet. >> i have. >> i know you have, but there may be a broader taste test that takes place. >> it's that curious chrome after taste. >> do you do shake shack versus impossible burger versus beyond meat >> you use goodyear, michigan lynn and beyond meat. >> that's not fair that's not nice.

you're saying they taste like tires? >> okay, how about trex. orion strand board i'm trying here, david >> well, if you put ketchup and cheese on anything, i'll eat it. >> exactly orion strand cheeseburger last night. a warehouser made it >> jim, still although a lot of utilities are leading at the open, some selected retailers, l brands, target once again as we said a moment ago. >> l brands is one of those you get these where it's not as bad as we thought. those rallies last about a day and a half target was much better by the way, target was going down ahead as if brian cornell was going to miss. the semis are horrible we should talk about the semis, because the semis are regarded as epicenter micron has been the tell of the semis. it's all the way back to where it was when pricing was falling apart and you had that short

squeeze. >> actually there's been a lot of talk about the smh, the van ex etf and what happens when it crosses the 200-day on the downside it happened last october what followed was not pretty. >> death cross >> yeah. >> well, look, i don't know what to say the numbers are not as bad as we thought, but again, china -- look, china is the swing vote. watch skyworks that stock is down horribly. so that's the best tell of that group. i'm offering tells only because sentiment is so negative, you need to see the ones that switch first. so i'm giving you the worst ones you know, the market is terrible by the way, another one that was bad was lowe's yesterday and lowe's was really execution, i think. we have marvin trying to turn it around, marvin ellison, but retail has become a total battleground with only target being something that you can buy right now. target >> costco, target, walmart. >> i wonder, some of the blowups

this week, kohl's and lowe's in particular have high exposure to new york, new jersey, california, illinois. >> home depot said no problems with salt in their conference call kohl's was just unfortunate. i talk about the good and bad. i believed in kohl's i do think it has a good balance sheet, buying back stock, it's got a good yield it has a deal with amazon that's going to kick in the second thing. but they're in the mall, forget it, it's amazon. forget it, jake, it's chinatown. it should not be that way. it's not the end of the world for retail at the same time, it's so in flux walmart had the best quarter in nine years and the stock didn't move what would it have done if it had been bad >> we've got every dow component in the red at the moment to jim's point, intel and apple are the worst performers intel month to date is the worst dow component.

>> intel -- bob swan, who is one of the nicest guys remember, he was the cfo, he takes over at ceo. what has he done so far? they have had -- watch hp tonight. hp they report tonight. you're going to hear about the continual intel chip shortage. so they have a shortage. they have -- they never did the 5g they did data center we know that has slowed. read the net app today about data center storage. you've got a good yield, but intel, i would call intel in disarray if i didn't have such respect for what the great andy grove and gordon mort did. andy grove no longer with us i can't say it's in disarray i'll let others do that. >> b of a cutting its forecast for year-end 10-year yield to 2.6. when the facts change, we change our opinion.

our forecast had implied a best-case scenario for resolution of the trade dispute, which seems unrealistic. >> yeah, i guess so. that's why we need the chinese to sell their bonds so we have some supply and get that yield curve better everything auto, what's the matter oh, you're joining the show yet? >> i'm back and forth, yes. >> let me know when you're back. >> i'm back. i'm back, baby it's fleet week. >> let me give you my "saturday night live" full download. it was $2 trillion in treasuries, now it's down to a trillion that would be shift snl rather dramatically. >> a trillion dollars is nothing compared to what the fed holds at treasuries. really why would you sell it all? you're just going to hurt yourself. >> they're supposed to need the money because we're supposed to be choking them. >> how badly are we choking them >> david, that's kind of a

ethereal question. look, i think there's definite decline in the chinese government figures why do we trust the chinese government figures to begin with you hear them called the communist government because they're communists drug stocks holding up, david. >> as you said, they conceivably would because they're not -- >> no, and we don't have -- biden is not -- >> united health is down less than the market. i'm getting a weird print on the s&p so i don't have that. >> it's great that you joined us >> jim, i'm just trying to report things, you know. trying to find new facts out to help inform the marketplace in terms of how it makes decisions about what things should be priced at. you can understand that. >> i think most people just like to talk. >> i didn't mean to offending you. what did you do for the mad dash >> we did best buy

>> you did >> yeah. >> retail. >> did you get that? did you book that haircut? >> apple at the 180. it's do or die >> apple 180. >> do or die >> do or die >> why >> that's the level that people -- >> is it a double top shoulder with a little -- >> don't laugh at the technicals it's no cup and handle, though really it is a head and shoulders. but that is the level that i think -- remember, the company bought a lot of stock at up w16. we're all waiting for somebody to say that china regards them as switzerland, that they have so many jobs, that they're exempt like starbucks. >> you said this a couple times. >> yes. >> do they give elon musk special treatment because he's a visionary. >> right. >> do they give apple some sort of deference. >> well, they could be look at howard schultz and what he's done versus luckin. >> we're looking for exclusions here on tariffs. >> yes. >> and we're looking for

exclusions on market access. >> i don't think peter navarro, who's, by the way, in charge i don't think he's trying to look for a chinese company that they're going to sanction. what >> he's in charge? >> well, yeah. >> navarro >> yeah. do you have a problem with that? >> if you tell it to me, i believe you. >> david, remember what you did when you got away from the show? >> yeah. >> it wasn't to book a haircut, you were doing reporting. >> that's true. >> there's an interesting concept. sort of like when i was an obituary writer at the tallahassee democrat, i had to do reporting. >> speaking of day two, keeping an eye on qualcomm. >> what's going on there >> the stock is getting hit again, a bit more than the broader mark as well. >> we need to hear from malikoff. >> i have not spoken to him. it's my expectation that we're not going hear from him. they really don't have much to say at qualcomm other than we're

seeking a stay and going to seek to appeal the decision of the judge. there have been any number of people i think "the wall street journal" editorial page is involved. >> downside, eps risk 50% if the licensing model changes to handsets versus chips. >> people bought that stock at $85 and $89, i think they have professional buyer's remorse kind of like how i feel about the house i bought in jersey >> it was sent up to heights not seen in some time. >> don't forget, broadcom did offer 82. >> the new target is 65, so essentially where we are now. >> how about tesla, where are we >> we're at $187. >> is that another line? >> you tell me about these lines. i don't really -- >> david, i'm focused. >> i'm more about levels than lines. >> oh, you're about levels

>> yeah. >> do you know that that's the typical pattern of a chinese deal it's priced at 17, opens at 25, then all you do is lose money from then on it's like now -- i mean the chinese -- you know what they ought to do? they ought to stop ipos here to save -- >> oh, my god, stop talking about that. >> why >> ban is almost in charge he's not part of the administration. >> one of the most important chinese ipo of all time was alibaba and that stock gets hit as well. down 21% over the last 12 months 12% over the last three. but it is sort of that proxy and it continues to get hurt. >> you know what else is getting hurt pretty badbadly >> tell me. >> broadcom. they're like we can start doing deals again. no they did have a good quarter, though. >> yeah. guys, i did want to weigh in once again on sprint and

t-mobile it's been a real feature this week, as our viewers know, of course, on monday you had the fcc essentially say, hey, we're going to vote in favor of the three commissioners agreeing to -- well, one key divesture, that being boost, and other agreements involving how quickly they were going to move 5g into rural areas, urban areas, keeping pricing similar. but the focus has been on the department of justice. we talked a great deal about that on monday and i can share a little more insight here according to people familiar with the doj's activity involving this and in fact the thinking of the man who runs the antitrust division and will make a decision as to whether to challenge the deal they're talking. t-mobile and sprint are involved in talks, pretty significant talks from what i understand over the last 48 hours about what they can do to meet what

continued to be objections from the department of justice. not just from the staff but from mr. del raheem as well about concerns in the marketplace should they be allowed to get together those concerns being specific, of course, as you might expect to pricing and what it's going t mean for the consumer. they haven't made a decision to block the deal that decision will be made in the next three or four weeks at least at this point. there is expectations the two parties will continue to have discussions. but it is clear at least according to my sources that the parties have not offered a plan of concessions that would meet doj's objections or at least meet what is their concerns at this point about how the marketplace will remain a competitive one, essentially wanting to replace the lost competition from having four go

to three and t-mo sprint so they do not appear to be close to a deal. sprint stock not reacting badly to what we're telling you right now. it had been down the last few days with various reports on where doj was at, where the staff was at not much new to offer there. it doesn't appear that the staff and mr. delrahim are in a different place. >> doing some reporting in the last two days about the amount of money it takes to do towers, cell phone towers. does mr. delrahim take into account the amount of money you have to spend on towers is so immense that it could crack the budget does he factor that in >> i don't know specifically whether he's taking their concerns about as separate entities they would be able to spend the amount of money they need to to roll out 5g in an

effective way. >> that's so relevant. >> it is, but what is also relevant is simply the pricing umbrella for americans in terms of the most important bill they pay each month it's notable what happened to at&t and verizon's stock price on monday. >> i know. >> what did they do? >> they went up a lot. and they would not of been going up if people thought it was going to become a more competitive market so we'll keep a close eye on this, a lot more reporting to do but we've shared at least what we can at this point. >> dow below the 200-day for the first time since may 15. let's get to bob pisani. >> tough week overall. let's take a look at our market issues of course the whole world is down 1%, 1.5%. the whole thing is down, over in europe as well trade tariff war escalations, we've got brexit uncertainty and crummy european economic data. european pmi numbers were below expectations, in the 40s in that area don't forget the dollar strength we're on a two-year high on the dollar, essentially due to some

weakness but that's affecting the overall markets here sectors, the usual trade-related sectors, once again semi conductors, energy a little weak here, china, etfs have been down, metals and mining another classic trade-related name all on the weak side dow names, dow dupont is a football essentially getting kicked around constantly intel, boeing, apple remember, apple was 210 or so a few weeks ago, down again today. united technology, all trade-related names. is this a drag on earnings that's what i care about i want to figure out what's going on in the third and fourth quarter numbers. the retailers have been out talking. home depot said this could cost a billion dollars a year if we have new tariffs coming in j.c. penney said there would be a meaningful impact from further escalation in the trade wars kohl's said tariffs were cutting into their profit outlook. if you look at the retailers, kohl's is down 20% this week easily you notice best buy down here today, and yet they had terrific

numbers overall. they surprised the whole street by essentially coming in and affirming their full-year guidance and doing a little better on their numbers than expected they affirmed the full-year guidance and they minimized the impact of taefriffs by buying products ahead of the tariffs and said it was premature to speculate. they're assuming they're not going to have the new tariffs come in and saying we're not going to talk about that but the market is taking down and other firms are taking the numbers down nomura said $300 billion in imports at a 25% rate. let's look at what that's going to do. they had tariffs would be unlikely before the g-20 meeting but they think they will be imposed in june or early july. that's what the street is essentially doing right now. it's trying to figure in the likelihood we'll have tariffs impacting third and fourth quarter earnings estimates finally i want to note a couple

of high-flying ipos down a bit remember, luckin coffee went public at 17, went to $25 the first day. it is below the ipo price, happened yesterday 17 is the ipo price, you see it at 13.91 finally, beyond meat they went at $25, remember, and they went all the way to $95 25 to 95 you see down here, though, it's $80, well off from the high but still quite a high flier for the year best performer guys, back to you. >> all right, bob, thank you. let's get to the bond pits as well. rick santelli at the cme group in chicago good morning, rick. >> good morning, carl. big day. big day on the technicals and the fundamentals, both for sovereigns and specifically treasuries and the dollar. let's look at the charts march 2019 the 10-year, you see that double bottom should we close where we're at, it would be gone zoom back to december 2017 the last year the 10-year yield closed under 2.37 which has been

the low yield close of the year. for 30-year bonds, it's not december '17, we'll start the chart there, it's january of 'y '18, but it's close. 30-year bonds doing the same thing. let's look at the closes and tomorrow's weekly close will be very significant the star of the day is the dollar index look at the dollar index zoom, zoom, zoom i know we've heard the boys talk with it today all the multi nationals will be whining about the dollar but it has been on an el camino walk since april, just steadily moving higher today actually there's a little more horsepower than we've seen. kick it out to 2017 and you'll see april and may as we zoom on the dollar index to show its strength finally, it doesn't end there for the dollar, it's turned back higher against the yuan, the chinese currency, the best level since 2018

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i've saved enough to come visit you. well, that's such great news! at u.s. bank, we believe that hard work works. and for everyone working toward a goal, we're here to help. ♪ good thursday morning. welcome back to "squawk on the street." i'm carl quintanilla with sara eisen and david faber at post nine of the new york stock exchange sell-off at the open dow down 400 in first few moments as we continue to watch trade rhetoric and flash pmis around the world that are generally not good. >> stocks falling sharply.

dow down about 400 points right now as u.s./china trade war worries weigh on investors as more announcements of suspending ties with huawei. >> the faa is meeting with global air regulators for an update on boeing 737 max jets. we'll hear from the acting director of the faa straight ahead. >> we do have more economic data across from the tape right now rick santelli with the numbers rick >> we're expecting april new home sales to be in the camp of 675,000, darn close. 673,000 is the actual number subsequentially, ended up at 723. so 673 is now subsequentially lower due to that big revision 673, well, it is the lowest level just since february. it is not that long ago actually and if you look at it on a monthly percentage basis, that

looks like down close to 7%. now, for some real granular exposure on this number, diana olick will dig down for us what do you see in the number, diana? >> it is exactly what we expected we expected a drop in home sales in april this is when people are out shopping, this number represents signed contracts, not closings, and in april we did see mortgage rates basically come up a little bit from those lows in march and so you had people out shopping, more flat line during march pretty much. i'm looking at the median sale price, though, $342,200. that's significantly higher than a year ago, $314,400 builders said they're trying to lower prices, but we're not seeing it. they continue to complain about the high cost for land, labor, materials, now tariffs being factored into those as well. not lowering the price any toll brothers did report yet -- a couple of days ago that they were seeing good sales for the last quarter, but their guidance going forward was not so great

so on the very high end, you aren't seeing as many sales as we are seeing on the middle to low end. builders should be lowering prices if we're going to see any movement i'm looking at the inventory, which is now at a 5.9 month supply, that's high. they would have more wiggle room, but 5.9 is a big supply of homes for sale it is not a huge number either way. but going forward, we're going to have to see how the costs for builders factor into prices. back to you guys. >> diana, thank you. back to the overall market here, pretty sharp sell-off on these china trade tensions all the major indices are down 4% now since the beginning of may. the international monetary fund out with the new report this morning saying, quote, consumers in the u.s. and china are unequivocally the losers from the trade tensions finding that tariff revenue collected has been born almost entirely by u.s. importers that runs counter to what the president has been saying. and further increase in tariffs will leakikely be passed througt

consumers. joining us is brian nick, chief investment strategist at nuvine. good morning brian, what is it today that has investors so nervous >> i think it is the steady drumbeat of trade related news even the economic data we're getting which has been soft is coming from a month -- collected before there were any trade tensions popping up again. the weak retail sales number, weak manufacturing number in the united states from april don't even account for the crisis and confidence that is likely to emerge in may and june because of the renewed trade tensions. it is the market anticipating more economic data ahead >> you see a crisis of confidence for u.s. businesses coming >> i think if we rewind to last year when we started to see the trade war pop up as an issue for investors. you saw a drop in consumer confidence, drop in the pmi globally and in the united states that's likely to continue.

doesn't always translate, but it is correlated with what the market does. >> jeff, we have gotten some international economic weakness today as well. business confidence and multiyear lows, how do you add up the soup of today >> there are a lot of concerns the market still seems like it is too confident in the trade deal and that's showing up today. look, the markets were only down 2%, 3% since the trade tensions were renewed i've seen surveys of professional investors that show 90% of them still expected a deal by the end of the year. i still think a deal may be likely, i'm not 90% confident so we're starting to see that come into the markets here. and i know we're getting the flash pmis today, but the global manufacturing pmi has fallen 12 months in a row. that's the longest stretch of weakness in more than 20 years of data for that series. so the backdrop is vulnerable to a catalyst like escalating trade tensions to weigh on confidence, financial conditions and capex and further weigh on earnings and markets.

>> that's nothing new. the international weakness, especially in manufacturing, how much more, jeff, can the u.s. take before the u.s. economy really gets vulnerable to what is happening around the globe. >> well, we may already be starting to see it we already started to see indications that layoffs are starting to increase and that may continue we got further -- we'll get the fmi numb pmi numbers as well. clearly the u.s. economy, any economy, usually looks the best at the peak and i think we may be nearing that. the fed indicating it was on hold, triggered a rally as it often does rallies often last about six months before they run into a catalyst and those escalating trade tensions may be the catalyst this time. >> so, brian, only group up now are utilities. what is your advice to investors? >> we have been trimming risk in our portfolios since the trade war first emerged in 2018. we were reducing technology, moving to consumer staples,

higher dividend secretary, not necessarily utilities but reits, infrastructure looking for ways to -- a market that may be sort of range bound, choppy, to still try to get paid for what you're holding in the meantime i would also agree with jeff, i think the market is probably still complacent with respect to a u.s./china trade deal. june and july will be pivotal. g-20 meeting and then the tariffs potentially going into effect on the final $300 billion if that meeting doesn't go well. that could be be a back breaker for the markets. >> where are you on that i think nomurra out today saying the tranche is more likely in q3. >> people are inching up to 50% on that call i think i expect a cease-fire. i don't think we'll get a deal, but maybe something out of a g-20. >> wave hands in the hallway what kind of interaction would make the market happy? >> i think an announcement that the $300 billion doesn't go into effect would be a market positive at this point

>> another six month delay like european auto tariffs. >> you have the european auto tariff moratorium, you have new tariffs going into effect between the u.s. and china and u.s. budget negotiations and debt ceiling raise a lot of policy risk being shovelled in fourth quarter. >> debt limit with mnuchin on the hill this week, say we got a delay in the fourth tranche, what happens to the second half recovery narrative in that case? >> i think that is -- that is certainly at risk. if you look at earnings expectations, pretty flat for the first half of this year. their expectations for rebound in the second half costs are rising, revenue is slowing and we're talking about all these tensions perhaps showing tidy financial conditions against slowing capex, weighing on consumer sentiment as well. i am concerned about this, are there shelters to this storm we just talked about weakening business confidence in europe. europe and japan are not directly involved in the u.s./china trade war and they

may benefit from the postponement of the auto tariffs and from japan scrapping that tax increase later this year and germany might actually implement tax cuts they are running a budget surplus. there might be some positives that might offer some shelter in the storm outside of those poller poll poller u.s./china stocks. >> do you play the global slowdown story i'm looking at the price of oil now, down 4.5%, trading below $60 a barrel, energy stocks getting hit. that's a global growth story are you in the slowdown story or not globally >> i am in the slowdown story globally that's why health care might stand out. worst performing sector year to date on political concerns and on the backdrop of double digit gain in the global stock markets. as markets get more difficult, the stability of health care earnings in a slowing global environment may pay off, i point back to the fourth quarter where global stocks fell sharply health care held up as one of best performing sectors.

that might be a place to find shelter from the storm >> brian and jeff, thank you, both >> thank you >> thank you for having me when we come back, piling on from growth to a, quote, distressed credit story, why one well known tesla bull now changing his tune on that stock. we're getting a bounce today no timetable for the return of the 737 max. the faa is meeting with global regulators in texas. the acting chief of the agency dan elwell will talk to phil lebeau straight ahead. dow down, right at 254 we're back in a minute this is my headquarters. this is where i trade 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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it has been a rough week for tesla, though reuters is confirming the legitimacy of an email from elon musk in which he says based on current trends, we have a good chance of exceeding i the record driveries eliveries t year theanalyst adam jonas holding call with investors this week recorded and then leaked online. discussing concerns about the company and including signs that demand is slipping and sales in china may not be as robust as hoped. as we said earlier, tesla getting a bounce today stocks still down over 13% since last week. and for the year, somewhere in the 40% range. >> market cap well below that of gm and ford now. back to the markets this morning. they are as you have seen down again as u.s./china trade

tensions remain high a growing list of companies suspending business with huawei. listen to secretary of state mike pompeo's comments earlier on "squawk box." >> the decision that was made, huawei had an enormous national security component to it the company is tied to china and the china communist party. that puts american information that crosses the networks at risk >> so how are all the tactics going to affect ongoing trade negotiations if there are any actual negotiations going on our next guest is a trade deal unlikely before the elections. with us now post nine, cnbc contributor michelle caruso-cabrera >> i think this works for president trump. he's got bipartisan support for democrats and republicans to be tough on china and, plus, i think that the administration was quite upset when the chinese pulled back, tried to extract more concessions, that's not what they wanted to do. if there was going to be a deal

at some point, that's when it was going to happen. now, off to the races to figure out what happens next. i think it is going to be tough. >> we were talking earlier with jim, as we often do in the mornings, carl and myself, about what is next what will come in terms of a chinese response. the rise of nationalism as well in china and in this country also people proposing things like the preventing them from listing do you sense based on the conversations you're having that this could go well beyond sort of a tit for tat in terms of dollar and cents >> absolutely. this is a full court press about chinese behavior the markets desperately want a deal and i understand that. but the white house desperately wants to change chinese behavior two different things and the first doesn't necessarily lead to the second right? so you have two different -- then factions within the white house. right? like a deal. versus changing as much chinese behavior as you possibly could,

right? so that's why i think that we're at this point where you think it is going to be until the election >> so any deal now for additional soybeans or purchases of equipment, that's dead, right? that would look -- get laughed at the this point. >> already laughed at once they want absolute -- >> the white house had been promo promoting the idea of a large purchase. >> right the hawks are much more in asce ascenda ascendance now it stems very much from the white house thought they had a deal, the chinese pulled back, and now all bets are off. >> one thing i heard, 24 year is the anniversary of tiananmen square, the anniversary of the people's republic. does that make it harder for xi to make concessions because of the nationalistic celebration they're go think those celebrat are an outpouring of what xi is,

right? those celebrations are going to be bigger because of who he is and the way he thinks. he doesn't -- he doesn't look at his economy, and think, should we have more government intervention, or less government intervention, more market forces, less market forces, it is more like how do i stay in power, how does the communist party stay in power, and that's his prism. that's why he went after corruption >> the two things that could interfere on the u.s. side are the economy and the markets. and so far all okay on that front. but if there is a sharp collapse of confidence or if this looks look a protracted thing that can drag down the economy, wouldn't the white house then change their tune >> possibly. so when you go back to december, and the world is falling apart in the markets, right? and the conventional wisdom was, oh, look how nervous the markets are about china, but, remember, happ happening at the same time was a much more hawkish federal

reserve. the fed is giving the president a lot more breathing room with their stance so he's got a lot more wiggle room here when it comes to -- look at the market, what is the market response even as this has gotten -- not like december. we got 3.5%? >> if you told people this a month ago, we would be down this much, you know, that was the discount in the market for things going completely awry -- >> down 4% from the highs. >> psychologically important remember how much trade we do. $800 billion we're $19 trillion economy, it is not that big on a macro level for individual companies that have to do business there, that have the supply chain there, yes, it is a big deal. >> so is it about what gets subtracted from growth or the slowdown in growth we know china growth is a third of global growth. >> sure. but here's the thing, carl, everything they do right now slows down their growth, right all the things we're encouraging

them to do would improve their growth that's the irony of all of this. >> that's larger than $800 billion in trade >> yeah, for sure, for sure. i end up spending most of my time thinking about this through the prism of national security what choices -- what trade-offs do we want to make in this world right now? the administration is making very clear that 5g concerns them and it will be full court press. i think when you talk about the sprint deal, t-mobile deal, i wonder if there is a thick overlay of that about 5g. >> they made the theme very important and that's why the fcc in part certainly signed on. >> these rumors you keep hearing about the nationalization of the 5g network, that comes from fears that the major telecom providers are so indebted, they can't actually roll it out in a meaningful way and that's why huawei could advance, right? you start to -- this mission, all these institutions, you start saying, okay, you know what, we need stronger telecom

providers, let that deal happen. >> we'll see at this point, that is not what my reporting is showing, at least from the department of justice side of things michelle, real quickly, the president likes the personal touch, he can respond positively with flattery. any chance they pull them aside and say, come on >> i think it is possible. i don't know it will ultimately be meaningful. and the bigger question is, is chinese behavior going to change not just for our benefit, but for theirs and for the global economy right? they can chat all they want. are they going to value intellectual property? are they going to reduce government intervention? have you seen where all the loans go now in that economy ten years go, going to the private sector now going to the state run enterprises that are inefficient, bloated, have political aims, officials within their upper echelons >> michelle, thank you. >> always a pleasure. >> always good to see you.

when we come back, a rough week for the retailers break down any bright spots in that sector. "squawk on the street" will be right back ♪ you should be mad they gave this guy a promotion. you should be mad at forced camaraderie. and you should be mad at tech that makes things worse. but you're not mad, because you have e*trade, who's tech makes life easier by automatically adding technical patterns on charts and helping you understand what they mean. don't get mad. get e*trade's simplified technical analysis. man: stand up

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welcome back to "squawk on the street." with the markets in sell-off mode, wall street digesting another day of retail earnings best buy and l brands reporting beats. on best buy's conference call, saying the impact of tariffs at 25% will result in price increases and will be felt by u.s. consumers common thread there in the retail earnings conference calls. u.s./china trade tensions, the xrt on pace for the third straight down week that about a percent right now joining us is oliver chen. oliver, i thought best buy was actually relatively good report. why is it getting beat up today on wall street >> good morning, sara. tariffs are a big concern. i would say the pricing in tariffs and as we look across the sector, earnings may have to

be cut by 10% to 25% that's a fear, a general sector fear in people's minds at lb and victoria's secret, we're worried about the long-term here, the store count. we're also worried about the new customer and what victoria's secret should do in terms of changing their product to add fit sizes. there is a lot happening in retail >> so just to be clear on best buy, despite the fact the results were somewhat better than expected you think this is the tariff overhang on the entire sector that is weighing on the stocks? >> that is a sector issue. we don't cover best buy to be frank. so i'm a little less familiar with that stock. >> but overall, i mean, this is clearly an impact. you say 10% to 20% hit on earnings, how do you get to numbers like that? >> will be very difficult for the companies to absorb all of the price increases from

suppliers. so that will have to come in the form of earnings in terms of the names we like with tariffs, we love walmart. walmart is a great name. 66% of the goods are sourced in the united states. we also like costco, we like ulta and planet fitness. so the big concern here is passing along prices to consumers and not all prices will be able to be passed along, that will take hits in terms of earnings and gross margins >> why do you like walmart on that story they're known for their everyday low prices, you think they're going to be able to price -- pass along higher prices >> we're excited about walmart keep in mind, over 50% is grocery at walmart also, a strong low to middle end consumer, quite a positive in terms of traffic and low unemployment and wage growth and walmart has been doing an excellent job in e-commerce as well as curb side pickup based on a lot of our research, over half of the digital growth could be from curb side pickup they're moving the 3,100

locations would drive up curb side pickup. those are all great positives for an e-commerce business growing at 35% or higher so a lot of pieces working here. digital, grocery, as well as walmart being an everyday low price, well managed scale retailer >> we got upgrade of target today, and one of the frameworks that they gave is that you're looking for people who are taking share because overall the consumer is going to be reticent is that where you are? sort of opdown >> we're excited about target. a third of their products are private label. they also have driveup as well as shift and others and they have been doing a good job managing digital and physical as well as fulfilling a lot of goods from in store online so all around target is well positioned in this environment also don't forget the strong consumer at the middle and low end will benefit target as well. they had positive traffic and

that momentum has been very attractive our studies also show very good pricing, very good customer satisfaction between digital, the product assortme assortment, marketing and changes in terms of making target america's easiest place to shop, these have all been positives for driving very strong numbers >> oliver chen, thank you. >> thank you thank you for having me. >> the faa is meeting with global air regulators over boeing's grounded 737 max. the acting director of the faa will join phil lebeau live from that meeting in texas in a moment dow continues to hover right above 254. down 377

good morning, everyone i'm sue herera here is your cnbc news update at this hour. we're getting a look at the damage left behind after a violent tornado touched down in jefferson city, missouri, late wednesday. severe weather swept across that state causing at least three deaths and leaving many people trapped in the wreckage of their homes. the man known as the american taliban has now been released from prison after serving 17 years of a 20-year sentence, john walker lindh walked out of a federal prison in terre haute, indiana. he was released early for good behavior indian prime minister narendra mody claiming re-election victory. his party is leading in contests for 299 out of 542 seats in the lower house of parliament. the election has been seen as a referendum on the 68-year-old

prime minister whose economic reforms have had rather mixed results. and former nissan motor chairman carlos ghosn attending a hearing in court ahead of his trial. he's accused of corruption it is his first pretrial discussion with people who will be involved in that trial. you're up to date, that's the news update this hour. back downdotown to you. carl >> thank you very much. markets feeling some pain today, down 347, lower across the board. u.s./china trade worries weighing on sentiment, more companies suspending business with huawei. with us art cashin as oil is getting crushed here, art, and it is not doing anything for the transports. >> no, not at all. the inventory data yesterday was stunning, you know they had looked for more like a neutral number and instead of aggregate when you put the products and the crude together

were up about $11 billion. and the market just could not handle it. and so that's adding to what is primarily a trade war sell-off this morning and it is nearly universal very few markets around the globe that are not getting pounded. >> do you think -- can we start building an argument that production is not demand on oil, inventories are not sales and apparel or cars or something like that? >> it does seem to be that this slowing economy that we talk about, global economy, is beginning to take hold and, you know you see copper is another low, multimonth low. down almost eight days in a row. all of those usual old yardsticks are not kicking in. so now we want to see if the supposed trump put shows up, you know after the sell-off on the 13th, he seemed to get the message

so whenever the markets sold off heavily, there was some kind of nullifying comment or whatever, so let's see if he comes out of the wings this afternoon it is so much all about trade. yesterday you had him storm out of a meeting after three minute introduction and the market did nothing the market didn't move at all. you had the fed minutes come out. the market read them and had no reaction whatsoever. but the minute you get something on trade, world markets take it on that's what the story is all about. >> president tweeting he was calm yesterday with the meeting. he did not storm out but, art, to your point, on the minutes, so the federal reserve says they're patient, patient, patient, used the word eight times in the notes from the last me meeting. is that patience going to be tested, the worse this trade war gets >> you know, the camp i'm in, i

said rates would probably move lower before they move higher again and i'm still in that camp, and they're watching this, i think what they're going to wait, given the history of the fed, they're going to need domestic data. they're going to need to see automobile sales slump, housing slump or whatever. and then they can talk to that i don't think they're ready on a grand scale to say, well, trade talks are not going well, we'll have to do something different so you will need to see -- >> more of a slowdown, it sounds like >> you need to see details of this slowdown, proof that they can walk in and say, here it is. >> b of a cuts there, ten year yield target to 26 what do we start seeing that from you that's one sign is when art starts calling for a cut or predicting a cut. >> well, we'll be getting there.

i think it may be several weeks because as i just said, we're going to need demonstrable data that the fed can justify itself on and let's not forget one other thing, the fed is in control but if the markets really rebel and say this is not going well, the markets can move the rates down before the fed does >> which sectors do you see as the most vulnerable as these trade tensions heat up and the rhetoric sort of ratchets higher on both sides? >> i think probably the one that you've been talking about, which is retail, and it is there, and interesting to hear the gentleman from kalyn say they like walmart for two reasons, half of the sales are in food, which is not involved in that trade war and that 66% of what they sell is domestically sourced. you'll see that in reports now

i would think -- i would watch retail and then i would begin to watch auto sales >> finally, europe, art. deutsche, the pmis, the iphone index and brexit it makes you wonder why europe isn't down more than it is. >> absolutely. the pmis are showing this is digging in all around the world. so -- >> art, thank you. >> my pleasure >> the federal aviation administration is meeting today with global air regulators to update them on plans for getting boeing's grounded max planes back in the air. our phil lebeau is there and has a special guest. phil, take it away >> thank you, david. i'm joined by acting faa administrator dan elwell you just talked with global regulators last night when we had a briefing with you, you indicated there is no time frame for when the max might be recertified and flying again and you have airlines who believe they're going to are this plane back in their fleet by august. should they ship their plans, should airlines be thinking the

max won't be flying until october, end of the year, well into next year >> phil, thank you for having me on no they don't need to make any changes to their plans they just need to know that there isn't a timetable for bringing this 737 max back to flight there is only one criteria, when we're done with our analysis and it is safe to let the 737 max fly. >> you don't have a projection in terms of i think it is two months, three months, six months out? >> it could be a month, two months it could be any of what you just said, but it all determines, it is all determined by what we find in our analysis of the application. we're pretty confident that the application is in good shape, and when we get it, we'll make our analysis >> you said for some time you would like the ungrounding of the max to be global and as many countries around the world to lift their groundings in conjunction with the faa but overnight there are reports out of europe and asia that some

countries or regions will say we want to look at the mcas software ourselves are you prepared for the u.s. and for the faa to go it alone and say we're putting the max -- we're giving it the stamp of approval to fly again? >> well, phil, go it alone, the faa is the state of design it is our responsibility to make the determination that the 737 max can fly again. we certified it to begin with. we will be first regardless and if the rest of the world agrees with our analysis, which is part of why we have 33 countries here today, then that is the goal for the world to agree with our analysis and to unground the max would be preferential, but they all have their own processes and they're going to do what they think is right we're all at the end going for the same thing, which is the safe return of flight of the max. >> we had ralph nader on our air this morning and he has a very strong opinion of what is going on with the max given the fact

he had a relative on one of the flights who was killed in the crash. he thinks -- this is not just about the mcas software being recertified, the entire plane needs to be recertified and looked at again. is he wrong? is he overstating this >> i have great respect for ralph nader and all he's done with product safety over the decades. we are the experts on certification. we have four different investigations, audits, reviews of our work, which we welcome. we always learn from those reviews. but the process to certify the max was done the way we certified every aircraft and as the safest mode of transportation in the world, and we're confident in our processes, and we know that when we say the 737 max is safe to fly, it will be safe to fly. >> you know a lot of the flying public will not agree with you people are saying, i'm not getting on the max how do you restore that confidence >> we restore that confidence by

doing the processes that we know have worked over the decades the processes that have led to a ten-year span in the united states 90 million flights, 7 billion passengers carried on u.s. carriers and u.s. aircraft with one fatality and we rely on those processes, but we don't sit still on those processes. we're constantly learning how to refine them. the american public and the world will see that the 737 max is safe when we return it to flight and they'll get back on the max and fly it again. >> how often do you talk with dennis muilenburg, ceo of boeing and have you had conversations with him where it is clear they have not been straight with some of their own test pilots or with regulators or with the faa. >> i don't have conversations with dennis muilenburg about press reports. press reports sometimes don't catch the nuance of what we're doing and what we're examining it is a very -- constantly in

communication with other authorities around the world, with the boeing technical experts, working night and day, committed professionals to analyze the proposed change to the max, to the mcas system and to get that plane safely in the air. that's the only thing i'm focused on, the only thing that the faa is focused on. >> are you frustrated by the steady drumbeat of stories that essentially paints a picture that the faa maybe not asleep at the wheel, but was not being as diligent as people expected him to be. >> i try not to read the press too much the faa stands on its safety record again, it is the safest mode of transportation in the world. and it will remain so as long as i have anything to do with the faa. and as long as my people continue to work on refining our processes, and making sure that

not just the 737 max, but everything we do is as safe as it can be. >> final question, with regard to pilot training, would you like to see pilot training include mandatory time back in a simulator when the mcas software is approved and not just computer-based training, but in simulator so they can go through a better understanding, potentially a better understanding of mcas and how it operates >> the united states, the faa, as you know, i'm a pilot, we have been strong advocates of constantly raising the bar for qualification and training of pilots, not just in the u.s., worldwide. we engage the international civil aviation organization on a regular basis to improve the training and the qualifications of pilots. we'll continue to do that. >> that didn't answer my question, though will you say to boeing, there has got to be simulator training >> we're still working on the training part of the directive that we will deliver when we

unground the airplane. but we're not finished with that. >> it is a possibility. >> everything is a possibility, phil. >> dan elwell, acting administrator for the faa jo joining us on a day where they're briefing regulators from around the world here at the faa office in ft. worth. back to you. >> all right, phil, thank you. boeing is the biggest drag on the dow now. taking 40 points off the average. when we come back, the chairman and ceo of interactive brokers will join rick santelli on trade, the market reaction and more major averages at this hour are lower. more severe reaction than we have seen in recent days to the trade tensions dow down 1.2% or 300 points. s&p down a full percent. worst day since may 13th, another trade-related sell-off energy getting hit the hardest don't go away. to a single defining moment... ...when a plan stops being a plan and gets set into motion. today's merrill can help you get there

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dow is down 306. to cme group in chicago, rick santelli with the santelli exchange good morning, rick. >> good morning. thank you, sara.

i would like to welcome my special guest thomas peterfy he's the founder, ceo, chairman of interactive brokers it is the largest global electronic broker in the world thomas, welcome. thanks for joining me this morning. >> thank you very much, rick good morning >> well, you know what, i always find fascinating is now that you have a global footprint, and you see so much in the way of client business and flows, you're the perfect man for a day like today. why don't we start out, why don't you rate the u.s. economy for me and this in the context of all of the nervousness about the global slowing with respect to economic activity >> so we see the u.s. economy as very strong still. especially the job market. skilled workers are very, very difficult to find.

and technology workers have rising wages roughly 3 to 5 times the rate of inflation. now, this has not translated into the goods and services prices because the large platform companies are able to take advantage of automation and scale. and other -- instead of raising prices and profits, we fight for market share so this has not come through the inflation numbers. as far as customer flows, fresh money is still coming into u.s. stocks, but it has recently slowed and interactive brokers, customers have been selling -- have been on the selling side,

chinese stocks through the hong kong connect in the last two weeks. >> all right, thomas now, we have a couple of minutes left i thought maybe you could also touch on the broader topic, now, today we're down about 300 but we have come off the lows. i guess what i want to ask is, when all the trade issues going on, and this administration trying to make some big changes which are difficult, the market seems to be pretty patient about the process, most experts think that it is going to have a bigger downward effect what is your thought, especially considering your background with regard to how trade and opening up markets can be such a big positive >> so, we are near the top of a ten-year old market. the trade issues do not seem to get better in the near term. they will probably get worse the democrats will investigate trump until they drive him

completely crazy what frightens me the most is there is very, very little liquidity in the market. so i would not go into the summer months with a long position i long pos i would rather go in flat and that does not mean that you have to sell your long positions. after all, we have the cme futures, the s&p 500 futures that people can -- or the spdrs or as you may know the cme recently introduced the s&p future this covers about $14,000 worth of s&p stocks, and you can really fine tune your hedges with these and what is most notable is that interactive

brokers charges $0.20 commission per contract to trade the micros. >> interesting, well, thomas, that's very interesting because those are much smaller contracts and they seem reflections in commissions really makes a statement about you and your company. thank you for joining me today, david faber back to you. >> thank you >> thank you very much. >> now going to send it over to jon fortt. we're going to look at what's coming up on ""squawk alley"". >> rare earth elements, an essential part of many different factors. they could end up becoming a key part of this trade war between u.s. and cnahi we have the ceo of american elements coming on to talk about exactly that on "squawk alley.

we are just off session lows, still more than 1% declines for all three of the major averages the dow's down 289 points. hard to find some bright spots it's a broad selloff home depot barely positive all other 29 dow stocks are lower, ibm is the biggest percentage decliner. as far as the s&p 500, it's the safe haven, defensive areas that are working like utilities and real estate, energy, industrials, technology getting hit the hardest. david, you were watching apple,

which is down again today. it's been one of the sort of key proxies in the trade war, right? >> i'm certainly concerned about what if anything will happen in terms of a company that obviously derives an important part of its profitability from selling iphones in china, also makes them there as well apple up only 14% for the year and it's about an $828 billion market value, far below where it was after earnings which were very well received by investors a few weeks back. >> three weeks ago it was up 34% for the year instead of 14. >> i would also say i'm watching l brands because it's a lot higher frmt it's having its best day in a decade. this has been one. biggest retail losers putting out results yesterday showing improvement, also raising the guidance that kept wall street happy. maybe a little bit of a short squeeze but overall just an under performer so getting rewarded today up 16%. bath and body works, bigger chunk of the business, that's what's growing double digits it's not l brands and it's not

victoria secrets which of course is shrinking. >> they had earnings on the big show yesterday. >> the big show, that's what we call it. >> the 3:00 to 5:00. >> it's had so many different names. >> it's the closiing bell it is the final hour of trade. we're going to be all over this market selloff and see what happens. a lot of momentum and twists and turns in the final hour. joining us senator chuck grassley on tariffs and the trade war. the energy sector back in bear market we're going to to talk to the global head of commodities from goldman sachs jeff currie on this 5% move lower in crude oil, below $60 a barrel really starting to pick up steam. >> we're about to break 58, oil down 330, incredible we'll see you guys later on. "squawk alley" is coming up next we are going to be all over the selloff in tech. we'll see if this selloff in the open gets bought at all. don't go away.

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i think we're done here. expect more from ai. ibm watson. good morning, it's 8:08:00 a.m at tesla headquarters in palo alto, california 11:00 a.m. on wall street and sidewa sidewa "squawk alley" is live ♪

♪ see that stranger coming over here ♪ ♪ you don't recognize him, i know your preacher will ♪ ♪ got a voice like sugar, sugar in your teeth ♪ >> good thursday morning, welcome to "squawk alley," i'm carl quintanilla, the new york stock exchange obviously a selloff at the open. dow session low about 406. but we've shaved some of that off more supply eiers cutting ties h huawei mike pompeo sat down with squawk earlier this morning and talked about those concerns. >> you saw what president trump has undertaken with respect to china for too long this is not partisan presidents from both parties had ignored the challenges that were presented to american workers, to american technology, and to american national security that china presents, and he is pushing back in every element th