2019, "squawk box" begins right now. live from new york where business never sleeps, this is "squawk box. squoo good morning, everybody. welcome to "squawk box" on cnbc. we are live from the nasdaq market in new york city. u.s. equities. this is the first trading day of june and as people who are bulls going to be happy to put the month of may behind us it was a rough one we are looking at the dow being down the last six weeks in a row. that's the first time that has happened in eight years. the s&p 500 and nasdaq have been down the last four weeks last week alone the dow was down by another 3%. this morning we are looking at red arrows these aren't severe declines but the dow futures are down by 83 points nasdaq off by 33

should point out that the nasdaq is up more than 12% for the year however, it is moving closer to correction territory it has a 9% decline from the may 3rd closing high let's take a look at what's been happening this morning in other markets. >> ten year? >> oh, my goodness 2.095%. >> the dow was down 200 when i woke up. if you were going to put bets on this, would you say 1.9? >> morgan stanley cut from 245 based on the tariffs. >> 30 year fixed rate mortgage is looking good. >> yeah. if you hadn't locked it in, the two year is at 1.88% we'll keep a very close eye on this >> record low on the bund.

>> what is it now? >> it was down 18 -- >> more than 40 points below >> yeah. i read -- i read that -- >> that tells you that this is not just tariffs happening here. this is a worldwide situation. the slowdown in germany and what we've seen with that with the bund down by 0.216%. >> is karissa cabrera on >> she's supposed to be. in her preparatory comments, it says is it tariffs or -- >> do you think if i left i could put out my thoughts and notes and people would take them seriously. >> you wouldn't do it? you'd have to sit and type. >> no. no no no

i could dictate. it would be siri and i would be saying nonsensible things. >> there are concerns about the tariffs and what it is on a mult multi-you're in europe, gi ma any. >> let's take a look at by a percent. and then in europe where there is some early trading taking place and where the president has arrived in london, red arrows across the board there, too. pretty modest declines biggest declines come with the fthsy down about .3 of a percent. president trump touching down in the u.k., joining us for a rundown of this presidential visit and how it's being taken on the ground, there's steve sedgwick

live >> reporter: very good morning to you this is different from the one of july of 2018, last year as well that was a working visit this is a state visit. this is at the behest of the queen. it's the queen's invite. any minute we're expecting marine one and the entourage to arrive it will culminate in an official bang ket hosted by mer majesty the queen. tomorrow is about working, speaking with mrs. may it will be one of the last acts of theresa may as prime minister of the country she will resign as the head of the conservative party often friday the president is waiting to become the next prime minister by saying, yeah, i think boris

johnson will be the best prime minister these comments will be made. this controversy, keeping up there. just before he landed northeast today, a stone cold loser. i'm nor which had rit about the president. battling on the twitter sphere >> he's the man you -- it was

going up every time the going to be quite looj. doing the working conversations of the prime minister. undoubtedly what's going on with huawei there is conflicting ideas about whether the chinese telecom company should be allowed into the infrastructure there is a question whether british should allow huawei to be part of the 5g infrastructure as well. the candidates are getting involved in that debate as well. you hear the cavalry there are a couple of gun carriages going into the palace. the gun salute to the president

will occur earlier you saw on the household guards calvary marching across. as you can see, a whole horse. it looks like we will be getting a gun a lawsuit when the president does arrive. it will arrive in the next degree he pulled out of the top 21 climate change agreement as i say, a whole host of other issues including the fact that jeremy corbin, the leader of the opposition, has been quite critical of the president. will not be attending the state banquet this evening mr. trump says he thinks it would be a mistake if he was not a friend of the united states.

a whole host of issues for me, very important as well on wednesday and thursday, the 5th and 6th of june, the importance of normandy marking the 75th anniversary on d-day. >> steve sedgwick in london. did you see the ads. the blimp ads on sky news yet? >> they have this blimp. it's a shadow being cast all over london. it says trump on it t. sort of is in gest but very el it's an odd.

this reminds me of the very dominant, competent mayor of new york city. very dominant. staffing announcement from president trump on twitter he said kevin hassett, who has done such a great job for me and the administration, will be leaving shortly. his very talented replacement will be named once he gets back united states. he'll be back it will go back and has anyone said -- you know what, two years in the white

house. that is a pretty hectic place. if you're an aei guy, you're kevin hassett, what some people think -- there is a frustration about not being able to do anything but even if you finally came around saying. >> taking time. >> rephrase. gdp -- >> see where it is today and see if you can unwind this. >> are you on board with the president? >> we'll see how he dances around the questions today >> yeah. >> when you look at the list of advisors that president trump was moving against clieg

lighthise -- it makes you think who are the advisors he's thinking about. >> not until june 12th the president was very conciliatory he immediately sent someone off. >> it's june 3rd >> we have a week to go. >> we'll see whether this will stir it. that's what we said. obviously with china, he's going to go through with things. >> yeah. >> which means you don't want to put the usmca and nafta at risk. >> you can bluff here. you can't assume it's a bluff. >> to that point, a senior level panel will have high level talks in the u.s. today. they want to stop the migrants

from crossing the border tariffs of 5% are expected to continue mexico is sending a big delegation to talk about the border problem we want action, not talk they could solve the bobber crisis if so, again, you mentioned diplomatic talk coming from the mexican delegation not so much and even the tliz the president was continue to out ou pretty good. now they're helpless to do anything the problem is the laws that we have here is where you get released after 20 days if you get here --

>> those are the laws that force us to put it on. >> and you'll be here for dnchts if you want to -- if you then you are release the there's a release. change the laws then. >> the point is that it's not mexico that is the problem here. >> right right. >> it's this law that's on the books that it's a magnet. >> it has its hands tied. >> this is "the wall street journal. new this morning, chipotle is raising it. we have to talk about big tech big tech under fire.

boeing shares after they're warning a defective part in hundreds of thousands of planes. dennis mullenberg coming up at 1:30 eastern time. here's a look at the biggest premarket winners and losers in the dow.

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i'd rather not. the faa is it saying parts inside the wings of more than 300 boeing 737 jets may be defective and need to be replaced this includes some of the grounded 737 max models. the faa says the issue doesn't pose an imminent danger. the failure and in a statement boeing is saying it expects the airlines to inspect the parts. the ceo dennis muilenburg will be on the exchange. >> buyers of boeing's 737 fear del

delay. and separately, a big story that may weigh man the markets we know what the department will be investigating the inquiry is said to be in the very early stages. google and the justice department have declined to comment. we should say separately the ftc -- what happened in the past two weeks is the ftc and the justice department divvied up google and amazon. the second part of thestory -- >> win the lottery by getting the ftc instead of the justice department the ftc is easier they're the ones that went and investigated goingless and ultimately dropped meaning they didn't pursue anything

we've talked about it being in the cross hairs. this is a different level. >> google changed some things as a result of a previous investigation. when you get the justice department involved -- >> it's a whole different story. >> -- it's a different ball game i'm surprised the market is not under more pressure. >> if you are facebook, are you -- >> i would think they are lining their ducks up i would be breathing a sigh of relief if you go back to the microsoft and what that ultimately did people look at that and say, that allowed google to flourish. >> they took the attention from bill gates and trying to deal

with the government in full force for all of those years the areas they couldn't get involved in. >> people say that might have cost them. >> i think it did. >> not because they weren't thinking about the business. >> they couldn't do things. >> exactly. >> part of the reason that google is so strong, they wrapped up the market. when you look at 1/3 of the online ads, they have so many other tentacles, you could say they have a piece of 70% of the overall industry >> google is down four spots after the major indexes fell

5% last month, brian lavin is here david, weeds with jpmorgan asset manages. let's talk about -- is this the shot across the bow? >>. >> new concerns and the percentages of sales that are coming from over seas. >> so you want to -- >> change your calculus or thesis i want to say look at the trade with where we're going the more we tighten, those parts of the market that are highest valued will see the connections. in a slow growth world, those parts of the tech company, tech

sore >> i any it's a question of structural versus we were gukding. cyclically short term tech could be challenged ghirch them longer term and you see to see a change broadly speaking, how much are you concerned now about this trade dispute? >> i am concerned. >> when i say tried dispute, i don't know if i'm talking china, mess i could he, if you want to wrap them in one big bundle? >> i think you want to wrap it into one big bundle for investment we've seen slow growth, very accommodative policy

every time we've seen the dollar ral rally. we are seeing it with concerns about the trade wars so regardless of where we're ultimately heading, we're creating a problem in the market because financial conditions are tightening. >> that's the issue. we've seen it play out the question is with the fed engaging and labor markets, how long can the services side of the economy, how long can the consumer stay resilient in the face of the broader economy. >> a month ago everybody was betting that there would be a deal with china, right >> right >> are you still -- i feel like

there's still a sense that a deal will come, it may take longer i don't know what that is or when that is. >> so i think it's important to put a line in the sand next year in november. we have an election coming up. i think the administration recognizes it will be very difficult to get re-elected if the economy is in recession at that point this year started out better this year we were like, oh, my goodness, we're going into recession and we grew 3% they're trying to extend it through move of next year in an effort to keep him in the white house. >> this was supposed to be the year of slower growth and better policy and we saw the fed pivot and now the uncertainty around trade. i still ultimately think that you will see some agreement or an agreement to continue to meet and work through this. at some point the transmission

mechanism through the dollar becomes untenable. >> i was going to say, i think you need to be cognizant of the fact that an agreement could be no further escalation. if we maintain status quo, the market might be okay. >> thank you >> thank you when we come back, chipotle raising a red flag on the mexico tariffs that president trump announced last week. tell you how badly the chain could be hurt by the potential tariffs. that's straight ahead.

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a major food chain is now raising a red flag on those possible mexico tariffs. kate rogers, what's chipotle saying this morning, kate? >> reporter: hi, becky chi poll stay is saying if the tariffs are enacted they could impact the company's costs by $15 million in 2019 and reduce margins by 20 to 30 basis points this is based on the starting tariff point of 5% in june and 25% later in the year. in a statement the cfo said if the tariffs become permanent we would look to offset the costs by a modest price increase, such as a nickell on a burrito. the company also added, it is aware that it could easily solve the volatility in the supply

chain by purchasing processed or pre-mashed avocados. the company won't go that route and it's upholding its food with integrity. it won't break out what percentage is imported from mexico but chipotle says beyond the avocados it buys limes, tomatoes, bell peppers. >> those are all things sold in california. >> they did say earlier in the year they've been working to diversify their supply chain that's something they are working on and will continue to work on. >> a nickell a burrito but we talked about that on friday. i agree with you, it is one

thing they're considering. we'll wait and see what happens. >> thank you great to see you. >> thank you. coming up, "squawk" ceo, arne sorenson is here. the travel season kicks off. as we head for break, here's a look at the s&p 500 winners and losers through the at&t network, edge-to-edge intelligence gives you the power to see every corner of your growing business. from managing inventory... to detecting and preventing threats...

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welcome back you're watching "squawk box," live from the nasdaq market site in times square. good morning, everybody. welcome back to "squawk box. u.s. equity futures are under a little bit of pressure in fact, those losses have stepped up in the last ten

minutes or so. dow futures indicated up by 93 points the dow has been down six weeks in a row s&p futures are down down by 10 points this morning the nasdaq is down by 41 points. should point out that the nasdaq is still up by 12% on the year to date. if you want to take a look at the treasury markets, that's been getting a lot of attention. ten year is all the way down at 2.3102%. we've seen it fall below that this morning that's as the pressure continues to drop. the german boon is down negative 21 basis points. we'll continue to watch that. coming up when we return, arne sorenson will join us to discuss the latest trends and where things are headed. plus, watching shares of fedex down 3% after word that china is investigating the shipping giant. 'lay tuned

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the nyu hospitality conference is taking shape today. they're going to discuss the impact of tariffs on tourism and lodging. joining us now is one of those industry leaders arne sorenson, president and ceo of marriott international. first off, how's your health how are you doing? >> i feel great. that's one of the things that makes this battle a little bit surreal. almost wouldn't know i'm fighting it. round three starts tomorrow so it's good to be engaged in the battle and we'll take it a day at a time. i feel great i'm working every day and looking forward.

>> so i was mentioning off camera how many hotels am i trying to figure out are you sure this is the right way? there are so many different brands now >> yeah. >> i'm confused. >> think about it this way for a second bonvoy is the -- >> 30 brands >> 30 brands, 7,00,000 hotels we think by bringing the loyalty program and wrapping it around and offering the breadth of choice, whether it's a luxury hotel, mid market, whether it's poughkeepsie or paris, we end be up with a choice where customers can basically say i don't need to look at those other sites i can go to marriott and get the full range. >> the analyst community is 50% behind 100%

has there been some criticism? >> i think it's nearly 100%. it will be interesting to see the tone at the biggest hotel conference the industry has been looking at it everybody understands theory is the right theory. >> the latest numbers you beat pretty handily as far as on earnings revenue was less than expected is this based on -- i think based on a global -- >> yeah. i mean, i think we're about 2/3 u.s., 1/3 the rest of the world. when you look at the economy, the u.s. is steady it is just rock and roll and we're posting record results which felt like the case you look through that, what we

see as steady growth sort of 1.5, 2% same store growth which is not great shape but it's up. bs obviously that is up >> i would have thought that labor would have affected your expenses >> tight job market. >> tight job market, wage increase >> fair point. >> the industry has a whole peaks at 4.5%. that's the market average. >> how did you do it then? >> you do the best you can to drive some efficiencies and use technology and use other tools it's a tough challenge >> arne, let's talk a little bit about where you've seen growth

slow if growth is still coming but it's slowed down in january and february, is it because consumers are slowing it or because business travelers >> yeah, again, i would characterize it as steady instead of pretty delicate market it's a through line that is fairly steady. i think consumer is still fairly robust i think we're seeing international rivals in the united states or certainly decline relative to the growth. >> you think that's a function of what? >> the chinese are certainly down >> that's because of the trade war? >> yeah. welcome. >> they don't feel welcome >> they don't feel as welcome. >> is that slow markets like new york >> affects the coastal markets. >> what about u.s. travelers to

china? >> that has always been up to them things might have slowed down. >> u.s. business travelers to china. >> china is a big country. big economy. i was there in early april, i guess. 80% of the business is chinese ultra luxury in shanghai, the dynamics in china are more about the chinese economy than they are about the u.s. manufacturing supervisor going to china to see their plant, with you undoubtedly i would guess is down if you pulled a single lever in the trade? have you caught back -- is it a

single thing >> i don't any that we'd change anything about the last six months, we're 350, 360 hotels open in china. we're opening 1 or 2 a week in china. they tend to be at the high end. the overhang of the trade negotiations is high our industry has not been impacted by trade issues. >> we don't node pretechs from the hotels. >> but the overhangs -- >> you haven't done anything different? >> no, every hotel is with a chinese partner. they own the real estate, we manage the real estate it means our business looks a little less foreign. and we're not stra feej beginning. we're travel we're not about a banking system we're not about a pool going

>> great. >> good place to hang out. >> i was going to ask you about security costs security costs going up at hotels >> security has been -- today compared to prior -- some markets, yes algeria, for example, i was there last fall. >> hasn't changed in the united states >> hasn't changed in the united states we've ramped it up a lot in the last 10 to 15 years. i think it's basically steady. >> thank you, arne. >> good to see you all. >> great to see you feeling so well. when we come back, markets are still digesting last week's tariff news. futures down by 100 points in the dow. the nasdaq off by 42 going through the possible impacts. as we head to break, the market

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welcome back, everybody. economists have been weighing in on the chance of new mexican tariffs and the fed funds markets reacting over the weekend and this morning, too. senior economics reporter steve liesman is here with what's happening. >> not pretty. fed funds reacting and economists warning of possible recessions take a look at the rate cut probabilities. we now are putting in a 57% chance of a cut in july. that wasn't even on our board in the last several months. now we're good darn sure it's going to happen with 87% probability by november and not only are we counting on a single cut, there's a 64% probability

of a cut by october of two cuts. >> is this happening because we're worried about what you see in treasury markets right now. >> yes hold on to that thought, becky brilliant as always. jumping the gun. the move in these markets is equal to the strong concerns expressed in the economic reports. pantheon said the chance of a self-inflicted unnecessary weakening in the economy this year, and perhaps even a recession. barclays says we expect global economic and financial conditions to worsen enough to warrant 75 basis points. jpmorgan says making abysmal growth attainable. now becky was asking what's happening in treasury markets. this is the ten year three-month. now in a 26 basis point inversion.

a lot of that since friday i would report the other side, but i do not have an economic report from the president's office about the positive impacts of the tariffs as far as i know they haven't studied it he did one on socialism. if he's done one on tariffs. >> let's bring in michael zesus who is morgan stanley's trade analyst and rufus yertsus. michael, start with you and tell us what is going on with the tariffs and what it could potentially mean. >> the tariffs are a result of what we've known there are differences between the u.s. and china side. the incentives are for both sides to escalate until something proves to them that

there are clear incentives to cooperate. you can read through the mexico situation is that the u.s. is demonstrating that it might be a less reliable partner than one would have thought before this re-escalation started. that ups the disincentives to agree further. we think investors are supposed to assume he is ka la igs is going to continue to happen until there's clearly more economic remark. >> moving the sidelines? >> what we've been telling people for most of this year and have continued to climb the table on is, government bonds are going to outperfect form negative on risk assets. kind of in the range and there's plenty more down side. >> rufus, what's your take >> i would agree with all of that it's very unlikely that countries are going to be willing to sign up to deals with the trump administration if the administration turns around and completely reneges on the deals

by raising tariffs by immigration or national security so it's a huge disincentive. here's mexico. we've had a deal for 25 years. we're thaurng off. you know, if he followed through with these tariffs, we've got zero tariffs on our trade with mexico today it's a huge -- it's the biggest export market for the u.s. so the implications for the exporters are big and for the mexican economy. yeah, this is pretty negative all around. >> does this increase the likelihood -- decrease the likelihood that usmca, the new nafta bill makes it through not only in the united states but in mexico >> yeah, significantly shortens the odds as i said, why would the government say, yeah, we can trust this guy let's sign a new deal with him.

>> michael -- one second michael, what would it take to convince you to move back into the markets if you're on the sidelines. >> the obvious up side is if at the g-20 trump and xi get in the same room and they say we're going to reset the clock and we're not going to do the next set of tariffs. >> people will buy back in >> obviously depends on the level we're at in a lot of ways we compare this to if you think about it in game theory concerns, any time communication is a positive start. starting from a place where markets are down substantially, that's a pretty good start neither side is talking or moving on the three big issues that they've said or what's the gulf between them. >> steve >> i was going to ask the question you asked, which is now -- it's like conventional wisdom is on the worst possible outcomes it's a huge change because we had the market pricing in the u.s./china trade deal. >> i would guess it's still kind of there

it's just less likely. >> it's very hard. the problem i have is i don't see the rhetoric of fed officials yet. they haven't reacted to what happened friday. we'll have a bunch of fed interviews this week so we'll be able to talk about that with them i'm not sure the rhetoric of fed officials meets the pricing of the market >> in terms of buyers? >> i don't think jay powell is ready to cut i don't think two cuts are baked in i don't think reversal of the rate of skepticism that's out there about is this going to happen or not is really warranted. >> michael, thank you for coming up. >> rufus, thank you. kevin hassett going to join us for his first live interview that he'll be departing as chairman of the council of economic advisors. barry knapp, we'll gethis thoughts on the latest trade headlines. the potential for mexican tariffs and much more. you're watching "squawk box" on cnbc ♪

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trade tensions the president's visit to the u.k. and your money. we'll get you ready for another big week of trading on wall street barry knapp of iron side's macro economics. >> biomaking news at one of the biggest medical meetings the company is here to talk about the fight against cancer. plus, mexico in focus after the president's tariff threat.

andy puz ner on how tariffs will benefit the u.s. as the second hour of "squawk box" begins right now. live from the beating heart of business, new york. this is "squawk box. good morning and welcome back to "squawk box" here on cnbc i'm joe kernen with becky quick and andrew ross sorkin the trade war and barry knapp. imagining partner and director of research at iron side's macro economics. u.s. equity futures at this hour indicated on the dow down 85 as you can see, implied open, nasdaq indicated down over 39. president trump's official state visit underway it will include a meeting,

business with breakfast leaders. we'll have a live update from london in a few minutes. we'll be monitoring today's events in london here's what's making headlines at this hour a key player in the trump administration is leaving. the departure of kevin hassett, chairman of the department of economic advisors announced in a tweet and he told "the wall street journal" his departure had been in the works. he's going to join us live. a new issue has arisen in involving boeing's grounded 737 max jet. the faa says more than 300 jets may contain improperly manufactured parts and that they're going to have to be replaced before the jet has returned to service. it's already identified jets that may have problems boeing's ceo dennis mulilenburg

will be on the reports that one announcement apple will make is the end of yu tunes. the functioning will be divided among other applications including the company's music service. oftentimes, guys, this day is more important than the day they announced the new phones and whatnot because you can actually see the software that's coming into the phones for next year. >> people don't put enough emphasis on today for apple. >> not because of the end of itunes. >> because they announce -- what happens here is they announce the new stuff and the new software stuff and what the developers are doing in the fall they'll announce new phones we'll get all crazy about that what happens today oddly enough can -- >> i guess i thought itunes -- my son, itunes -- wait a minute. apple music? no itunes. i remembered, i used to buy like individual things and keep them on my -- >> itunes is also how you -- >> like you used to buy cds.

>> how you bought movies and tv shows. >> to own them. >> or podcasts. >> subscription thing -- >> don't need it, right? >> but this is all going to separate so there will be the tv app, film stuff, podcast app. >> i don't need it anymore right? >> itunes? >> you may not. >> i'm a spotify guy. >> that's free >> no. >> you pay that? >> can be free. >> there's a free version but you can't download songs. >> and if there is a free version, anyone would have it i would think. typically that would be -- >> you know, i've been with spotify since the very, very beginning. very, very beginning i met -- >> you don't really know what you pay for. you have people who do that. >> i don't know. i have to talk to the family office. >> he's a little more tech savvy than the rest of us. >> he is >> he's pretty tech savvy himself. >> i can tell you daniel when he was starting this little company

and the whole thing is in crazy town i was one of the early subscribers. >> he came in with a problem on twitter. >> why can't you fix that? >> every person that follows me, there's a big thing -- >> it's probably some kind of answer. >> i've almost blocked as many people as i've tweeted at times i've tweeted, 5,000 to 3,000. >> speaking much disputes, let's talk about the trade dispute between china and the united states that's been keeping investors on edge and now investors will have to deal with the tariff threats on exm i could he let's get to barry knapp and michelle caruso-cabrera, cnbc contributor. >> good morning. >> long-time friend. great to see you michelle, why don't you lay this out for us now that we've added the complication of the tariff threats against mexico and not for economic reasons what's that mean >> what struck me is that the german ten year yield went to a new all-time low we're not in the middle of the economic crisis in europeand

again today. if i'm in germany, i'm looking at what just happened thinking, wow, if he can turn on mexico, we are not out of the woods when it comes to tariffs on german cars that could come back. >> germany is so reliability they have the issues of brexit and the issues with china. that is the emblem of how badly it could go for europe. >> do you think that's why they have come under more pressure this morning and on friday of last week because of the mexico situation? >> i think mexico certainly added to that. there's also the issue of the european banks that they just never fixed. >> the salvini issue. >> all of those other problems then on top of it you think what he's doing in mexico, he's not done with them >> no. >> he likes this took. he pulls it out of his tool chest. >> he likes this so much, i watched his news conference i think it was two weeks ago he said everybody says the economy was strong despite the

tariffs. i think the economy is doing well because of the tariffs. he briefs it helps the u.s. economy. >> went against all of his advisors including liteheiser. >> we'll see what happens. >> the mexicans are working very, very hard to please the president. mexico doesn't like central american immigration as much as the united states does not like central american immigration they are very, very frustrated with the problem the mexicans have themselves when you look at the pooling have turned negative >> so, barry, what does that mean from the market's perspective? how do you size this up? >> so i think the problems with germany are far deeper than just the tariff issues. if you think about trade more broadly, global trade growth was two to two and a half times gdp in the last business cycle after china entered the wto. you had this 14% growth in

global trade through that business cycle this business cycle it's growing at the rate of gdp so i would view that as globalization no longer expanding you have a number of countries that have created entire economic models, germany being first and foremost, so dependent upon exports that germany's in the same spot they were in in the middle 200s. they had to restructure their labor markets to become competitive. they have to restructure their economy. merkel could lose. what they should then do is cut the tax, cut individual taxes try and spur domestic brand. eliminate the imbalances. >> never going to be enough domestic demand. >> there could certainly be enough to sh rikshrink a curren7 or 8% surplus. >> this permeates out through the central bank the real issue is that germany

is the weak child in europe and they need to restructure away from exports it's going to take political moves. >> when the german ten year goes down, it brings ours down, too the u.s. tenure looks good, right? >> looks like a windfall >> so our view on the markets all coming into this had been once we got through earnings season which outperformed by quite a bit, almost 6% beat, that the world's attention was going to turn to this. ultimately there would be a deal but that the correction would hit the exports. >> we're looking at video of the president arriving at buckingham palace that's why we're watching this through the day and monitor that it's fitting time to talk about europe as the president is arriving wa do you tell people to do today, barry >> i think with respect to u.s. equities and equities broadly, it's going to take obviously a few more weeks that we're going to need to get closer to g-20

before you start eliminating all of the uncertainty the underlying trends are fine. >> the best case scenario. >> i think the u.s. will be fine i would certainly be cutting exposure internationally i've been suggesting that all along. i wouldn't chase the bond market here we have the rally going on i'm sure we'll talk about the fed a little bit some more i've moved into the camp where they will be cutting this year but three times in the next three quarters so i would -- i would gingerly step back in to some of the cyclical sectors today and through the course of the next couple of weeks and add some exposure. >> still at 60/40? >> 60 stocks, 40 -- >> bonds, are you serious? >> been a long time. >> better than cash. i was in cash. >> i'm at 100% equities. >> i know. i know we had this conversation before. i look at what happened with the long end of the curve. everything is just fine.

>> fine for now. >> parking money in diamonds >> got to give a little bit of exposure to bitcoin. 1% of the net worth. >> no way, i'd rather own gold than bitcoin. >> me, too, and i don't want to own gold. >> i don't want to own gold. >> is bojo -- >> boris johnson, are you talking? >> going to happen >> i don't know. whoever is number one is not the one at the end of it. >> farrage >> can he do it? that would be so fun to watch, wouldn't it? >> i mean, from a journallism perspective, farrage would be the best boris johnson would be second. what you need is somebody to say to the folks in brussels, we're going. this is it really walk away from them that's when you're going to get your best deal. >> since you left things have gotten crazier as it moves towards some of the stuff you wrote about in your book. >> cre

yes. >> you like this guy now do you read this stuff >> i do. he >> he's a true believer. >> by the way, on that front, the immigration issues we've been talking about an important event happened over the weekend. there's a new president of el salvador i interviewed him a few weeks ago. he believes in the free markets. >> what? >> el salvador >> el salvador it was run by a former leftist guerrilla, a marxist it's 180 degrees different from what was there before. let's see if that starts to improve one of those economies -- >> what does need to happen? if this is out of our control and out of mexico's control -- >> those economies have to get better, right? they have all the classic issues that we talked about, right? a terrible business climate, sbrers to entry. all kinds of tough that -- low hanging fruit that if they just did it could -- >> and the crime and corruption.

>> corruption, rule of law, all of the basics. but this guy at least says i'm embarrassed that people leave el salvador >> you've had that position by the helicopter cnn is on there -- >> that's the blimp. >> cnn, they're not taking this. they're focused on the blimp no, kidding. >> michelle, thank you great for coming in. >> always an honor to be on your show. >> we love having you. coming up, the ceo of isles vance pharmaceuticals. plus, president trump, as you can see right there, landing in the u.k. and blasting the mayor of london.

an update on his official state visit is next. stay tuned you're watching "squawk box" on cnbc hey! i'm bill slowsky jr.,

i live on my own now! i've got xfinity, because i like to live life in the fast lane. unlike my parents. you rambling about xfinity again? you're so cute when you get excited... anyways... i've got their app right here, i can troubleshoot. i can schedule a time for them to call me back, it's great! you have our number programmed in? ya i don't even know your phone anymore... excuse me?! what? i don't know your phone number. aw well. he doesn't know our phone number! you have our fax number, obviously... today's xfinity service. simple. easy. awesome. i'll pass. all right. welcome back, everybody. this is president trump arriving

at buckingham palace the helicopter just setting down there. this is a full day that will be taking place that people will be watching very closely. the queen is going to be welcoming president trump in the house gardens. a guard of honor will be marching pass and gun salutes that are expected to be fired in the nearby green park. president trump will be sitting down with queen elizabeth. there already artifacts of significance of america that will be on display there later in the afternoon -- there you go yes. later in the afternoon he'll be sitting down to tea with prince charles who you can see approaching there with camila. the future king is going to be sitting down for tea with president trump later this afternoon. this evening is the big deal though that's the center piece of the visit is a state banquet back at buckingham palace where the queen and president trump will be delivering toast. much of brittain's royal family is expected to take part in this

visit including prince william, the duchess of cambridge and prich prince harry hear's president trump emerging with melania from the helicopter that's been set down at buckingham palace. steve sedgwick has been covering this visit and joins us right now from london. steve, what can you tell us? >> reporter: i can tell you, we're hearing the gun salute that you just mentioned actually going off in green park. if i'm quiet enough, you might hear the next salute did you hear that? i think you might have gotten that as i speak, the gun salute going off in green park. what we've actually just seen is the two helicopters with marine one landing in the palace gardens. ten minutes before that. we saw, as you mentioned, prince charles and the duchess of cornwall, camila, arriving and

coming into the palace to be part of the official delegation. i hope you can hear those cannons booming as i speak as well that's the official day. as you say, tea with prince charles and camila at clarence house which is literally a stone's throw away from buckingham palace. what we have seen is this enormous presidential entourage that accompanies the president cadillacs, nine ton vehicles they will take the president after the formal lunch down to westminster abby which is, again, a couple of miles from buckingham palace in order to lay a breast, we understand, at the tomb of the unknown sailor the duke of york, prince andrew. and later on as you say, the state banquet which is for 170 people, it's become a little

controversial. the party's ahead of the poles the labor party in the u.k he said he would not be attending the ceremony he said we shouldn't be rolling out the red carpet for the president who is not working in the u.k.'s interests, both within nato and indeed without as well. so very stark comments coming from one of the most important politicians here in the united kingdom. as our viewers will also know, sadik kahn, who is the labor mayor of london, have been renewing their antagonistic tweet this morning just before landing at stanstead, the mayor doing a terrible job as mayor and being a stone cold loser who should focus on london. sadik kahn said, actually, we should not be rolling out the red carpet to the president as

well and criticizing the president on many previous occasions for his foreign policy you can see some politicians are very antagonistic towards the president. others including conservative party hopefuls for the job at prime minister are being a lot kinder we heard in advance of this, boris johnson getting the thumbs up yet again from the president saying, yes, he would do an excellent job if the foreign -- former foreign secretary the president is breaking a few protocols and getting involved in the race to succeed the prime minister warm words in advance of this trip from nigel ferrard. he's had an excellent elections late last month. the brexit party which nigel leads at 29,000 meps

nig nigeles if ferrar. the 3rez is getting himself into all kinds of talks and for many the most important part of the visit, june 5th visit to portsmouth. that's where they left to go to the beaches of normandy and the omaha beach. if any viewers have been there, it is the most amazing place with an american cemetery there. that's where the president will be for the d day commemorations. >> steve sedgwick, thanks. we will be taking this all in as we move forward in the show. but there are things happening here one is isle vans talking about its development. meg, good morning. >> good morning, joe that special guest is dr. maria fardis

thank you for being here. >> thank you for having us. >> folks are describing your data as one of the highlights of the meeting. it's a way of making personalized cancer therapies available to folks with hard to treat cancer explain briefly how the technology works. >> definitely. it's self-therapy for solid tumor. it involves take being the cells outside of an area we put the cells back into the patient. it's a one-time treatment. we remove the hostile micro environment. it's about a two-week period time frame and, again, it's a one-time treatment. >> the patients, let's talk about advanced melanoma. we hear about the drugs ketruda. we think of those as miracle drugs. it's a large number who have

their cancer progress beyond ketruda and other pd 1s? >> yes the patient population you're seeing have failed all available private therapies. >> or therapies have failed them >> sorry that's a better way of saying it we are able to see the til technology, tumor infiltrating lymphocyte can offer a 38% chance which doesn't have any alternatives the patients have run through ketruda, sometimes all of the checkpoints have gone on them. if they have a deraf mutation, these are all been tried. >> there is a huge need. >> yes. >> you've been at two acquisitions in biotech history. as you look at iovance, small

company with large opportunity, do you see yourself being an independent firm >> we are already because of our resources, financially, from an fte perspective, availability of employment, we are ready to take this product to commercial we are planning on submission for our first market application in 2020 for metastatic melanoma. i do acknowledge the partnership with big pharma. this is what i've done in the past life. it's amazing it creates opportunities that a small company may not have we are ready as well as in terms of commercial and medical affairs. >> we have to leave it there a lot more to discuss. >> thank you so much i appreciate it. >> becky, coming up at asco, we have the astrazeneca ceo much more. thank you. >> we'll see you later this

morning. when we come back, at 8:00 a.m. eastern time, white house economic advisor kevin hassett has announced he is epngstpi down from his position "squawk box" will be right back. this is not a bed...

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still to come on "squawk box" this morning, trade tensions and your investments. we're going to break down what you need to watch and apple's future the software developer's conference will be in focus. the app store a big focus not only for developers but investors. we're going to hear from an analyst. more changes at 1600 pennsylvania avenue. president trump's top economist says he's leaving the white house, but first he's going to join us live kevin hassett is going to be our special guest in just a moment back in a bit. we are still watching as president trump arriving at buckingham palace. ceremonies are underway. we will be bringing you updates all morning long after we saw the president met by prince of wales as well as the duchess of cornwall

and then the queen who just looks amazing for i think she's 93 93 walked down the steps herself. walked back up the steps herself. she looks great. >> pomp and circumstance over in london, check my facts -- anyway, they do it well. this will be fun to -- i don't want you to switch the channel because futures are down there's things going on, but it's certainly something that i know in my family, anything royal is dvr'd and watched and not missed but i guess the more substantive things are going to happen later in the day this is also ceremonial. president trump, i know that i would screw up i'm positive that i would -- >> royal protocol you mean

>> i think so. you're not allowed to touch certain people. >> walk backwards. turn your back to the sovereign. but he is going to be sitting down for lunch with the queen and they'll take a tour of the royal collection there's a lot of artifacts of significance to america. >> if you try to fist bump with -- >> i shake everybody's hands. >> that's why you have the stuff there -- >> i don't think -- >> no, that's what i mean. yeah, exactly. >> ow. >> here we go. see? this is what we're talking about. not for nothing, but that's a pretty smart outfit melania is sporting there. >> there is a lot that will be happening in the afternoon prince charles, the future king is going to be sitting down for tea with president trump there you see first lady melania trump along with the queen and president trump. the evening is really the center piece of this visit though that's going to be a state

banquet held back at buckingham palace both the queen and president trump will be delivering toews there are expected to be a few hundred guests including much of brittain's royal family. prince middleton will be there, the dutch chess of cambridge and prince harry here you see the guard of honor and what's being played. >> getting ready for their lunch. private lunch with her majesty which i would definitely mess something up there use the wrong utensil. >> chewing with your mouth open. >> you're supposed to -- >> i know you're supposed to do that it's headed the wrong way. >> spill it on your ty that way. >> yeah. >> national anthem we will keep monitoring this

>> and we'll keep monitoring the futures. >> that guy on the right, he doesn't blink. anyway, "squawk box" -- >> that would be what you would do. >> i'd mess up i'd try to get him -- >> to react. >> tickle him. what do you think, andrew? >> no. >> squawk returns in a moment. >> there's the futures dow futures down by 20 points. >> noogie patrol bye! ♪ 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,

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time for this morning's market movers. >> they cut the overweight rating they cited a possible stalling o out of how much investors will spend given the antitrust concerns those shares on the move this morning. keeping an eye on general electric down fractionally down 5,000 shares of pre-market

volume jpmorgan reiterating the underweight they have adding the numbers are seemingly getting worse. we'll end on the big merger news this morning shares of cypress semiconductor up 25% pre-market. 500,000 shares the computer chip maker is bought by german chip company infineon they say they will become the eighth biggest chip maker in the world after buying cypress and its closing. joe, back over to you. >> dom chu thank you very much. we will come back to you and check later for more movers. i know dom was probably watching some of the markets. you know who's really got this what's wrong are you still thinking about the big blimp?

>> this -- we are covering this with the pomp and circumstance. >> you're thinking about the blimp? >> you said there's a lot of people there that have lots of angst about this >> they're not going to be taking the carriage ride down the mall because protesters are expected to be lining the route. >> there is a lot of pomp and circumstance that's going on right now in terms of visual of what we're seeing but in terms of -- >> you want to make sure not everyone is happy that trump is there? no, i'm with ya. i've got you okay all right. >> just putting it out there. >> people here aren't happy when he comes home, you among them. the ten year treasury yield dropped to the lows not seen since 2017 here to discuss, gregory peters. head of multi-sector and strategy and senior portfolio manager. tdim fixed income. barry knapp does not celebrate with a k

kna-n-a-p- k-n-a-p-p. our chief market commentator i'm sorry what happened there. >> yeah. >> i'll try to earn it back. >> we had some discussions, looking at the ten year. >> that's where the pomp and circumstance the bond market. >> there's been a radical shift in what's being riced in the market from the fed. if you go back to november of last year, it was pricing in this year 50 basis points hikes. that was 50 basis points of cuts that's a radical shift in a short period of time the bond market is telling you that economic activity is slowing. not only here in the u.s. but globally. >> especially in europe when you look at germany.

do we just assume bond markets have it pegged right now >> i'm not convinced the bond market has it pegged but what has occurred is that the fed's back is against the wall so you actually have 20 see these come through. so to me there's very little room for error the markets have, i think, pushed a little too far in terms

of expectations around the fed saving the day in terms of rate cuts. >> i would add a little nuance about that fed, sort of what that market's saying with respect to the fed and all i would declare it a speech on thursday and walked out and thought, oh, they just changed their bias >> really? >> no question i read all his speeches. i've met the man that looked like a clear change in tone, but if you look at the bond market farther out, even today i'm just looking at the 5s 30s part of the curve. 2s, 10, one year follow lower, the break even those are steepening way out the market isn't saying -- the reason that the fed is going to ease is because we're going in recession. we're saying, look, the market is pushing the recession into ease on the back side, we can create an inflationary impact it's not the same where if you

take 2007, 2008 where, no, we were really -- we were headed south and all parts of the curve were flattening. this is steepening out in the back end they'll have to validate it with at least one move. that would be my expectation but then from that point forward, it may just dissipate and the rate market could really move sharply higher. furthermore, what's happening now is it's actually hastening the fed's transition from accommodation of mortgages and treasuries to all treasuries because we're picking up -- refis are picking up quickly that will put vol and duration back in the market so that if things do turn the market could sell off shortly. >> what's the eventual terminal load do you think of the ten year >> i think we get down to 150 type of zip code >> wow. >> so the way to think about it, there's been tremendous amount of stimulus put into the system.

tax cuts, fiscal boost accommodated fed accommodated central banks globally and you've basically got 330 coptic on ten year think about it, that reversal. you have this demographic challenge. you have too much debt broadly all these factors i think bode for lower rates. i will sit here ten years from now and will look at 3% as the biggest buying opportunity in ten years we've ever seen. >> had a long discussion, i keep talking business over the weekend, i couldn't help it. boomers trying to retire and -- >> why were you talking about that >> no, not about me. talking about why wields were so low. >> because of the demographics with it? >> paying cash money it used to be you would tell your clients, okay, you have $1 million that you've saved for retirement 8% you can live, on $80,000 a year.

>> no way you're getting 8%. >> what do boomers need to retire at 1 3/4. >> 4 million, 5 million? >> we think it's great to have lower yields >> the savers. >> it's been doing that for the tnk yecade. >>haou, greg barry with us. >> thanks. ...or trips to mar. $4.95. delivery drones or the latest phones. $4.95. no matter what you trade, at fidelity it's just $4.95 per online u.s. equity trade. ni'm workin♪ to make each day a little sweeter. to give every idea the perfect soundtrack. ♪ to make each journey more elegant. at adp we're designing a better way to work, so you can achieve what you're working for.

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protectionism. steve liesman joins us with more. >> the national association of business economics says a low probability recession this year at 15% but rising sharply in 2020 15% for 2019 rising to 35% for mid 2020 by the end of 2020 we're up to 60%. nabe says recession fears rised. the consensus has gone quickly for multiple cuts. ever core isi says we now see a base case in which the fed will reluctantly cut rates three times starting in september in a mini easing cycle. here are the probabilities in the last hour. 57% for july that is new. we were down 20% in july that's now near 60% for the first rate cut 64% probability of two rate cuts here's the question. the question is whether fed rate

kulgts will be sufficient to offset the down side tariff. the new tariffs on china and mexico will be off set or be outweighed by the positive effects of the tax cut last year. >> no, i think that if you think about public policy uncertainty, there's public policy uncertainty, baker bloom -- >> steven davis. we've had him on. >> that's right. that's at his highest level on a monthly basis since 2012. >> business confidence, capital spending plans held up really well in may but the risk obviously is that you truly impair that. >> i know you're a huge proponent of the positive impacts of the tax cuts and i'm most of the way with you but we have another guest we want to bring in. >> two other guests. >> joining us to be part of this conversation, national taxpayer union senior fellow manny depler

and andy puzner. wanted to get your reaction on what steve was talking about and whether you think this makes any sense. i'll go to maddie first. >> i agree with the comment about how whether or not the fed can outrun the bad effects of tariffs. now the thing is -- the question that i have is why we're looking at tariffs now after the president has put so much momentum behind a tax cut policy and a deregulatory agenda that has focused on getting this out of the way taxes are paid at the border the new implementation of mexico tear ris, that's $17 billion in new taxes. quite frankly, what tariffs do is they decrease the amount of capital available for productive investment they increase the cost of doing business in the united states and they raise the cost of goods to consumers all of those things are reversals of what the president is trying to do. i don't think the fed is going to be able to back out the effects of that. >> do you want to take the other side and square out the circle

i can't hear you now i can. go ahead >> you can't defend the tariffs with mexico on the basis that they're supposed to be an economic stimulus or detract from economic growth because they aren't intended to be an economic stimulus. they're intended to address a national security issue. what the administration believes will help us economically is the u.s.mca. we are facing a crisis at the border the president feels this is an appropriate issue. congress isn't helping we certainly don't want troops on the border. i think this is a rational way to address the issue you can't defend them economically >> the issue is whether this is going to be an effective tool in somehow changing the situation at the border. >> this is -- >> we're not going to know that until we find out how the mexicans react i know they're sending a delegation to washington, d.c.

at least the issue will be seriously -- >> if u.s. consumers will have less money everyone will have less money to do all the things that we need to do to deal with some of the border -- >> here's what we know -- >> but congress isn't going to give them the money anyway i don't know that that addresses the national -- jeh johnson said we have a crisis at the border with jeh johnson, the former secretary of d.h.s. under obama say we have a crisis if we didn't >> we -- call it a crisis, call it a problem, a challenge, call it whatever you want we have to fix it. there's nothing to fix here. the question is what is the fix? "the wall street journal" talks about the laws in the united states need to change. that might be a fix. the question is whether tariffs unto themselves can actually be effective. >> here's what we know we know the new york fed did a study and they estimated that the tariffs on china would cost $830 per household

that was around depending upon what 12i789s yestimates you usee mexican tariffs would be worth more than that all i want to though is i wakno see the administration study that says these tariffs will give me an economic benefit that is beyond the benefits of each household. >> here's what's more perplexing about the notion of tariffs. andy mentioned usmca at the exact same time they also increased the step moving forward on usmca and offering administrative policy that went to the hill. this is weeks after the administration pulled back on tariffs that were already in place on mexico and canada steel and aluminum tariffs in place for a better part of a year if tariffs are an effective tool, why would the administration back out of those

tariffs only to turn around and put new tariffs on the mexican economy and the $350 billion worth of imports coming into our country. it simply is inconsistent and doesn't make sense. >> i'm going to leave you with the last word, sir. >> sure. you have to look at these things differently. what we've done with steel tariffs and usmca is based on economics. steel trade is good for the economy. what he's doing with respect to the current tariffs is trying to address a national security issue at the border. they're not the same you can't judge them the same. >> tariffs are a blunt institute. poor tool. >> she stole it from me. >> thanks, guys. when we return, kevin hassett announcing that he is stepping down as the president's chief economic advisor he will join us for his first live interview since that announcement right after this break. future still under pressure. "squk x"ilbeig bk.awbo wl rhtac

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a big day for a big dow component. apple gets set to kick off the software extravaganza. what to watch and the future of the company's revenue streams as the final hour of "squawk box" begins right now 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 concern along with becky quick and andrew ross sorkin the futures have improved a little, definitely from earlier this morning when they were down a couple hundred points. the dow and s&p indicated down a little over 7. put it below 27.50 the nasdaq indicated down 34

points or so treasury yields are back surging above 2.1% on the ten year all the way almost 2.12% they got as low as 2.08. >> 8, yeah >> let's tell you about some stories that we're watching today. according to the federal aviation administration, some of boeing's planes, including the grounded 737 max may have faulty parts. boeing says it has identified 20 jets that most likely have to have their parts and plans to check -- i'm sorry, they've looked at 120 and they're looking now at another 159 for the same components. we're going to talk more about the latest developments later in the hour you don't want to miss this. it's ceo, boeing ceo will be on the exchange at 1:30 eastern time dennis muilenburg will be talking on that broadcast. a senior mexican delegation will be in washington. this after president trump surprised a threat of escalating tariffs on mexico set to kick in

a week from today. and then yesterday president trump tweeted mexico is sending a big delegation to talk about the border problem is they've been -- the problem is they've been talking for 25 years. we want action, not talk they could solve the border crisis in one day if they so desired. otherwise, the companies and jobs are coming back to the u.s.a. facebook has been in contact with the commodity futures trading commission about rolling out a digital currency the paper quotes the head of the cftc saying the conversations are in the very early stages this could be, you know, people talk about why bitcoin is going up maybe crypto is here. big white house personnel news from president trump as the weekend came to an end the president tweeting last night, kevin hassett, who has done such a great job for me and the administration, will be leaving shortly. his very talented replacement will be named as soon as i get back to the united states. i want to thank kevin for all he has done he is a true friend.

joining us is kevin hassett. kevin, great to see you this morning. >> good morning. >> thank you for being here. >> of course, yes. >> sad you're leaving. >> me, too. >> you've come on since before you've gotten that job you've been there since september of 2017. a little less than two years you are one of the longer serving people in the administration it's a tough workload. with the announcement of the mexico tariffs, a lot of people wondering is that why you're leaving? >> no. this is something that's been in the works for a little while i've been there for almost exactly two years. before i was confirmed i started to work as a consultant in the white house. i started the 1st of june. it's very normal for the cea chair to move on after two years. it's healthy for the organization the cea is supposed to be a subjective body rather than a

political analyst. as you know, i'm a student of cea and i think it's a good thing that, you know, president clinton had i guess four cea chairs i think president bush had five, president obama had four i think that's about the right number. >> why do you want to leave? >> oh, i think it's really partly respect for the institution and sort of normal two-year role and wanting to go back and spend time with my family i have a youngest kid going off to college in a year wouldn't mind seeing his senior year absolutely normal circle of life stuff. >> kevin, you mentioned being in a position for too long and maybe getting too close to the administration does that mean you are looking at things like the tariffs as a positive because that's not something i would have expected out of you two years ago. >> you know, as the president's tweet suggests, we've grown very close. we work closely together i was in the back room with him talking about the departure, we

were both pretty sad about it last week. you foe, i mean, the departure question and the tariff question are different. >> that's fine let's just ask the tariff question >> go ahead. by the way, i'm going to be around for another month or so i'm happy to come on. >> are you going to kiss and tell are you going to say i used to steal things off his desk so i wouldn't see him do you have some spicy stuff that you're going to come out with in a couple of months >> no. >> i don't see that from you. >> no. and, in fact, i don't know if there's much spicy stuff i've noticed. sorry. >> there's a very talented and intelligent guy going to replace you. it's not larry summers. >> i think i can confirm it's not larry summers. >> can you give us a hint? do you know who it is? >> no, but the cea has, you know, a staff of maybe -- it can get up to 50 if you count interns.

there are a whole lot of people who are economists who come here we have like a full stack of people lined up for next year so the cea is going to be fine. it's kinds of like i'm the special teams captain of the patriots and i'm moving on there's still the patriots they're going to be fine. >> kevin, let's talk about the latest tariffs -- threatened tariffs against mexico what do you think of them? >> i think the president is dealing with immigration crisis that i think he appropriately terms a crisis and his d-- you know, he's serious about trying to get the mexicans to the table. they have a list of material things that the mexicans can do. i'm heartened to see that they're coming to town to talk about that i think it's very manageable for the mexicans to fix this problem and i think that's one of the reasons why the mexicans decided to get them to the table. >> are you a fan of using something that isn't an economic problem.

>> i don't give advice about things like border security. i can say if you look the mexicans are okay. >> one of the questions that steve liesman asked is have you donnie economic study or report on the impact of these tariffs for the president or even for your own group >> i can't talk about what i do or don't do for the president, but i can tell you whfr there is a decision that the president has made, i was involved in meetings are with we talk about this cost and besh benefit. >> can you walk us through the economic impact as you see it? >> you know, i think big picture, that right now we're hoping for, you know, positive talks. i think if you look at -- >> i imagine somebody says to you if this is prolonged for six months f this is prolonged for 12 months this is the impact on the u.s. consumer, this is the impact on gdp. i hope somebody's done the math on this. >> yeah, you know, again, i don't want to talk about what i

have or haven't talked to the president about. i can say if people are tuning up their models, one of the things you can see is the impacts are much larger on mexico than the u.s. the intent is to solve a very difficult problem. i'm glad to see the mexicans come to town to talk about it. >> right now the likelihood that a week from now that they go on, you think that's 90% you think it's 50-50 >> you know, i'm not going to give a percent that i think. i think if you look at currency movements, tariffs, that you could -- you know, you can model what the market thinks the market doesn't think that it's guaranteed it is going on. >> the market does not think >> the market does not think that. >> one of the criticisms is that all of that hard work, you blew in the face, tax reform, deregulation, if the president thinks, well, i've got sort of

some money to work with and i'm going to solve some of these other problems because things were going so well in terms of, i don't know, stock performance had been pretty good until the last six weeks or so, gdp, unemployment, things like that, do you agree with that assessment, i'm going to fix some other problems because i have leeway or does it make no sense to reverse all of this progress that's been made by, you know, putting the two separate issues together >> well, you know, once again -- so, first quarter was 3% right now real time estimates of the second quarter that they're in the 2s. kind of a normal ebb and flow of inventories and trade i think that's causing that slight clip down the fact is that we're still looking at a 3% momentum going forward for the year the up side for that is that we had a rif on our program

i know that we're all disappointed with the fact that the chinese talks got very close to the finish line and then went back, stepped back a little bit, but i still think that the idea of trade reform is a really positive one and the president is right to emphasize the trade space. >> did we backtrack on anything? or do you still -- i mean, do you know of anything that -- the chinese are now saying that we pulled out at the last minute with some key provisions is there any truth to that or is it -- >> you know, i'm -- i'm hope nal at g-20 the president will have a chance to discuss that with his chinese counter part i think when there are negotiations going on, sometimes people get surprised at how adamant joe is about this or that so i think in the end our sense was we'll stand by that view, but negotiations are tricky

business i think that it's right for them to try to proceed forward now without necessarily hard feelings >> what's your forecast for a recession? is it likely next year a lot of people are coming to that conclusion and the bond market seems to at least be red flagged that that can be a possibility. what's going on in the bond market and then answer about the recessi recession? >> first, i think if you're looking at real time recession indicators that don't use indicator rates, they have something at the st. louis fed that's a real time indicator is at zero. the odds are pretty close to zero if you're looking at the data but if you look at the interest rates, of course those models can be probabilities that are north of .5. so it is something that we're puzzling over. part of the problem is that there's a global deflation

setting in because of the weak economy in europe and a weaker economy in asia and that global deflation is putting downward pressure on medium term interest rates and they're setting off the alarms if you think it's going to spread to the u.s. strong income growth, strong output growth. high capital spending. i don't see the european slowdown spreading to the u. >> kevin, if that's the case, why do you think the fed funds few toours a futures are baking in a rate hike this year -- >> rate cut. >> rate cut this year and potentially two? >> i'm not giving the fed advice. >> you don't like to give the fed advice but -- >> right now i think the fact is that if you look at inflation,

it's really tame and probably heading south. what markets are thinking about is probably something related to deflation. >> what are you feeling? some think we have two economies. some numbers come in strong, others surprise us what is most important to pay attention to >> the thing to pay attention to is, gosh, how many times have i been on your show on jobs week durable goods direction jobs headed the wrong way if you are looking for optimism, when interest is high, optimism follows. there will be a big jobs number given the uncertainty of the

path of the economy. there have been some pluses and minuses. >> we have the rest of the week before we get to that jobs number what would you be banking on in terms of what kinds of numbers to expect? >> i think probably the consensus is in the 150 to 200 raping and we'll adjust that when we see it >> if we get it with the momentum we've seen -- >> when is your last day >> i was faced with that it's the end of june something like that. >> end of june >> yeah. >> i'll come back before then in. >> yes >> go to disney world in july. then you -- then you become a cnbc contributor. >> are you going back to aei >> right now i don't have any firm plans for what i'm doing next. >> we hope you'll continue to join us on "squawk box." >> did the president ask you who you would pick to replace?

>> that means yes. >> was there a specific person -- >> that means yes. getting nowhere. >> thank you. >> great seeing you. >> coming up, it's a big -- big jobs number, andrew. >> yes. >> big jobs number on friday >> we're going to get your estimates before friday. >> okay. >> for you coming up, big day for a key dow component. big implications for the company's stream of services revenue. used i have to get some new artists what's her name, dia lupo? plus, we could get news on apple's business in china and evolving digital privacy standards. we'll talk to a topable list you're watching "squawk box" on cnbc the cloud i need?

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hey! i live on my own now! i've got xfinity, because i like to live life in the fast lane. unlike my parents. you rambling about xfinity again? you're so cute when you get excited... anyways... i've got their app right here, i can troubleshoot. i can schedule a time for them to call me back, it's great! you have our number programmed in? ya i don't even know your phone anymore... excuse me?! what? i don't know your phone number. aw well. he doesn't know our phone number! you have our fax number, obviously... today's xfinity service. simple. easy. awesome. i'll pass. welcome back to "squawk box. justice department said to be preparing an antitrust investigation of google. joining us on the sprint line is

brent thill. brent, number one, what's it going to mean for google who else is in the cross hairs at this point? answer them one at a time. >> it's very vague it's not clear what they want to go after this is the number one question. they continue to highlight this as a risk. this is somewhat in the stock. clearly it will be down on the news again, we think this is more of a speed bump, not a roadblock. it's another short-term setback for google's multiple after they missed the first quarter earnings which makes second quarter even more important that they put up a very good, clean quarter. so we'll continue to mon tofr th -- monitor this historically these have been more speed bumps, not roadblo s roadblocks we lived through this with microsoft. we'll do the same thing. this isn't going to go away. this is a rolling series of

regulatory waves, if you will. we think this will also hit the other players, facebook among many of the others that we cover. >> obviously facebook is what you think about. it's totally different issues with the two companies, is it not? is it more similar than i might see in terms of privacy? >> yeah, i think they have similar different issues there's a combination of similarities but they're definitely different issues. again, it's vague right now exactly what they want to go after. i think we'll get more details until we get a clearer line of sight, i think the multiples can continue to be impaired. again, this is really i think the bigger issue for many investors, the weakness that we saw in the fundamental so that seems to have a bigger weight than the regulatory overhang that's what i think most of our clients are cuing in on.

>> if you listen to some of the rhetoric coming from some of the candidates running from the left here, brent, it's almost as if you have a really great business that resembles in any way, shape or form a monopoly because your product is so necessary and so sort of a part of our lives. you can name any of these big companies. >> monopoly, duopoly, triopoly some people on the left think they should be broken up whether they should or not is everybody that's really good at what they do, could they all be in the cross hairs, brent >> i think the big platform leaders will be and, again, we've seen this. i've covered tech for 20 years we've lived through this with steve vollmer at microsoft when they wanted to separate office and breakups, what they were doing with bundling. i look back at that. the one commonality is big platforms live for longer than

you think. they thrive. they snap back quicker because, to your point, the relevance of our life how we get up and get to work. we use google maps how do we find what's going on in our lives we use google. there are so many services i think ultimately as long as it's done in a fair, safe way for consumers, the regulators should stay clear of some of these other issues i think it's an overhang for the whole industry i think this is why in the rest of tech you're seeing software, semiconductors you're seeing pretty material outperformance in those sectors and under performance in internet because of these concerns yeah, the big platforms in the names that are more consumer facing are facing increasing level of scrutiny. it doesn't feel like it's just our government rk it's governments throughout the world.

>> this last question. can we still assume it's a lighter touch in the united states you can see from the eu or other parts of the world >> yeah, i think the regulators have to be careful many of the jobs created, you look at google and how they're building out, they have to be careful. i'm sitting in israel and you look at the levels of innovation coming out of tel aviv you do not want the jobs going to other countries they have to be somewhat careful from that perspective. >> okay. all right. brent thill, thanks for the quick action for us. i know we called you today to update us on this. with jeffries, senior annual list. want to move on to another tech giant, apple kicking off the annual worldwide developer conference where software is the primary focus. joining us with what we can expect, he's an analyst at btig. good morning. >> good morning. >> i was saying oftentimes we

make a big deal out of the phone and what happens in the fall, but in a way what happens today may ultimately be more important. sort of walk us through your perspective. >> this is the lead in to the phone, right 5,000 developers worldwide developer's conference meant to get behind up about what the new operating system offers, how they're going to create new apps or update apps it's important as a lead-in. it sets the stage for where are developing and focusing on the developer themselves to think about ways to drive new subscription type services >> and so what are you expecting? what's the big highlight in your mind >> there's not a big highlight frankly the stock sells off most of the time in wwdc. there's nothing revolutionary. for me, the stock's off 18% in the past month on all of these

china concerns the ceo of the company is going to be up in a higher profile situation. it would be great if they updated us on the situation in china. >> do you expect him to say a word about china >> i don't expect him to i'm hoping he will he made a big deal saying things are improving in china he's built up expectation in growth in the quarter. >> if apple needed to fundamentally change its supply chain, how long would it take? what are the costs going to be >> it's not something we've analyzed it's hard to know. you're talking about a million plus people making this product. high precision product it doesn't happen overnight. there was a new story about tim cook reaching out to pegatron. >> fox looked like it was going to reach out >> you can build the plants there, then you have to hire and train the people, you have to get the equipment there.

that takes time. look, the threat of that to china should be enough if they start moving a lot of that manufacturing out of the country, that obviously has negative repercussions from that country f. it moves, it's not going to come back if you make that much of an investment to move manufacturing out of china. >> the other piece of this, i want to get your comments on we have this news over the weekend about google, about amazon with the ftc looking at amazon, splitting this up. what do you think this means long term? >> joe was talking about it being different. there is one similar thing they're going after big companies and a lot of this has to do perhaps with how the election is going to go one way or another just because something is big, the company calls this ecosystem. it's improving the services for the end consumer. >> let me ask you a question elizabeth warren -- >> call it a utility >> what would happen if the app store on the apple phone had to be operated by independent

company? what would that do to the services business component of their franchise and the revenue that they're trying to grow there? >> it's been pretty clear that the value that apple has built to the consumer over the years is not just the hardware, it's not the software, it's a combination. >> i'm not going to disagree with you >> today with the developer's conference, they need 5,000 developers with an opportunity to make money on their platform. >> has the standard changed? i think the question is. i'm looking at some of the things they're laying out for google if you could not get the search box, that means 63% could no longer click through on the google query personally i think that would be bad for consumers but it might be good for competition. are we looking for more of an eu style -- >> like a competition. part of competition is funding new companies. is the venture capital world

going to fund companies if they don't think apple, google, amazon is there to buy for the consumer. >> i wonder for standards. i don't think you can look at any of these and say this is bad for the consumer with what apple has done with any of the issues. if you are talking about regulators taking notice, does that mean the standard for regulation has changed to look like an eu style. >> it hasn't changed yet obviously there is a populist element. there is bipartisan support for a lot of this stuff. i think a lot of this will hinge on the election. what senator warren says, we'll see what the -- >> why do you think it's going to hinge on the election >> this is under the trump administration right now that they're looking at these big tech companies. >> and the democrats like them less. >> that's true, it could be a little bit more aggressive let's put things in perspective. we had microsoft as -- you had

at&t and there was an i -- something that happened overnight. we'll see how the companies deal with it. >> thank you all still to come, an uncertain road ahead for the american auto industry we'll be talking with a top forecastor about which companies are at most risk of potential new tariffs that president trump is threatening and who's in the best shape to weather a headwind flu plus, the latest on what boeing is facing. this is the couple who wanted to get away

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welcome back to "squawk box" this morning more bad news for boeing over the weekend. the faa saying that the 737 max and another boeing plane contain afaulty part in their wing we're going to get over to phil lebeau with more on this developing story phil >> reporter: andrew, the two planes affected, the max, which is already grounded, and the 737 ng, next generation. you know when you are flying and you see the wing and the slats that come down, particularly as you're preparing to land the tracks which control those slats may have some defective parts. now we say may because it has not been determined that all of the parts need to be replaced. so boeing is working with those airlines that have the 737 ng.

they don't have to ground those planes but they do need to inspect and then if they are faulty parts, those parts need to be fixed. also a report over the weekend from "the new york times" once again detailing how test pilot and engineers feel that the design of the 737 max was changed in process which contributed to the problems that we've beendocumenting over the last several months, especially with regard to the mcass flight control software we'll talk with boeing ceo and chairman dennis muilenburg we're going to talk about the business, about what happens next for the 737 max, their plans to get it back in the air, whether or not that will happen as quickly as many people believe it might or if it might have to be extended out. you do not want to miss this interview, guys. >> phil, in terms of just -- let me ask you a quick follow-up on this >> yes. >> the story over the weekend, how much has that moved the

story forward? what is the impact on washington what is the impact on these planes getting back in the air >> i'm not sure that it moves it forward in terms of telling us anything that we hadn't seen before i think it's a -- it's a confirmation of everything that we've been reporting on that others have been reporting on that this was a process that because of the accelerated pace it left a lot of people making assumptions or boeing making decisions that you look back on now and regulators look back on now and say, wait a second, who approved this? who made this decision if that's how boeing approved the 737 max, does it need to be changed in the future as they develop planes in other words, what can be learned from this? i think that's the primary thing that's being hooked to regulators in washington. >> phil, just following up on that again look there, have been all kinds of new hampshire reports, the

company finally said, yes. >> that's a question we're going to put to dennis muilenburg. there have been a number of comments from him and from boeing when you reach out to them saying we understand mistakes were made we want to take a look at this and understand it better at some point i think the broader market is looking for a definitive statement from boeing and whether or not we get it from dennis mule lenbeilenburgmy say, look, this is exactly what happened, exactly what went wrong and here are the steps we're taking and, b, what's the fallout from that? do we change the way the process is structured? the way people make decisions? et cetera. >> thank you so much we're going to watch this interview at 1:00 p.m. >> you bet. u.s. and mexican officials are meet in washington today

eamon javers joins us with what we're hearing so far it seemed like a cry for help. they immediately sent some people, eamon. i wonder if something can happen before a week from today i just -- i don't know is it likely in your view? can you extend this for us >> they did immediately send some people. they're holding a press conference very early this morning. it began at 7:30 a.m. to lay out their response here to the president's tariff threat and what the mexicans are saying is ultimately that any tariffs are imposed on mexico will hurt both countries. take a listen. >> the reality is that because of the crossing, four times in one direction, the 5% will be affected and compounding on each other. so the effect on prices for consumers will be much greater than 5% or 10, 20, 25.

>> reporter: the officials also said they're willing to negotiate with the united states but there is a limit to that and the limit is mexican national pride in terms of how they ought to handle issues in their country. they did suggest though that one of the key ways they feel to address the immigration issue is to benefit the countries in guatemala, el salvador they say by addressing the issues there, the united states and mexico by working together, can lessen the impact of working in mexico. the ultimate decision is can anything come of the negotiations the answer is, we'll have to find out. >> thank you, eamon. want to bring phil back. try to get a sense of what you think the impact is going to be on automakers, phil. >> devastating in a word, andrew, devastating

in a word, because of the parts going back and forth across the border 5% turns into 10%. as an automaker you get it you take it in shorts in terms of profit margins, you take it in the showroom and raise prices which will definitely impact sales. >> all right, phil thank you. we'll be watching this afternoon with that interview with dennis mu muilenburg, too. let's bring in jeff shuster. what does this potentially mean for the industry, jeff >> well, you know, i think just building on what phil said, it's absolutely devastating the potential if we see this escalate up to the 25% by october, i think initially this is something we could see be absorbed if it's really short term, but the uncertainty is really what's at stake here. i think that causes a lot of jitters across the auto

industry >> who is in the worst position? which of the big american manufacturing companies are sweating this the most >> you know, i think when you're looking at the imports coming from mexico into the u.s. in terms of vehicles, full vehicles, not just the parts, the full vehicles, you're looking at more than 50% 55% is with the detroit makers of those, gm and then fca are most at risk here followed by nissan, voerks wagon and toyota. really it stretches. >> what does this mean for the auto parts makers? >> goes much further than that looking at those parts that absolutely cross multiple times, you know, you've got essentially most of the major auto suppliers that are in mexico building parts. you've got about 16% parts of the parts used in the u.s.

manufactured and coming from mexico it would be a pretty stark situation on the indid i individual dual vehicles it could be 3,000. >> would they have to pay the tariff every time they cross or do we have any idea? >> it appears they would be tariffed every time. certainly you're looking at the four times -- in that example, four times going across once, getting the tariff from the u.s. side i would have to believe mexico would reciprocate on that. you're potentially looking at th that those are the implications if this actually goes into effect >> right right. >> let's talk about the implications that have been put on by raising this threat. this has to be creating

uncertainty by ceos and having some of them rethink their plans. what happens >> no question about it. it's already been a very difficult environment for the auto sector and for ceos trying to make decisions, both in the manufacturing full vehicle assembly but also in the supply base looking to where they're sourcing vehicles from they're looking much further forward and trying to figure out how they're going to invest in electrification, autonomy. they're looking to make cuts in other areas and the cost side of this and this throws a massive wild card into the industry. the industry is already a little jittery. we're seeing seals have peaked, likely to be down. so certainty is the enemy.

if that doesn't get passed either by the u.s. congress or legislatures in canada or mexico, then what? >> yeah, again, it throws everything into central turmoil. likely would see things go back to wto levels in terms of trade and, yeah, this is something that's getting pushed, trying to get that approved. i think this tariff, which is, again, untrade related, definitely throws some wrenches into those negotiations and i think really sets a precedent for just the level of unpredictability with decision and trying to move it forward. >> thank you good to see you today. >> thank you for having me. coming up, we're getting set to kick off a new month of trading on wall street, but the dow is currently on its worst losing streak in eight years what needs to go right for stocks finally having a chancofe

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welcome back to "squawk box. the dow posting losses for six straight weeks that's the longest losing streak since 2011 the eight-year number that we were talking about, here are the futures this morning that's just about the least negative that we've seen for at least the dow down 46.

down 200 right at the very beginning. that was at about -- what time did i get up quarter of 4 so that was about 4:00 when we were down about 200. and down 25 now on the nasdaq and the s&p indicated down 4 >> let's get down to jim cramer at the new york stock exchange who is there now we've been talking about a number of big stories that have taken place over the weekend i'm curious about big tech, google and specifically amazon. >> it's all kind of shocking because the attorney general -- deputy attorney general for anti-trust told me not that long ago that these are great companies, there's no need to break them up. obviously there's so many investigations that you just have to say the momentum is there. both democrats and republicans,

they're going to be turning lor. how many times has alphabet, google been investigated they have to go through this it's a process, andrew it's a process of hate and it's trying to be built into the stocks it's difficult to figure out what price range ratio you figu which ratios you should have in both parties hate these guys >> you think it is a different process with not one happy ending >> what would it look like though >> i mean -- you can see youtube being separated. the actual main business that the search business, the websit that we all live on and e-mail and all of that, do you see it being separated? >> they're trying to figure out how to make it so that search does not steer towards anything. in this market, waymo would be

worth so much money which you do self-driving car the market still loves that. we had dupont this morning, if we can craft artificial meat, the stock market will get a big move things are a little crazy. we'll find a level through the process that alphabet's worth. we'll try to figure out what price of ratios we'll pay for the company. >> real quick, any thoughts on boeing >> muilenberg has to do another m mia copa, it is about a big order over the weekend if they can demonstrate and hone

in, people have faith. it is the mia copa process and it is not done yet >> i want to be more positive but this is a tough one. >> it is tough >> okay, the dow posting losses for six eight weeks. for more on the markets, investment strategist, before we get to whether you think or why you think we are headed down now because of all these trade stuff. when you were forecasting a return on 2% or below on the 10-year. since that forecast, we had 3% growth, a bunch of prints and some of the lowest unemployment numbers in history for certain people and just -- really strong

economic activity for the last year and while you were predicting this to happen, what was it was it economic? now i know it is still in a recession. what was it that made you forecast that we would not go above three or below two >> again, thank you for rawlings th >> again, thank you for rawlings th >> again, thank you for rawlings th >> again, thank you for rawlings th rawlin rawlin recalling that everyone though the trade war was not a big issue as you quite correctly pointed out. what was big at that time was the fact that economic growth in 2018 i thought was more of a sugar high than a tax cut and

they simply do not last. essentially decided that it was transitory and they're not going to put much on the high growth numbers that we got in the second half of the year. second, inflation, the fed had been paying for ten years hitting the 2% target just has not done it. i thought these are the two components of the expected real growth and inflation you don't get a push-up from either of those. that was the reason why. >> why do you know inflation was going to stay so low >> inflation was going to stay low because the americans are getting older and they don't consume as much. you need younger workers

quantitative easing over ten years essentially impoverish for the benefit of equity holders. that's negative for consumptions >> the other is hsugar high and it is not going to last. even if it does not stay at 3% or it goes back to 2.2, the old relationship with gdp and interest rates made more sense i understand maybe you don't think we are able to go at 3% or 4% but 1% does not make any sense or 2% or 2.5%. even if we do go back to the mean gdp growth rate something else is going on than just not staying at three. >> you are absolutely right. >> something is going on i do say then and now i am

saying it goes to one handed now you have a trade war and it is difficult for china and the united states to back off. they have taken strong positi s positions. >> also, we are running out of time, you think a lot of people are hanging their hopes on the mexican tariffs not being implement implemented, slapped on next friday you say whether they are or not because you raise the anthropologist possibility that they're going to come back everyone thoun tho are delayed on friday. >> the president can decide that he can go back on it which means there is no usda after all it may be passed a lot of uncertainty >> all right, check back in with you. you are at 1% right now. i don't know what i am going to

do if i retire in 30 years >> one hand, not 1%. >> coming up we'll get you ready for the monday morning market open later today, don't miss a big rvw with dennis muilenberg stay tune, "squawk box" will be right back my ideal cloud? it has to work like air traffic control. it's gotta let new data integrate with data from our existing systems. ♪ ♪ be able to pull from reservation platforms built 20 years ago.

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all right everybody, that does it for us today it is time for "squawk on the street," we'll see you back here tomorrow good morning and welcome to "squawk on the street," i am david faber along with jim cramer and we are live from the new york stock exchange. carl has the morning off let's take a look at the futures as we get ready to start a new week after what was not a particularly good week now it is june our road map this morning does start with stocks which are looking to start this month, well, a lot like may, is it? in the midst of what i