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 is its

longest slide since 2011 plus, dow dupont is finally complete after three years we'll talk with the ceo jim collins, coming up in a few minutes now. >> antitrust concerns for alphabet the justice department will ramp up to pro google search practices and other businesses jim and i will discuss as well future and treasury yield is moving lower the first negative month for stocks trade tensions in the forefront with china saying over the weekend, the u.s. is quote "solely to blame" for the break down in talks. it is willing to resume negotiations june 10th, if mexico does not stop the flow of migrants coming

through mexico and presenting themselves at the u.s. border, many of those are from el salvador and guatemala and other central american countries jim, you and i were talking as we do briefly, we like to leave things here on the field you were saying the mexico thing on friday was just too muchfor the market >> yeah, this was so capricious, okay a lot of people said to me, i am done i am done. i am going to raise a lot of cash i don't know where it is going to strike next this poll numbers are at a two-year high. we are beginning a new year. the new year is one where maybe we are going to put tariffs on europe because they're still importing a lot of cars. the new year is about 3.6% of employment if the employment goes up then you want senator warren, he's got it pretty much figured out if employment goes up, he wins against a radical democrat

it is heads i win or tails i win. >> which means you do what as an investor >> the 10-year, 2.07% yield this morning. time to refinance that mortgage. >> true. >> you are back to levels that is are kind of interesting the one thing i would say, david, the whole idea that maybe the fed can bail us out. the dow was the key indicator for him. a lot of the people whom i think surrounded him felt that the stock market was important seemed to have lost their abilities instead the hard li r liners are in, they're focused on our world >> peter navarro, a friend of

yours and steven nolan, the main man on immigration >> his best work was take the money and run. oh, i am sorry, that was a different steve miller >> we are going to go 5% >> the people in this corner, president trump, they felt that china was their great interest they are just blown away after the mexican tariffs. we don't want to associate with anybody attacking our friends. are they friends for 25 years have let people in they don't have weapons that are against us they do not have destroyers or aircraft carriers.

there is a lot of people who just say i am done and going neutral here >> right >> does that mean they'll go for kamala harris? >> so early for that >> we are talking about the democratic nominee here. >> is friday not a good employment number? people are going to say wait a second, the tides is goi is goik out. look at the tweets they come apparently, it is always like the fake media >> it is fascinating in terms of encouraging people boycotting at&t to pressure them. >> how about that? >> it is kind of wisdomable. tonight is the episode of "chernoble" a

"chernobl" and maybe he wants us to boycott it. when it comes to at&t, you have to wait for a while they're working on it. yeah, back to mexico though, let's not lose the threat here >> business is next. >> we have a meeting this weekend. >> what are you going to do because you have a new business that you are considering >> what should we call this? >> immigration -- >> one of my businesses is in dollars. >> a restaurant. >> it is hurt pretty badly >> you can't pass along the pricing. >> you are not alone though. >> that's why i am angry >> this kind of uncertainty for

large business and small and medium businesses. >> i had a conversation with somebody runs a business that imports a lot of supplies for food services for businesses in china. a small business, 10 employees one is they're looking at sourcing products. 80% had been coming to china and taking it to vietnam as much as they can much time and effort have been spent as oppose to trying to grow the business. worrying about this and then the other worry is okay, now i have got most of my stuff comiing vietnam at a similar price point. what if the price goes off from china? >> people can be paralyze and they are prevented from focusing on the growth opportunities while they deal with resources

>> you just summed up where people are on friday and saturday, the president can blame these, i am disposing it, what can i do? i had to resource avocado. why? because i can't pass the prices on it. do i want to spend a lot of time i was trying to figure how to grow a business. now i am trying to figure out how to maintain. >> there are a lot of people who would. i am fortunate enough of decent balance sheet. >> what does it mean >> let's not take it back to much more broadly. what is this going to mean in terms of the way people invest and business investment and broadly speaking for the stock market does the ten-year yield have it right at this point? >> we should never doubted the 10-year. i do believe what happens is

even though the ten-year have gone down in yield that we have to refigure what we'll pay for companies and the price earning ratio of everything is going low. you will pay less for everything and later on we'll start to pay a little more for healthcare site unless it is packed because the president is arbitrary and capricio capricious >> this is the tax that the u.s. consumers are paying >> no, david, it is paid by part of mexico. you are part of the brainwashed liberal media. sm >> when we come back, we'll talk to the company's ceo and executive chairman of dupont, we are live at the new york stock exchange when we come back [ sitar music playing ]

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my owner might have given me a little bit of catnip. uh. [ laughing ] that's great. listen... it is great, gidget. everything is grand. [ meow ] [ purring ] [ growl ] are you finished? [ cooing ] that was weird. oh sister it's going to get way weirder. dow dupont joining us now chairman ed greene and jim collins how are we doing verses the initial merger of dow dupont in

terms of value creating? >> we clearly have some macro issues affecting the companies and affecting a lot of our companies. if you look throughout the company right now, every metric improved tremendously. we take $3.6 billion down to the company. if you look at benchmarking of the three companies, we benchmark to any of the pure company that you want to compare us to. a little bit weaker revenue for dupont, we had gross margin at a 20 bases point of an improvement of 90 bases point. the under lining business of way we are running it. >> there was a bit of bad luck, obviously, cell phones, you have

a great -- 5g is a good story. what is this story here in terms of business person trying to work in this >> the biggest thing is the china tariff issue, it is affecting all three of our companies. du dupont, 20% of our business is being affected now it is high end smartphones and autos. we think that persists a couple more months here of these stocks that we are going through. if you look to take the dupont, we take so many and industries all over the globe it is those two, it is isolated and consumer and china really slow down on spending on big ticket items >> you got a disappointed group of shareholders for three years watched this thing proceed and

what happens to the value you are supposed to create of this 3 $3.6 billion in cost i remember when the deal was announced. i understand margins may have improved but they want to know what happened? where were the values that were promised >> it will play overtime if you take the best of your company in the industry then corteva is the second largest and most balanced portfolio with the best pipeline coming out dupont is right at the top or everyone margins at 28% which is right at the top that company is much more focused on material size company, it is going to have a huge pay out macro issues will clear, it is macro issues that's affecting right now. it is the tariff issue on the

dow dupont side. >> it is not delivering on what you promised >> by the way, the second go around when i split up tyko, we had 809. i just came off a three-week low and i visited every possible shareholders there could be and they say they are excited of what the next five or six or seven years will look like for these companies. >> jim, you had a forecast three weeks ago, i am not clear about that because warnren's prices have quoted -- >> can it be good for 2020 >> it is a great question. it is one of the reasons why we said we are not going to update guidance because of all uncertainty out there. there are some negatives but there is some positive starting to show up >> we have a strong business in

latin america and second half of the year brazil. the summer season, our market is here and there and we'll benefit from that. as we get into the fourth quarter of the year, we start to sell into the 2020 market for north america. >> david talks endlessly of the problem of your largest competitor i know all businesses, it is not like boeing is going to track air bust just actually on your number, does it matter how hobble your chief competitors? >> these lawsuits are related to the home use market and not the professional customers we deal with >> you and i are business people you can't even get your head up sometimes because of loss. >> yeah, i understand. this is an important tool for our growers. we remain focus on a

complementary part of our portfolio. it is a small part on the product line that we sell. we got one of the best lines in the industry we'll have a number of choices for our customers to be able to support them in the future >> and back to global growth, i think the second half of this year in terms of guidance is where you started pointing people towards more growth, we are wrapping up i guess, can you be confident and give them what we are hearing and seeing tariffs not on profits of mexico concerning you >> a short concern i had two conferences last week with a lot of ceos it is a group that ceos want to have a fair trade around the globe. we want this issue to get resolved sooner or rather than later. i don't think it is healthy. it is not affecting us in the supply chain for dupont it is only $15 million.

if morte tariffs in place, ther is little effect on that do we talk ourselves into a downturn here and that's happening with the consumer in china. >> how long have you been seeing that in china? since december the business on the high end purchases whether it was homes or smartphones or autos, started dropping in the middle of december two dynamics happen through this you have to get through stocking which takes your business down but you have to get through that inventory and the chain. that'll help lift our numbers. $200 million in the first half, we won't have it in the second half the issue we don't know exactly is what will the volume of sales will be in autos and china and smartphones. >> let's go back to tepco, i hae

said this, you are a miracle worker now i got to wonder, do you have options for what's left with dupont i don't want to call them strays but there are things that you can bring out that have more values i want to ask is is your work done well, it is interesting, jim, with dupont portfolio, i love the way it is, it is a multi industry company we can run it very well for about three years now. the beauty of the dupont's portfolio is we have optionalty. it is about 30% of portfolio and those companies stray at 19 or 20 times, dupont is not going to trade at 19 or 20 times. that's if we want to do something with the portfolio and not keep it the way it is.

we'll look at that if that's the right path to go down. >> back to corteva, you are still talking about accelerating synergy -- >> despite some of the head winds we are talking about, we are executing all the levers we have and one of those is these cost energies. $1.2 billion from the time we started the merger we got good visibility and we can pull some of those forward and help us out in the second half of the year it gives us additional tail wind as we go into the start of 2020. >> 3.5 years later >> and dow chemical of the 6%

ye yield. >> it is a long road >> 3.5 years is a long time but for me it has been pretty exciting by the way, just to that point, putting dow out there with this kind of yield and pay out puts them at the top of their set and that's exciting for investors. >> gentlemen, thank you. >> thank you >> good to see you >> thank you for having us ed breem and james collins one more look at the futures as we get on trading minutes from now. we'll be back after this your daily dashboard from fidelity. a visual snapshot of your investments. key portfolio events. all in one place. because when it's decision time... you need decision tech.

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here is a look at the futures as we get set to open five minutes from now. we'll have jim cmerar's mad dash stay with us, we'll be back in a couple of minutes.

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all right, we got two-minutes to go before we get started. he was ready to walk over there. we only have two-minutes >> what do you want to do starting with the mad dash >> let's say you are a believer and feel like nothing can happen can you hit me this is hitting 118. jp morgan, guess what? steve tusa talks about how they thinks can be deterioratiing fo

ge i didn't know -- this is the beginning of the research that maybe we'll see it >> he's relentless >> i don't want to put it out because there is still people feel as i do larry culp is doing a good job and he's doing everything he can in a different environment >> there is the president in the world collection review. >> where is wolff? he's there in the gallery. >> look at it. it is a great look what he's saying basically is, he's basically saying that he's the rating agency. he does not like the way turbins

are going. it is just not going to stop i had thought there is a bit of stabilization but the relentlessness of this one is frightening. >> there is the opening bell, of course, here at the big board, corteva. agriculture company. over at the nasdaq, wing stop, chicken wings restaurant >> they have done a great job. i looked into who gets to buy wing stop, you have to make money -- david, i want to go on for a second mr. mabout mr. bre.

he had been a miracle worker he talks about how much money he created during the worst time. now, he does move on he's not -- >> we'll, it is taking a long time my question reflects the frustration that you are well aware of or he's well aware of among a lot of shareholders that's been there. valued creation as a result of the cost of synergies, he said they're taken the cost out >> is dow chemical more to the price of oil and it was -- i think the answer is yes. it was something that we did not expect the dow is basically a stock that's trade like an oil stock but it is a higher yield

so the purgatory as the way we describe these companies, they are purgatory and whether it is fair or not. >> and operating with the backdrop of some what certain macro environment. mr. breen talks about the drop in consumer in china corteva, i guess the question, i am going o come bato come back . do you think it is possible for it to be the same as dupont. michael clayton where the company is on fire left and right. >> i don't think mr. collins fully understood you are saying is the competitor distracted >> i know. it is an interesting point

as we have said the acquisition of the center climbing the ranks of the worse steel ever now endangering germany or whatever you want to call it. >> if you spin off the old dupont, they're engulf in a lot. >> t 3m is part of the reasons. i see these things and i know that dupont is supposed to be of what's happening with camorse. >> interesting look at the president right there. >> there you go. back to you. >> don't tell my wife that he's at buckingham palace. >> i have been there to visit the queen.

>> let's move on from dow dupont and talk about google and the department of justice. wall street journal was reporting on late friday the justice department preparing an anty truitrust of google and asl as amazon. google or alphabet investigate, does not mean they're going to go anywhere with it. >> how many times they have investigated in this issue, david? >> this is as company that's quieter than it has been in the past talking to a couple of shareholders this morning. they missed cps as we well know. they had a nasty deceleration last quarter a

they're wondering if the place is button down >> she's in the bunker down, too. we have a number of reasons and not that long ago just because there is some level s of businesses you and i spoke to him, there was a time where he felt these were crown jewels and no need to go against him if you look at the democrats want to break up google, you know what they said? break them up. waymo is worth more. >> youtube >>st implicit. >> it is >> the distraction that would take place of years of litigation in court. you may end up with breaking it up for more value. >> a lot is microsoft and the browser, i don't think that's

fair i don't see the people who run alphabet making that same mistake. >> no. >> in fact, there seems to be believes among shareholders that have been preparing for this >> done. >> which is why they also been not particularly, not talking very much. >> we are over sole, the nasdaq is still down. >> s&p goes up. >> if it was not for the mexican tariffs, i thought we'll be facing a balance at the beginning of june, you are getting a little bit of money and 401 k. >> we are part of that white paper. we don't know, do we, jim? >> no. >> we were due for a balance i want to point out something in your world, this company is

rumored to be acquired by hum a humana, centene. >> this has been rumored for a while. there has been mix signals cfos talking a lot to shareholders i talk to a couple of large holders, i never said anything on air about it because it seemsless likely than humana would ever go hostile. and this is obviously against their typical policy, put an ak out this morning where they say we are not doing this. >> was that odd? >> it is odd that it was as you can see, it was impacting humana stock price over 5% and also

having significant e if he can significant effect on centene. they made it clear there was no interest there >> the third point potentially is in there and creating a momentum for something in terms of voting down on their deal if humana will come they put this out. let's show you the wording here. compa there it is, we can go to the next one, one time limited exception to that policy and we are saying companies are not going to make proposal for centene. >> extraordinary >> michael myers just signed the contract he's going to be there for a couple of years. it is a very well run company,

centene. they have done so well with the obama changes, i know it sounds impossible, they're very good provider and make a lot of money. >> um, does it sound like the bell you ring at a funeral >> they're all ringing the bell over there >> we do have a deal this morning that is worth mentioning >> for me i am sorry -- >> oh, stop apologizing. >> it is 23.85, all cash frankly it is at a price, there was some reporting of the possibility of the deal. it is a price that's far above of what investments had anticipated. the multiple quite high for infineon a key question, how can he get trust from the chinese

that certainly was one part of it they were invited to process by five weeks ago they do need the u.s. and europe and they seem to be comfortable in terms of getting it all >> automobiles is a key possibility. >> i spoke to corey many, many times. >> who's he? >> the ceo >> the thing that's amazing is i challenge him directly in autos. look at what i have in autos, all electronics and electric orders he demonstrated over and over again, are you in the wrong autos? and he kept on saying we are in the right auto and the market does not realize it. he was dead right. this man was so committed to bring up value, he's a wonder. he took over in a period where

t.j. rogers, there were issues whether if they can pull out a tail spin. heather ha he's done a remarkable job if the market does not give me value, darn it, i will bring up my value myself. is that a dream come true for a lot of companies kept down by trump. >> we are not going to be speaking -- we'll speak to mr. rodgers. >> he's an old friend in the old days he's apps terrific guy i think he also got tired of just trying to make money and being good >> now infineon is down now. >> you are much better at the

world. >> it is the new faang >> it is absurd. please explain how there would dea short squeeze for companies. >> beyond reports? >> there is few shares out, too. >> how do they get it so wrong >> the flow is quite small >> i had roku -- >> did they ever release the lock up. >> nothing that i am aware of. >> fine, i want to point it out. >> there is a bunch of stocks that a lot of the hedge funds totally understand the shorty process and what it could means in terms of borrows and are up with companies >> the mark et is selling resiliency this morning and

alphabet and amazon are all down it is unclear what will transpi transpire. >> unless something happens quickly where the dojishes somethidoj issues something. we are examining them, we are not going to bring them. that's what you are hoping the company is not talkative about it i think they are hopeful that they can -- david, was this governor supposed to b anti-regulations >> yes what's happening >> innovation has been stifled by the presence of these enormous companies that we have not adjusted in any way and dealing with their impact on the u.s. economy on consumers and the world's stage and we need to >> other than coal, name me an

industry, what are champions right now? >> he's tariff man >> he saw how the coal minor worked >> that's my favorite tweet today. >> is he a president >> bob is back he's on the floor, he's got more on what's moving this morning. >> hello, jim and david, i was just back from spain stocks are on the flatter side that's pretty much here for the united states. banks are flattish two big movers on the downside they been trying to bottom the last couple of days, that is positive sign. there is three obvious and big problems for the market. it is not just china trade, it is a little blodroader than hat.

we had an agreement with mexico and canada that they're going to vote on and the congress all of a sudden, you have tariffs nothing is ever settled. we got tougher regulations, you see what's going on with amazon and google and facebook. finally,s the stock market was expecting and earnings uptake the second half of the year. not a down take. these three things together major head winds for the markets right now. a lot of people think a lot of damage has been done not as much as you may think here is google facebook and amazon today here. this is a major worry in my opinion for the park that other people are not paying enough attention right now. look at where we are at the global level this is some stock catastrophe happening in the last five or six weeks. shanghai is 6% and s&p is 6%

germany is 6%. everything is still up folks, s&p 500 is up. jere germany is up. shanghai was up 30% or 20% a little while ago the dow component, yes, the semis had trouble. apple and microsoft, these are still very, very big gauge for the year my point here is not a catastrophe or at least not yet here the market's decline is not enough that we had the big three problem, what's the right multiple for the stock market right now? may 1st, it was 17, way too high today is 60. if you put 15.5 multiples on the next forward, you are at 26.50 a lot of people like to look at this number, focus on that number because that's a good number to look at or earnings, assuming only modest earnings gains or a lower multiple.

if you take zero earning gains, you could be at 25.50. >> i will tell you why i like 26.50. >> remember when we were down here this is 23.50. at the top was 29.50 the difference is about 600 points the dircfference right in the middle is 26.50. that's another good reason to concentrate on that particular level. david, back to you >> thank you, mr. pisani >> tesla is down >> jesus >> it is down 45% for the year >> let's move on let's get to the bond pit with rick santelli joining us in chicago. he's not in new york anymore nice to have had you here, good to see you back in chicago >> oh yeah, i know you guys were all great.

it was wonderful sitting at the desk to be part of history is global interest rates really get crushed and for a change is kind of the u.s. is leading the way look at a three-day of twos. how it drops under 190 should we close for the summer of 2017? three days of tens the yield anchors and just coming out we can feel it in all facets everyo everyo we see in version on the short end and if you look at two's verses tens, it is widening out. the long end is only down one bases point. look at a three-day of bund, here is the interesting feature. it is basically still connected to friday's range. you notice the last two were

not, not twos and tens let's show the spread in the past that we can argue the relative value trade, it was their yields pushing their yields down. look at what's happening to the spread, it is narrowing which means the latest round of drop of u.s. treasury yields, we can point directly at the trade issues and how investors are altering their portfolios, scribner yo nervous for equity and reaching for credits with regards to sovereign ty what's going on with foreign exchange certainly the dollar have lost some ground. the market insists the fed needs to tight sooner than later if you look at the dollar verses the chinese yuan, it is bumping along 6.90 >> david and jim, back to you.

>> rick, thank you, rick santelli at the cme group worth noting that a lphabet is down 6.5% and facebook is also down clearly worries of antitrust >> these are terrible moves because lack of faith in any -- no certainty. facebook is doing quite well, alphabet is doing quite well the irrelevance of what is happening in companies is in large part because of the material nature of the president. >> he's fake news now. >> stocks edged into negative territory for the session so far. coming up, you saw this earlier, cypress up sharply after agreeing to be acquired by infineon we'll get reaction from the company's founder, its former ceo t.j. rogers, he'll be a guest on "squawk alley" and we'll be right back. it's us. millennials.

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a look at the worst performers on the s&p 500. this quarter, you can see mylan having lost almost 40% of the market value

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on "mad money" tonight >> brinks, not your father's brinks, the big trucks you see rolling around they rang the opening bell on nasdaq very exciting show >> all right. >> charlie morris, does such a great job. >> see you back here tomorrow. >> can't wait. >> you'll be on "mad," but i won't see you there. coming up, mohamed el-erian on the markets and trade tensions keep it here

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welcome back to "squawk on the street." we have some breaking news we are expecting our april read on construction spending and it is out it is unchanged. unchanged. we're expecting up .4. but we had a huge revision, a 1% revision up for last month from minus 9 to up .1 of 1% that's huge. for the money ball, expecting a reading in the 53 camp, a little light. 52.1 52.1 now, 52.1 is going to take us back quite a ways with regard to the last time we have been down at that level and it is going to comp back to october of 2016

when we were at 51.7 and let's go through some of the internals, shall we? the employment moved higher. 52.4, current read at 53.7 important considering we have employment data this week. prices paid, also heated up a bit from 50 to 53.2. and finally, new orders, also an improvement, from 51.7 to 52.7 so light on headline, but we did gain strength on some key indices within the number, not a huge change going on the interest rate complex as the curve steepens on the wide side and verts on the short side. and the trading at levels we haven't seen since 2017 depending on which maturity. sara, back to you. >> all right, rick, thank you. good morning, everyone welcome back to "squawk on the street." i'm sara eisen here with david faber live as always from post nine at the new york stock exchange carl quintanilla has the morning off. looking at the markets, we were up, then down, at session lows

after that disappointing miss on manufacturing. s&p 500 down a third of 1% dow down 70 points coming off six weeks of declines, longest losing stretch since 2011. >> to our road map this morning, it does start with president trump, he's making a state visit to the united kingdom, attacking london's mayor as air force one prepared to touch down we'll take you live to buckingham palace with the latest. >> and china ramping up the rhetoric, blasting the u.s. on trade, we're live for you in beijing. >> another problem for boeing 737 max as the faa unveils a new safety warning we'll give you latest on that as well. president trump kicking off a four day state visit to the uk and france, arriving in london this morning before touching down he did go avalon donefter mayor, tweeting this, sadiq khan has done a terrible job as the mayor of london, has been foolishly nasty to the visiting president of the united states, by far the most important ally of the united kingdom.

he's a stone cold loser who should focus on crime in london, not me khan reminds me very much of our very dominant confident mayor of nyc, de blasio, has also has done a terrible job, only half his height i look forward to being a great friend to the united kingdom and looking very much forward to my visit, landing now he does the insults, i mean -- >> oh, my god, i don't even -- i found something i agree with him on, the height stuff, come on, as a short guy, that's terrible. you can't go there come on. >> full of -- >> the president's tweets this morning actually about boycotting at&t, i thought, from a business perspective were perhaps more interesting apparently not happy with cnn's coverage according to his tweet he was not able to watch fox news and then encouraging people to potentially boycott at&t, cnn's owners, to try and change their coverage in some way i'm not aware of a response from at&t the shares were having a good morning, up 1.2% >> brushing off the tweet

impact, we will continue to monitor the president's movements, take you live to london david, he's also made comments about brexit, saying if they can't get a good deal, they should just pull out of the eu with a no deal brexit. that deadline is october 31st. he's going to a country where there is a leadership contest and very much huge question on whether there is even going to be a brexit deal. >> we're talking october at this point, right >> october 31st, halloween brexit. >> let's go across the globe now, though, to china, which has been laying out its conditions that it would need to return to trade talks. it had a release this weekend of the so-called white paper. eunice eun has more on what they said and what we can expect. good morning from here at least, eunice >> thanks so much, david this was the second policy paper on its trade conflict with the united states. and it listed three things it wants to see before beijing will come back to the negotiating table. it said it wants the u.s. to lift all the tariffs that were

imposed last year on chinese goods to be re goods, to ensure that there is balance in the text of the deal. otherwise, the white paper was highly critical of the u.s. tactics and put all of the blame for the failure of the trade talks on washington. in the meantime, beijing says it is going to continue to -- continue to fight the trade war to the end tariffs on american goods kicked in this weekend, beijing outlined its criteria for its unreliable entities list, that's the black list for foreign firms and individuals. and state media say that federal express is under investigation for mishandling packages for huawei, the chinese company that is currently in the cross hairs of the u.s. government fedex has been under attack by state and social media for the past couple of days. the communist party's people's daily ran a commentary saying, fedex, no one can help you if you break the law.

moments ago, another communist party paper posted a report guessing which american companies meet the first two criteria to be added on the black list and so they say those two criteria would be companies that cut ties with huawei and the second violate market rules for noncommercial purposes and the global times is suggesting now that could include intel, qualcomm, broadcom, and google guys >> eunice, of the list, a real focus, you might imagine of investors, google doesn't do that much business there, but qualcomm and avagao, they do a lot of business with the chinese. >> yeah, they do and google, though, was still put on the list because of the reports they said that there are media reports that google was considering ending its relationship with huawei had it comes to the app store and huawei uses a lot of android apps in the os and so they -- in

that report they were speculating that google could also be harmed and added to this black list >> eunice yoon, thank you. well, president trump's trade fight with china and, of course, the threatened tariffs on mexico causing concern among investors about the potential of recession. outgoing counsel of economic advisers kevin hassett joining cnbc this morning saying chance of recession is close to zero. have a listen. >> the odds of recession, i think, going forward this year, pretty close to zero if you look at the data, but if you look at the interest rates, of course, those models can be probabilities that are north of .5. it is something that we're puzzling over. i think that part of the problem is that there is kind of a global deflation setting in because of the weak economy in europe, weaker economy in asia, that global deflation is putting downward pressure on medium term interest rates and creating the yield curve invasions setting

off the alarms >> here to discuss the impact on u.s. trade policy and markets and the economy, mohamed el-erian, welcome back good morning to you. we just got a manufacturing read that was the lowest level in years. the ten-year yield is at 210, the chances of recession this year, are they really zero >> the low if you look just at the economy, and i think kevin hassett is correct in saying if you assess the economy, what has changed, sara, are two things. one, the risk of a policy mistake has gone up. what happened on trade last week was different in two ways, one is the escalation of tension with china is now targeting specific firms, that is quite different. and, two, threatened tariffs on mexico means even if you make a deal with the u.s., you could still have issues. so the risk of a policy mistake on trade has gone up the other one, you know it well, is the self-fulfilling concerns

in markets because of where the pain trade is. the more disrupted the fixed income market, the more the -- i think the baseline is low recession, but the risk of a policy mistake and a market accident has gone up >> what about if those tariffs on mexican imports, the total, i think, more than 350 billion last year go from 5% to 25%. what kind of economic damage are we looking at? >> so a lot of damage to mexico. and the market is sensing that but for the u.s., some damage, but the bigger issue is what happens in negotiations. you know, the rest of the world thought they understood the new game plan for negotiations with the u.s. which is forget about this volunteer process of solving issues, forget about going to the wto, you've got to make concessions to the u.s what the threat against mexico says to them is even if you make

concessions to the u.s., you may still have problems. so expect china and later europe to become much more hawkish in the negotiations with the u.s. and you see that already over the weekend. >> mohamed, this morning, the yield on the ten-year bond hit 2.07%. what is that saying to you >> so saying a few things, i think first the markets are worried about growth prospects because of what happened last week secondly, the pain trade, the technicals are such that they accentuate the move. it has been a massive two-day move, david. and, third, is don't underestimate the fact that the index on the bond market, the move has spiked a lot more than the equity index. >> mohamed, sorry to cut you off. i want to show viewers what we're looking at here, a live picture in london where the president is at westminster abbey, he's laying a wreath at the grave of the unknown warrior. let's listen in for a moment

>> pray for peace. >> you are in the midst of discussing the implications of a yield below 2.1%, at least as of this morning on the ten-year when we interrupted you. feel free to continue. >> yeah, david, i think what you should look at is not just the yield is below 2%. it is that the index on the bond market spiked more than the equity market. that's telling you that the vol market sees more unusual uncertainty or radical uncertainty ahead for the economy than what stocks are pricing in right now >> radical uncertainty means what in your opinion >> i think it means an economic outlook that is more vulnerable, i think it means market

technicals that are more fragile. and it involves a higher risk of a spillback from disrupted markets to the economy it is a different outlook than it was last week, and let's see whether we can get back to where we were before >> we talk about the direct impact of the tariffs, right who pays, the importers, which economies get hurt, the exporters. what about the indirect impacts? how do you think about these spillover effect to capex decisions at company levels, the uncertainty in terms of planning, the price of crude oil. so many sort of ramifications that go just beyond the direct trade impact >> that's why containing the issue was so important the minute you no longer contain it, you get this radical uncertainty and what does that do you postpone decisions if you're a company, you postpone decisions, and if you

are a consumer and that's happening in china, much more than the u.s., you postpone your own consumption decisions. so the demand comes down and that then feeds back to the supply side. that is the risk of this uncertainty. >> this morning we had the executive chairman of dowdupont saying since december in china, specifically, they have seen a significant decline in consumer demand for big ticket items. does something like that concern you? does that spread does that have an effect on the european economy where a lot of the automobiles perhaps that the chinese would be buying are manufactured >> we should worry more about china because you get three natural inclination coming in that actually hurt the economy one is the consumer is typically risk averse. so what do they do they step back and that is a problem not just for china, but for the rest of the world, particularly europe two, is that the government goes back to all tools that are less

effective in promoting growth, but are more problematic for the transition and, three, is that china itself becomes more hawkish with the leaders of the world i think you worry about china a lot more in this outlook than before, and if you're dependent on chinese markets, that's an issue for you. >> so if you add it all up, have you adjusted your forecast for what the fed is going to do this year what is your prediction? the market says 50 basis point cut, that's half a percentage point. >> it is really tough for the fed because based just on the economy, you can't justify 50 basis point cut, but, remember, the markets have gotten used -- conditioned to be able to force the fed to do something. so if the fed doesn't validate the 50 basis points, we risk the market perceiving a policy mistake, not an actual policy mistake, but the markets perceiving a policy mistake. what does that do?

it disrupts market functioning, it tightens financial liquidity and then it contaminates the economy. the fed is in a tough place, not of its own creation for the power fed but the creation of the previous fed that gave the market everything the market wanted and now the markets want more >> mohamed el-erian, thank you very much. >> thank you, sara and david >> good to have you. when we come back, president trump's trade threats fanning recession fears. we're going to speak with jim stewart. and later, evercore's founder and senior chairman roger altman will join us big show ahead don't awhe.gonyer i don't know what's going on. i've done all sorts of research, read earnings reports, looked at chart patterns. i've even built my own historic trading model. and you're still not sure if you want to make the trade? exactly. sounds like a case of analysis paralysis. is there a cure? td ameritrade's trade desk. they can help gut check your strategies and answer all your toughest questions. sounds perfect.

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it's like you're the dad and i'm the mom and we're in a relationship and this is our baby. [ laughing ] well... it's exactly like that! exactly! ♪ market coming back here a little bit investors continuing to worry about the continuing u.s. trade fights with china and mexico top officials from the u.s. and mexico beginning talks today in an effort to fend off president trump's new tariff threats chipotle telling cnbc such tariffs could boost its costs by $15 million per year and lead to price increases for the consumer, one company that could be affected. joining us now post nine to discuss it, jim stewart is back. welcome, jim >> thank you good to be back. >> what sort of research have

you been doing into the tariffs? >> i wouldn't call myself an expert, but a lot of historical links at trade wars, who wins, who doesn't. this mexico thing really has thrown me for a loop because i haven't been able to find any examples of a tariff war over a noneconomic issue like immigration at the mexican border the basics are, tariffs got started because countries wanted to protect their fledgling domestic industries. u.s. had an early stages so that is why tariffs existed now, i'm trying to think, who are we trying to protect with tariffs on mexico. mexican products are so embedded in the u.s. supply chain that the stocks that have gone down on this news are u.s. stocks the u.s. auto companies. so we're using a tariff threat to try to get mexico to do something on the border. we're not asking them to cut tariffs, we're not asking them to liberalize their economy. i'm not an expert on immigration, but i don't know

what more they can do, maybe something. but that is a completely nontrade issue >> we should point out, it is legal, the president has vast powers over policy when it comes to tariff and we have seen him use it before. he wants to sort of use the economic leverage that the u.s. has, they need us more than we need them to try to get them to move on immigration. 80% of their economy is tied to u.s. trade >> well, you know, of course it is legal i don't think anyone is questioning that i think the question is it wise? is it productive, is it likely to achieve the answers the u.s. is looking for we're using sticks i don't purport to be an immigration expert but what about a carrot? what about sitting down and saying, what do you need to do, not at the u.s. border, but the southern border with mexico and how can we help? there are ways of addressing the immigration problem. to use a tariff war, first of all, i don't -- did you see today they were talking about waging one against australia why don't we do one at a time? let's get a victory. let's show that we can use our

economic clout to gain some concessions, maybe china, let's get a victory in hand before we go off on multifront wars. so far, all we have done is have to give massive billion dollar subsidies to american farmers and i talked to quite a few of them, they don't want the subsidies. they want to sell their products in the global market and i think that, you know, i think something has got to give here instead of just sort of, like, wild casting about to see who is the next victim going to be i would like to see a victory. >> what do you think the impact will to be we do go to 5% on the 10th and then another 5 a month later and another? we could end up at 25% tariffs on mexican goods by october? >> again who are we helping here who are we hurting because it is not a tariff issue, we're not achieving any economic goals here. we are going to be hurting american consumers and american companies that rely on imported mexican parts. and that's going to be a big

tax. >> they go back and forth across the border too for some of the more complex products. not the easiest thing to ascertain. >> the other question, again, is what can mexico do again, i don't purport to be an expert, maybe they can do something more there again, the u.s. has the advantage over mexico. the trade wars that are won is a huge powerful economy turns against a small fledgling economy. they can win those but the victories are inconsequential because the -- because of the size of the u.s. economic affair to mexico, it is not going to use the needle that much even if we do quote/unquote win the war in the economic sense. if they can do something at the border, great. my feeling is, let's talk about that and find ways to help them do it. >> jim, before we wrap up here, let's come to something you have spent a lot of time on, antitrust law. >> right. >> the reports starting on friday that the doj is investiga investigating alphabet not that they're necessarily going move forward, but give me

your take on sort of what we can expect we're seeing shares of google down over 6% this morning >> i think it is a fascinating development. you are seeing this unusual convergence on the far left and far right of hostility toward the big tech companies i have to say, it strikes me as so often the case, antitrust enforcement, they're deciding to move against google exactly when amazon is posing the biggest competitive threat they probably face in their existence. amazon is gaining share. so that, my first reaction was it seems to me this is two -- does google favor its own results? that has been explored in the united states and the eu i don't think google should. they clearly mark those ads at the top. i think consumers have adjusted to that. i don't think that's changed significantly. but if they want to look into that, fine the other question is their management of the ad platforms that is an interesting new development. i haven't seen the market share

data there as some of the practices. >> 70%, i think, something along those lines, in the journal today. >> all the antitrust cases depend on market definition. and 70% of what is my question if you're looking at -- that's a very narrow definition of that market and i suspect it will be fierce arguments over that. anyway, they may investigate, fine but i think we're a long way from a case against google >> jim stewart, thank you. >> sure. >> good to see you. when we come back, a new problem for boeing 737 we'll tell you what it is and what it might mean for the future of the fleet. and shares of cypress semiconductor surging this morning. deal valued at over $10 billion. correct? >> correct >> cypress semiconductor founder sqwkn odgers joining "ua o the street" in the next hour don't go away. when it comes to your customers' expectations,

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and engineers outcomes. ♪ cool. ♪ the faa says there is a new problem with some of boeing 737 commercial jets. phil lebeau has more on this

story. >> what we're talking about are the slat tracks, if you are on a 737 and you look out the window, you might notice as you come in to land, you see the slats on the front of the wing that they come down, 148 wing parts are going to be inspected. boeing has determined some of the slat tracks, some parts may be faulty and 133 of the 737s that growing to be checked are the previous to the max, they're called the 737 ng planes. those planes will be checked as well it brings up another issue with regard to the 737 and the 737 max, if you look at shares of boeing, in particular, what stands out is that this is a stock that, gosh, how much is it down over the last three months since the grounding of the 737 max. we're going to be talking with ceo dennis muilenburg on the exchange we'll talk about where things stand with the max, the recertification process, and

airlines who met over the weekend, guys, in south korea, saying, look, we would love it see the world lift the grounding of the max at one time does he think that's a possibility? we'll talk about that coming up at 1:30. >> phil, does he face real questions from investors, from wall street on his leadership? that got mentioned in his interview last week, i think, with cbs i'm wondering how big of a deal that is for the stock and the company and whether we should be paying attention to it >> well, i don't think his leadership is in question in terms of if he's going to be replaced there is no indication i've received talking, you know, with various people, that dennis mu muilenburg's job is on the line here they have to get through the crisis their leadership, that is in focus, especially because they're a long ways from getting through this they have to get it certified. then they have to get -- their production schedule was brought down to 42 a month they got to get back up to 52. and then do they get up to 57 by the end of the year as

previously expected? those have real implications in terms of profits and what happens to the remainder of this year so in that regard, he is definitely on the hot seat in terms of people saying, what is happening here, how does he go forward, how does boeing not make this mistake again with this 777 x or future models? >> boeing at the bottom of the dow again today. phil, thank you. look forward to your interview at 1:00. time for etf spotlight, looking at energy, moving higher, breaking a four-day losing streak. that sector falling more than 11% last month as energy companies remain some of the most vulnerable to potential mexican tariffs, also crude oil got hit. today, crude oil rising from four month lows with saudi arabia indicating that opec will continue to limit oil output wti still chalking up the gain of more than 18% so far for the year like the stock market, still up for the year but had a bad --

>> downtrend of late. other stories making news this morning, courtney reagan has a cnbc news update for us. >> good morning, david here is your cnbc news update at this hour. earlier today president trump and the first lady were welcomed at buckingham palace by queen elizabeth. prince charles and his wife camilla, the trumps are in the uk on a state visit and being hosted by the queen. british foreign secretary jeremy hunt says the uk is going to put on a fantastic show for the president. >> what is really inappropriate is for anyone to boycott a visit bit president of the united states, by the way, this is a state visit, not a political visit. he's being hosted by her majesty the queen to mark the great friendship between our two countries. it is not about party politics >> acting u.s. defense secretary patrick shanahan meeting with south korean president moon in seoul. the first time shanahan visited south korea as the acting defense secretary. cleanup effort beginsing this morning in parts of

maryland after severe weather rolled through parts of the state last night powerful winds toppled trees in this neighborhood as you can see on the video of bethesda that's our cnbc news update for this hour. this weather has been wild sara, back to you. >> courtney, thank you when we come back, roger altman is with us. last time he joined the show, he was optimist big the china trade talks. listen >> there will be an agreement. and the question is when, not if >> does he still think a deal will get done? plus, his thoughts on nethe w tariff threats against mexico. don't go away.

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forecasters are growing more and more worried that the u.s. could enter recession by the end of 2020. steve liesman joins us now with more especially after that data at the top of the hour. >> that too. but this is really about protectionism from worry to

almost convinced about a recession. the national association of business economics out with its june outlook and they're forecasting a high chance of recession next year, largely due to growing trade protectionism the odds, below 15% for 2019 that's below average, but rising up, you can see there, according to the survey out last night, the 60% by the end of 2020 recession fears surged amid rising trade protectionism morgan stanley writing over the weekend, if trade tensions continue to escalate, we could end up in a recession in three quarters and the consensus, very quickly, has gone from no cuts planned this year to general for multiple cuts, evercore isi writes we see a base case in which the fed will reluctantly cut rates three times starting in september in a mainly easing cycle intended to ensure against downside risks associated with trade conflict the fed funds futures, you can see, i left friday afternoon, there was not a 50% probability

of a rate hike in july and that's where we are now, rising all the way up to, i guess, call it ivory soap for january 2020, 99.9% sure of a rate cut by then in fact, 64% probability of two rate hikes this year we ask the president's outgoing economic adviser kevin hassett this morning on "squawk box" if he provided any analysis to the president on tariffs he declined to say so. he did reassure us that mexico would suffer worse than the u.s. sara >> steve, thank you. oh, you got an interview >> two interviews, charles evans from chicago, from the fed's listening tour that they're doing, and then 1:15, we talk to richard clarida. you might imagine i got a few questions for those guys. >> yeah, absolutely. looking forward to it. we'll see if they change their tone to match with the markets >> good point. >> thanks. >> joining us now for a closer look at trade tensions, the impact on the economy, and

evercore's founder roger altman joins us good morning to you. we played a clip from your last appearance, i think, with us, less than a month ago. you were relatively positive on the possibility that china and the u.s. would get back together with the negotiating table you didn't say what happened within weeks but you did expect that they would reach a deal as a rule evy do you still feel that way >> i do. but the agreement might be to suspend tariffs and resume negotiating rather than have a full blown ultimate agreement. the united states has the advantage over the very short-term, simply because their exports to us are so much larger than ours to them. but over the medium and long-term, china has the advantage because the authoritarian nature of the regime, no elections, and the classic china long view allows

them to wait us out and we don't have the patience that they do and that's not a comment about president trump, that's a comment about the american governmental system. so i do think they'll be in agreement, i think the chances now that it is in effect a moratorium on tariffs and a commitment to resume negotiating or something like that is more likely than an ultimate agreement. because i think what is now happened, including in the last month since we saw each other, is that china has dug itself in. and you see that in terms of xi's visit to the site of the beginning of long march, you see that in their rhetoric over the weekend in terms of the paper they released, blaming the united states. and it is becoming harder for china to agree, though i think it was always hard, to the changes we want from the point of view of intellectual piracy, mandated technology transfer and

so on and so forth i stick with what i said i don't think this will last very long. and, again, that could be weeks and weeks, but not going to be many months, and if you look at the comments steve liesman just made, and the marking down of gdp forecasts he alluded to and that's going on everywhere, you look at the ten-year in round numbers, you look at the obvious reversal of the outlook for the fed in terms of market expectations, those are all bearish signs. now, president trump is going to run and i heard jared kushner recently lay out how they're going to run the core of the entire campaign is going to be, quote, jobs are up, wages are up that will be a lot of other elements too, but that's the beginning of it. so they aren't going to risk the growth and maybe going at negative growth with the election coming up so is this going to last many, many months? the answer, i believe, is no.

>> well, listen, friday's action, though, when it comes to that tariff on mexico, it certainly seems to be saying otherwise in terms of concern about growth and/or the stock market you speak to -- you speak to -- >> that's a different issue, though >> it is i want to get your -- i want going to your opinion on it. first, i would love you to answer this question it is specific to the work you do every day what are you hearing from ceos, other decisionmakers in terms of their willingness to continue to make those kinds of decisions in terms of spending money. are they pulling back at all >> not yet and you -- i think the business community as i read it, it is very difficult to be declarative on what the business community thinks, because there is no precise answer to that changes every day, like anyone else, but my reading would be so far not enough time has passed since the onset of the china trade tensions for businesses to

change their own forecasts very much and change their own attitudes towards capex and inorganic, you know, things like m&a. not a lot of time has passed however, there is anxiety and give or take half the people i talked to think that what i said earlier will be the case that this won't last that long. by the way, some people think the tariffs on mexico won't ever be imposed and then there is another group, of course, that says this doesn't look good at all, and pretty soon i'm going to have to react to it. but so far not yet >> which is worse, the tariffs on mexico or the tariffs on china in terms of the impact for u.s. consumers and our economy >> well, i think as a matter of the numbers, the tariffs on mexico would be worse. in terms of consumer impact, here in the u.s., but the prospects for an agreement

there, a real agreement, would seem to be much higher so that this view that maybe the tariffs will never be imposed on mexico, reflects the expectation that there can be an agreement so if each of them went on a long time, mexico decided this would be worse for the american consumer, the chances that the mexico situation does go on a long time, i think, are lower than the china side of this. >> but, the mexico thing came out of nowhere, seemingly, doesn't that throw you a bit off balance? doesn't that throw business a bit off balance as well? >> well, i have to be honest, i'm not a fan of it. and we all know that virtually every one of the president's advisers, ex-steven miller, opposed it and it just doesn't make a lot of sense to me we'll see how mexico responds. mexico has a big incentive to, i

mean, a very big inecentive to make some agreement which will get the numbers on crossings, border crossings down and get the threat of these tariffs off the table. we'll see what happens i think you may see something though over the fairly short-term, we all know there is a mexican delegation coming to washington shortly, we'll see. >> all right still constructive >> i am. >> thank you good to see you guys. >> didn't not realize more than 90% of strawberries and raspberries come from mexico that's a lot. >> that's going to be more expensive. >> right >> organic too. >> or start growing them coming up, the former vice chairman of goldman sachs bob hormats weighs in. he'll join rick santelli next. "squawk on the street" will be right back the market has really recovered over the last 43 minutes now up 117 points.

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long time market bull jeff sots says don't panic with the volatility find out why he thinks new horizons are on the way on tradingnation.cnbc.com more "squawk on the street" coming up. geico makes it easy to get help when you need it. with licensed agents available 24/7. it's not just easy. it's having-a-walrus-in-goal easy!

roooaaaar! it's a walrus! ridiculous! yes! nice save, big guy! good job duncan! way to go! [chanting] it's not just easy. it's geico easy. oh, duncan. stay up. no sleepies. over to the cme group in chicago with rick santelli >> good morning. thank you, i would like to welcome my special guest robert hormats, vice chair of kissinger associates inc., many of us remember as former vice chairman, big resume you know, today we learned something i think is actually big. we have this massive, massive move in interest rates from thursday evening, friday morning, to today.

and the catalyst, the mexican surprise how do we know it is a mexican surprise ism is released, on the weak side the respondents comments, which were gathered before the friday last week surprise regarding mexico, still included mexico and many other comments. transferring many of our supply chains from china to mexico. the tariffs forced us to change the way we do business, shifting more business from china to mexico and, boom, now mexico has drawn into this. can you try to tie it up for us? >> well, i think the underlying theme is uncertainty and unpredictability these supply chains have been developed with china and now to a greater agree as you point out with mexico for a long period of time. the idea is to develop between american companies and foreign companies, close supply links designed to help improve the competitiveness of american companies because they take

foreign components and incorporate them in goods they produce in this country. if you disrupt those supply chains or cause uncertainties, it causes a lot of problems for american companies, a, their costs go up, and, b, the uncertainty of the availability of supplies go up. so these uncertainties have a major effect on the market and also on investment plans over the medium term >> let's shift gears and spend more time concentrating directly on china, bob. last time you were on cnbc you were talking about that the stock market is already bet on a deal and it is pretty hard to argue with that. even though the influences of the mexican trade surprise has been an outlier that has affected the markets do you still think a deal is possible and how do you think stock investors, whether domestically or globally, will proceed at this point, considering how the talks broke down >> early on when i was on last

as we were moving toward the beginning of may there was every signal coming out of beijing and out of washington that a deal was very close then something happened. first of all, i think the u.s. pushed on some the red buttons that caused china to take a different position that said, look, the u.s. is pushing us too far we shouldn't forget that china has public opinion, too, and n china, even though it's run very different than the u.s., has inside pressure to deal with xi jinping and their own sovereignty was causing a political reaction in china. they pulled back because they thought the u.s. had gone too far. now i think there is still a possibility of a deal, but i think it's going to take a lot longer and now the problem is even worse because it's not only

tariff escalation that is occurring, it is escalation in terms of restrictions on exports, restrictions on investment you know, the so-called entities list of restricted companies that the u.s. is adding chinese companies to and the chinese are creating their own enemies list. so what we have here is we're on a path toward mutually assured disruption if this kind of trade war continues. it will adversely affect both sides and both economies, inflation and slower growth on both side, which hurts other economies, too, because they trade with the u.s. and china. >> excellent, bob. thank you for your opinions today. we're watching treasury yields lead the pack lower. but the mexican trade supply has -- >> it's going to be more and more disruptive unless it's

dealt with quickly >> sarah, back to you. >> i'll send it over to john for a look at "squawk alley. >> well, cashing in some chips this morning infineon looking to buy cypress for $10 billion. coming up on "squawk alley."

welcome back to "squawk on the street." the major indexes have been swinging between gains and losses if you take a look, though, one upside standout is the materials sectors. you can see behind me all members of that sector are positive on the day, at least to start for the time being driven in large part by the move higher -- really just dupont now, which is trading as its new iteration after spinning offer its agriculture division, chemicals and plastic companies among the biggest gainers in that material sector it has been an underperformer in 2019, up around 6% compared to the 10% gain for the s&p 500 keep an eye on those material stocks i'm send it back to david at the

stocks exchange. >> thank you, dom. >> what is going to be featured today? >> beyond the mystery of where this market is going to go it we'll speak to mark mobius they have been relatively outperforming amid flair-ups in the trade war. and we'll hear from cliff robbins. >> "squawk alley" is up next the founder of sip press semi conductor will joins after that company gets sold. orlando isn't just the theme park capital of the world,

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. good monday morning. it's 8 a.m. at google headquarters in california "squawk alley" is live.

good morning welcome to "squawk alley." i am john fortt. a possible investigation into the alphabet subsidiary, guys. between the d.o.j. and other agencies possibly looking at amazon, it seems to me we might be coming to the point that government is looking at the question whether consumer hard is the main fact