>> business never sleeps this is "squawk box. ♪ "squawk box" here on cnbc. we are live from the nasdaq market site in times square. i'm becky quick along with joe kernen and andrew ross sorkin. our guest is joe terranova he is a cnbc contributor. >> i'm just glad he's here i'm excited on a friday. >> beautiful out >> we've already been talking about what's happening here. >> he's a guy that has a job >> the jacket and the pants? >> mrs. terranova matched, put all the shirt and tie combo. is that all you? >> sound asleep when i left. >> so she didn't all right. >> well, well done

well-dressed man joining us for the morning. we have the u.s. futures yesterday's stocks were off pretty significantly this morning you're getting half of that made up for with the dow futures up by 136 points s&p futures up by 14 and then the nasdaq up by close to 40 points again, yesterday you did see stocks down by twice the levels you're seeing now. overnight in asia, take a look you're going to see that the nikkei was off by just over a tenth of a position. shanghai was relatively flat the hang seng was up by 1/3 of a percentage point in europe there is early trading taking place green arrows across the board. stocks are higher just about everywhere you look. the cac is up by 1%. the dax is up by .9 of a percent. in italy stocks are up by 1.5% and spain up by 1% also, if you want to take a look at what's happening in the treasury markets here in the united states.

you did see all of this activity in the bond market yesterday the ten year note again yielding well more than 2.4%. last was 2.331%. >> i know we have our problems here obviously politically in this country, end of democracy, constitutional crises, et cetera could be worse we could be in the u.k look at the slow motion train wreck. culminating in this news breaking in the last hour. prime minister theresa may will do this on june 7th. this is weird. >> who's stepping into this situation? a little bit of chaos. >> could it be bojo? >> it's not going to be nigel? >> he's been on the rise >> i know he has he's a piece of work steve sedgwick in london good day, steve. >> reporter: yeah, it's been quite an incredible few days, actually, this week.

a lot of people have been calling the demise of theresa may. we've talked about this many times on "squawk box" over the last couple of years in fact, since she came in after the brexit debacle where mr. cameron and mr. osborne resigned in the middle of 2016 on the back of losing the vote. mrs. may has been talked about in quite derogatory terms by large parts of her party and large parts of the party but she stuck at it for a long time. this week her time was up. let's just listen in to a very emotional theresa may, literally, within the last hour. >> but it is now clear to me that it is in the best interests of the country for a new prime minister to lead that effort so i am today announcing that i will resign as leader of the conservative and unionist party on friday the 7th of june so that a successor can be chosen >> reporter: the one thing that mrs. may was in power to do was to deliver brexit.

that's pretty much what she said all the way through. if we're going to judge her on that, then she has failed to judge brexit as well she has an insurmountable task within parliament and within her party. very split party as you all have been saying as well, who will come next is absolutely key for not only the conservative party but for the country as whole do we get a remainor who as the prime minister said speaks or do we get a harder line r. lots of big questions. i can't give you the answers because it is a long and convoluted process you need the conservative party and then that person becomes prime minister mrs. may staying on until june the 7th. that will include president trump's state visit and the period where he's in normandy to

commemorate and see the memorials for the 75th anniversary for d day. thereafter she stays on until we have a new leader to the conservative party anyone can put their him in in the hat. very low barriers to entry then there's a whittling down candidate. the best two can tats with the most votes as well then they go to the conservative party members throughout the country. that whole process could take certainly this month, certainly next month people are saying it could be until the end of july before we get the next leader of the conservative party, hence the next leader of the country the brexit process will start again. we don't know which way a new prime minister will take this. meantime, we have news back home this morning. president trump rolling out a $16 billion plan to help farmers

hurt by the trade conflict with china. the white house event with farmers. the president said a deal with china is a, quote, good possibility. he said the u.s. campaign against huawei could be up for negotiation. he calls them a very dangerous threat to national security. the deal with farmers signaling that this trade war may go on much longer than many people had expected the comments about huawei we want to talk about how they fit into the trade war, you know, you're either a national security threat or you're not and so you have to make a decision on that and i think that's playing into this whole discussion, but speaking of huawei, china firing back at secretary of state mike pompeo over a comment that he made right here on "squawk box." here's what secretary pompeo said yesterday about huawei's assertion that it doesn't spy on behalf of the chinese government >> they say they don't work with

the chinese government is a false statement. >> there's a law they must work with it. >> required to by chinese law to do that. it's just -- the huawei ceo on that at least isn't telling the american people the truth nor the world. >> overnight a spokesman from china's foreign ministry was asked about secretary pompeo's comment and he said recently some u.s. politicians have continually fabricated rumors about huawei but have never produced the clear evidence that countries have requested the u.s. government was provoking suspicion to confuse and instigate opposition we did ask him directly what kind of evidence he had. i think it's fair to say he did not -- he did not say there was -- >> why would he. >> -- specific evidence. >> he said it's clear and obvious. >> he said it's part of the law that they would have to -- >> i was going to send this to you. you missed tweeting it out recently some u.s. politicians,

that exact quote, and then i was going to transpose for spokesman andrew ross sorkin because this is exactly what you've been saying there is no evidence. >> but you could be a spokesman. >> no, look. there is an absolute possibility -- huawei represents a national threat in that it represents the potential and risk that they can use those routers and servers and devices to ultimately spy on us. i do not believe yet that anyone has pointed to it today in the same way, by the way, that you could argue that boeing is a national threat to china or you could argue that intel is a national threat. >> sisco. >> or sisco. >> you said that. >> we have to parse our words and be careful with what we're saying and then in the larger trade negotiation i would imagine you would have to decide huawei is a national threat potentially and treat them as such or not but then to treat them as a pawn in the trade negotiation --

>> we've done this before. >> zte, is this part of the negotiations. >> but i have to say it is a little concerning. i'd like to know if there really is a national threat and from people i have spoken to in the industry, they believe there could be has there been any evidence? >> it's nuanced. it's nuanced in that when you're doing negotiations all's fair in love and war you can't be naive that we might use this -- used to call it as a pawn i think it's more like a look or a bishop i think it's that powerful but it's not to say that we couldn't extract something that might make it less likely that they were able to do this. >> i also think it's fair and valid to say as tensions rachet up and as relations deteriorate between the two companies -- between the two countries, you're looking at a situation where they could use these two things if we're looking at them as enemies instead of trading

partners and friends -- >> cross verify. you could do something like that we're going to let you in conditionally. if we ever see that you're building out some type of monitoring or surveillance, using a -- you know, the innerds of these devices against us -- >> i don't know if you've read the latest situation between huawei and a company that's here in the united states where they're suing each other about what's happened. if you read the details on it, it's kind of concerning. huawei does have these relationships with a university in china where they were taking information from another company. >> there's no question that all of these telecommunications company represent a national security threat. >> there's support for this as well >> right. >> and i think that's important to understand. the market might get a little bit thrown off sides by it and take a pause, but there's support for the initiative right now. i thought very interesting last night was the announcement that potentially and now we're tackling the real issues, which is currencies, and we're talking

about going after -- finally going after countries that are devaluing their currency and placing a tariff as a subsidy on the currency that that's somewhere that we've never been before and it's an important place that i think we need to be. >> that's another thing hard to prove. and, you know, people could look at qe and talk about that we -- i mean, we basically -- all the -- what our central bankers have done, you don't think our currency would be stronger if we hadn't done a lot of that? >> i think our currency is strong enough. i certainly think there are countries -- >> it would be a lot stronger if we hadn't devalued qe four, five, infinity times should rates be where they are now with where unemployment is >> back to andrew's original point though, i think it's fair to say that the president really confused the issue yesterday by making off the cuff comments saying, yeah, maybe it's all going to be part of it >> he kind of says things that we know are --

>> and make his advisors go like this. >> -- we know are probably true. >> it makes his advisors want to tear their hair out. >> is it counter productive or do the chinese see that, oh,, wait a second. >> it's hard to take the idea of a national threat seriously when you have the president saying things like that. >> once china supposedly pulled the rug out from under us with multiple provisions, that's when we really got serious. huawei your' going to do that, then here's our answer. it is a significant -- we're going to destroy huawei if we can. we're setting up, really a cold war to go on for 20 years. us against the chinese now if i bring that back a little, the next thing you know it could be like canada. >> yeah. >> all of a sudden we get a deal. >> i can flip it around and say i can go to the national security threat issue and say if you believe that's real, and i actually believe long term it is

real, then what do you do about it >> why would we allow it >> are there ways you can manage it >> i think it's very challenging. even if you don't have huawei devices in the united states, you'll have them all over europe -- >> the u.k. now, the -- >> much of the rest of the world. that becomes a back door effectively for china. that becomes the larger conversation. >> 6:13. >> 6:13. we have a lot going on this morning. >> you know we're off monday. >> i heard. >> did you factor that into your mood >> i think that's why i spoke so much. >> you're feeling good >> no, i needed to get it out. >> you have backup >> all right when we come back, we've got the latest battle in the war to lower health care costs. former cleveland clinic ceo is making his way to the set right now to talk about the big changes that could be coming soon as we head to the break, let's take a look at the biggest free

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the senate bipartisan committee put out a package disrupting health care. it could be introduced on the senate floor sometime this summer. president trump is expected to sign an executive order that would mandate disclosure of prices in the health care industry joining us is dr. toby cosgrove, google cloud's health care team executive advisor. dr. cosgrove, it's great to see you. >> it's a pleasure to be here. >> what do you think of what we're hearing in the news. will the plans work? >> we clearly need more transparency around pricing all the way across health care, and i hope that that will begin to put price pressure on and increase competition. >> been hearing about this for so many years, i feel like i've been talking to you about this for the past decade. price transparency, knowing what they're responsible for. how come it's taking so long. >> i think a lot of things take a long time in washington. i think it's a matter of

pressure and a lot of push back by a lot of pharmaceutical industry individuals i think, you know, i would just as soon not see advertising on pharmaceutical drugs -- >> at all. >> -- at all if you are going to do it, i think you have to pair it with pricing because we have all the complications with it. frequently people come into the doctor and say, look, i saw an ad about this on television last night. are you going to give me that drug >> because those people looked really happy in the ad >> always. >> how do you feel about pricing for services and listing it in the same way you walk into the doctor, before you get to the doctor or they say if you're going to take this blood test it's going to cost x. if you do this test it costs -- >> i think that's where we ought to go. we have the transparency around quality. we worked hard at having that. we do not have transparency around cost. it's not a simple thing to do it for example, if you go to the emergency room and you have a stomach ache, who knows whether it's appendicitis or you've got

the flu. >> right. >> that's the problem where you get into costs, pricing. >> there's places like -- andrew, you ran into this. when you wanted to get a screening, some test using a machine -- >> the mri. >> the mri. >> the mri without insurance because i hadn't had the insurance form filled out. they were going to charge $4500 for an mri i know you have to amortize the machine but this is a lot. with insurance -- down the street it was $900. >> there's no question about it. i think that's one of the things you ought to have transparency about. >> but doesn't this become about technology for so many years i have heard about amazon, the ability of amazon to disrupt industries and that amazon eventually will enter the health care space, they will utilize technology to allow for the price transparency you're talking about why is technology not disrupted to this point and why can't

they >> the technology is going to be an enormous amount health care is doubling every 73 days huge amounts of data can't keep up with it. on the other hand, that's the opportunity. now you have the data and you can begin to analyze the data and find things we never expected we were going to see before. >> is that what google is doing right now, too >> the machine learning? >> yeah. >> the things that have come from machine learning are amazing. you now see that you can do voice recognition, you can tell whether somebody is on a drug or not. you can do a retinal scan, make 60 diagnoses from a retinal scan. >> really? >> what kinds of diagnosis can you do from a retinal scan >> everybody who's diabetic should have a retinal scan in a year no way you

ophthalmologis ophthalmologists. >> how many things can you find out? >> 60. >> is this elizabeth holmes new company? >> no. no. >> are you sure this works this time >> yeah. it was sfleld ldeveloped in lon. take a picture of your retina. >> will we get to a place where i can go to a general market where we can go to amazon, within 15 miles there's one for 3800. >> that's been done by some startup companies and it's not gone on for a wide swath you can tell in san francisco how much a mammogram costs and try to direct people to that spot where it's cheaper, less out of pocket costs. >> now i'm worried, andrew what are we getting this for

do i need to worry >> mri >> no, you don't need to worry >> i don't need to be anxious. everything is fine >> everything is fine. >> the results are okay? >> you should be thinking colon no, sir could skoe pis. >> i'm fine. >> do you know what it costs >> the drug? >> no, the colonoscopy. >> to be transparent >> that's true it's interesting we've done a whole lot to put people's quality out there and -- but people don't shop for quality. >> right. >> i think eventually they'll shop for price. >> what's the name of the drug. >> propofal. >> you have the most exquisite colon of anybody it've ever see. >> i said, thank you.

>> next time i'm going to televise it. that's been done actually. what were you? now i'm concerned. what was the mri. >> i ended up not doing it. >> years ago, i had a c 5-c 6 herniation -- >> disk? >> so you got the mri? >> nothing needed to be done. >> we need you to come and diagnose, toby >> you have offered me like a cradle to grave type physical, right? >> yes, i am i can tell you where i want it to start >> i'm just fine there, thanks i'll bring my wife i don't know where you're going with that. >> dr. cosgrove, thank you. >> better than fine. >> coming up, big story -- big update rather on two storied stocks this morning. we're going to talk about the time line for boeing's 737 max fix and the rebounds in tesla shares all that and more coming up. "squawk" returns in a moment i'm working to make each day a little sweeter.

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then i can focus on what i want to do. visit your online broker today, to learn more. welcome back to "squawk box," everybody. an update on boeing. the faa said it would not release a timetable on when it would certify boeing's 737 max airplanes safe to fly. however, this morning a reuter's report says it could be certified as early as the end of june they briefed the u.n. aviation agency privately yesterday it was targeting the end of june for the 737 return of the max.

yesterday phil lebeau was told they didn't want to announce a timetable. >> it could be a month, two months it could be any of what you just said, but it all determines -- it's 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 >> take a look at shares of boeing you're going to see that this morning they're up another $2.46. 353.01 of course, any of the other airlines we've heard from, the u.s. air lines say they expect to see them through some point in june. they expect to see them grounded that's what we've heard from southwest and they say they expect to see those planes down through some point in june. we're continuing to keep an eye on shares of tesla they're higher following a rocky week more than 7% of the value of the stock bounced yesterday after

musk told employees that the company made an average of 900 model 3 cars per day this week that brings tesla closer to its stated goal of producing 7,000 cars per week. he said they were about 10% off. that was a leaked email, not a tweet. >> wasn't a tweet. >> it was a leaked email. >> i saw that when i was on twitter. that's one way to get around the material tweets that the s.e.v. h -- sec has banned. >> morgan stanley comes out this morning, reiterates on boeing. $500 price target. they're reiterating, keeping price targets. tesla, analyst community is going the other way. >> right. >> on the institutional side, one of the biggest developments for tesla in the last ten days has been t. rowe price they had a $2 billion stake in tesla. they liquidated in the first quarter 80% of that stake.

$1.6 billion they took those funds and they made an investment in cruise automation now you have the blackrocks, the vanguards. does this mean you're seeing institutional frustration with the governance of tesla and more negative reaction? >> is that why you you have seen the continued selloff, drip down, drip down, drip down >> i think it certainly gives an indication that there's a loss of confidence about something at tesla, the governance component of it, on the institutional side the selling occurred in the first quarter, not to say that thoer -- >> who's selling now. >> right the remaining 20% could not have been sold now. again, it speaks to -- you think about tesla and you think about esg, right checks the box on the e. does it check the box on the g not so much. >> yeah. that's interesting. >> interesting coming up, fallout from the trade war. we're going to talk about the impact on american truckers. these are guys that can boss a

big rig with the rest of them. what's it going to take for them to keep on trucking. 10-4, good buddy "squawk box" will be right back. hey dad! hello, betee! kaisi hain aap (how are you)? i'm good, how are you? good! so good to see you. it's late, where are you? i'm at work. oh gosh, so late. i know, but guess what? what? 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. onmillionth order.r. ♪ there goes our first big order. ♪ 44, 45, 46... how many of these did they order? ooh, that's hot. ♪ you know, we could sell these. nah. ♪ we don't bake.

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♪ ♪ welcome back you're watching "squawk box," live from the nasdaq market site in times square. good morning, everybody. u.s. equity futures this morning are higher after the declines that we saw yesterday in the market right now dow futures are indicated up by almost 150 points yesterday we did see some pretty steep declines but the dow off significantly. down by about 286 points s&p up by 15 points and the nasdaq indicated up by 41. we have seen four declines in the last five sessions for the major averages the nasdaq, in fact, yesterday closed at the lowest level since march 12th let's take a look at what else is happening news breaking just after 5:00 a.m. this morning. british prime minister theresa may indicating she will

step down. >> it is now clear to me it is in the best interests of the country for a new prime minister to lead that effort so i am today announcing that i will resign as leader of the conservative and unionist party on friday the 7th of june so that a successor can be chosen. >> well, despite all of that chaos, london's ftse is up higher trading up .6 of a percent. the pound is up against the dollar we'll have much more on what this means for brexit and the markets coming up at the top of the hour. time now for the executive edge we are taking a closer look at the impact of the trade war on china with trucking. frank holland joins us now frank. >> reporter: keep on trucking is a saying that we all know that as a result of tariffs and the trade war drivers of big rigs like these and trucking companies say a key source of their revenue keeps on declining. since april of latz year they say they've seen a double digit decrease known as the spot market the rate for standard trucks

that deliver about 80% of consumer goods, that's fallen by 18%. the rate for meat and other perishables falling nearly 14% flatbed trucks that carries steel and others fall 14%. tariffs are a major factor retailers front loaded their goods into the u.s. at the end of 2018 to beat tariffs. now with their warehouses, store rooms and shelves all stocked up, those companies are in the driver's seat when it comes to pricing. >> they say, i don't have to move it right now. i'm going to negotiate a rate that's a little bit lower than i thought i was going to pay initially. >> with the shippers strg the pricing power, it definitely has an effect on our lower revenue it's also dropping to the bottom line where we don't have the ability to increase as our costs increase for 2019. >> reporter: another pig issue for truckers like these is the

declining rate of dual transactions that's when truckers drop off and pick up a load at the same place at the same time we spoke to the harbor trucking association representing companies that served the port back in 2012 that dual transaction rate was 80% this year it's approximately 20%. you have to remember, truckers don't get paid when they don't have a load in the back of their truck. back over to you >> frank, did you get your commercial driver's license? >> you know, we're on private property becky, so i don't need it here but i certainly can't get out on the road. i'm getting the hang of this. >> how many gears did you go through, frank staying in the same gear >> reporter: i'm staying in the same gear. >> how many you got? >> reporter: we have our camera person in front of us. >> how many you got? >> four. four >> that's it >> i could do that >> that's it >> what about the horn have you found that? that's the most important thing.

the horn >> i knew what you were going to do this. >> the kids do that. so the guy doesn't have to do that >> not anymore. >> you're looking for the old school pull one. i'm guessing you're doing this that doesn't exist it's just right here. >> that's what i was doing nothing weird. anyway, thank you -- thanks, frank. coming up -- >> thanks, guys have a great morning. >> our next guest says the s&p will finish at 2800. should you sell and go away? facebook's former chief privacy officer, chris kelly -- is that a joke privacy officer. calling the bald guy curly chris kelly joins us to discuss facebook's privacy officer stay tuned, you're watching "squawk box" on cnbc

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the dow slipping yesterday on trade news. u.s. equity futures are rebounding the dow is indicated up 150. joining us for a look at what's happening in the markets is hans olson, chief investment officer at fiduciary trust hans, you make the point the expression sell in may could really come back with a vengeance this year, which is really sticking your neck out on may 24th when we've had five straight weeks of the dow being down awesome call may could be rough >> there's an addendum to that, sell in may and go away. when you look at the -- that adage, it -- basically the idea is you come back in the fall, which means that the summer period and early fall could be a pretty tough time, which i think it's going to be that's just a function of very sloppy earnings, the reality that we're not going to get a fed rate cut that's kiennd of wishful thinkig we're going to be left with the

reality where we're late cycle where we have a number of different conflicts on fronts that are going to be impacting earnings at some point it will impact growth but not now. >> you say you're sticking with your 2750 to 2800 s&p target, right? >> yeah. >> you're sticking with it, so did you -- have you had that since the beginning of the year? >> yes >> okay. so that first three or four months where the markets gained 20% up to 2950 were you watching in horror? is that what's happening >> disbelief. >> disbelief. >> almost con cussed. >> now it's coming back into -- >> it's coming back to where -- >> it makes more sense >> exactly we'll probably over shoot that on the down side at some point this summer. i think what we're playing for here is you play for the end game what does it look like at year end? it's somewhere between 2750 and 2800. >> you're at fiduciary trust you take this -- >> over 30 years worth. >> i have known you over the

years. you have always been -- would you say you're cautious? is it the tie? what do you think it is? when was the last time you were screaming, raging bullish. i don't ever remember you being like that on the show. you may be right. >> a few years ago, remember, we -- >> i don't remember. what -- there was a time >> no, it was. i was very, very positive on small caps here in the u.s that's where better values were. turned out to be a pretty good call, but i do think though that the environment that we're in right now -- we ran 20% in four months on what >> well, you're speaking directly about the equity market, multi-asset approach i think unfortunately people fail to remember there's other asset classes in this capital market mosaic. high yield, investment grade, municipal bonds all performing tremendously well. what's that signaling overall for the equities market, if anything >> i think if you -- it's been a

flip from what it was last year as you recall. everything was down last year. and so you get some relief or hoped relief from the federal reserve if in language, not indeed you saw risk assets were right across the landscape and i think that that can only play so far. we've seen most of that and now we're running -- the complacency is running into reality. the reality is is that we're going to have probably the balance of this year, certainly on a policy front it's not going to play out the way people had -- >> asking what caused that maybe it was 3.2% gdp growth maybe it's 4% unemployment maybe it's productivity gains? >> without a doubt >> seems like there's a lot of great things to cause that. >> that's right. that's why i think you end up this year about 12% higher than where you started. >> that's where 2800, it would be 12%

>> 12%. >> because of the december selloff? >> yes. >> hans, thank you joe, can you stay till 8 >> as long as you would like. >> he's going to stick around. >> as long as you continue to give me the enthusiastic welcome, i'll be here. >> applause. >> then you told me to have a colonoscopy. it didn't follow. >> coming up, we'll look at a heart wrenching glitch in the tax code that's affecting families of veterans we'll have that story right after the break.

welcome back to "squawk box" this morning military families getting hit by a new tax on survivor benefits that go to children of fallen soldiers joining us right now to talk about the push for a fix on capitol hill is our own ylan

mui. >> reporter: good morning, andrew this is about a glitch in the tax code with heart-wrenching consequences, and that's because it's hitting america's gold star families that's survivors of servicemen and women who died in duty yusineed with lost her husband, daniel, in the navy four years ago and has been raising their sons on her own ever since. >> if i could have my husband back and live on less, i'd totally have him back and be poor, but i'd feel upset because our husbands have given so much and this is how we're being treated. >> now, as a gold star widow, she gets special survivor benefits with a portion of those payments going to her children their money used to be taxed at the lowest rate, generally 12% to 15%, but now many families are finding that rate has tripled to 37% and for wade, it's a difference worth hundreds of dollars. >> i don't think that that's how he thought he was going to leave us i don't think that's how thought we were going to be taken care of. i don't think it's fair thate

should have to take another financial hit and another burden after dealing with all of the things we have to deal with, which is our grief, our children's grief, and the financial burdens that come with all of that. >> reporter: washington is working on a fix both parties say they want to solve this problem, but guys, congress left for recess without reaching a final resolution. back over to you. >> okay. ylan, thank you for that for more on all this, want to bring in our guest, joining us right now is congressman dan kidly, a member of the ways and means committee and chief deputy whip of the house democratic caucus what can -- well, we know what should be done, but what can be done >> well, the house did act on this just this week. we passed legislation, the secure act, which is a piece of legislation intended to bring more americans into retirement security, but we thought since this is about income security, it was the right vehicle so we passed legislation through the house in a bipartisan

fashion that corrects this problem. this is an example of what happens when we have legislation brought to the house, as it was in 2017, the tax cut bill, that really hadn't been vetted, hadn't gone through committee. lots of mistakes this is a mistake that had real consequences for families. we corrected it. and i believe the senate will take it up there was talk that the sent might take it up as early as last night but certainly, when we come back in, this is something with broad support. it ought to get enacted. you know, it deals with the problems with gold star -- the children of gold star parents. it also deals with tribal payments to children that were suddenly going to be taxed at that 37% rate, benefits going to fallen first responders -- the same problem so, this is a significant issue. it's a mistake it was a glitch that should have been caught, but you know, that bill was rushed through and there were a lot of mistakes this is one that we can fix, and the house just voted to fix it,

in an almost unanimous fashion. >> congressman, are there other glitches or mistakes in that original tax bill that you think are going to come to light and that will ultimately get addressed? >> there are i mean, there are a lot of technical problems there's sort of three buckets -- technical issues that were just drafting errors because they rushed it. i hope you could say this falls into that category there are also some substantive issues the way, for example, that the opportunity zone legislation, which was included in it, which is the tax incentives for investing in distressed places -- it didn't include a lot of the detail that we're now finding could skew those investments actually away from the most distressed places into more affluent communities. so, there's a whole number of these things that we're going to address one piece at a time. >> come back to the opportunity. what do you mean by that, in terms of your view that it would skew investment? on the opportunity zone piece. >> well, because it didn't

anticipate that the market would pick the highest performing communities, and it didn't provide any adjustment so that there's greater incentive to go to the most distressed places. in other words, a census track that might be adjacent to a very affluent community in a very affluent region qualifies where a census track in my hometown of flint, where i'm sitting right now, has to compete against that investment with no advantage it just doesn't meet, i think, the intended goal. that's not a technical error that's a substantive error that was not anticipated because the legislation really wasn't given the chance to be fully vetted through the committee process -- >> and it will be addressed? and if so, how >> well, i would like to see some sliding scale or some additional incentives for those really hard-to-invest-in communities. there are some technical errors.

for example, in an opportunity zone census track that has zero population -- in other words, a great big brown field, an empty industrial site -- it might be in a very distressed place and ideal for the opportunity zone advantages it doesn't qualify because the legislation requires -- >> i see, okay. >> -- a poverty rate to be one of the factors it just doesn't make sense, so we want to correct those sorts of things. >> congressman, we thank you for your time and perspective this morning and we'd love to have you back and continue this conversation >> any time. thank you. >> you bet when we return, author ben mezrich joins us for the next hour we're going to ask if facebook should be broken up and why he changed his mind about the winklevoss twins. later, has tesla found a bottom the stock rebounding some over the last two days. we'll talk to an analyst with a five-year target of $4,000 stay tuned to "squawk box" right here on cnbc what do advisors look for in an etf? don't just track an index,

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and facebook under fire. former chief privacy officer joins us to talk privacy concerns. zuckerberg's call for more regulation and the future of the social media giant, as the second hour of "squawk box" starts right now ♪ ♪ war is coming to the faraway towns ♪ >> announcer: live from the beating heart of business, new york, this is "squawk box. ♪ good morning welcome to "squawk box" right here on cnbc i'm andrew ross sorkin along with becky quick and joe kernen. in studio with us this morning is ben mezrich, author of "the accidental billionaires" and "bringing down the house," just released a new book. good to see you this morning. >> good to see you. >> it's called "bitcoin billionaires." you've sort of gone back to the crime of the scene here, the story of the winklevoss twins and their big payoff in crypto we'll be hearing more about all of this in a bit

also joe terranova is with us. joe, also a cnbc contributor, hanging out with us for an extra hour it's like we're in extra innings here, so thank you for sticking around. >> enjoying it. >> we want to show u.s. equity futures real quick this hour we are in the green after a bit of a wild ride this week dow looks like it would open up about 140 points higher now, nasdaq up about 35 points, s&p 500 up about 14 points after a day yesterday -- well, i'll let becky -- >> it looked -- >> it did. >> but it wasn't. >> i keep reading stories saying plunging prices and plunging stocks it was like 1%. >> it was less than 300 when it was all said and done. >> 286, i think. >> looked like it was going through 500 for a while. >> my question for hans, the credit markets, they're okay they're trading okay that's signaling something if this was more like the december environment, i think you'd see the high yield and investment grade market selling off. >> we've got ben here to talk about yield spread. >> yeah. >> and the inversion and

everything so -- >> i'm writing a whole book about yield. >> you're brushed up on all these things where, in copper have you seen copper >> my next book is "copper billionaires." no. >> pork prices up 49%. >> i can't wait -- i like the winklevie. >> you can't look away. >> they're tall, handsome and rich and there's two of them, so i like them doubling -- >> when i first met them, they looked like the bad guys in every '80s movie i had seen, the guys in the skeleton costumes chasing the karate kit around the gym. but i changed my mind -- >> i liked them when they came in and i'll tell you, look, if you have the winklevie versus larry summers and need to pick a side -- i've spent enough time with larry to realize i really like the winklevie -- >> ooh. >> that's an easy one. i agree with that. >> why is that -- >> i don't know. >> i like larry. >> listen, the twins are -- >> larry doesn't like the twins, but -- >> the twins are like something

out of greek mythology i mean, they're identical, they're giant, they're olympic rowers, but the reality is, they're actually a lot smarter and they've been at the forefront of two revolutions now -- one, facebook, and the other one, crypto. and that's not by accident as i lacked deeper into them, i realize i had got them wrong. >> not just one, the "squawk box" revolution, but they have two, which is not easy. >> we're going to jump into all of this in a moment, but meantime, let's get you caught up on the headlines. british prime minister theresa may is stepping down she says she will resign on june 7th after failing to win parliamentary approval for her brexit deal. her successor will be faced with the possibility of britain's departure from the eu without any deal in place. we'll have more on may's resignation in a few minutes. earnings just out from athletic footwear and apparel retailer foot locker the company reporting profit of $1.53 a share. that missed estimates by 7 cents. revenue was also short of what the street was expecting comp-store sales were up by 4.6%

analysts were looking for an increase of 5.1% and that stock is down by about 5.5%. and we're watching shares of dow component boeing according to a reuters report, the faa could approve a return to service for the grounded 737 max jet as soon as late june that follows a meeting on the 737 max involving more than 30 global airline regulators yesterday. boeing shares up by almost 1.6%. as we mentioned, our guest host is ben mezrich. we'll talk facebook, tesla and much more with him, but right now, we want to start with bitcoin, the topic of his latest book and ben, you made me hate the winklevie, the winklevoss twins, in the social network. how did you reassess this and come back to them? >> when i wrote "accidental billionaires," i met them, i thought they're the bad guys mark zuckerberg's the lovable nerd but about a year and a half ago, i read in "the new york times" that they were bitcoin billionaires and i called them up i sat down with them i was never really that interested in bitcoin because math makes my eyes glaze over.

the word blockchain is the most horrible word ever invented. but i met with them and they started to tell me this crazy story, and it made me reassess who they were. these guys speak five languages. they are latin scholars. they can code almost as well as mark zuckerberg. and they had some ideas that may have been part of what became facebook -- >> you need to revise that scene in -- i like larry, too. i was just kidding -- >> his analysis was exactly right, though. >> so they were that dislikable. i don't think larry came off that great either. >> they're guys who wore suits to class they walked into larry summers' office wearing suits that scene larry summers said was exactly right -- >> andrew wants to wear a coat every day in here -- >> you probably wore suits in college. >> i'm happy to wear a suit. i want to know how you got a meeting with them after writing the first book. >> here's what i love about winklevie, and right now i'm the third one, so i can say this they watched "the social network" and they came to the premiere and even though they were played as the big jocks who

were chasing mark zuckerberg around, they also saw in it stuff they liked because they have a 1950s right-and-wrong men of harvard thing going on they really believe in right and wrong, and that's really what spurred them all the way through that movie and so, even though they were characterized that way, they were willing to talk to me and sit down with me and once i got to know them again, i think we got along really well. >> was it awkward? >> i'm terrified of guys like that, because in high school, i was hiding in a locker from guys like that. i mean, they scare me! but after we got to sit down for a while, it wasn't that awkward anymore. >> you're the third -- >> winklevie that's what i call myself. >> that wouldn't be a third twin that be a triplet. but that's possible. remember "twins," the movie? >> what's neat about twins, they're mirror twins i go into this in a book one more day and they would have been conjoined it's a subset of identical twins -- >> what? >> you're so close together, that's why when you meet them and talk to them, they're like talking to one person.

they're mirrors. >> isomers that's very cool. >> that's why they're like one person when you're talking to them and,why they were such good rowers is they're identical, but they're opposite one's lefty, one's righty. isn't that cool? you can learn a lot in "bitcoin billionaires." >> start reading it now, do you mind >> listen, you can read it right now. bitcoin -- it thrilled me when i wrote this book. i knew nothing about bitcoin i watched the stock and i was sad i was not a billionaire because i knew about it at $5. the twins bought 200,000 coins at $7 and then dove head-long in so when it reached 10,000, they had $2 billion. >> do they still have all 200,000? >> they are big believers in bitcoin to 250,000 that's what they say -- >> so they kept it >> they held on to, i believe, most, if not all of it i don't have -- >> they wroed it down, though, from when it was at its peak. >> what's amazing is they rode it to 20,000 where they have $4 billion down to 2,000 where they had less than $1 billion, but now it's back at 8,000 --

>> forget the price for a second what'd you learn about bitcoin, whatever it is. >> that's a great way to get into it. the price is not indicative of bitcoin. bitcoin is the future. i believe that crypto is the future we're not going to be walking around 25 years from now paying with little strips of paper from a leather wallet like medieval paezants, bartering for things everything is going crypto and money not backed by math or a specific country makes sense we live in a world where you want to send a dollar to someone in india in five seconds the way to do that is something that doesn't have an authority in the middle. crypto makes sense i can text you a coin -- >> also the way to do it if you want to do a drug deal -- >> well, that's where it all started. >> you'll have governments that have to decide whether to allow it. >> whether they allow it, because it's money that's not controlled by anybody, and eventually not traceable that was the idea. originally it was all drug dealers buying stuff on silk road, and that's part of the story, but that's where the winklevie come in, because they're not those guys they're the guys in suits that larry summers wants to throw out of his office. they walk into this story and

see this world of drug dealers and gun people and all of these people doing bad things with bitcoin, and they say, let's try and make it part of the new york financial system. >> i've got to ask you about a news story that's in crypto world today. i don't know if you saw this this is the "financial times" saying that facebook held talks with the winklevoss twins over a new currency. >> yeah. >> a secret unit of the social media company's been working for more than a year to create a currency that its users can use to send money back to each other and apparently held talks with the twins. do you know anything about this? >> yeah, this is part of my story. i think between the twins and zuckerberg, it's always personal and i believe back in zuckerberg's mind somewhere, he's seen the winklevoss twins' rise in crypto and he's looking into crypto and now facebook's idea's to launch their own crypto, so who do they have to reach out to it's interesting, now the twins know more about this than facebook does, so they're one of the people that he has to go to to get into this world it's wild, but i really believe it's this personal shakespearian battle that goes all the way back. >> and you think that mark

zuckerberg literally says to himself, wow, the twins are doing this, i've got to get into this >> i believe in the back of mark's mind, he's sitting there with that in his mind. i really and truly believe it. and i know the winklevie wake up every day thinking about zuckerberg -- >> that's my question, i'm sure they wake up thinking about zuckerberg the question is whether zuckerberg wakes up thinking about the twins. >> i believe this is a thing that's going on. obviously, it's a small part of it, he's thinking of world domination because that's what zuckerberg really wants, and we'll get into that. but i believe he built facebook to be the monster it is today. i don't believe it went off course this is the course and i believe a crypto is the next step in that. >> so, if zuckerberg is thinking about it, why not elon musk? why not satya nadella? why not tim cook >> elon musk is someone who people thought may have been one of the founders of crypto. people have wondered who created crypto and his name came up as satoshi nakamoto, not as elon musk but i think amazon has thought

about a coin any big, major technology company has had to think about that next step, because once you have your own money, you know, that's the end game, i think. >> but then is it really a currency >> well, it is it's a currency if we believe it is you know, if we're all able to use it -- >> it's the same thing, the dutch tulips that was currency because we thought it was currency and we thought it had value until we thought it didn't. >> but i can't send you a tulip in india instantly, and that's where crypto has a big advantage over all of these things with crypto, i can literally send you money -- you can walk around with your vault of gold on your phone -- >> but anybody could also make up their own currency, too -- >> anybody can, but if not everybody's behind it, it won't dominate it won't be the one everyone uses if we all accept bitcoin as the next form of money, it is and if we don't, it goes to zero that's what's intriguing about it, it's backed by math, it's backed by crypto, it's backed by all of these things that no person has control over, and there's something appealing about that there's a freedom to that that doesn't really exist anymore. >> do you own bitcoin? >> no.

i own zero bitcoin. >> why >> i've said this on the show before -- i am the worst person with money in the world. and whenever i invest in something, it goes to zero i owned pets.com i owned worldcom i owned every stock that went to zero -- >> so it's like opposite day, if you're watching. >> right i don't carry a wallet because i don't know what to do with it. so, bitcoin i believe in, but you know, i'm not out promoting something that i own i'm promoting the story. i think it's an incredible story. >> all right ben's going to be with us for the hour we have much more to dig through with him, including more on what that he thinks on facebook and what's happening there thanks, ben. coming up, more on this morning's breaking news -- uk prime minister theresa may announcing her resignation effective june 7th the global market reaction straight ahead. plus, is global economic data telling you the true story about the economic impact of tariffs. steve liesman has been crunching some numbers and joins us with the results. you're watching "squawk box" on cnbc the wifi that set the standard,

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>> and that's breaking news this morning. british prime minister theresa may announcing that she will resign on june 7th in what was an emotional speech earlier this morning. and i guess i can't even joke about it i was going to say, we've been able to get one of the winklevie to come in we don't have both of them, we only have -- but you are not the winklevie and this is a serious story. but you are 6'7" and handsome. he's a guy you wouldn't have liked either in high school. >> i would have been scared of him. >> he would have put you in the locker. >> would have been scared of wilf anyway, wilf, i felt a little bit -- i heard her voice and i feel -- >> impossible not to, yes. listen, i think the biggest takeaway for this is that if you look at the betting markets of who's likely to replace her, boris johnson's now the overwhelming favorite, but all of the front-runners are brexiteers so, the big change, if you say why was she able to hold off the headwinds she was facing for most of the last years but not the last month, it's because of the rise of nigel farage and the brexit party likely to top the

polls in yesterday's european elections, and that has shifted the mood of the conservative party to accept the likelihood that the next successor should be a brexiteer, and that's played out in the pound over the last month, down significantly, albeit today it's flat to slightly higher, having been down 14 days in a row coming into this, and it changes the likely shape of brexit. >> those are familiar names up there to you, more than to me, but i remember, is it gove and the lady as well -- >> andrea ledezma. >> she was close. >> she got down to the final two against may the first time and had to pull out. the process is theresa may will remain as prime minister until friday, seventh of june, which means by the way, she'll be in place still for president trump's visit to the uk. >> yes. >> and then the conservative party mps will narrow the contest down to two candidates from that, conservative party members of which there's only about 110,000, will vote between the two, and we'd have the winner by mid-to-late july.

>> is the new prime minister going to be much more likely to be able to get some plan passed than theresa may >> not in terms of a negotiated plan for two reasons -- one, the parliamentary math doesn't change at all because we're not having a general election, and two, the european union maintains that the only deal on the table is the one that's already negotiated, and it doesn't seem like there would be a major renegotiation by that date what it changes the bargain on is whether the prime minister is willing to go for no deal. theresa may wasn't going to do that the market hasn't priced in no deal, but that possibility is higher today than at any point over the last two years, which clearly has implications. >> for brevity and tabloid headlines, shouldn't we be hope for a bo-jo? they're all brexiteers, right?

>> the top four favorites are, and it looks overwhelmingly like it will be a brexit -- >> what happened to the loners >> well, the conservative party is what's in knoectifocus now. pw be interesting to see the results of the european elections sunday night and how significant the shift is. >> see, he should be the triplet, the third, not you. >> i wouldn't write a good book, though. >> you'd like to be a billionaire, though, wouldn't you? >> sure, i'll take it. coming up, tariffs and gdp are the numbers telling the truth about the trade war. check out futures this hour, up about 144 points on the dow. we're coming back. >> announcer: time now for today's aflac trivia question. who played during the first ever mlb night game in 1935 the answer when cnbc's "squawk box" continues [knocking]

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reds and the philadelphia phillies welcome back to "squawk box. multiple forecasts and studies are now out gauging the impact of the new tariffs on the u.s. economy. most are not pretty, and steve liesman is here with the details of these details -- >> it's interesting what happened, andrew economists skipped the idea of even valuing the new tariffs and went to valuing the next round, because now that's the base case the base case now is that they're going to have this 325 -- and we talked about this a month ago, that this idea of tariffs, get ready for it, it's going to stick around, guys. guys, go right to the chart and i'll show you what, just a smattering of some of the -- so, goldman says gdp will come down by 50 basis points nomura less optimistic, saying 30 morgan stanley sees a 25 basis point effect, and the new york fed says it will cost households in four different ways see if i can remember what they

are -- prices, confidence -- what's the fourth one -- third one? >> energy department -- >> dead weight loss. right. i'll get to the other ones later, but here's some of the commentary we've gotten on this. goldman sachs says "the effects would be large because the experience with the initial 2018 tariff tranches showed quite sizable price effects. nomura writes "there appear to be few readily available alternative sources for the consumer goods included in the new round of tariffs we expect most of the impact on gdp growth to come from lower business investment. this is the most interesting one to me. new york fed says "importers are induced to ship to ever more expensive sources of supply as the tariffs rise." and we do not have an estimate as yet from the administration it doesn't appear it has modelled any of the economic fallout. but, so, let me just talk about this dead weight loss idea and this is from the new york fed's paper. if you have a product that costs $100, and it goes to $125, and you look for another source for that product, you're going to

end up somewhere below $125 but still above $100, right? and by the way, the down side of the importer going to or the producer going to another country is we don't get the tariff revenue from that. >> right. >> so, if they go to vietnam and they're going to $124, $120, whatever it is, it's still 20 bucks more expensive -- >> but it doesn't go into the u.s. coffers. >> doesn't go into the u.s. coffers. and the producer spent the time and the energy to find this other source, and that's part of the dead weight loss. >> steve, we talked about this the other day on "halftime." is it inflationary or deflationary >> yes >> to both. >> okay, here's the way -- and we have an imminent economist who's going to answer this just a second, but i'll tell you quickly -- inflationary on the front end because prices go up, and that's just a fact potentially deflationary on the back end as a result of reduced economic growth, so that's some of the thinking around it.

>> let's talk more on tariffs' impact on the gdp and welcome gregory docko, oxford u.s. economist. and these are -- a lot of it is science, but a lot of it is art, too, gregory and i just wonder whether in a period where the fed is actually grappling with the risk of disinflation, or at least they're not necessarily going to exceed their targets, just wonder -- it's never a good time for tariffs, but if you're trying to accomplish something, i wonder if you have more leeway in such a disinflationary environment right now to do it >> potentially i mean, there's been talk of these tariffs raising inflation. and indeed, they will. and if you impose tariffs on consumer goods, the upward effect on inflation will be actually greater and faster. but you have to remember that these tariffs are negative for growth and as growth starts to slow, as

the economy starts to slow, you get a disinflationary effect and our calculations show that this disinflationary effect comes fairly rapidly so, from a fed's perspective, which has that dual mandate of full employment and price stability, they're going to be focusing not so much on the transitory inflationary effect, but really on the disinflationary effect and the negative growth effect. >> and if you assume that consumers are going to pay everything, and i think that that's an art as well, not necessarily a science, because it gets spread out i don't think it's 100%, obviously, to consumers. but $831, i can see that it's regressive that's bad it doesn't hit -- it doesn't tax the rich like you would. but we do tax the population to affect certain things we want to affect in policy or society or whatever so, i can see how you could argue that we will have some near-term costs to dealing with china's trade practices. and at this point, i don't like that it's regressive, but we've

raised taxes for all kinds of things that i'm not sure are productive uses of capital, or at least not used efficiently by the government, so i'm not necessarily ready to just dismiss tariffs out of hand because of that, if they're temporary and they actually result in something. >> well, if they result in some better trading systems or more equal -- >> or the gdp is higher years from now because of -- >> that's a possibility. the risk, though, i think is that as we implement these tariffs, as so far we've implemented a lot of tariffs on intermediate goods, on capital goods, and those tend to be the goods that contribute to potential output growth, so to how much capacity we have in the u.s. economy so, if we're not only constraining consumer goods, but also these intermediate goods, we're actually weighing down on potential growth and so, i think that down the road, the effect is not a positive one, but actually a potentially negative one for how fast we can eventually grow. and yes, there might be some benefits for some industries, but the system that we have adopted or that we're moving towards, where we have these

tariffs in place and then we introduce subsidies to certain sectors of the economy are quite distortionary. >> isn't it true that if we had done what joe is talking about, which is, in other words, essentially implement a revenue program and have a -- that it was paying for another program -- we would have had a study from the joint tax committee, we would have had a study from the cbo, we would have looked at the economic implications and the costs of this, and that so far, there's no such study at all from the administration in what i have chronicled to be one of the largest tax increases since 1993 there is no estimate from the administration of the economic impact what we have here are a smattering of estimates from the private sector trying to understand the economic costs. and i think that's a big, big problem with this. maybe it is the perfect, most beautiful social program we have ever implemented, a series of tariffs to bring back domestic manufacturing. but if that is the case, where is the analysis to show it >> yeah, i mean, that's really the key question i mean, we're not seeing any analysis that proves the point

that these tariffs are actually conducive to increased economic activity we're seeing job losses across a number of sectors. and we've had tariffs now for over a year, which started with washing machines and solar panel cells and then moved to steel and aluminum, and the findings from the different industries are that we've actually lost more jobs than we've created jobs. >> we never know -- these studies are -- they may or may not be relevant, but even after we've done something, there are still arguments. >> that's true. >> i still don't know whether supply side is voodoo economics or whether it was -- >> that's true and when you brought your daughter to the college, you never knew if it was the exact perfect type college, but you spent time thinking about it was that time wasted i don't think so. >> let me ask you, was the reagan supply side renaissance real or was it voodoo economics that resulted in a big deficit >> yes. >> we still don't know so how are you going to know beforehand >> so let's not study it put a blindfold over our eyes and walk out into the wilderness, unawares of what the future and the forward road may bring. >> that's why we have the dismal

science of economist -- >> we sit here and think about it and we may or may not be right, but at least there's an analysis of it as opposed to kind of going off the cuff. >> guys, thank you. >> even afterwards we don't know, so -- >> when we come back -- >> just do it -- >> what else do we do for china? >> just do it. who used expedia to book the vacation rental that led to the ride ♪ which took them to the place where they discovered that sometimes a little down time can lift you right up. ♪ flights, hotels, cars, activities, vacation rentals. expedia. everything you need to go.

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still to come on "squawk box," much more of this morning's breaking news. theresa may announcing she will resign on june 7th we will discuss who is in the running to replace her and what it means to brexit and then, why investors need to think like the king of the jungle we've got john roque to explain that analogy then, former facebook chief privacy officer chris kelly will join us to discuss regulation issues, privacy and the possily ibitof breaking up the social media giant it's time for our memorial day sale on the sleep

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welcome back to "squawk box. i'm dominic chu. let's get you up to speed on the analyst calls, starting with constellation brands, in case some of you are planning to enjoy some cocktails, wine, other things this weekend. shares are down 0.75%. it's an alcohol and now cannabis company. a little over 1,000 shares of premarket volume analysts at morgan stanley are downgrading the stock to equal weight from overweight and cutting the price target to $22 from $230. it's valuation after the run yuf from lowe's this year and a potential for decreased beer demand. shares of alibaba about a

percent or so to the up side 30,000 shares of premarket volume the e-commerce, tech and payment services company that some call the amazon of china has been added to the select list at stifel financial with a buy rating and a $220 price target, citing the recent relative underperformance of the shares to large-cap benchmarks and now trades at an attractive valuation compared to other large or megacap global e-commerce companies so, those shares up. and speaking of e-commerce, the company at the top of the heap, of course, is amazon shares are fractionally higher on around 10,000 shares of volume premarket amazon could be a $3,000 stock within two to three years. that's what analysts at piper jaffray are saying, even factoring in a deceleration of growth across their major operating segments they do maintain their overweight rating, their $2,222 price target assuming current shares outstanding, a $3,000 price target leads to a projected $1.47 trillion market valuation.

becky, back over to you. >> wow, wow, wow not impossible. >> not impossible. and they're saying that things are going to slow down and they're still going to get there within two to three years. >> dom, thank you. >> you got it. >> we should mention, next hour, michael olson of piper jaffray will join us to talk about his big call on amazon that's at 8:30 a.m. eastern time. all right, we have seen some wild swings in the markets the last two weeks or so what can the technicals teach us about those swings joining us now, john roque, technical analyst and market strategist at wolf research. and mike santoli is our senior markets commentary we talked about being the king of the jungle and i started reading your comments and i got so interested in the way that lions actually hunt that i forgot to figure out what you're trying to say about the stock market so, when they hunt, and it's mostly the lionesse senk doing the hunting. >> they're doing the work. >> so the men are sitting around on their fat it. >> mostly like they do everywhere. >> and they only have a 16% to

18% success rate, because i mean, hunting and killing things is tough you can get killed yourself. >> just walking around here's tough. >> around here, it's like living in new york. but your point is, they go after sick or old or young antelope -- >> or weak. >> -- or weak wildebeest, and stuff like that. >> that's how we want to play it with respect to selling or shorting things, target the weak items. >> technically look at what's weak what's weak? >> russell 2000 especially is weak, energy's weak, oil's weak, europe's weak, asia's weak that's the weak spot s&p's hanging in there nasdaq's hanging in there. >> so kick these poor sectors while they're down is what you want to do. >> exactly right. >> is your success ratio going to be better >> i think so, without a doubt just like you want to buy winners, you want to sell losers. >> why is the russell 2000 under so much pressure people would think maybe they'd be able to get past, when you're talking about tariffs and all of these other issues why are they the ones under pressure a lot of them aren't as global. >> first off, i think they're under pressure because about 35%

of them don't make any money that's number one. number two is, i don't think there's any money manager who's going to sell a big-cap stock to sell a small-cap stock there's certainly not enough cap in small cap to make up for what you would sell in big cap. so i think having an inherent disadvantage and i know they outperformed on the initial bounce, but they've been underperforming since february so they're a laggard here. we really do want to sell them we think they're going a lot lower. >> i'll give you three names popular in the marketplace -- ge, nvidia, tesla. are they three examples of what you're trying to classify? >> we think ge is in a spot for buying tesla and nvidia we think will get a lot lower. we think ge has already had its bear market and is rebuilding. tesla we think is elon musk's bubble finally popping, and every bubble that pops, there's a disaster and we think nvidia was faang before faang was faang, and nvidia hasn't bottomed yet, so we think it has a lot lower to go for tesla and nvidia. ge, we would do some buying. >> overall, there are some nonconfirmations that bother you

with the overall averages? >> yeah, so, into april, late april, early may, some indexes made new highs it was unconfirmed by their long-term momentum indicator, and eventually, that has to be resolved it doesn't have to be resolved because we have to come down a lot. it just has to be resolved because it's a combination of price and time or time or price, but we don't think we're going up from here because the internals don't suggest it and i'll leave you with one last item we score every item that's in the s&p 500 on a zero-to-four scale, four being the best, zero being worst. and right now there are more zeros than there are fours so, until that equation gets to an extreme, where there are a great many more zeros relative to fours, we think it's going to be hard for the s&p to rally. >> ben, when you sat down, you were talking about the momentum indicators not considering the advanced economy -- >> i don't know about tesla's stock, but i love elon musk. i think elon musk is the future -- >> do you -- >> she just said don't love -- >> you love him from the perspective -- >> don't buy the stock -- >> can't we let him make his

magic cars if elon musk is watching, call me i'm a billionaire's best friend. i think elon musk, a billionaire and a scientist together saves the world. >> you like him from the perspective of being a great book let's be clear about this. >> but also, it's guys like elon musk that make the future. listen, his crazy car is the future and his crazy going to mars is the future and his tunnel under l.a. is the future. let him do it, you know? he's got the money and he wants to do it. >> mike, bring us back -- >> it will probably happen whether he's running a public company has been my view about this for a while. >> but that's the issue. you can separate the man from the company and the stock. he's saying he's pushed humanity forward and he's done all these remarkable things -- >> listen, all the problems in the world are going to be solved by a billionaire married to a scientist. that's what i believe. you know, global warming, you know, all of these things. you take a billionaire and that's -- >> i think it's climate crisis >> can you bring us back to the present? >> just to take off on what john's saying -- the market has been obviously kind of held

where it is by a relative minority of sort of safer defensive stuff, big growth stocks, so stuff that didn't need to have the economy do great things to work and i think yesterday you watched the market completely chase the bond market around >> right. >> at 3:00, treasury yields just lifted a little bit off their lows and the stock market bounced into the close, and that was the whole scotory yesterday because why? what's the message of very low yields and a flat yield curve? we know. i think it's getting interesting in the sense that the second half of this year was supposed to be, okay, economic reacceleration, profits growth the second half of this year is five or six weeks away at this point. so now that's where we are in trying to figure out if it's going to happen, quote, on time. and that's to me why the market has felt stuck but also, i don't think it's about waiting for resolution it's not going to be some kind of satisfying moment of trade resolution it's going to be either the market gets kind of washed out enough and people say, hey, yields are so low, dividends look fine relative to those yields, a lot of cheap stocks. we'll just buy them.

most of the gains in this bull market have happened when something we were really afraid of didn't happen and that's what we're kind of waiting for. >> mike, the last thing we were afraid of was earnings you now have a vacuum, basically, of five to six weeks of no earnings how should we be -- >> i think that's still sort of out there as okay because they haven't fallen apart, but you haven't seen the signs that the estimates are going up and that you've had an excuse to raise estimates. >> let me get mr. roque's comments on that you always make things -- andrew, he does this where he makes it sort of entertaining. so, heckle and jekyll, tom and jerry, scooby and shaggy, you've got all of these -- >> those are the next ones -- >> but it's like copper and oil. copper is getting crushed. you think oil is a short >> it's almost unprecedented to think that oil and the energy market could be in a bull market while the rest is in a bear market so we've been sellers for a month and a half >> you think it's indicated lower. what is copper indicating? >> maybe there's going to be slow growth in industrials just pay attention to price. >> got a glazed look

he just mentioned elon musk with copper anyway, thank you, john roque and mike santoli. coming up, we're going to talk more about facebook under fire ben mezrich is joined by facebook's former chief privacy officer after the break. stay tuned the wifi that set the standard,

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sacrificing quality, security, civility for clicks. >> that was facebook co-founder chris hughes with nbc's kate snow and the former roommate of mark zuckerberg calling for the breakup of the company and says zuckerberg has not been accountable for shareholders yesterday, zuckerberg fired back in a conference call, saying the company has plenty of competitors and its scale helps it tackle abuse. zuckerberg also argued that antitrust remedies would not end up solving the safety issue, something he says regulation needs to tackle. zuckerberg's call for government oversight has been focused on issues like content moderation, but that wouldn't fundamentally limit facebook's power want to bring in chris kelly to this conversation, former facebook chief privacy officer and he was also the company's first general counsel. also our guest host this morning is ben mezrich, and we welcome both of them to the conversation. >> thanks for having me. >> chris, you heard what mark zuckerberg said yesterday. is he right or wrong

>> oh, he's absolutely right you have to actually have scale in order to address these problems obviously, some of them are caused by scale, but the only way to have that, you have to have a very profitable company and invest heavily in the artificial intelligence and machine learning that it takes to catch this stuff ahead of time the company is working very hard at getting better at that. >> but chris, when mark zuckerberg says "we need regulation," right, is that a cop-out? is that effectively not a head fake, but a way to effectively push off -- i don't know if it's the inevitable -- but to push off what may be some of the very hard decisions that have to happen there >> no, it's an honest engagement with what the future should look like it's a thoughtful process of how do we actually address the problems that we're talking about instead of structure remedies and when i was on last week, you know, one of the things that's missing in a lot of this commentary is understanding that under antitrust law, you actually have to prove a monopoly first. >> right.

>> and it's still not even close to clear that there is one for facebook here. and then from there, you have to decide whether a structural remedy is appropriate. and just sort of smash the company is not a strategy at the end of the day the company's talking quite actively about community and that's what -- >> chris, i don't disagree with you at all, but i think perhaps ben mezrich, who's on the set with us, may disagree. >> i have to jump in. >> sure. >> a couple things first of all, i think chris hughes is very smart, but i disagree with the idea of breaking up facebook because i think -- >> so we're together on this okay. >> i think these things tend towards monopolies i don't think you can have facebook without it dominating, and i think that was always mark zuckerberg's goal. i think facebook is the monster mark zuckerberg always wanted to create i think he's always believed it should dominate, and that was the word he used in his instant messages when he was making facebook and these things -- facebook isn't fun unless all your friends are on facebook. so, if facebook was broken up, one of these things would become the monopoly otherwise, you don't use facebook that's why facebook needs to

monopolize these technologies -- i don't even think the word monopoly works anymore for these technologies it's not a monopoly in the sense that nobody can compete with it. it's a monopoly in the sense that we either all use facebook or none of us use facebook so i don't think breaking it up -- then we all shift to instagram or whatever's next i think the problem is, you've got -- and you're saying this as well -- you've got to deal with the issues of it now, i differ from you in that i think these issues were zuckerberg's goal all along. i think he doesn't believe in privacy the way we do. i think he always wanted to break down those walls i think he thinks the world is a better place when we share everything and the world becomes a village. those were the initial goals of facebook. >> you don't think he's had an evolution in his thought process since then >> i think he's definitely not the kid he was in college that i wrote about, but i do think he's genuinely surprised when we push back at these things and then he deals with them with a band-aid, then he's surprised again, then he deals with a band-aid. >> chris, you want to take that on >> sure, absolutely. there's sharing and interconnection, and this is the first time that we've really, really had a complete

interconnection of the world and it's not even there yet. it's where -- you know, it's about 2.3 billion on facebook now. but that complete interconnection of the world, the ability to message everybody else on the network to share efficiently and effectively is definitely one of the visions of facebook but to do that, you actually have to provide context and privacy and control over time, and that's one of the things that is still, you know, sort of embedded deep in the technical architecture of facebook, and there may have been some changes over time and maybe not enough attention paid to that technical architecture, but that's certainly part of the discussions that we were deeply engaged in when i was there ten years ago. those technical underpinnings are still there. >> chris, do you think that the pivot that mark zuckerberg is making towards privacy can be accomplished at the same time that the business goals of having this global village -- >> this dominated village of -- >> -- exists

meaning, can you have privacy at the same time that you have this networked world. >> i think you can it's just not what some people have thought of as privacy if you mean privacy means that i can be a hermit and i can avoid any accountability and nobody ever sees anything that i do, you're not going to have that version of privacy in an interconnected world it just won't exist anymore. and it never really existed in some ways. but if you're talking about privacy means that you get to control your audience, you get to decide who you share what content with, that's a very powerful thing and the supercomputers that we carry in our pockets that talk to supercomputers in the cloud to help route that content is a massive step forward in human history. now, it enables people who are bad actors, who try to amplify division, and that's one of the things that has to be dealt with you need more transparency on people not being able to hide behind, you know, hide behind rhetoric over time in order to drive that, and that's what

facebook is doing in the political realm right now. >> are you -- >> go ahead. >> i agree with you on these issues the part of the privacy and the data stuff that bothers me is the whole idea of targeted ads and user experience. and i keep hearing from facebook that it enhances your user experience the more data that's shared, because the ads are more targeted nobody wants any ads, and everyone tries to look away from them -- >> but nobody also wants to pay for the service either, so you have to figure out a way to do it. >> i think that a subscription -- as much as people don't want to pay for something, doesn't a subscription method get rid of the targeted ads and get rid of the fact that our data can be sold to somebody else? >> so again, the company has always had a policy of not selling personally identifiable data it provides a targeting mechanism based on demographic characteristics, et cetera, which i thought when i was there and i still think is a principled privacy stance. from there, obviously, people don't love advertising in any context. they're not going to love it when it comes on in the next commercial break on cnbc either. >> right. >> you have to actually think

about how the business model works. and one of the key things that facebook has tried to do is provide a free service to the world that provides this interconnection. paying for that, they've managed to build a great business that allows them to invest billions of dollars now in some of the problems that interconnection creates, and that's what they seem to be focused on, which is -- >> chris, we've got to run, but i need to ask real quick i talked about this idea of know your customer, that maybe -- you know, there's so many fake accounts is there a different way to solve that and also, we were talking about the, like, live video yesterday. >> yeah. >> should that be allowed? >> why not just put a delay on it -- >> be able to broadcast everybody in one shot? shouldn't there be a delay or some kind of closed system >> well, the one-strike policy they've adopted now i think is probably the right way to go at this point you don't want to discourage people from using a new tool and discovering sort of great, new uses for it, but generally speaking, obviously, if somebody's setting something up, there will be other indicia of problems beforehand and you can cut them off. >> okay. we've got to run we appreciate your time, chris

thank you so very much ben mezrich is going to continue to be with us. >> i am. i've got more to say. >> i know you do thank you. and we should say thank you to joe, who's taking off. >> thank you for being with us. >> holiday weekend. >> have a great long weekend. >> yeah. >> great to see you. >> you've get a day job before you get to go, though. >> i do. coming up this morning, big market movers. and later, mike novogratz of galaxy investment partners, yep, he knows a little bit about crypto coming right back.

breaking news. british prime minister theresa may is stepping down amid a brexit crisis. >> today i am announcing that i will resign as leader of the conservative and unionist party on friday, the seventh of june. >> why investors need to take notice a bullish call on amazon a piper jaffray analyst tells us why he thinks the company may be worth $3,000 -- the stock, that is -- in two years. plus, a hedge fund titan michael novogratz is here with his best investment ideas as the final hour of "squawk box" begins right now ♪ hot town summer in the city ♪ back of my neck getting dirt and gritty ♪ >> announcer: live from the most powerful city in the world, new york, this is "squawk box. ♪ good morning and welcome back to "squawk box" here on

cnbc live from the nasdaq market site in times square i'm joe kernen along with becky quick and andrew ross sorkin the futures have moderated gains to about 100 points now, up 150 earlier, nasdaq indicated up 22 and the s&p indicated up just under 11. today's top market story -- british prime minister theresa may is resigning after failing to get parliament to agree on a brexit plan. >> but it is now clear to me that it is in the best interests of the country for a new prime minister to lead that effort so i am today announcing that i will resign as leader of the conservative and unionist party on friday, the seventh of june, so that a successor can be chosen >> take a look at how the british pound has been reacting to this. it's stronger against the dollar today, and stocks, the uk, the ftse has been higher all morning long as well okay, corporate news to bring you this morning tesla shares are bouncing back after hitting a 52-week low

earlier this week. phil lebeau has been following the company for us for so many years. phil, it's nice to see you, though -- >> andrew! >> -- they're sort of panning up on you there. >> whoa! >> hey, there, now we're at equal -- oh, now i'm going up, you're going -- who knows what's happening here. >> let's get some elements on the air so we don't see me moving all over the place. let's talk a little bit about what we're seeing with regard to tesla. you mentioned that the stock did bounce back a little bit yesterday. so much of the focus right now is on what's happening when it comes to the liquidity outlook for tesla, if you will the current cash decision after they did the latest capital raise, $4.5 billion. debt payments -- the really big ones really don't come through until 2021-2022, so you essentially have now through the end of 2020 where tesla has pretty decent financials with which to see how business shapes up, and that comes down to model 3 production remember yesterday there was the email that came out from elon

musk to the people at tesla, saying, look, we're making good progress we're producing about 900 model 3s per week, but that's 10% below the target of -- or per day -- making it 7,000 per week. so, they're about 10% below the target as you take a look at shares of tesla, keep in mind, guys, that the big focus is going to be on this model 3 production and model 3 sales, and we don't get those numbers in terms of deliveries and sales until the beginning of july. so, you've got a pretty good stretch here where maybe we get more emails from elon musk, emails that are sent to the staff that then are leaked out where he says things are going well, you're doing well. in the meantime, however, we are in a period here where there are not a whole lot of benchmarks along the way to getting those model 3 numbers. >> hey, phil, thank you. let's talk more about tesla. joining us is tasha keeny, an analyst at arc invest.

also, bryce doty, senior portfolio manager. it takes both sides to make a market here and we have both sides represented in this debate this morning bryce, i want to start with you, because right now tesla's bonds are rated junk do you think they should be? >> without a doubt they're rated junk for the right reasons. i mean, they continue to bleed a river of red ink it's difficult to predict the future it's incredibly competitive environment they're in they continue to miss sales forecasts and production forecasts, so it's a pretty dicey situation. you know, the bonds they issued last week -- i mean, it's amazing that they're down 12% already. that's wiped out $200 million for bond investors even for a junk-rated bond, that's pretty tough to take. i think what was happening was that people realized, investors realized they could buy the convertible bonds, short the stock, and even though the bonds are down 12%, stocks are down

more, you actually made 5% or 6% in the last week those are the kind of situations that we like to stay away from, and i think the junk rating is more than warranted. >> tasha, at arc, this is one of your biggest holdings, tesla it's an important one for what you have why do you have conviction, and what do you think's going right with this company right now? >> so, at arc invest, we focus on innovation. so that's what this is it's an innovation story and i think right now people are misunderstanding that. when you look at tesla and you think about sort of the most common bear cases, it's that there's no demand for the vehicle. that's absolutely insane i mean, we found out in first quarter that over 69% of trade-ins for the model 3, for the standard range version were nonpremium vehicles. so they're pulling in demand from other segments. they outsold their next best competitor by 60% in the premium vehicle segment. i mean, people clearly like these cars, and for a good reason i mean, tesla has a software advantage that no one else can beat.

>> under elon musk's own admissions in the letter he sent to staff yesterday, the email he sent to staff, though, they are running behind the targets and i think that becomes a question when you have a big valuation, you have a fast cash burn, and you're not meeting your own expected deliveries. >> yeah. i mean, so, first we know that elon musk sets extremely aggressive goals, right? i mean, that's sort of tesla's m.o., to set this really aggressive goal, and then you do everything you can to meet it, and often they fall short of it. but in doing that, in sort of pushing to that target, they've been able to achieve the impossible so far. if we talk about cash and those worries, i mean, in our valuation model, we actually expect -- we have tesla raising an additional $10 to $20 billion in the next five years. >> wow. >> and we're actually okay with that, because we want them to get as many cars on the road as possible because -- >> that adds to your position pretty significantly -- >> we'd be okay with that dilution because every car acts like an r&d for tesla. we want them to produce as many cars as they can, get them out

there and then run a fully autonomous taxi network -- >> what do you think is the fair price for the stock then >> in our bear case, assuming no autonomous at all, that's $560 in five years. our bull case, we actually think it could go north of $4,000, and that's with autonomous driving. >> and were you surprised about the demand fall-off after december >> you know, they had obviously logistics issues with deliveries so we would have expected that -- >> you put it all on to logistics? you don't believe there's any demand issue at all? >> no. i think it's absolutely insane -- >> they are just underproducing. if they could just produce as many cars as possible, they could sell every single one of them that's humanly buildable? >> yeah, i mean, the question is, what are you expecting that -- how far do you expect them to fall, considering that it was the top revenue grossing car in the u.s. last year? it's hard to say that all of a sudden there would be -- >> bryce, what's your response to that? >> well, whenever i hear things like impossible, it's another red flag for me. i've made a lot of mistakes

investing, and there are certain tell tale signs that you look for. a lot of manufacturing companies can make just amazing, amazing technologically advanced products, and there's no market for them because they can't sell them at the price that anyone would be willing to pay. so, if you increase the price of the tesla cars to the point where it actually covers the cost, plus had a reasonable profit margin, you know, the demand follow-off would be precipito precipitous. and that's the problem everyone's having with electric cars electric vehicles are really not that new anymore in terms of innovation or technology it's the innovation, or the thing that we're looking for as investors, like, who can do it in a way that you can get consumers to buy it at a profitable price point, and that's the challenge that i don't see anyone really having solved so, that's the issue it's not just being able to produce the cars it's being able to find buyers that really have that much kind of cash to pay not the subsidized, reduced price that is producing all of these losses

and the black hole of all investors' money going into it -- it's, you know, how are you actually going to turn this around to make it sustainable and viable >> i mean, that chart doesn't say anything to you? does it indicate anything? this sounds like a story -- $4,000 that sounds like a story stock autonomous taxis i mean, can you really balance your checkbook with, you know, sort of pie in the sky, you know, sort of predictions like that, or -- >> you know, so, i'd like to talk about sort of the ev market in general -- >> what? >> i'd like to talk about the ev market in general and this issue, again, of people thinking that there's no demand for these cars >> well, what's the -- i heard you say that about demand. what's the stock -- what do you attribute that chart to? >> the tesla chart, the price chart. i think that's people misunderstanding the tesla story. >> i agree 100% you know, target schmarget we want our automatic electric fleet of taxis don't you want that in everybody wants that. >> sure! >> i want a jettisson car with e

same sound -- >> i'm making you the jetson car -- >> i am not going long yet -- >> she's completely right, the future is going to be tesla cars -- >> sure, but you have to -- hold on -- >> everywhere you go you're going to go on your app, say tesla car, get me. it's going to pick you up and take you there. >> the thing i don't understand is, let's assume that the future of the world is ev cars -- >> yes, and bitcoin. >> and let's assume the world is robotaxis, okay? but let's start with ev cars what percentage of the market does tesla have to be to make all this work? because it sounds to me like we're talking that they're going to own 50% of the business, which is a huge part of the business i don't know that -- there's very few industries where somebody literally, unless you're facebook, controls 50% of the business so you start there then the second piece is you get into the robotaxi front, and you say to yourself, okay, there's uber who's running around, there's lyft who's running around, there's waymo who's running around, there's cruise running around, there's everybody in china who's trying

to do this, and i'm not dismissing -- i think tesla may actually be advanced in some ways, but also, you know, there's questions about lidar. there's all sorts of things going on here. so there's a huge risk element, putting aside everything else that people question about tesla. >> yeah, so, i'd like to touch on that because i don't think they'll have 50% share of the market i think evs will surprise. our forecast is that there will be 26 million sold in 2023 that's much higher than people expect, and it's because battery costs are declining. so, there's going to be this crossover point where an ev is actually cheaper than an ice car, and that's what's going to cause this demand uptick so, we're actually thinking that tesla -- tesla's market share right now is 17% over market and in our bear case, that goes to just 6% -- >> 17% of the overall ev market. >> ev market. >> just saying not all cars, because it's a small piece of it. >> exactly and that's another great point, that evs are a very small percentage of all cars sold right now. so our bear case is they'll go to 6% market share and our bull

case is 11%, again, down from 17%. and then when you look at the autonomous market, sure, there's competition, but no one can match tesla's data advantage waymo's missed time lines. cruise, you know, mary barra will not reiterate that they're going to launch in 2019. it just seems like this is a very difficult problem to solve, and with tesla's data set, they're best positioned to do so. >> tasha, bryce, thank you both for coming in. >> we also need to say thank you to ben mezrich thank you. >> "bitcoin billionaires," go get it it's a fun book to read. >> thank you, appreciate it. >> your flying car's waiting for you. >> flying car. >> it's waiting for you. beyond meat! we're going to go from this to beyond meat. never going to eat a cow again soaring in its public debut earlier this month, and this is not just a one-company story jane wells is grilling up the details for us this morning. where have you been, my jane >> reporter: well, sleeping. we're getting a very early jump on the summer grilling season

for memorial day, and in the real meat versus fake meat war, fake's getting all the hype, but can supply meet demand we talk to the beyond meat ceo, when "squawk" returns. ♪ about trust and speed. i need it to guide this analyst to customize flood coverage for this house. so that this team, can inform this couple, that their payment will arrive faster than this guy. hey. ♪ ♪ so whether i'm processing claims due to this fine gentleman... (car engine starting) or suggesting premiums for this young lady... ai can help change everything at this company. expect more from ai. ibm watson. onmillionth order.r. ♪ there goes our first big order. ♪ 44, 45, 46... how many of these did they order? ooh, that's hot. ♪ you know, we could sell these. nah. ♪

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welcome back to "squawk box. the red meat market worth about $900 billion globally, but the fake meat competitors are looking to take a big bite out of the business and jane wells joins us this morning with some of those details jane, nice to see you. >> reporter: andrew, okay, one of these is fake meat, one of these is real. i'm going to let you decide shortly which is which yeah, barclays suggests that the alternative meat market could grab up to 10% share of the total market you're talking about around the world, and yet, beyond meat is only known in about 1 in 50 households there's also another barrier which may be cost. the beyond meat patties i bought last night cost over 50% more than regular meat. the carl's jr. burger is $3 more than the regular burger and has more calories, though zero cholesterol and less fat even so, demand is ramping up like crazy this summer impossible foods has warned of potential shortages. beyond meat has had supply chain hiccups before in the last couple years, and the ceo tells

me he's not going to let that happen again >> what i charged the team was to be available to have capacity and feed stock and ingredients sufficient enough to go twice the levels of demand we expect, so we don't have a supply issue this year. >> reporter: how long do you think it will take for the price to be comparable >> i set a goal within the company, an internal goal, but it's a five-year program to at least in one category or one product to be able to underprice animal protein in a significant way. i'm hoping in the beef category, but i don't know yet. >> reporter: all right i managed to gorge myself in their r&d kitchen. the company is in its quiet period before reporting earnings for the first time as a public company june 6th now, one reason why the cost is going to take a while to come down is because he says he has still a pretty young supply chain. and you know, he's got to convince more farmers to cut out the middle man, which is the cow. he says give him the plant material directly and he can

process it with less land and water for the same amount of protein, so that will be interesting to see guys, back to you. >> all right, jane i used to live in monrovia i had a house there. i know exactly where you are san gabriel valley, kirkwood. >> reporter: it's beautiful. it's beautiful. >> yeah, good job. >> reporter: do you know which is which here? can you guess? >> if i tasted it, i think -- >> the one on the left is real, right? >> if i tasted it, i could tell you. >> the one on the left -- >> reporter: this is fake -- >> oh! i guessed wrong. >> reporter: this is fake -- >> the one that looks bloodier is fake? >> reporter: and i'm telling you -- yeah. yeah and it almost smells like meat and i have to say, when i tasted it yesterday, maybe, you know, you get condiments on everything no, it's really -- you get that meat after taste essence it's pretty freaky, you know but the point is, it's still more expensive and you have to make that choice. >> is it lower calorie >> no -- >> it's not, is it >> reporter: no, it's more calories it's more calories but lower fat and zero cholesterol, and then

you don't have, you know, a cow involved, if that's an issue for you. >> right. >> right and we've seen the cows on the chick-fil-a commercials. they do not like -- >> eat more chicken. >> -- what happens and i'm sure that's the next -- they're going to be carrying these beyond meat signs soon eat more -- >> reporter: that's a great idea. >> but they can't spell for -- they're terrible spellers, actually chicken, c-h-i-k-i-n and stuff but why would they be able to spell? they're cows they get mad, too. >> reporter: that's a real failure -- >> mad cow jane, thank you. monrovia, san gabriel valley, off the 210, i believe the beyond meat stock is up over 200% since its ipo barclays is bullish on the entire meat substitute industry. an ai note from the bank this week estimated that the alternative meat market could reach $140 billion in the next ten years. that's only 10% by then of what the meat market will be -- meat market joining us to discuss the industry, andy levit, founder

and ceo of purple carrot r.j. is a senior restaurant and retail analyst at morning star andy, you're more vegan-based meal kits. i think you see the potential of beyond meat, but you're here and now. they may be a little bit more in the future >> you know, i really love what beyond meat has been doing, and they've really been catering to the kind of consumer who wants to reduce the amount of animal protein that they're eating and start to embrace a bit more plant-based foods. my company, purple carrot, caters to that same type of audience, where it's not just -- you know, it's sort of vegan food for non vegans is essentially our play and we've been at it for about five years. >> what would i be able to get down i mean, just gag down? i mean, i can't give up carbs, so i don't know how i'm going to give up normal food. but what would the best thing you've got for me -- i've got to eat something for a week and not, you know, not hang myself what would i have to -- >> yeah. >> what would it be? >> you know, it's an interesting

data point that 82% of purple carrot customers are just like yourself they're omnivores and think initially how am i going to survive. >> right. >> and i think what our culinary team has done such great job of is creating culinary meals that surprise people with how delicious the flavor is, where you don't miss the meat, you don't miss that flavor i think what beyond meat has been doing is helping people get comfortable with that idea, i'm not going to eat meat, what's that going to taste like, how could i survive a week and they're helping grow the whole category of people who are interested in more plant-based foods. >> r.j., do you know what -- i mean, what would you order at a vegan spot >> yeah, that's the same thing i'm going through, too, is you know, finding myself -- i've been an omnivore, trying to get into this space more and more. and as i think andy made a great point -- beyond meat's really helped to break down some of the stereotypes about plant-based and vegan-based -- or plant-based products they've done great job they have it in the meat section at the grocery store, so that's a first step

as jane pointed out, when you grow, there's the same taste and aroma. and i think as there's experimentation and curiosity about the product, i think more and more nonvegan customers will try this out maybe not a full replacement, but rotate it into the diet, every quarter, every couple months i think that's a starting point. we'll see where it goes from there. >> do you have a preference for beyond versus impossible, r.j., in how you cover these things? >> yeah, i mean, at this point it's interesting, and i don't really have a preference over either one at this point, but what is interesting, too, and i think jane hit the key point here in talking about the fact that supply's going to be the key. already talking to a lot of restaurant companies that are already having to start to pull the product off their menus or just they can't serve it because there isn't enough supply. so, i think that's going to be the key. for restaurants to make a splash in this, the key is going to be getting enough demand, making sure they manage expectations. but in terms of the product

itself, i found they're both very good and i think that they will change a lot of people's minds about plant-based proteins >> they're going to continue to, i guess, make advances, right? this isn't the final product for either, is it, r.j.? >> i don't think it is i mean, i think -- you know, it's not just the key products right now. there's beef and, you know, a pork substitute for most of these companies. but i think they'll branch out into chicken and other products at the same time when that happens, that's interesting because then you capture any vote at the restaurant people coming in, families, i mean, you'll be able to satisfy any dietary preference really with the full suite of products, so by no means are they done. >> andy, what do you think is coming >> with respect to the plant-based movement >> yeah. >> i think the movement is alive and well there's really a whole revolution coming. consumers are both thinking about how to improve their own health as well as the health of our environment. >> what's the cool, like what's the 3.0 version of the burger? >> you know, it's i think just more flavors, more textures.

it continues to replicate the same concept that people are used to having with animal protein. and so, it's -- >> is your business mostly on the coast or in the big cities or is it everywhere? >> it's a great question we started out on the east coast. we're a boston-based company and we actually find that we've got incredible national distribution of our product. we certainly cater to more forward thinkers, and that tends to be -- we have a lot of folks on the east and west coast, but it's amazing how our demand has grown in the middle part of the country as well. >> all right, r.j., thanks andy, thank you. >> thanks so much for having me. >> thanks. >> nice seeing you. >> you bet. coming up, the bullish call on amazon. it is a very bullish call. a piper jaffray analyst tells us why he thinks the company may be worth -- are you ready for this one -- $3,000 a share in two years. we'll explain in just a moment thanks for the ride-along, captain! i've never been in one of these before, even though geico has been- ohhh. ooh ohh here we go, here we go.

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economic news. durable goods minutes away, plus a bullish call on amazon the analyst who says shares may be worth $3,000 apiece in two years. then, hedge fund power player michael novogratz will join us. stay tuned you're watching "squawk box" here on cnbc i consulted with your grandmother's doctor. we can do the screening at her house. hi. this is the man that's going to check your eyes grandma. cognizant ai solutions are helping healthcare companies advance diagnostics and prevent blindness in patients with diabetes. everything looks good. you have beautiful eyes. ♪

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we're just seconds away from the latest read on durable goods. exactly 12 seconds from now, 11. the futures right now are up 106 points a gentleman named rick santelli, standing by at the cme in chicago. and he's going to give us some numbers right now. rick >> all right preliminary read on april durable goods, down 2.1%, not good, but pretty close to expectations we have a revision, 2.6% last look it's downgraded to 11.7%, ex-transportation, unchanged, also close to expectations last look, lost 0.8% capital goods orders, nondefense aircraft, proxy for capital spending down 0.9% that's about triple what we were expecting. we were expecting down 0.3%. also, retrograde there from 1.4% to only 0.3% and if you look at shipments

versus orders, that was unchang unchanged, also close to expectations and the downward revision there as well from unchanged to down 0.6% so, these are preliminary. they can fluctuate but really, nothing good here, nothing horrible, nothing good we see interest rates still continue to hover at lower bounds, the low end violated some important support levels. you know, 2.39% is where we closed 10s last week we're 2.39% now, we had 2.29%, hovering halloween 2017 levels becky, back to you >> stay here let's bring in steve liesman he joins us with more on this. steve, what's your reaction? >> i'm going to give you the easy part. the easy part was the decline in boeing orders -- expected, okay? this is the max coming through and by the way, i don't know how much we want to "x" this out because there will be an economic impact. usually you have this volatility in aircraft orders and we xlts

it out and it comes back with another one. now how enduring is the phil lebeau story we'll have to follow him on that down 29% on nondefense aircraft parts. rick is 100% correct that this is one of the most volatile series we have and i did some work on this. you don't know if you're -- which side of the zero line you're ever going to be on on this number. that said, we watch it very carefully, and the nondefense capital goods ex-aircraft being down 0.9% is worse than expected it was up 0.3% the three prior months, so that's okay and as you know, becky, we've had a running conversation about what's been happening in the wake of the tax cuts to equipment spending and business investment, okay so, i brought you two reads. it doesn't include today's data, but it's a longer-term look at the quarterly data two reads on business investment there's two different channels we're looking at equipment, which is weird -- it's been -- sort of the growth rate has been down since the tax cuts were implemented.

and then there's intellectual property, which hats off to barry knapp on this, who's really pointed me to look at this as the way the tax cuts might be having the biggest effect is intellectual property, software, and things like that some of that could be repatriation of the licenses for intellectual property here in the states but it's done relatively well. so, we keep watching this, keep looking for the impact and now we have to start looking for a potential impact on business investment from the tariffs, and that's one of the channels that we talked about in the last hour that economists expect to see it. >> all right we are out of time i'd love to talk to both of you more, but gentlemen, thank you both for joining us, steve and rick and we will talk to you guys next week when we come back, too. new this morning, piper jaffray's michael olson out with a note making the case for amazon's stock to reach $3,000 in the next two to three years that would be an increase of more than 60% from today's levels joining us right now on the "squawk" news line, michael olson, senior analyst at piper jaffray. michael, thank you for being with us this morning what gets you to this

conclusion >> yeah, what we're really doing here is making a valuation argument that if you split amazon up into three major segments, which would be the core retail segment, aws, and advertising, and then apply something close to a comp-through average multiple to 2022 estimates for the retail segment, you arrive at a share price of about $3,000 in about two years or in mid-2021, when investors will begin to start trading the stock off of 2022 estimates. >> what are the risks, though? i mean, there are so many things that are swirling with amazon right now, with the idea of regulators potentially getting involved with a lot of the big technology names, with the idea of just the president not particularly caring for the founder, jeff bezos. how do you kind of factor in any of those risks, or do you? >> we do factor in the risks by using a relatively conservative growth rates as well as what we believe to be conservative multiples, and in particular, you know, amazon's core retail

segment is growing more than four times faster than the brick-and-mortar comparative companies. interestingly, though, if we used a slow growth brick-and-mortar comp-group multiple on amazon's core retail business, it suggests upside from where the stock currently is so, in other words, investors are currently valuing amazon's retail segment below a brick-and-mortar multiple, even though it's growing so much faster than that comp group. so that's one example of how we believe there's conservatism in our analysis and that bakes in some of the concerns that people may have >> you talk about the potential for a spinoff of amazon web services how likely do you think that is? >> you know, it's really hard to say, and we honestly don't have a good read on whether or not that could happen or not, but i guess i would just say that there's really no reason that those two businesses need to be combined with one another. that could appease some of the regulator concern, and ultimately, it would be a good thing in this case because it would sort of unlock the

realization of value for each segment. >> what happens if there's an economic slowdown, some sort of a recession in the united states between here and then? would that impact amazon, or because it's in the online sales portion of things, you think it's immune to anything like that >> i don't think it's immune it would definitely have an impact, and that's probably, you know, outside of regulatory or other risks, that's probably the biggest concern is some sort of macro slowdown impacting the core retail segment. so, definitely not immune, but at the same time, kind of riding the rising tide of secular tailwinds of offline/online growth will help to offset that to some degree. >> your price target for the next two months is $250, a lot of room to run in 12 months, too. >> yeah. we believe there's a lot of room to run in 12 months or 24 months, and it really comes down to kind of the same conclusion, which is that if you look at each segment of the business and apply a reasonable multiple -- again, we're not asking for

significant premiums to what kind of some of the comparative group averages are -- you end up at a share price that's significantly higher than where we are today. >> are you the highest price target on the street >> i don't believe our 12-month price target is the highest, but i'm not 100% sure on that. >> okay. michael, want to thank you for joining us today michael olson. >> thank you okay, coming up when we return, hedge fund titan michael novogratz is making his way to the "squawk" set we're going to talk cryptocurrencies with him, stocks, and his best investment ideas right now. novo, right after the break. >> he's an excellent walker. excellent. ♪ (vo) i know what you're thinking. electric, it's not for you. and, you're probably right. electric just doesn't have enough range. it will never survive the winter. charging stations? good luck finding one of those. so, maybe an electric car isn't for you after all. or, is it? ♪

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good morning, everybody. welcome back to "squawk box" here on cnbc we are live from the nasdaq market site in times square. futures this morning have been in the green all morning long. at this point, the dow futures are up by about 88 points. we've been up as much as 150 points after a decline of more than 280 points yesterday. right now s&p futures indicated up nine points, the nasdaq up by almost 20. among the stories front and center -- opposite fortunes for two sporting goods retailers foot locker shares are sliding this morning after the company fell short of estimates on both the bottom and the top lines for the first quarter. comp-store sales also rose less than had been anticipated. shares of smaller competitor hibbett sports, though, are up

after results beat estimates and its comp-store sales rose more than expected. hibbett up by about 15%. foot locker down by 9.5% >> hibbett. >> ribit, ribit. we are also watching snap. they are in talk with major record labels to let users include music in snapchat posts. that's according to the "wall street journal." snap has licenses for some individual artists but wants broader rights to entire music catalogues snap shares up by about 1.8%. and then food delivery service doordash has raised $600 million in a new funding round that puts doordash's valuation at $12.6 billion just a year ago, the company was valued by investors at $1.4 billion. big win for spacex the company launching its falcon 9 rocket overnight, carrying a payload of 60 satellites into low-earth orbit. it is part of the company's star link mission to being cheap broadband internet all over the

planet spacex ceo elon musk confirmed that the satellites were online soon after deployment. okay, now to our "squawk newsmaker" of the hour, of the morning. galaxy digital founder and ceo michael novogratz is here. we haven't seen you in a while, so thank you for coming in. >> thank you. >> okay, so we're going to talk crypto first, and then we can talk about all sorts of other things but we went through what some people were describing as a crypto winter, and we seem to have come out of it. is that real or is that a head fake >> i think it's real listen, the crypto bubble, i think part of the reason it crashed was that everybody wanted to launch a coin was launching the new bitcoin. 3m was the better bitcoin. everyone had a version of bitcoin, and so you had supply grow exponentially and at one point regulators got nervous now i think you're seeing bitcoin really having established itself as a star value. it won that lane there's lots of other parts of the crypto universe, but bitcoin has won the lane of store value,

which is hard to do. you know, there's really only one other store value -- gold -- where you're worth something just because you're worth something. almost everything else, you're worth something -- like uber shares are going to be worth something because people are using it, you know and so, it's a unique thing that bitcoin has done. >> i want to talk to you about uber and see what that's worth in a moment. but on bitcoin, what do you think it is intrinsically worth? >> again, what's gold intrinsically worth? you can take all the gold in the history that's ever been mined and put it in three olympic swimming pools and it's worth $8.5 trillion. why? it sits in vaults. we don't use it for anything other than jewelry, to show our wealth. >> who do you think's buying bitcoin? >> retail's still buying institutions are moving in the yale endowment moved into bitcoin. stanford endowment moved into bitcoin. harvard's endowment has moved into bitcoin these are real names and real thoughtful investors and so, what's been happening is we've been building the infrastructure -- custody, trading, lending -- to allow institutions to feel more

comfortable. and then in the last few months, you saw microsoft say we're going to do our identity solution and we're going to link it to the bitcoin blockchain that's one of the ten biggest companies in the world saying we believe in crypto. >> people who are saying they believe in crypto -- i was going to say, facebook for example may believe in crypto, but they may believe in their own coin. and could we go back to the same challenges we had a year or two ago when everybody and their brother went into bitcoin? >> i think facebook's wildly important for the ecosystem. because here you have one of the biggest companies in the world saying cryptocurrency is going to be part of our future if you believe it, if you think -- that's been written -- going to have a stablish coin, right? a coin that's linked to -- holds steady to some basket of currencies, right? that will be used for payments >> right. >> that's their hope i don't think that takes away from bitcoin quite frankly, it credentializes the whole space. bitcoin is not going to be a payment currency it's going to be just like gold. we don't spend gold on anything. you didn't buy that tie with gold it's going to be what people

perceive as a stored value. >> what do you think it could or not be worth >> i think a whole lot more than today. there's a long way between $140 billion and $8.5 trillion between bitcoin and gold. >> and you do think that a lot of the -- i used to think to myself, all of the people who got burned on the way up and down the last time won't devgo c in or won't go back in for many years. is that not the case >> i don't think it's the case and a lot of institutions never got in, so they felt kind of smart. and now they say, wait a minute, now there's more cover >> right. >> what about retail investors >> listen, retail will come and go, and a lot of the guys who got burned won't come, but there's 7.5 billion people on the planet, so there are plenty of retail customers to continue to come in you're seeing a resurgence in china and japan. >> are there any other coins that are interesting to you right now? >> sure. listen, there's a whole second bucket, what i call web 3.0, so

ethereum seeos has an announcement and my anticipation is on that announcement it goes higher. they're all fighting to be web 3.0. that's going to take a lot longer to play out, right? the technology and the adoption. i think that's a two to five-year play, and it's much more like a venture play than a currency play. can you get enough people to build on top and it's got to be useful. >> do any of these become currencies >> i think facebook's payment currency, i think telegram's going to have one. you're going to see one of these payment coins work, and i think that has a chance to be a real currency. >> all right you mentioned uber before, and i'd love to get your take on uber i also want to talk to you about the markets more broadly i know you've spent the last couple years thinking about crypto, but you also think about stocks. >> listen, i still trade macro and i'm fascinated listen, uber -- i wouldn't short uber right now, you know it's an iconic brand -- >> would you buy it? >> we do know driverless cars are coming are they in two years, three years, four years, five years?

who knows. they're coming and so, markets love to buy a story. and this is a powerful story and so, it was kind of easy to short on day one with all the hype and the biggest ipo, and you had that little washout. i think it probably goes sideways now, but it's a powerful enough story that i don't think it's going away. >> and so, you wouldn't buy it at these levels, though, at $40? >> you know, it's interesting. i don't -- it doesn't have the momentum right now, and so i don't -- it doesn't excite me as a buy. but in general, you know, the rideshare, plus driverless, it's going to work. and so, you're going to see it catch back on in time. >> okay. so, if you think the rideshare is going to work, where do you put lyft and by the way, given that we've had a great debate all week, including this morning about tesla, the idea that elon musk thinks he's going to be in the robotaxi business. >> yeah, and he will listen, there will be a battle over time. we're early, again you know, i have two teslas.

greatest car i've ever driven. so, it's hard to short elon musk you look at what he did last night with spacex. i'm lucky to be a shareholder there -- >> of spacex >> of spacex that's a spectacular -- >> are you a shareholder of tesla as well? >> i'm not, but it's getting to levels where i could buy when you're running at that negative -- i haven't done enough work on it. again, it's hard to short elon >> we had a guy who does look on the debt -- >> we had a debt guy -- >> on earlier today. >> -- and a futurist on. and i don't know, you know, i guess the real value's somewhere in the middle, between a debt guy and someone that thinks it's going to, you know, they're going to be selling 23 million cars in two years. i don't know. >> what would you think if, since you're a spacex shareholder, what would you think if he merged spacex and tesla together, like he did with tesla and -- >> ooh, i wouldn't like that at all, you know? >> yeah. >> quite frankly, i'd love him to sell off this new satellite business, bring liquidity to the stock, and that would be kind of cool. >> right. >> so, even at $190 you wouldn't like it at all

so you don't like tesla's stock? >> to be fair, i haven't spent enough time on it to -- >> you said, "oh, no," awfully quickly, that it would hurt your spacex holdings. >> listen, i think merging two completely different companies -- people want to make -- >> but he's done it already. that's why i bring it up. >> and that's not great. you know you get the good and the bad when you invest with elon musk >> you are trading the macro markets these days what do you make of where we are? >> listen, i think -- this is easy to say -- if it wasn't for the trade or the cold war which we're going into, markets would be significantly higher. >> you said we're going into a cold war >> it feels like it. i don't think this is just about fair trade anymore this is about beating china. i think if you go to the core of the trump hawks, you know, they want to take out china it's a very different attitude than we ever had, at least in my career i remember literally when i was at goldman sachs sitting when they were negotiating wto, and he was saying, we're not ready

to take on goldman sachs in china. it won't be for a while. and everyone kind of greed with that, like give china a chance to catch up. well, they had their chance, and now they've caught up kind of, and so, i think the intuitive thing for where our mind-set had been would be to say, okay, let's let's make a fair trade. i think the trump hawks want to -- cut them here and throw them everything to the left. >> everything is going off to the right. >> as an investor, what do you do about it? >> i am angry that i was not shorter. the other side of the economy is doing okay it is slowing a little bit and ton of liquidity for the system. i thought we'll melt up in stocks we still might if we can get through this my confidence that we are going to come to a quick conclusion that this trade war is weighing quickly. >> given the attention that you

spent on crypto. do you believe that crypto is uncorrelated to the market >> there is not enough correlation right now. most people in the market don't have crypto. and i think in four or five years, it is much more significance i would say it certainly feels chinese money moving into crypto >> part of the surge, because of facebook and microsoft and this trade war. >> what about the world of regulation this is still unregulated world, it feels like. >> you know listen the u.s. has been really slow on regulation they got scared with a bunch of hacks that happened. i think the fcc is slowing it all down we have not seen a security launch we are seeing other parts of the

world growing faster >> does it mean we'll be left behind is there a huge opportunity ahead because you get different administration in or you get something happening and this opens up is it literally about time >> the u.s. and the regulators know they're a little behind and they know where the world is going and the competitive landscape. they're taking the time. it is taken longer than we hoped but it is going to end up in the right direction and destination. >> one of the things i want to ask you is we rad ray dahlia on. and you tweeted out the idea that you thought milton freedman, the apple idea have gone too far i was surprised. >> i am pretty left of center. listen i think what milton

freedman was writing, you had really high marginal tax rate and labor share of income, labor share of profits at a record high if milton saw where things had gone today, he'll have a different view >> i don't think so. when you said everything get pulled to the left, you meant to the left because in the movie it is to the right. it is to the right y you got your billion and you are ready to spread it around. >> i am giving it away >> it is funny the way it happens. is it guilt do you think >> no. >> it is not self-loathing do you feel you came about it an unfairwa unfair way >> i am catholic >> me too. >> help out your fella citizens.

>> you don't want to do things where the end result is not helping them out, right? >> not at all. as long as we are headed to the same place, you need to connect the dots >> do you think a lot of left wing policies ended up helpi helping -- >> big government comes with as ton of trouble we have world of -- >> i think you need redistribution of wealth there is a lot of different ways you can do that. >> part of government roles have been redistribution. >> what's the best ways that you have heard of all candidates coming up with a lot of different ideas? >> i think a wall street tax is an interesting one some version of the tax can. that's controversial especially in wall street i think you look at talent of

this and makes spread a little wider, maybe the 300 phd at renaissance interviewing their counselors something else. >> you would have a transaction tax? >> i would have a transaction tax. >> would you have a transaction tax on crypto? >> sure. when i grew up, state college was affordable it is not affordable anymore for most americans you can start there. fairness was important to me and so education is at least one place we should provide equal opportunity. >> that's easier said than done. >> i agree >> figure out how to improve as we throw a lot of money at it already. >> if we can launch those satellites and not have one break, the first shot.

>> the one and only, michael novogratz, fantastic having you. >> will you come back? >> i would love to you have to quit the game. he's out of his mind he's a whole - >> you have to see the documenta documentary. >> oh, i saw it. >> it was on the plane >> he did not cooperate at all it was very interesting. >> on "squawk on the street," don't mess ken moelis. stay tuned -driverless cars... -all ground personnel...

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this morning we have seen the futures in the morning all morning long earlier when we started, we were up 150 points. the dow is still up by triple digits, up by 100. nasdaq is up by 24 points.

the bond market is where you will see a lot of people are paying attention, too. there was some activity that took place there yesterday ten-year is yielding 2.31% everyone make sure you enjoy the long three-day weekend memorial day, you are doing this and making sure you remember those that served and lost their lives. we'll see you back here on tuesday, right now it is time for "squawk on the street. ♪ >> good friday morning, welcome to "squawk on the street," i am carl quintanilla with david faber and sara eisen cramer is starting the weekend a little early durable goods are not good got more heated rhetoric on china on trades. teresa may resigned in the u.k