ahead of time. and i'll tell you what inventories added, 0.6 so 1.5% of your 3% was from trade and inventories. you tell me where we'll get it from productivity or hours worked >> hold on to those numbers. because you will find something to pull out to make it less. >> i will not. i will not i promise you i won't. if there is a real change in underlying gdp, i will get on the rooftops and i'll scream it. >> time for squawk on the str t street ♪ i got to have faith, because got to have faith, faith, faith, i got to have faith ♪ good thursday morning. welcome to squa"squawk on the stree street". futures are indicating some stability after two rough days we got a more retail earnings in know cuss. uber's first quarterly earnings

and more china calling the u.s. negotiations economic terrorism. and you heard the president saying china wants to make a deal >> and boeing's ceo personally apologizing to the victims' families >> and xrt retail etf down more than 11% this month alone. it is the worst monthly performance of the year. and retailers reporting today. government says gchlt q1 gdp up. core cpe revised down to 1.3 >> it will only get lower. a downgrade of the steel companies. i've been going over the inventory numbers.

holy cow go back to jcpenney. i believe that bed bath with the new leadership, they will be dumping things 7,000 stores that have closed. we have little companies that just became public recently. it is cut in half. >> so your point is inventories are high >> yes, so that means promotion. but anf, they looked really good, but they didn't even forecast -- they said that it is getting more competitive dick's said listen, we're not factoring in the tariffs if you factor in the tariffs, they have to cut prices. dollar general is surprising 37 only 6% in china pretty good. but la look, the -- i went to rocket man just to cheer up i saw you there. love that purple thing your wife did. very lovely.

but it was really rather amazing because manny was basically saying things collapse he is talking about ever since the decision to do the may 10th, he was saying why aren't people more focused on this there has just been kind of a big pause. >> is this this this is coming making the decisions to how much to buy >> no, consumers kind of stopped buying >> really? >> yeah. >> does that make sense to you you think most people even know what happened on may 10th? >> it was a really -- >> the answer is no. >> i think that david raises a couple good points i'm sitting there saying to manny like how could this happen how could you forecast so badly. he said look, i only do what the orders are but the orders demonstrate that people are not buying calvin

klein and tommy hilfiger right now. and i said to him that is what you buy when you have unemployment 3.6%. it is nice stuff but he said right now it is not a good time. europe is good, but that stock deserves to be down line and manny always says i come on in good times and bad times. this is a bad time >> he does come on every time. he talked to jim last night about softer tourism, stronger dollar, and meaningful comp decelebratiode kr decell cell race take a look. >> we felt that we had to pull back there and still have been able to hold it together but it is a much more challenging environment. no walking away from the fact that the consumer is feeling more pressure. here and in china. and you can't walk away from the fact that the trade disputes and the issues are not creating a bit of a manageover with the

consumer >> i don't get that, jim in the u.s., i don't understand-understan understand -- first of all, everything you hear is that the economy is strong. the concern is about ceo confidence, about business investment, things of that nature because they are very focused obviously on what it will mean for their businesses when global growth slows but you're really telling me the consumer -- >> may >> then it wasn't trade, it was something else >> no, it was may. in may the consumer took a big pause. this will turn out to be a month that i think it will be very unlike the 3.1 gdp growth that we had manny's 2 -- >> so unexpected i don't buy that it is trade by the way, you would want to actually buy more now prior to the tariffs coming into effect >> is the stock cheap now? absolutely did manny say the second half will be better yes. they do a very hard comparison he said that the major department stores are not doing well thousand, if you remember,

remember when the department stores reported and all the quarters looked good, with the exception of target, guides were terrible because of what is happening right now. and that may was bad may is a bad month now, he was looking -- he was searching for reasons why the consumer stopped buying too. and he keeps saying it is washington not the president, but that government is a major sore point and that people have gotten a -- and this is my word and jimmy carter's word a malaise because of washington. >> he used the word malaise? >> it is a dangerous word. >> politically loaded. >> the contrast is the president saying that it is the greatest this, the greatest that, the graetdest th e greatest this. why? because they made his ties he wanted to give manny a jingle >> so if we buy in that the consumer is truly spooked, what is the bigger dynamic, that or a worried enterprise, a worried capex environment?

can we have both >> yeah, i mean this happened very quickly >> but on the consumer front -- >> i hoe it is jaw-dropping. >> i don't know how much to read into -- >> remember, you are doing back to school now. >> because the concern has been not on that level. we talk about it every day consumer strong. we bring in all these -- >> reliable brand, calvin klein been very reliable and i will show you the stuff that is still expensive. >> three pack for 20 bucks >> i like that macy's a much more but i just was struck -- i said man, this can't be it can't be, manny after the stock was down there is a pause

sounds li s paw-a-w-p-a-w-s. sorry i'm from philadelphia. >> the pause that refreshes. >> thank you >> speaking of which, we're looking for signs that boeing may get a move higher. last night mullenburg apologized to the families and defended the save difference the aircraft saying he would put his family on a 737 max without any hesitation he was asked about his future with booing too. take a listen. >> did you ever consider resigning? >> no. it is important that i continue to lead the country. and the fact that lives depend on the work we do, whether people flying on our commercial airplanes or military men and women around the world who use our defense products, that is a worthy mission >> so he has the families of those who were killed, he has consumers who were also spooked about flying and then of course the relationship with carriers he has to mend those >> yeah, i think that this

should have come months ago. it happened though i think that they are trying to change the overuse word narrative, it should have happened months ago. but the work that i've done on it, there was no a-b plan. that was not true. they have guys going 24/7 to find out what went wrong they have done a lot of simulator work on this and it is like it didn't crash when they simulated it what i'm saying is they are being more sponresponsible thane sounded. >> were they less responsible than they should have been when they actually allowed -- >> responsive or responsible >> both. >> i think that the responsible is harder than the responsive. i know that they were not responsive enough. this interview i would contend on the national news, should have happened at the same time that they went around and reassured the -- >> pilots.

>> pilots and wall street. but they did not reassure the public and this is -- i mean i think that you could argue maybe they weren't allowed to maybe that the faa is more powerful saying you can't say anything maybe they were hamstrung. but the mea culpa, we're fixing it i personally would -- i'd fly in it >> faa won't allow themselves to get fooled again, right? >> what do you mean fooled >> well, it didn't look good when you had all the foreign governments banning the airplane and the faa was standing by. >> the faa being slow. but that is not on boeing. there are many people at the faa who had experience with boeing, but i don't think that the faa is as much of a pushover as people think i know that is very contrary to what people say. but -- and you can -- look, i'm

partial to boeing because of their long term safety record. i think they should be given some benefit of the doubt. the stock is barely down even though it has china and max and you've got -- remember when gary kelly said -- might have understanding is that the carriers while they are not all thrilled are not changing. >> it is 100 bucks off of the high from march. >> so is everything else though. i mean, apple. >> we'll talk about apple today. regarding boeing, stay tuned this morning for an interview with oscar munoz o morgan stanley took to overweight >> and this man has led a turn not unlike what we saw with precision railroad with csx. hunt hunter harrison originally oscar has done a remarkable job on time. the stock is the best -- by far the best airline by the way it

used to be gary kelly. they had the worst exposure to boeing and were too texas oriented when the dallas federal reserve came out with really bad service numbers. really bad i think continental is at track difference because oil is done but the market has got this incredible gloom.track difference because oil is done but the market has got this incredible gloom and there is an etf for everything that you can short. >> that is for sure. >> i'm still stuck on the whole consumer thing listen, if you look at the 10 year bond yield, it is telling you something. >> it sure is telling you something. >> maybe cnny said things were last quarter and they were it was a decent quarter. the quarter was okay >> why shouldn't things be good? 3.2% even revised. lowest unemployment in a very

long time. >> i asked him just what you said i said come on, manny, this can't be he's been on the show probably longer than anybody and he said no, it is true, i'm reacting to whatteds are put in. jcpenney back to. macy's >> maybe it is the retailers getting ready for the tariffs. >> no surprise inventories would be up because they had to bae while the getting was good >> yes, they had to -- so they have all the stuff >> if the president does the next $300 billion, i had been thinking that it wouldn't hurt the consumer much, but that is not true the president saying it really won't. larry kudlow says -- remember he said that it was and that was contrary to the story line from the president. but i think it is important that we point out look, i mean i have been pro tariff. manny made me think jim, get serious here this is hurting.

so he is talking about listen, that may, the may -- the unglorious month of the -- what was the movie? >> in-glorious bastards. >> yeah. it's may >> i do usually know my show tunes. >> my fair lady. >> get me to church on time? >> my fair lady. >> the rch reference makes for sense. >> is that the wrong -- >> may >> i looked at hammerstein's house and almost bought it still to come, fedex expanding its ground and its president will join us and take a look at the plea market, we have calls on apple, verizon, tesla, comcast. citi we'll talk about whether or not we see buying.

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>> and this is a piece of the top five investor questions, she is focused also on will there be an exemption or will the president make it so that if you are making your product in china and you are apple, what will happen is that your prices will go up for those goods. what she did not talk about that i wish she did, unintended consequences of tariffs on apple are that people will -- because she says that she will buy samsung. buy the android. because there are no tariffs on korea. so you end up with an unintended consequence of boosting korean sales. and i don't know if the president's people really get that the president's people should read this report it does include the idea that americans pay for the tariffs.

you know on the seventh day they created tariffs that chinese paid for but you have to look at this piece. it is really valuable. but she is worried about major reasons of cost to the consumer. if they consider china as part of the next round. this is a serious piece. >> well, i think part of the reason apple stock has not been performing particularly well is -- >> you noticed that? >> i think the concern of what chinese might decide to do if it ratchets up. even if it is included in the next match so almost everything anyway. >> this is not beer kegs and not mattresses i don't know if you saw -- >> yeah, commerce has been making all kinds of announcements regarding steel kegs and mattress dumping. >> we look at these things and our eyes glaze over. these are very powerful.

>> demanding cash up front >> they do almost $500 million in imports of mattresses but tempur, one of the complainers -- now you can just raise your price because the chinese competition is gone. and we rent kegs like everybody else chinese kegs are in fashion. but they will raise the cost of beer which will then immediately reverberate to the consumer. i know that the chinese pay for everything but they are not going to pay for the beer i'd give them two for one and beat the clock night >> the president for the first time acknowledged ever so slightly that there was some cost to the u.s. consumer in his comments in front helicopter >> i'm being facetious can't avoid it it will raise the price of beer and mattress better go get the mattress right now from -- >> casper. >> tghost.

comes to your house. >> we'll talk about rising prices even as they call for the fed to cut rates and we'll count down to the opening bell when it comes to your customers' expectations,

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6 minutes before we get started with trading time for a mad dash. going to talk about the dollar generals >> when you go dollar general, do you like it more than dollar tree >> you know the answer i've they have been in either one. >> dollar tree is fabuloufabulo dollar general is the winner they raised numbers. 3.8 comp sales 2.8 was -- yeah, interesting didn't think that it would pop up right now but this is kind of -- >> fascinating >> we got everything cooking can you put up a thing right now about how phillies did last night? dollar tree, dollar general

raised numbers dollar tree cut numbers. but initially it got hit then people were like it is the expense for closing the underperforming family dollar scores so gary philbin chose to take a number and actually do what we always want. which is make it so it is operating. you know how they always hide it no, gary philbin doesn't play that game. dollar general has reduced their reliance on china 6% isn't that great the president will give them the medal of whatever. achievement. medal of achievement and then -- but dollar tree, when i had gary on the show, a lot of reports that he is up to 40% in china that is wrong. he's cut to about 20%. so i like both of these. >> wow. >> a big group of people right here trying to get to the summit so that is a problem >> horrible problem. of course. a market to get to less than five of minutes away from an open here.

a lot of research to get to. >> you have a faber report rocket man >> sprint and rocket man

>> sprint and rocket man

you're watching "squawk on the street." opening bell this about a minute very busy thursday as we look another some retail stories. obviously a bunch of sell side calls. president talking about trade and other issues mueller as well. and then this notionthat when socks are down 4% in the month and bonds are up 4%, last few days have a pretty significant rally last ten occurrences according to the spoke >> we have to get through this month. i think this month is -- and manny's stuff did worry me but june historically has a lot of commitments to the market the plethora of deals seems to have calmed down we need to know more supply for a bit would be terrific. against that, we need something other than what the president

said about trade we need something, it doesn't matter washington has transcended everything >> let's get the opening bell here s&p 500 at the cnbc real time exchange at the big board, the food allergy fund. at the nasdaq, conmed. a little cooling off on the bond rally. some evidence of a momentum top in bonds >> i had one of my favorite technicians looking at the rates and saying -- looking at the fed saying interest rates are not going lower. and if rates start going up, it is great to the stock market so i need to see rates go up >> you said yesterday the market would love a little higher interest rate. >> and they want rates to go up. and when you see that, you see rates go up, it will be very good for -- you would not lower

the steel stocks like we saw i hated that downgrade now? now? >> deutsche cuts i think 70% something from the high. >> that is like recommending beyond meat. >> that has been a good thing. stock keeps going up >> that is great analysis. thank you. >> you say you expect rates to go up, but you'd like them to go up for equity sake, but you think the fed should cut rates >> it is up another 6% >> what was the point. >> sorry >> i think that the fed is -- i think that the fed should be dumping its bonds right now because boy, do we have a bond shortage worldwide and cutting rates at the same time because we see too many -- too much money is going -- it is not to prop the market up. but the loan growth has slowed

down and a lot of that is because there is a lot of loans that are tied that moved up that would come back down in terms of pricing. look, i know it sounds ridiculous that you could have 3.6 employment and you need to cut rates, but may is bad. you don't have a lot of bullets, jim. >> you're coming with that >> yeah, i'm coming with that route. >> you're going to use it now? >> the journal oig hhas a piecen the uncertainty of the trade war. >> i think jay needs another two month and he will agree with me. >> you're going by his first name now >> sorry, mr. powell >> how about chairman powell >> chairman powell >> meanwhile pimco saying we are probably in the riskiest credit margin we've ever had as clos, leveraged loans will hurt clo investors. >> bloomberg saying -- wish re

had him more but saying it is hard to find anything that is a winner. i agree with that.but saying it anything that is a winner. i agree with that.had him more but saying it is hard to find anything that is a winner. i agree with that.im more. but saying it is hard to find anything that is a winner. i agree with that.ad him more. but saying it is hard to find anything that is a winner. i agree with that. the checklist doesn't do have china. there are so many variables. apple bee lple bee's came out a that delivery is bad, takeout. and that is another thing. how much takeout do you have the number of things that you have to check. i was listening to your excellent mcdonald's interview and i honestly thought i would want to buy the stock after easterbrook talked i felt like maybe i'm too bullish on mcdonald's. >> traffic is an issue for the whole industry because of delivery >> i didn't feel -- i felt like being on, geez, maybe steve is

trying to get me to buy win dens his candor is fabulous and i've been a fan of mcdonald's and it is a buy but he is so nonpromotional. but i said wow, consumer in flux i had the same problem with chipotle starbucks figuring it out. kevin johnson said listen, just have two lines, have people go through, get loyalty going mcdonald's needs loyalty and he has been saying that he will do it they should know my order. i'm not asking for a smile and an egg mcmuffin. >> that is the eventual plan if you are willing to provide your information. >> if you stop at that one on which the l.i.e., exit 69, i've stopped at that one for, i don't know, 25 years like how can they not know what i -- i'm ordering the big fries. how can they -- i need -- do i need artificial intelligence to call up the order that i've given all my life?

what stock was i just talking about? >> mcdonald's. >> he's paying attention >> i am paying attention >> we should quiz him though periodically during the show >> what did i do for -- >> i promise i'm listening we did the dollar stores come on. >> this guy comes to play every day. those young yankee hitters are so good. >> they are good i'm a mets fan >> what was that guy zeuz who came with the stock picking contest? hercules >> stock draft not good i'm looking at kraft heinz down another 1.6% i'm wondering maybe beyond meat will tr consider an akebeing an >> you are good. >> stock down 52.5%.

no real news this morning. >> there was a piece saying that the s.e.c. investigation i real >> 10 q has been a long time since they released a report given the accounting issues that they have. some analysts have put out that maybe the asset sales are not going as well as people hoped. but it is worth noting >> devastating decline in a company that had all attributes of what you wanted, good yield had acquisition al, a lot of targets. and now we're hearing things about whether the s.e.c. issues -- i mean look, this credit suisse piece, justifying lower tp is it that toilet paper? is this supposed to be pt? price target they put it tp they have it wrong >> target price. >> target price. oh, i easily confused when it

comes to kraft heinz but david, they are saying that the s.e.c. could actually -- might be real. and this is not the s.e.c. the one that really plays hardball >> no, this has been a disaster. obviously sparks here and there -- >> target price is 26. >> all right, i did want to get to a quick faber report. >> you like velveeta >> not really. but i like kraft singles >> stuff comes in handy. >> wanted to talk about cbs and viacom yesterday they had a board meeting. of course we've been talking about the prospect of talks between these two companies. yet they aren't yet talking. >> they're not >> not yet there was a board meeting yesterday. and the board has not yet begun the conversations with viacom. but they are expected to begin

within the next couple of weeks let's say. >> so they will talk >> they have been saying it for some time. but not seeing any road blocks at this point according to people familiar with the situation. the viacom side, they are simply sitting there and waiting. it has been the cbs side getting their house in order the directors figuring a number of things out. but at this point for example, they still don't have kind of a point of engagement. last time it was the director bruce gordon this time we don't know yet. they don't know on the viacom side but both sides do seem to expect to begin to commence conversations. >> mid june you think? >> yes, i think so, if not sooner and you have a lot of people weighing in here in terms of even analysts starting to talk about it and again, no real road blocks that are seen at this point. once they begin, we'll see it is the belief bob bachus will

be chosen to run the combined company. acting ceo extended his contract as was necessary given it was going to end in june certainly they won't have a deal done by then >> six times earnings. do you know i think the paramount and this acquisition, if you look at the valuation of hulu, people hate their -- ever since it was like hey, we can drop all of viacom's kaibl cable. >> you have analysts starting to weigh this 11% of creative to current standalone to 20 eps of 650. and predicated on two factor, a 0 pnt 0.75 which change raexchange rao and remember last time 0.6135.

>> do you think that it will be all right? >> i think third time will be the charm. a lot of people at viacom are scratching their heads about the stars conversations and why cbs really considering pursuing that but still waiting. >> benny and the jets. rocket man we have to get to bonds. i thought rocket man was fabulous i'm a big john elton fan >> i like elton john how can you not like elton john? >> bonds reacting to this better than expected gdp revision rick santelli at the nasdaq this morning. >> yeah, unbelievable in opinion that we held the 3% handle we all know the reputation of q1, it is always soft. maybe q2 is a little soft right you new, but i think i'm very optimistic with regard to the data the problem is that the treasuries didn't pay a lot of attention. look at a two day chart of tens,

but don't dispense of the those 2 and a quash has big psychological advantages when you look further down the curve, 30 year bonds joined many of the other maturities the last several sessions following levels we haven't seen since summer of 2017 but many are nervous do you want to be long equities, are you optimistic about the economy? that is valid, but the next chart is an overwhelming portion of why our rates are low look at bund yields. minus 19 biggest negative lowest yield close ever for bunds and we're getting close. but still 240 basis points between us and them, that is a lot of spread. but no matter what happens, i don't think that our central bank can firm up the long end unless bund yields firm up or japan or any of the other yields that are under management by central banks

and the bright spot, dollar index. everyone i talked to that have traveled either through japan, china, europe, the dollar is in demand and that dollar index hovering at these levels is super strong and that is an area that i don't see weakening anytime soon carl, david, jim, back to you. >> we'll see in you a bit. rick santelli in new york city today. let's get to laguardia this morning. phil lebeau has the ceo of you nighted oscar munoz. good morning, phil >> good morning. and we are here in the new terminal, terminal b, at laguardia. we'll talk about that in a bit oscar munoz, ceo of united before we talk about the changes here, have to ask you about the 737 max. dennis muilenburg talking last night and this morning talking about bringing the makts bax bak when do you think we will see it flying again >> i think the expectation is that we will do it in a safe manner, that all of the external

folks, regulators, investigators agree that it is the right time to bring it back and i think that is really the focus what i heard from dennis, that safety is first. >> august, maybe even as early as july or should we even push it back to september from an operational perspective, we're prepared to do it at any point. the critical point is when we have any of those conversations is that this aircraft returns to flight safely and that the public agrees as well. >> and i hate to a date on this, but are you looking at august? >> from an operational perspective, we pushed to august, i believe august 4, so we'll continue to monitor. and when we think that it is safe to fly, we will be incredibly communicative to all our customers when that flight comes back -- those air kroft co craft come back. i pledged to be on the first one. and we'll make sure that we reassure our customers

>> and i know that you will try to do that, but i'm telling you, when i fly, it is a punch line people make a joke about the 737 max and people stop me and say i'm never getting on that plane again. how do you convince people that they should fly it again >> i think that there is a combination of communication tools in what we do. but certainly first and foremost, didn't assume that everyone will want to fly or assume that everyone will get over it. we have to assure in any way possible and so again, we'll be transparent, we'll allow any kind of rebooking if required and continue to prove to you like everything that we do, i always say proof not promise, and that will apply in this case safe return to flight is very critical to people around the world. and it is a good aircraft clearly. but at the same time, that is our view and our flying public needs to be assured and feel safe and confident. >> jim has a question for you. jim. >> it has been a remarkable

resurgence for your company. your airline is one stock that has worked really well you had an incident a couple years ago where a passenger was dragged off and a lot of people felt that your company was finished, that it wasn't handled right. what did you do to make it so -- people aren't thinking about that at all. they are thinking about that you are on time, they are thinking about that you have what i regard as being the most reliable record of all the airlines what happened at the airline in such a short period of time that you were able to make it so that we don't think about the bad, we think about the good and we take it >> well, thank you for the koyo compliments. we they hanever want to forget event. it drives our focus and mission on caring for our customers. to the other issues, yesterday we got a lot of these questions, as we announced the growth strategy, there was a lot of

concern and we said it is a uniquely united opportunity that will make sense and we book ended our growth with eps target for three years. and i think the combination of those things, our sound smart cost management and again the thing i always say, proof not promise. we are delivering. we have a full 2018 despite head winds. a great first quarter despite a lot of headwinds and we feel very pubullish despt all the noise. so the confidence and execution i think gives investors a great comfort. >> and so should we take heart and look at say oil, let's say oil goes to 50, which i think it is really rolling over, is ther potential up side for that >> i think with regards to fuel, we gave our guidance with the 40 to 80 sort of rate again, let us worry about all those things we'll give you the right parameters, and we'll have transparency around it

but between 40 and 80 we've said and we'll get to our numbers >> and we're hear in this b terminal that lot of people in new york have not flown out of, we're used to the c terminal how much of a difference will it make that you have not only a new brighter fresher with better amenities terminal, but also run more efficiently >> you always say game changer, but this is beautiful. it is spectacular. it is what our customers deserve. it is a great city and great cities should have great airports and for us, it is a big business market for us. we hahave 40 flights out of laguardia to all the big cities. ewr is our hub in the area where you can basically get anywhere laguardia will take you to 40 different places so we're excited about it. >> and speaking of newark and your flights overseas, there has been a slowdown in international travel to the u.s. what are you noticing? >> you know, we're not seeing

it now, later in the year possibly, but at this point in time, our numbers for the second quarter and guidance, we're still on that and we have not seen the issues that people are talking about. and we hope not to see them. >> oscar munoz, ceo of united airlines here at the new terminal b later on, i get to go out of terminal c for the last time dodge the water buckets. back to you. >> and we all know how much you fly, phil. we're as excited as you are. phillebeau, thanks and we should mention ratio lowest in seven years. >> that is a bad sign. geez just pure bad. how about the fact that phil, greatest reporter we have, right at the beginning asks about boeing got to love that i was there this weekend >> were you in front of a green screen >> no, it is dynamite.

>> they are finishing some of the project that they have been building, one chbt of the biggest in terms of the concrete google headquarters and oracle are the big ones >> when we come back, the president of fedex company expanding to seven day ground. we'll talk about that. and dow up 80 points, intel leading for a change up 1% don't go away. dear tech, dear tech, let's talk. we have a pretty good relationship. you've done a lot of good for the world. but i feel like you have the potential to do so much more. are you working for all of us, or just a few of us? can we build ai without bias? ai that fights bias? ai that helps us see the bias in ourselves? we need tech that helps people understand each other. that understands my business. dear tech, dear tech,

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it's a now there's one store that connects your life like never before store. the xfinity store is here. and it's simple, easy, awesome. jim, what's coming up tonight? >> we have a really big show we have pioneer. everyone wants to know, scott sheffield, everyone wants to know what's going on linton and murphy are a great tag team yes, cannabis. all anyone wants to know is are oreos going to have cannabis what are we going to have it in our baby powder, whatever? medical and also recreational. i can't wait to talk to them going to be a really big show. >> pretty good guest list. >> yeah. linton always hijacks the show. >> who >> bruce linton from canopy. he wants to be my co-host. i want to give him friday this summer. >> well paid >> all the cannabis guys you

bring on. >> we'll see you tonight "mad money" 6:00 p.m. eastern. when we return, an inside look at disney's new "star wars" galaxy edge, including bob iger's take on that $1 billion investment dow is up 85

♪ good thursday morning. welcome back to "squawk on the street." i'm carl quintanilla with sara eisen, david faber at post nine of the new york stock exchange gains after a couple of rough days we did hold the moving average yesterday. plenty of watch today, whether it is potential month and buying obviously, more retail stories, potential weakness, pvh down big. big calls on apple, verizon, citi and tesla and the president on everything from mueller to china trade. >> road map for the hour, though, starts with china. ramping up the rhetoric, calling u.s. negotiations, quote, naked economic terrorism president trump saying china wants to make a deal. boeing ceo speaking out on future of the company while apologizing to victims' families after the deadly max crashes

united ceo pledging he'll be on the first flight when it is back in service. retail wreck, the etf tumbles more than 11% in may it is the worst monthly performance of the year. more retailers also reporting today. pending homes about to come out. let's get to diana olick diana? >> pending home sales in april down 1.5% month to month and down 2% year over year that's a miss. the street was looking for a slight gain for the month. that is the 16th straight month of annual losses for pending homes. these are a measure of signed contracts in april so closings in may and june, most recent indicator of what buyers are doing and importantly, mortgage rates were actually pretty low in april when they were out shopping around. 4.3% mortgage rates today fell to the lowest level since january of 2018 the problem, though, is still high prices and low supply on the low end of the market. prices are beginning to shrink

those gains. but there is a double-edged sword there, because while buyers are helped with affordability, some are a little concerned they might be catching a falling knife, that in some large overheated markets, prices may actually go negative over the next year or so. so, again, a miss on pending home sales, down 1.5% for the month. back to you guys >> diana, thank you. stocks opening higher this morning for first time in three days as some recession fears ease trade talks between china and the u.s. are still weighing on investors. joining us now is alex triden and brian levitt gentlemen, welcome to both of you. >> thank you >> brian, what is today? is it a bounce from oversold conditions or is there a true feeling that maybe recession fears were overdone >> maybe a little bit of both. we're getting a little bit of a reprieve in here we continue to follow the same pattern. the economy starts to do well, we do something on a policy

front that tightens financial conditions, strengthens the dollar, the economy slows, and we go back into what looks like a muddle through environment with the fed not doing much, maybe even easing and markets pressing higher. i suspect you'll have more volatility in here until we have some clarity on where we're heading on trade, but the most important thing is we're still in a secular bull market, it is unlikely we're heading into a recession and stocks should head higher. >> alex, do you agree? >> i think there is equity market rally year to date has been built more on sand than stone. we have been pointing to very dovish central bank policy from the fed and other central banks around the world and we have also seen some easing of the trade tensions up until the last few weeks the problem with that is when you build your house on sand, rather than stone, it is prone to sudden and very aggressive reversal and that's what we're seeing a lot of valuation expansion year to date, investors are very reliant on the federal reserve to provide yet more support. and the trade tensions have

turned on a dime and we suddenly are back in an environment where we seem to be drifting towards trench warfare on the u.s./china trade negotiations >> pimco had comments this week where they argue that the market is losing confidence that central banks in general will keep asset prices afloat are we -- are we at that stage of the cycle and what does that mean for us? what does it mean for europe >> i don't think we're at that stage in the cycle we have -- >> you think a rate cut would lift prices? >> we're in an environment where inflation is rolling over, so it is -- you look at the five-year forward, benign inflation environment. the economy is going to muddle along and so that takes us right back to where we have been over the last decade, which is a couple of percent growth and a central bank that is reasonably accommodative. valuations are elevated, but not excessive. >> the narrative has been deregulation, red tape getting cut, tax cuts go down. right. >> all of that actually was disruptive at the end of the day

because what ended up happening was you had a couple of good quarters of economic growth, but rates that climbed to 325. we went to this new environment where rates went up, but the economic levels were not sustainable. so we came back down that created volatility in the markets. with the beginning of the year was telling us is we're back into that nice environment of a couple of percent growth, no real pressure on rates, no real pressure on inflation, but we ended up in a trade war which derailed it. so we need some -- we need some greater certainty on policy, we'll never get all the way there. we need clarity on policy and we should be back into a very nice market. >> which all comes back to the gdp. the last look at the first quarter today. 3.1. good first quarter second quarter tracking, the atlanta fed at 1.3 alex. what is going to happen to growth this year >> for us, i think muddle through but slow and steady environment is going to continue i think what will happen is investors are going to be disappointed if they're looking to the fed to provide some sort of support to this equity market

rally from here on up. i think the fed, apart from them doing anything, a hike or a cut. >> the fed always comes through for the market. >> that has been true historically i wonder under a different fed chair and under a different composition of the committee whether you can apply what happened over the course of this cycle to this current composition of federal officials. i think investors need to get used to an environment where monetary policy is in longer the stabilizers, the training wheels it has been for the last ten years. asset purchase programs have been wound down. central banks, not aggressively tightening interest rates, i don't think you're going to be as accommodative going forward the removal of those training wheels i don't think you'll see the financial markets topple over what i think you will see over the later course of the cycle is increased volatility that's something we have seen in the fourth quarter of last year and moving into the early parts of the last couple of weeks. >> two things underpinning this tykele has be

cycle is accommodative policy and china providing stimulus when it looks like they're economy is going to slow in my mind, this trade uncertainty actually extends those two underpinnings, the fed, you know, i was worried last year when the fed was getting too tight. now they backed off. and the market is expectin perhaps even lower rates this year and i suspect china will respond with further stimulus. >> you're not worried about ratcheting up of tensions in terms of trade it is likely that we're going to go to 25 on 300 billion. feels that way, certainly. very tough to know maybe all imports. don't you think there is going to be a broader impact in terms of growth and confidence if we continue to go down this path of higher -- of more hostility with china? >> absolutely. it is slowing economic activity. right now consumer confidence is about as high as we have ever seen it. it has got nowhere to go but down and we know that policy uncertainty remains and that will slow the economy. this could exist for a period of time because the administration,

the trump administration feels pretty good with where consumer confidence is, and perhaps chairman xi thinks that he can kind of wait this out for a bit. but the reality is this slower growth environment is not plunging the economy into a recession. it is slowing the u.s. to what was always likely to be a more sustainable rate than the 3% we saw last year. now, if you get sub 2% growth and inflation rolling over and the dollar too strong, the federal reserve will step in -- >> dollar on a two-year high today. >> it is on a two-year high. >> i don't get it, is this about the fed, pushing the fed to a rate cut, or about a fed on the escalation and the china trade war. what is the market trying to communicate here >> the market is obviously worried right now about a further escalation of the trade war. that's why we see ten-year rates going where they're going and through the three-month yield. so we all need to take note of that we saw that in the mid-1990s

with concerns about mexico and the asian economies and federal reserve lowered rates and we had four, five years more of a cycle. >> this is the exact point that andy pozdner makes >> i think it will be very difficult. the reason being is that you also got to be very concerned about the signal it sends to the rest of the real economy that you're cutting interest rates when things feel okay. does that mean actually things aren't okay and you should start pulling back on consumer spending that signal and that communication is quite difficult. i think what you need is some sort of catalyst, some trigger now, there are some other aspects maybe if the u.s./china trade war escalated into a full blown conflict that would justify the federal reserve cutting interest rates, but right now and off the back of the gdp results we have seen, i don't see that being a big enough catalyst. >> i'm one of the few people who is -- >> they were significantly higher but it is more about the

direction of them than the level. look, couple of years ago we went to 135 on the ten-year rate n midst of a policy mistake. the federal reserve raising interest rates when the rest of the world was easing we went to 135 the fed backed off and we extended this cycle the way we should have done. we backed away from a policy mistake. right now we're in the 220s on the ten-year we're in the midst of what the market is viewing a policy mistake. too tight on trade with china. that doesn't mean the united states shouldn't focus on structural reform for china. i'm not rendering an opinion on that what i'm saying is the market is saying we're too tight on it right now, and ultimately the administration needs to come up with an agreement or we're going to need more policy accommodations both of which should be supportive for markets going forward. >> you mentioned that the fed would be sending a bad signal about the strength of the economy if they cut. what signal are you getting from the retailers, 52 week lows, i went through the list yesterday.

kraft heinz is on the list every day. in general, the signals we're getting lately from the retailers were pretty soft. >> i think we need to see whether that is short-term weakness or something that is more structural as a symptom of time monetary policy the other factor i think the fed needs to be cautious about is you are going into 2020 and there has been some degree of political pressure on the federal reserve to cut rates before, cutting, acknowledging that and bearing down to political pressure then leads investors to start questioning how much political credibility you've got and for central banks, credibility is everything as soon as that starts getting questioned, that starts to become a real challenge to implement monetary policy changes. >> good one, guys, thank you alex and brian how was the 1973 recession were you working then? remember that? >> were you working here then? actually, i was. there was -- >> on "squawk". >> yes >> when we come back, it is a sector that led the market lower

in may but it might be signaling a market bounce. we have details on that. a massive growing part of disney's big bob iger on the parks and galaxy's edge opens tomorrow you'll hear what iger had to say. dollar ger, w 6 enaldoup2. the latest innovation from xfinity

isn't just a store. it's a save more with a new kind of wireless network store. it's a look what your wifi can do now store. a get your questions answered by awesome experts store. it's a now there's one store that connects your life like never before store. the xfinity store is here. and it's simple, easy, awesome. welcome back to "squawk on the street." time for our etf spotlight

>> we're looking at some of the really bombed out areas that are cyclical bellwethers or have been to see if there are stirringings of bottoming activity semiconductors, look at the ishares. want to point out a couple of things last september is the semis in white. it peeked before the overall market peeked. went down like that. same thing here. we peaked, third week in april, in the semis and actually had another week before the overall market broke down. the bottoms are much more in sync you see right there, back in december, they bottomed on the same day yesterday, you see this tiny little curl up, we did get a gain yesterday in the semis, sort of conspicuous in a down day. another further bounce today that's one to keep an eye on and exaggerated version of the overall market that's how semis tend to move. look at transports much more challenged group, further below its highs and

seems like bad underperformer over the last year the iyt. also has shown an ability to preview the market did also peak here, a little before the overall market did in april. not really as clear a sign here that this one is looking to bottom much more directly trade related. maybe not more directly but directly trade related and the bond market telling a tough signal about inflation and growth this is one to watch too it seems like right now the underperformance 10% below its recent high, not all time high, has a lot of people worried about the economic implications of transport watch for the early bottoming action here. >> how common is it for transports to be down 10 when oil is also down 11 since late april? >> there has been a little bit of a delinking it seems on that to some degree, carl the shippers like logistics company, fedex and u.p.s. looked pretty tough during this whole phase whether it is because of structural reasons there or the diminished volumes of global trade, but, yeah, it seems like

the transports are not where you want to look for comfort that the economy is really holding up well though you also have to keep in mind it is not necessarily a read on everything about today's economy. semis might be a better one. >> wonder if the russell 2000 index of small caps get thrown in there too with groups in terms of risk measures and groups that have been hit harder than the rest of the s&p 500 and just what that tells us about the economy and where the market is going >> i view it a little more as a risk appetite read and credit conditions read, very levered companies, a lot of unprofitable companies and a lot of financial companies in the russell not as much domestic mom and pop selling to you and me as it is, i think. companies that need the economy to do well and even trade to do well for them to thrive and then, of course, you need credit flowing into those areas of the market so it definitely is another read if we're going to have a bottoming and risk appetite, if we have gotten too defensive

collectively as investors, we'll see if that plays out. >> all right, mike, we'll see you in a little bit. mike santoli when we come back, disney's big bet on park expansion. you'll hear what bob iger is saying about the health of the franchise and the current state of the consumer. get a check on the major averages here. pretty steady, dow up 62 s&p five points below 2800

my degree from snhu has helped me tremendously. the flexible class schedules allowed me to go to work full time, run my catering business and be a mom and parent. when i reached this accomplishment, it was like, it's here, it's happening, it's now. we at southern new hampshire university are the ones who succeed. we are the ones who break through.

for disney and our parent comcast, theme parks are a big part of our businesses, both customers investing heavily. julia boorstin talked to bob iger and joins us from the new "star wars" theme park in anaheim, california. good morning, julia. >> that's right, carl. disney invested $1 billion in this 14 acre expansion of disney land, called "star wars" galaxy edge ceo bob iger telling me they raised ticket prices ahead of this launch to as much as $149 for peak days to help moderate demand saying they haven't seen any resistance to higher prices and no indication of a pullback in consumer spending >> if you just look at the economy, and you look at the american consumer through the

lens of our parks division, you say everything is just great that's a division that is doing extremely well, continuing to deliver not only a better guest experience but growth to the bottom line, growth in terms of revenue. there say lot of demand right now for these products >> reporter: with iger saying bookings are strong for the key summer season at their parks, we asked if they're seeing any impact of the trade war with china. >> our visitation to our parks from china is relatively modest. other markets in the world, uk and canada, mexico, other parts that are much bigger than china. we have seen some nice growth and i've read the articles about slowdown in chinese visitation to the united states i don't think we have seen anything that would be perceptible yet at our parks i was just in shanghai last week and i can tell you that the popularity of that park is still extremely high >> reporter: iger saying that despite the trade tensions, they

do plan to continue to invest to expand their shanghai park, which is partially owned by the shanghai government. and he wouldn't rule out the possible to open more of these "star wars" lands overseas the only other one is opening in orlando in august. back to you. >> julia, i know iger talked to a bunch of people, reuters asked him about doing business in the state of georgia after the controversial legislation there. he said it might be difficult to get employees to go there. what are the ramifications of iger stepping into another hotbed of political controversy? >> well, look, i mean, i think he was very careful to not say anything specific. he said it would be difficult, but did say they definitely wouldn't disney invested so much in production in georgia. if you look at the films they have shot there, including black panther, they do have a big presence there and what i've heard, carl, from a number of folks, not just about disney, but other players in the space, a lot of people are hoping this is going to be a stop in courts so they aren't

going to actually have to pull out from shooting in georgia because if disney and other studios stop shooting in georgia, that would mean multibillions of dollars of potential impact >> julia, thank you. elon musk says tesla has a lot of catching up to do to achieve a record quarter in a leaked email to employees, musk says while demand is strong, he'll start holding calls with delivery teams every two days to know what is needed to, quote, accelerate our rate how many leaked emails have there been flaft fin the last fs quite a few. >> another way to communicate, i guess. >> suggesting, you know, issues that he's on top of. but acknowledging some of the problems out there. >> somebody pointed out if you had bought shares on the day offed funding secured tweet, down 50%, closing down 379 or

something like that. >> problems started piling up from there when we come back, boeing 737 max image problem with the ceo of united saying to reassure his passengers ahead of the fleet getting back in service. getting a check on the major averages, stocks are bouncing back a bit today dow up 58 points s&p up .4. nasdaq up half a percent we'll see if this holds. stffheju o t highs we'll be right back.

good morning i'm sue herera here is your cnbc news update at this hour. acting defense secretary patrick shanahan says he was unaware of reports that the white house wanted to keep the uss john mccain out of president trump's sight during his recent visit to japan. he talked to reporters in indonesia. >> -- this morning the first i heard about it in terms of ship movements, the only ships i've moved is the uss

abraham lincoln. yeah okay i need to find out a little bit more, just have the first glimpse of it this morning >> afghan authorities say a suicide bomber targeting a militaryacademy in kabul has killed at least six people six more were injured. no one claiming responsibility but insurgents have targeted that academy in the past and julian assange missed a court session this morning, apparently due to health problems he had been expected to appear from prison via a video link at a brief extradition hearing. his lawyer told the court assange is not very well you're up to date. that's the news update at this hour back downtown to you >> sue, thank you very much. markets remain on edge as trade negotiations, increased tariffs, a broader slowdown around the world continue to weigh on stocks. china accusing the u.s. of naked economic terrorism, saying it is not afraid of a trade war. the president says china will come back to the table

>> china would love to make a deal with us we had a deal and they broke the deal i think if they had it to do again, they wouldn't have done what they did. we're taking in billions of dollars in tariffs china is subsidizing product so the united states taxpayer is paying for very little of it i think we're doing very well with china we'll see what happens i can tell you, china very much wants to make a deal because the companies are leaving china to avoid the tariff china is becoming a very weakened nation. >> joining us this morning, stephan selig, former undersecretary of commerce for international trade. steve liesman is with us as well great to have you both good to see you. >> carl. >> your base case we get some kind of agreement, yes >> i think the president had it half right, the chinese want to get to a deal and we want to get to a daeal. how long is it going to take and how much pain are we going to

suffer what we're seeing now there is going to be more fits and starts to getting something done than the market expected a few weeks ago. secretary mnuchin said we were in the final laps. now i think people are kind of girding for a longer process and in fact the next encounter with the president is going to be with in japan with president xi at the end of the month and we shouldn't expect any resolution anytime soon. >> you think this to the agree we get something, short-term, year end deadline or where do you think our timing is now? >> probably more of a political deadline than anything else. and whatever we get, it is not going to be a panacea where all of our issues with china are going to get solved. the question is do we get something done that both sides can point to as a successful outcome, my view is this is go to be a long-term process and something that this administration, future administrations are going to have to deal with for a -- for the -- >> not unthinkable to you it doesn't happen by the election >> well, as i said, highly

unlikely i do think we get it a deal because what the president said is the chinese want it and we want it. the fact is as you know, the new york federal reserve said it is going to start to cost households $830 a year it is going to impact growth and the stock market which the president looks at quite carefully is down 5% for the month. >> steve, how do you think about the economic impact when you hear people like stefan say this is going to be prolonged fight and could go well beyond this administration >> i think that's true the question is is it going to become manageable. the market has the forecast when it comes to a stock earnings to begin with and then it has to forecast the macro economy. the place it is in right now is having to forecast political outcomes and i think stefan starts to make an interesting argument there when we talk about what is a victory even look like, what does a deal look like. what is happening now is the market is becoming -- to this

idea there is going to be a prolonged trade fight. i guess there is a potential upside but that's not the way the market is trading on a deal, in contrast to how it was trading before the president increased the tariffs and we learned more about the details of the negotiations. so i think right now there is potential upside if they make a deal, i think that stefan is right that another -- i don't want to say this, but i have to say it, thousand point down in the dow might bring president trump and perhaps president xi to a different place than where they are right now. >> and not just the tariffs, david, right it is also the pressure on their technology companies adding huawei to the entity list, almost putting zte out of business and what is interesting is tactically are these things that the administration is doing to be tough, to theoretically get to a better deal, actually working in cross purposes? because one might argue this would embolden the hard-liners to say, you see, that's why we need to be able to do this stuff

ourselves and not be dependent on the west and dependent on the united states. >> that's exactly what some of the state propaganda is arguing now, we were thinking one way, prior to the final laps, and now we're -- the hawks have taken over. >> is this a nuanced clever negotiation? >> a risk that has become much more heightened. you have this risk they spill over into really bad. >> and tactically what are we -- are we handling this optimally one might say, i think the business community is in agreement that we needed to deal with these issues with china and the administration deserves some real credit for addressing when past administrations, republican and democrats, haven't the real question is -- >> that's really my problem with the whole thing, i'm just not clear what the goals of the administration are on the one hand, if it is ip and technology and access to chinese markets for u.s. companies, that seems like a manageable set of goals. but there is this other idea

that is out there, what we really want to do is bring manufacturing back to the united states if that is the goal of the administration, then i think the means by which that is achieved are long term, high tariffs on not just chinese goods, but other goods as well. so -- besides what they're goal is and what they can possibly achieve, there is another thing which is what they end up with i think it is good goal, but it means long-term tariffs if they want to bring back stuff to the united states. >> and, steve, the issue is the goals the administration is setting out like reducing bilateral trade deficit is really not on that list and not relevant to the issues that u.s. companies and western companies are facing if they can deal with intellectual property and counterfeiting, if they can give us some increased market access, and if they can begin to scale

back state support of chinese businesses, we will have accomplished a lot the notion that that they're going to feltgo ing to fundamentally change their economic system is a zero. >> those were all big asks, those are what you're talking about is what american businesses would like, big asks of the chinese. >> why it was never going to happen in the 90 days that the president ultimately set out and we have this tension, right, which is that the quicker we try to get a deal done, the less substantive a deal will actually be and the less impactful over the long-term it is going to be for the economy. >> steve, the -- i hate to -- i never like to quote polls, but the tariffs are not leaning the president's way. this week, tariffs go 32, bad 37, free trade deals good 51, that's up from 24 three years ago. you get the picture. >> i have a different picture, carl, tomorrow we have our all america survey coming out. we asked a lot of chinese questions, a lot of questions about china, and really comports

with what you're hearing there, tariffs are not holding well and it is interesting to see that. china is not the enemy that the president makes it out to be i think that's something that we'll see to the extent to which that kind of internal political dynamic here in the united states ultimately drives policy. >> and those polls are only going to get worse the fact is that businesses are attune to these issues now, it affects their supply chains and future planning and investment the consumer hasn't seen it yet really when the consumer starts to see it, those polls are even going to get worse. >> what are you hearing from the extent you speak to ceos these days, what is their stance here? do they have less confidence are they not willing to make a decision >> there are heightened levels of uncertainty that is the enemy of capital formation and investment

people are going to defer investment or be more cautious, but i think to steve's earlier point, we haven't in the past been able to assess this sort of geopolitical risk. hasn't really ever been relevant for business decisionmakers, and as a result of that, i think there is real rtrepidation goin forward. >> why isn't it showing up broadly in the inflation number at this point? >> a couple of things. i don't foe know if you saw, on the large retailers talked about this what they said is when they had a good whose price went up because of tariffs, they spread that price increase over a series of goods. and what you probably find is that the inflation from the tariffs exists in a couple of places in the first order it exists in the counterfactual what would be happening in the prices if you didn't have a tariff in place. the second thing is you do have some pressure on margins and profits, both from the producers angle and the importers angle.

and the second thing is, this new round of tariffs, the round of tariffs that economists said matters a whole lot has not been in place for a whole lot of time now, so we'll have to wait and see. you know how you can't create or destroy matter, if you raise prices, it is going to be some place. it just doesn't go away. >> prices take time to adjust. >> stefan, steve, thank you, guys good discussion. boeing ceo dennis muilenburg apologizing for the plane crashes in the past year in an interview with cbs last night, he was asked about the future of the company as well. listen >> did you ever consider resigning? >> no. it is important that i continue to lead the company and the fact that lives depend on the work we do, whether it is people flying on our commercial airplanes, or military men and women around the world who use our defense products, that is a worthy mission. >> on boeing, phil lebeau sat down with united ceo oscar munoz

in the last hour, discussing the opening of the new laguardia terminal and when the boeing 737 max fleet will be in the sky what did you learn >> united, like american, like southwest, they all fly the 737 max. if you look at when they expect the max to return to the schedule, they're all forecasting between early and mid-august oscar munoz said they're still on track for that at this point and important point for him, making sure that not only is the plane safe, but that customers are comfortable flying it. >> safe return to flight of the aircraft is very critical to not only us, but people around the world. it is a good aircraft, clearly but at the same time, that's our view and our public -- flying public needs to be assured and feel the same confidence. >> look at shares of united. we had a chance to ask about the state of business. united, like all the airline

stocks, under pressure transports under pressure over last week and a half oscar munoz says in terms of business, they're not seeing a falloff in demand or traffic not only in the u.s., but around the world. >> all right, phil lebeau, thank you very much. thought you had maybe sound there. phil lebeau at laguardia. when we come back, commodity crunch, devastating flooding in the midwest pushing prices to new multiyear highs. and the hurricane season is just beginning. we'll get you live updates when "squawk on the street" comes ba ck

one indicator suggests some of the hardest hit stocks could ndut m for a bounce. fi oore at tradingnation.cnbc.com more "squawk on the street" coming up. let me ask you something.

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been staging a turn around dom chu has more for us. >> the companies that do all these types of drug developments, but they're not the leaders in the health care move so far. it is an outperformer by the way on a month to date basis for the overall s&p 500. if you look at some of the moves we have seen, within the sector overall, you can see here with the yellow line down 1.5% for the health care etf, one of the big spiders. if you look at the leadership, it is health care equipment and services, so these are health perhaps equipment companies, diagnostic companies, ones that make health care year, and insurance companies. and these stocks are the ones that are doing really well you got medtronic, up 4% so far month to date. united health care on the insurance side up 4% and a distributor of products, they're up 6% and idex which

makes veterinary products and diagnostic equipment up 8% these are the types of companies leading the way higher if you look overall, at the stocks you really care about, the reason why the market cap weighted index these are the biggest ones here, johnson & johnson, pfizer, stocks like these will be the ones with the biggest influence. perhaps overlooked for the time being, some services customer, device makers and insurance companies, they're the ones who pay attention to sector if thisa turn around. back over to you. >> dom, thank you. one sector not getting a lot of love, energy, crude oil prices down 8% for the month of may alone. on track to break a four-month winning streak they're under pressure from growing u.s. supply. also global economic worries outweighing concerns about supply disruption from the middle east. s&p energy sector also this month's worst performer of the 11 s&p 500 sectors speaking of that supply

disruption, storm season is in full swing the national hurricane association says above normal hurricane season is 30% likely to come. contessa brewer joins us with more. >> it is 40% likely that we'll have an average hurricane season it officially kicks off saturday, the season, the government scientists predict as many as 15 named storms. two to four could become major hurricanes here is some sobering information. first the national flood insurance program is scheduled to expire tomorrow unless federal lawmakers intervene. a disaster aid bill that includes a short-term extension for flood insurance program is stuck in congress. without the extension, a lapse would mean homeowners and renters can't purchase or renew flood insurance. that could also interfere with buying and selling homes in flood zones. secondly, insurance rates are increasing those who live in hurricane prone zones or hit before could see rate hikes between 15 and

30%. but everybody regardless of where you live should expect to see some kind of increase. all this on the heels of the spring season filled with severe storms, late winter snow, massive snow melt, flooding that has just inundated the midwestern states and the tornadoes. you're seeing some damage here across the great plain and other places the number of tornadoes is nearly 30% higher than what is typical in spring. and take a look at the big insurers here. chubb, progressive, aig, met life, all state, travelers, all with exposure to the catastrophic losses due to flooding and tornadoes wind and hail in the midwest so why are the insurers doing pretty well year to date analyst paul newsom tells me property casualty insurers are considered safe haven trade. so if the storm is on wall street, investors it seems find shelter there. sara >> yeah, i mean, what exactly is

the date for hurricane season? >> june 1st, it starts on saturday. >> i got to get my gear ready to go >> hopefully you won't have to use it let's send it over to jon fortt with a look at what's up next. >> good morning. big news for from fedex. seven day ground delivery starting next year they always do it during the holiday season they'll continue it into next year we have got the president and chief operating officer coming up on "squawk alley.

welcome back to "squawk on the street." let's get over to rick santelli back at hq for the santelli exchange. >> i'd like to welcome my special guest david wessel i'm going to get right into it pretty much every story i read that talks about dropping treasury rates, of course, links that to the relationship to a slowing domestic and global economy, and i'm sure there's a lot of truth to that, but my question to you is specific, right now we're at minus 16 on boons. what's going to happen our long end if boons go to minus 26 or minus 30

what happens to the long end rates in the u.s.? >> you know, rick, it's good to see you. i can't get used to the fact i don't hear all those traders shouting in the background it's so quiet. i can actually hear what you're saying look, i mean, i think that's another way of saying that we often assign movements in u.s. markets in the bond market to what the fed's doing or what's happening here, and we lack -- we sometimes in our shorthand lack the global perspective. you're absolutely right. first of all, i think there's a bit of gloom about the global economy in general, so the bond markets are very global, but secondly, when you look at what the european central bank is doing or the bank of japan, it's going to be very hard for bond yields to rise here as long as those central banks are still flooding the markets, and they are because they're worried about their economies. >> as a matter of fact, david, we could almost make an assumption that they're going to be dipping further into the liquidity well, whether it's with special rates on loans or purchasing more securities or e

-- etfs in japan. it's very difficult, how do we tell investors to look at yields how much of that should make them nervous about having positions in other sectors in the u.s. versus there's not much we can do about it it isn't really a doom and gloom signal >> well, i think it is a gloom signal it's hard to believe that when bond yields fall as much as they are around the world that that's a sign of great optimism about investments -- >> oh, absolutely agree. >> i do think it's a worrisome sign i think the other thing that's going on is we're being forced to confront the fact that whatever your theory about what causes inflation, it doesn't seem to be working right now, so i think the yield's also -- you know, some of this is what's going on with the term premium, and some of it's what's going on with inflation expectations which are getting a little soft for good reason. we flooded the world with money. we have expansive fiscal policies around the world, in some cases very expansive, and we can't get inflation up to target anywhere except maybe the

u.k. it's making people rethink how they look at the world that must be hard for investors. i'm glad i'm not rich. i don't have to worry about it so much. >> and then the final topic, many out there including pimco have started to ring the bell on some of the dangers that are in the securities side. i know we've had jay powell talk about korcorporate securities ad some risks there. do you want to tell me your prognosis with regard to what's going on with fixed income on the securities side? >> basically the question is has the corporate sector in the u.s. borrowed too much, and are we living just on the edge of the cliff. there are an awful lot of bonds that are a hair above investment grade. if the economy goes south and they go below investment grade, are a lot of investors going to dump them? so i think the conventional wisdom right now is this is worrisome but it's not alarming yet, but it could be a problem if the economy slows precipitously, and you know at

some point it will do that so worth watching but not urgent yet. >> i guess just to carry on with that topic, what we need to watch is when they need to lock and reload in 2020 to see how that rollover goes, we'll get a much better sense of what type of issues may affect the balance sheets of those corporations. >> yeah, absolutely. i mean, profit numbers today were not very encouraging, but profits have been so strong lately that we're bound to have an off quarter here and there. >> excellent it's always a pleasure thank you for joining me. >> you're welcome. >> carl, back to you >> good to see both of you guys, rick, thank you very much. got some retailers making big moves beginning with express, higher after revenue beat forecasts and same store sales decline was less than ant lists' forecasts shares of pvh getting hit very hard, the company behind tommy hilfiger due to the kbraimpact higher tariffs it sources most of its clothing and accessories from china a lot of the comment was not so

much about tariffs but general slowdown in the u.s. and china. >> amongst the consumer and i have a hard time connecting that to the consumer being worried about our trade tiff with china. >> part of it is they mentioned the strong dollar which impacts tourist spending in the u.s. but in general just consumer confidence being shaken a little bit. they've seen the deceleration recently. >> do you think consumer confidence has been shaken recently >> we haven't seen it in the official numbers, but we're getting it from the retail conference calls, and that is some weakness lately >> watch what they do now, what they say. >> may did confidence in those doing the buying for the retailers. >> it depends. if you go to the specialty retailers and some of the ones that source a lot of their product. also dollar tree ceo gary philbin warning if tariffs, the next wave of the 300 billion in imports from china come through, he said that's going to impact our business

credit suisse said they're the poster child i. they get 40 to 45% of their products imported from china. >> dollar general only 6%. >> that's twaactually at a 52-w high. >> we're talking to retail now what else you got coming up? >> we're going to talk to former colorado governor hickenlooper, presidential hopeful of course, and we're going to talk about trade, what would he do in this sort of situation? the democrats seem to be supporting president trump this this effort. also, guys, first uber earnings report since going public, first time we're hear from dar dara kozrashai on an earnings call. dow's gains largely gone, still up six pntois on the s&p, "squawk alley" is coming up next with the president of fedex. don't go away.

see that's funny, i thought you traded options. i'm not really a wall street guy. what's the hesitation? eh, it just feels too complicated, you know? well sure, at first, but jj can help you with that. jj, will you break it down for this gentleman? hey, ian. you know, at td ameritrade, we can walk you through your options trades step by step until you're comfortable. i could be up for that. that's taking options trading from wall st. to main st. hey guys, wanna play some pool? eh, i'm not really a pool guy. what's the hesitation? it's just complicated. step-by-step options trading support from td ameritrade still nervous about buying uh-oh, la new house.meone's is it that obvious? yes it is. you know, maybe you'd worry less if you got geico to help with your homeowners insurance. i didn't know geico could helps with homeowners insurance. yep, they've been doing it for years. what are you doing? big steve? thanks, man. there he is. get to know geico and see how much you could save on homeowners and renters insurance.

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good morning, it's 8:00 a.m. at faib headquartecebook headqun menlo park, almost 11:00 a.m. on wall street, and "squawk alley" is live. ♪ ♪ why do i love you so, i don't know but that's all i need to know ♪

♪ so don't be asking, why do i love you so ♪ ♪ that's all i need to know so don't be asking why ♪ ♪ i never felt so good before, kind of makes me wonder what i did before ♪ ♪ always wanting more, i never knew it could be like this ♪ ♪ good thursday morning, welcome to "squawk alley," i'm carl quintanilla, with morgan, the dow's gains erode just two points now we're going to start with facebook protesters expected at menlo park this afternoon ahead of the company's annual shareholder meeting with mark zuckerberg's influence over facebook and its recent misinformation failures in focus meantime, you've got presidential candidate elizabeth warren out with a billboard in the heart of san francisco calling for the breakup of tech giants like facebook business insiders, henry blod jet, paul holland are with us this morning to start off our 11:00 a.m. hour. i'm thinking to a national piece earlier in the