business never sleeps, this is "squawk box. >> and good morning, everybody welcome to "squawk box." we are live from the nasdaq market side in times square. i'm becky quick. our guest host this morning the shark tank's kevin o'leary here with us for three hours and we do have a lot to talk about check out the equities at this hour the u.s. stocks are coming off the biggest two day rally we have seen since january and we're looking at the green arrows again up about 61 point and the s&p is up by 8. the nasdaq up by 30. we have seen the dow up for three days in a row. the first one was a four-point gain still, the best day for the dow in four months of course that depends on what we hear from the job market tomorrow and then the s&p is up by 8 1/2 points from the highs the s&p is now down by 4.3% and the dow off by

5.2% and nasdaq down by 7.4% remember we were talking about correction territory for the nasdaq looking down by about 10%. check out what's happening in the treasury markets the ten year is yielding is 2.10% after falling below that on the adp numbers that were weaker we are looking for more than 200,000 jobs to have been created by the month we'll get the numbers tomorrow at 8:30 a.m. oil prices, let's check this out. because with so many questions with what's happening in the economy oil prices are in a bear market wti, 5181. down by more than 3% yesterday and again pushing down from 20% from the highs levels back in april. people are wondering if this is an indicator of what could come in the economy as we look to figure out what's happening with the economic numbers >> we have two big trade stories

this morning to talk about the u.s. and mexico failing to reach a deal during talks yesterday. at issue, the two -- whether the two kind strike -- whether the two can strike an agreement on president trump's threatened tariffs on the mexican imports i want to show you a tweet that president trump says talks will continue today in response to all of this. credit rating agency fitch downgraded the debt rating of mexico and moody's looked at the outlook for mexico the peso dropped against the dollar and watch the mexico etf. this is a good sort of sense of where things are down and off about 2% right now. joe? >> looks like it's back, kind of. >> kind of. >> i mean, i don't know. that looked like it's back down. basically, the future sold off here as well they're now up i think initially, you know, it

was being reported that no deal, no deal. but is president trump the kind of guy that lets one of his underlings announce this while he's over in normandy or wherever the hell he is? >> he made some comments yesterday. >> he'll be back here before -- i would say before -- if he's going to announce a deal with mexico on immigration he's going to be here i don't think it will be announced by either pompeo or whomever else was there. >> but he did make some comments yesterday. president trump did. just basically did - >> not doing enough. >> he doesn't care if u.s. senators are wrong - >> veto proof, they can't do it. >> but he said the tariffs could go on. >> and then china might go up. the other big story, trade story this morning president trump says tariffs on china could be raised by another $300 billion if necessary. he made the comments earlier this morning no words -- or word on which goods could be targeted.

this guy, you are a brand. i mean, you look exactly the -- every time you appear, you look exactly the same that works for you, right? >> i will not be done until you're both wearing jackets, okay, and the watches are spectacular. >> but what about the black tie? you have no way of expressing yourself. >> i think the black tie is a crisp look. >> it is, but -- but it has been red every time. >> it reduces my decisions every morning. >> this was einstein. >> i was thinking who else is known -- because - >> you don't put any thought - >> we wear blue shirts it's because of a lighting issue. so we're not washed out. >> i learned five years ago when showing up with a blue suit on, the wardrobe woman said you're go to cause confusion. get back to the hotel. >> this is your look. >> you learned about the q rating that it measures both positive and negative.

you have gone for the big negative, basically. the mr. wonderful negative and everybody knows you. >> i have been very bold in introducing the red pocket handkerchief. >> small, incremental moves in fashion are what you want. >> he has the ugly watch on. >> i'm going to do one of the guest appearances and i'm going to bring a ceo of one of the major watch companies to help me with the intervention on the watch. >> the utility on this apple watch is so much higher -- i mean, i can find out all sorts of things about my calendar. the phone can ring i can talk into it dick tracy all sorts of things. >> i think he's saying it's the pocket protector. >> think of all you do your conventions, interview ceos before you say a word, you're 20% off retail with that watch just like that. >> look, i like -- i like the functionality of it. but it's the equivalent of a pocket protector in fashion. >> everybody else has the same thing. and it can take my ekg

come on. >> for god's sake, totally neurotic all the time. >> putin is listening to your heart beat with that thing. >> it's possible it's possible. >> but you have to decide is a watch a function or -- >> fashion jewelry. >> right if you make that decision, you have to live with it, i guess. >> i think it will be fine to bring in the ceo with five different ideas for you. show case it to everybody and talk about the capital appreciation of the markets on those watches. >> an investment. >> one of the best asset classes last year, men's watches up 50%. >> okay. let me ask you about the tariffs and what you do as an investor ahead of these do you worry about monday tariffs being put on mexico? >> i'm worried about the nafta too which affects all of north american investing i including the canadian market that will get damaged as a result. it will get slowed and delayed the first 5% won't matter but it will send a signal i think all trump is saying you have to help me stem the flow on

the border you can show case the ideas here maybe we'll stop this thing. >> speak of canada seriously, give me one. last night - >> high five. >> i watched - >> can you believe this? >> you know -- >> i'm going to watch one, friday there's a game. >> i have been to all the games up in toronto. it's turning me into the basketball fan that i never was. >> all right i mean, there's no ice anywhere around. >> you're guaranteed another game back in toronto too. >> do you miss the ice would you rather have it cold there? would they like basketball to be played on ice? >> my first job was working for the league in the early '80s and i saw so many hockey games i had seen enough for my life. >> we should - >> we'll talk about the top corporate story. >> plays into his great positive view on all of the auto stocks around the world. >> sarcasm. >> it's horrible news for those french shareholders.

they are -- no other word except screwed. >> let's tell you what happened overnight. fiat chrysler is withdrawing the renault merger offer that came suddenly it was hours earlier that the companies were planning to put out a joint statement saying the plans were moving ahead after getting an okay from the renault board. in a statement fiat said it's become clear that the political conditions in france do not currently exist for such a combination to proceed successfully france of course the french government owns 15% of renault renault shares on this while first look at fiat shares up by 1 cent check out renault shares, see what's happening down by 6.25%. that's what kevin is referring to. >> i spent too many hours last night on the phone with many of the participants in this transaction to figure out what went wrong only - >> it was the french government. >> well, very interesting -- >> nissan board members were going to sit out of it. >> it was a very interesting situation on what really happened which is the deal had been struck effectively between the

chairman of renault and the chairman of fiat chrysler with the blessing of macron with the french -- so the view was this was going to happen last week if you remember, ge announced it would slash jobs and ford and then that changed the equation then the finance minister got involved in the negotiations and effectively tried to recut the deal and so they wanted to move the ceo headquarters to france they said they wanted to have a favored nation clause. if you're going to close plants at all, you have to do it elsewhere first. you have to keep these jobs. they wanted a permanent representative on the board forever. >> this tells you as a shareholder, they have a super voting right with the 15%. the only option you have as a shareholder of renault is to get out of the equity which in my view will go a long grind to zero and own the bonds if you

have to own this miserable situation. i think you want to avoid it like the plague. the government's played its hand i think this is a horrible outcome for them. >> apparently, john elkann tried to -- who runs fiat chrysler was trying to get out of this thing as of last weekend saying, guys, this doesn't look like it will work they kept saying give us more time give us more time. we will get there. and that's why i think there was a sense that they were going to get there. however, this whole idea that this is a problem with nissan and they somemow needed to get nissan's position -- >> they were sitting on the side. >> so what happened there were two nissan board members who said we'll abstain and then the french government at the last minute said actually i know we have dealt with all of the other issues we won't do this deal unless we can get the japanese on board which was never conditional of the whole deal to which they said we'll fly to japan today, the plan was they were going to fly to japan to convince the japanese government to convince nissan to have their two abstaining board members change

their vote. >> to vote against >> to vote for the deal. the french government -- >> why >> it was a smoke screen to get out of the deal. that's what happened here. >> so what is john elkann going to do now? >> that's a real question. i think there's a legitimate question whether you know he'll be better off independently than he would have been in this mess. >> somebody -- i think the answer to that is yes. >> i think it's a real mess for the next five years, no question. >> you don't think the moral of the story is that remember with alston how hard it was for ge to satisfy the french government. it screwed the deal? >> -- they wouldn't do anything in any hotel business. >> it's not a great idea that the government is so involved with - >> i don't think you want to be partners with the french government. >> with any government. >> anywhere where the government is your partner, where the outcome isn't horrendous long term >> china you can do pretty well with the government, i think.

>> when you partner anywhere else with the government, the outcome is bad long term, short term. >> i think that's the moral of the story. i remember ge, the stuff that the government was -- you know >> because of the unions there you couldn't shut down and fix the place to make it something -- >> are you surprised -- to sell those things over there. no the immediate profit, you know >> here's a question for you though would you want to be in business with nissan? nissan is not actually owned by the japanese government. >> why does -- >> no, but they -- >> big picture can you see in ten years, five years less than that, somebody using ubereats and saying make sure you deliver my egg rolls in a renault? i need that brand. it's irrelevant. >> don't deliver it in a renault. >> renault, i'm saying if you're fiat chrysler right now, you think to yourself, what are my other partner options? >> if you're watching carlos ghosn. i mean, if you're watching

carlos ghosn because they're potentially going to do a merger if you believe that they said, will you follow that path? that's what his wife just said. >> hey, tell me more tell me more. >> i mean, i don't know. but i think it would give me a lot of pause particularly if i just ran into the problem with the french government. >> i would like to hear from him now. he must know something really intriguing. >> that's what they're alleging, his wife is alleging. >> always going to speak his book but he has merits that he's innocent we'll see. >> there could be a case that maybe he was a little greedy some of the situations are absolutely out there but maybe there was something else afoot too. >> i never heard of a corporate ceo that's greedy. not a problem. >> all right, when we come back this morning, trade talks and the markets. we'll talk about the big stories likely to drive today's trading. first, before a break, let's look at the biggest premarket winners and losers in the dow.

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halver ford trust and good morning to both of you feeling any better at the end of this week? it's not the end of the week, it's almost -- sort of like a thursday. >> look, we had this crazy flight to quality in bond rally. when you get rates this low it's supportive of the equity prices by definition. if you plotted the simplest trend line of pes against the ten year treasury yield we are 10% under value. nothing crazy but kind of enough to give a little cushion to the flat earnings environment. >> what are you doing then >> well, the interesting thing here is if you look at the last two pull backs, q4 and then may, one of the things that struck me is kind of the perpetual, you know, gambler's dilemma of looking for safety and value value underperformed in may, didn't do anything for you in the sell-off so you know we're looking at things that have more of a combination of quality and growth for better participation. >> like?

>> like stocks that consistently grow their dividends. >> you want to name some >> the blue chips that can weather the storm. this is a nifty 50-50 for the century. anything out of the classic tool box, coke -- >> buy with both hands and call it a day >> you can because the participation in the up markets and the defensiveless is there in the down markets. >> hank, do you agree with this? >> i totally agree with symmion. with the ten year treasury at 2.1%, you can go out and buy high quality blue chips that have yields 50 to 100% better than the ten year treasury and you're going to get growth of income with dividend increase. you buy the ten year today, ten years from today you have the 2.1% that's pitling compared to the great blue chip dividend growers. so i think it's a tremendous

opportunity and it's actually been with us throughout this historic ten year bull market. >> let me make this more complicated. would you buy tech companies right now, either of you >> i think tech -- >> not in your nifty 50. >> i'm going to pick tech over value. the underperformance of value is there even though the values did fine if you want some participation, i'm going to pick tech over value. >> no dividend growth because there's no dividends. >> right. >> there's emerging dividends but you're right not part of the dividend growth story so it's another piece of the puzzle. >> the old tech -- >> yeah. >> microsoft yes apple is that tech is that -- because that's the story getting crushed with regulatory - >> that's a piece that gives you an entry point because of the little bit of regulatory that's happening. >> well above the ten year, 2 1/2 that'll grow probably. the dividend i mean, most companies can grow a dividend, do that over ten

years so the dividend doubles. you know, the rule is 72. >> and the key here is to not stretch for yield. because if you stretch for yield, then you're going into that perpetual value trap. >> this is music to my ears. i love companies that can generate more cash and return it but there's a lot of tricks going on out there if you're increasing your dividend, trading at 18 pe, ratcheting up debt, so it's not all the same you have to have a quality. >> it's not all the same you can sort that piece out in a couple of different ways you can look for very long track records of diff defend growth which takes care of the leverage choice by one vehicle if you will but there are ways to get there. but you have to watch out for companies that are leveraging up. >> hank, what else are you doing? >> well, look, we are staying the course staying fully invested in the equity portfolios. we have a balance between offense and defense. offense being the more cyclical side of the market

defense being the staples, the health care. we think that makes sense in this environment and look, i think we'll have a choppy market through the summer but here's the bull case very quickly. the trump administration comes to trade agreements this fall. tariffs are lowered. you -- you might even get a couple interest rate cuts in the meantime and all of a sudden you have this tremendous tail wind and acceleration of gdp growth going in to 2020 it sets up perfectly for the elections. that is the bullish case and we think it's the most probable case here. >> okay. an interesting -- we can debate all this in a little bit but thank you so much. >> thank you coming up he's man's best friend -- wait a second. wait a second. does that trigger you at all he's man's best friend that triggers me he or she depending on -- i have both they are definitely man's best

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and in the $30 billion pet food market and frank holland is joining us with this with the story of going fresh for your pets. some of the stuff kind of looks like you could eat it, frank i'm not sure though. but it looks great for dogs. >> good morning, joe you know, fresh pet food is one of the fastest growing segments in the pet care industry and it's become the standard to have it with human grade ingredients. that means you at home, you could actually eat that. that's the translation i'm going to do it perfectly safe so take a look this kitchen inside of a petco store. this is part of a partnership with pet food for dogs it will reduce annual revenues by $100 million every year as part of an overall strategy

to attract more health conscious pet parents, they say it's going to increase customer traffic and the average purchase by customer by mid single digits petco aiming to become the leader in the fresh pet food segment. >> we're going to drive share growth in the space. we're going to outpace the market so you're talking about 20, 30, 40% growth. >> so fresh pet is the only publicly traded company in this fresh segment. it reported 28% revenue growth lass quarter the food comes in at $5.38 per pound and grocery pup, it's almost $8 a pound. and they're offering here with just food for dogs overall, the average price for dry pet food, kibble, it's about $2.19 per pound. so there you go. >> what makes this unique and different is that some of the guys that do it online, they make their food in a big kitchen that you're not allowed to visit.

you know, you can't see the food et cetera. we are about transparency. >> and right now, fresh pet food is about 2% of the overall $30 billion u.s. market. however, according to nielsen estimates it's grown 70% since 2015 and that's expected to slow down a bit oppenheimer estimates it will grow into the billion dollar business over the next few years. >> frank, which one of those did you eat? we have a bunch on set this has turkey liver in it. >> yeah. it is real food. i mean that's the whole idea i don't know what this is called but this one has turkey, it has some macaroni in it. cranberries. >> the same one. we have the same one it has turkey liver in it. how was it >> you know what dogs seem to love it i don't think it's really seasoned and flavored for people but it's edible. you saw me eat it. it's not going to hurt you that's the whole idea. a lot of people see their pet as

a family member and they want them to eat just as well. >> if you're eating the same thing as the dog, give the dog what you eat my dogs eat all kinds -- they get, you know what, they shouldn't get people food. i still don't think we need to eat this, frank. >> you bought it just in case. >> all right you know, this is typical though i mean, i hear dogs getting prozac and laying down on the couch and barking to their therapist. people go crazy for their pets. >> including you. >> including me. but i'm with the $2 kibble $2 - >> 91% of americans see their pet as a member of the family. so you're not alone. >> yeah. i have three of them $2 kibble with two german shepherds, unbelievable when i go in. >> vegan dog. >> vegan dog. >> exactly >> i mean, does this company have any vegan solutions

>> people give cbc oil to dogs >> 25% of americans they say that the nutrition of the dog food or the pet food overall is the number one concern not price, so people really care about their dogs >> this is healthier than what i eat. wild pacific cod, russell potatoes, green beans and broccoli grain free. >> look over here, there's brussels sprouts all kinds of things. >> wow >> you know a dog is the only creature that loves you more than you love yourself not more than it loves itself. you know how much you love yourself, you know what i'm talking about. >> if you take your dog down this path and they get used to the food dog it probably increases the seven -- >> bite your tongue. my mallty poo is 14.

going to be 14 he's fine. awesome. he runs around like a maniac he had some glaucoma. >> frank, thank you. when we return - >> go retch in the toilet, frank. >> a name that includes a name fashionable with investors today. but first as we head to break a look at yesterday's s&p 500 winners and losers executive edge is sponsored by at&t business with edge to edge intelligence covering every part 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. 86 points now on the dow as far as futures i'm trying to do the math. 520 plus -- 200.

but 520 plus 200, 720 -- this would be 800 points. we had six straight weeks of down action totaling about 7%. looking at 1% a week so far we're getting back a nice amount right when things seemed like they were getting worse, didn't they when we were ready to call this - >> especially with the threat -- >> of mexico stuff, i know then boom. >> 5.3% off the highs right now. the dow is 5.2% off. >> pretty crazy. take a look at oil prices which you can see on the ground breaking show that comes on at 5:00 p.m. starring melissa lee, it was pointed out that gold is rallying like crazy and oil is in the new bear market normally you can gauge gold by how many barrels of oil it is

worth. it's weird to see it did verging. it might be a deflation trade for oil, but weird that they're -- look at that $51 at this point separately, stocks to watch this morning, cloudera shares are down sharply the software maker reported better than expected first quarter results but forecasting full year guidance far below analyst estimates saying some customers are putting off renewing their contract. the ceo announced they're retiring next month. shares of stitch fix, they are soaring. the online style service reporting third quarter earnings and revenue that beat forecasts, they signed up more customers. they're spending more. the company also raising the revenue outlook, and the ceo katrina lake will be on "squawk alley." >> a small flow. billion dollar company a lot of movements whenever it

reports. see, i'm working, you know -- i'm working a 13 hour day. i'm learning all kind of stuff i'm going to invite you on next time, o'leary. >> you know, all the online companies are measured by revenue growth and not profitability. so it's because the cost of money is zero basically. when we return, a new report on jobs in america and it includes a city that tech start-ups might want to consider for their company headquarters stay tuned you're watching "squawk box" here on cnbc currency check is sponsored by interactive brokers with lower costs and higher returns

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the american spirit inherently competitive, driven with an appetite to succeed. perrer is veerps is paramount and knowledge is essential. >> good morning. welcome to "squawk box" here on cnbc. >> that's what drives us to provide the information you need to propel your dreams forward. tomorrow is jobs friday but today we're going to take a look at some a small slice of the job market high growth start-ups. joinings now is dan roth editor-in-chief at linked in and a cnbc contributor you can tell us whatever you found out, dan, but the word is that small businesses, "a" are having trouble finding the people they need, and "b" would be most affected if there's angst about the trade situation. >> well, i think that overall

what we saw in the job numbers for may was that companies that were affected at all saw an impact especially agriculture whether that's big business or small business, but big business cut way back in hiring in agriculture. also in manufacturing. big drops in manufacturing, was i think are more tied to the slowdown -- i mean, the shutdowns. >> how about the tightness of the labor market >> absolutely. yeah, companies can't hire the people they want to hire they can't hire. they want to hire engineers. that is the big one. they want to hire salespeople. huge demand for salespeople. and there is more openings than there are people that can fill these positions. >> when you saw the adp number, did you have any advanced notice based on what you're looking at or did that surprise you too it was so weak? >> it wasn't a surprise. >> to go from 270 to 27 in a month? >> our numbers don't show the

same kind of drop that adp showed but the same trend has been happening for the last few months >> so there's no way that tomorrow is different or doesn't reflect what wednesday's numbers showed you think that you're going to confirm this tomorrow, that it was weak >> i think that over time the government numbers will show the same thing that our numbers are showing which is that there is less hiring going on in particular industries. >> because they can't find the right people or because they don't want to hire >> it is a -- because they don't want to hire i mean, for some of the industries like defense, energy, retail about 8% drop in hiring in retail year over year. these are industries saying we won't hire at the same rate we have been hiring last year was a great hiring year one of the best we have seen but no question that the lag -- there's always a lag between the headlines and hiring and we are seeing that lag kick in right now. tariffs, trade, the shutdowns,

those are having an impact. >> you know the retail hiring is an interesting one we talk about how the people aren't stopping spending they're just spending differently. is it more efficient for an amazon type operation to be delivering goods to people they need fewer people, we don't count them the same way? >> exactly you can still be shopping at a greater rate than you were, but don't need the same number of people standing around in stores >> you need more warehouse people. >> exactly amazon, look at the hiring, amazon is one of the biggest hirers - >> every quarter they have way more people than you can possibly believe. >> do you -- >> in the tech we look at that so the software and engineering -- the software and i.t. hiring, huge increase last month over month. >> what about the guys in the warehouse? >> they're -- for amazon they show up under our amazon hiring. >> do you support bernie sanders

proselytizing walmart for what they have done >> criticizing walmart >> yeah. preaching. proselytizing. you don't like that word >> was he talking -- was he selling -- >> he went to the walmart -- he wanted to go -- yeah they have done organedly -- organically, retailers are much higher on average than where the federal minimum wage is. it's happening because of the tight -- are you supporting his efforts to do that as a private sector guy because i know you. >> i would support anything that helps people make more money and -- >> would you support a federal minimum wage of $60 an hour? >> i am -- go ahead. >> ask you about the new platform linked in live. i have been testing it lately. and my question -- what's the vision for you that? because the platform has such potential in e-commerce. but i don't think you're on

board for that yet is my sense in terms of cue curating the content. >> you go on there and you talk to your followers. the goal is to create community conversation if you want to use it for sales use it for sales but what we see is people come on to ask questions of people like you, and they are -- what professionals need is help they want to understand how to get better, what they do, how to get hired at places. what to do when they lost their jobs in retail and where they go next and how they deal with an incredibly shifting economy. looking for help, you provide that kind of help and if they can get answers live that's what they want. >> can you tell o'leary where he should invest next on "shark tank" based on what you're seeing >> dog food. >> the platform with the small private companies is beyond huge because they see a way to tell their story directly to the potential customers. your team is not on board with that yet so just letting you know. >> got it. i will say thing tied to the

numbers and tied to that which is that a lot of the growth we are seeing in high growth start-ups are happening outside of california and new york i think it's because you can now use the platforms to be able to reach your customers. >> rise of the rest. >> steve case has been saying it seems to be happening in the number. >> and did you know that jeff is a good golfer? >> i do now. >> you don't know him that well. >> stick with me. >> coming up when we return a lot more on "squawk box" this morning. we'll get a live report from the annual shareholder meeting where arnie sanders is bringing a lot ofttention to the normally uneventful conference. we'll be right back with all that next. but we're also a company that controls hiv, fights cancer, repairs shattered bones, relieves depression, restores heart rhythms, helps you back from strokes, and keeps you healthy your whole life. from the day you're born we never stop taking care of you.

walmart holding its annual shareholders meeting this week. bernie sanders slammed the retail giant over wages. >> reporter: good morning, becky. it's day two here for walmart shareholders week in northwest arkansas, and normally the shareholder business is pretty

uneventful but not the case this year when bernie sanders showed up he was invited to present a proposal and that was for hourly associates to have a representative on the board of directors. that was defeated as expected but sanders used part of his time to address wages. that was directed at the executives, the board and the founding family. >> it's not a radical idea i'm asking walmart, the employees are asking walmart, pay the workers there a living wage you don't get rich on 15 bucks an hour, that's for sure at the very least, you should live with some security and dignity. >> reporter: now walmart ceo doug mcmillen did address walmart wages ahead of sanders' comments at the beginning of the 25 minute shareholder meeting. >> we moved up our starting wages in the u.s. by 50% in the last four years and we continue to adjust up on a market by market basis it's clear by our actions and

those of other company has the federal minimum wage is lagging behind $7.25 is too low it's time for congress to put a thoughtful plan in place to increase the minimum wage. >> reporter: now, today walmart executives will be giving store tours and media briefings and that of course is ahead of the big celebratory event at the arena on friday morning. back over to you. >> courtney, thank you joining us now to talk about walmart and wages is the ceo of store ch advisers and former ceo of hudson's bay and toys r us. jerry, what do you think walmart has actually risen, wages have risen 50% over the last four years. what's bernie sanders doing? >> this is fascinating drama you have a socialist going to arkansas to demonize the largest private employer in the country. it's going like this right? so obviously wages have risen

any way. the economy is hot any company like walmart will pay what they have to hire good people as employment has risen, wages have risen as well with amazon going to $15 an hour, it's inevitable it's going to go to $15 an hour regardless. walmart operates in small, rural communities $11 an hour is a good darn wage what alternatives might exist in that community. having said all that, if something were legislated or $15 an hour were required, walmart is better to proceed in that environment. one thing you can guarantee and it's a value judgment if you force wages up to $15 an hour, there will be fewer jobs, fewer higher paying jobs and some people won't get the opportunity to get in the labor force. that's the tradeoff that politicians have to make, as a ceo, your job is to succeed, not be a victim and prevail in any environment. >> i look at walmart being the target here. it's a little ironic because walmart under doug mcmillen were the first ones to raise minimum

wages. amazon and target who did it after walmart went ahead and started that whole thing but, we are coming up to an election year. you'll have a lot of voices that to do this what do you think ultimate happens? see a $15 minimum wage in the next two years >> it's hard to predict. i don't think anything can happen on a national basis that would require all three branchs of government to be under democratic control i don't think that's going to happen there's a lot of action at the state level, local levels even, new york city wages is 15 an hour now. >> six different states. >> point out, the history on this is not good in terms of overall employment as a business manager, your job is to deal with that and do something about it so you're going to auto mate more if wages go up beyond what they should be you're going to outsource more you're going have fewer jobs >> the facts drive me nuts starting to feel really good about being virtues you and everything and come up with all these facts.

i did like your very first comment that is there hammering the largest private employer -- it's perfect for bernie for a socialist, isn't it? >> by all marks. you know, walmart had been 10, 20 years in wilderness more recently -- >> any reality of any kind it really is a soviet sort of -- he learned a lot over there. >> he get much press anymore this is a great way to get it. >> what do you think his chances are of becoming president? >> the chances of becoming president are zero i'm not worried about that my question is this whole metric of having imposed minimum wages at all, jerry, are you in the camp -- this is my opinion >> it's a wage price control. >> well, the problem is it takes a state like new york to boast this $15 to makes it uncompetitive. amazon decided not to come here. >> seattle. >> in the end, big picture, jerry, if you could wave a magic wand, do you think the market really is a better way to determine minimum wage, let the

market be the market and let people compete or do you think -- >> of course of course i do look, it's ridiculous. obviously as doug pointed out yesterday, $7.25 minimum wage is antekuwaited look, the wages are well above that nobody pays that they'll be at $15 an hour before you can blink any way. as long as the economy is strong, they'll keep growing go too far and force wages to be too high, the one thing i will guarantee you is that capitalists will not pay more for something than it's worth. they won't pay people more than the value of what they generate so there will just be fewer jobs with a rapid growth in artificial intelligence, automation in general, there will be fewer jobs more rapidly if you raise wages too rapidly >> little opposition rhetoric, andrew, here if it's just me, you're always game >> it's wonderful to have a free market voice like that it's just refreshing

it cleansing that i love about it. >> what do you think you got nothing? normally -- >> i think the question -- >> represent the other side for us. >> the other side is what's the right number i do think -- >> the market determines the right number. >> well, the market determines a terrible number in china right? >> that's not a free market. >> well, you could -- >> this is a free market. >> the company themselves like walmart have gone well above the average. >> my point is you have to figure out what you think the right number is. >> i just try to bring everyone in, all viewers. >> gary, thank you good to see you. >> bye thank you. coming up, former secretary carlos gutierrez on failed trade talks between the u.s. and mexico later, jay clayton will join us in an exclusive interview stay tuned you're watching "squawk box" on cnbc

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♪ trade talks in washington continuing just days before tariffs on all mexican imports kick in. former commerce secretary carlos gutierrez joins us with his thoughts on getting a deal done with our neighbors to the south. plus, we have an exclusive interview with the chairman of the s.e.c. jay clayton we'll asking him about new rules on disclosing conflicts of interest and what it means for brokers an investors. can beyond meat go beyond the hype

>> hm, this is a tasty burger. >> after going public last month, the company is ready to report its quarterly results we have a preview what investors can expect from one of the hottest ipo. plus -- >> vegetarian, pretty much makes me a vegetarian. i do love the taste of a good burger. >> as this second hour of "squawk box" begins right now. ♪ feels like the first time >> announcer: live, from the beating heart of business, new york this is "squawk box. good morning, welcome to "squawk box" right here on cnbc i'm andrew ross sorkin along with joe kernen and becky quick. in studio is mr. wonderful take a look at u.s. features at this hour. show you what's going on dow jones looks like it will

open 76 points higher, nasdaq 35 points and the s&p 500 9 points. u.s. and mexican officials are set to resume talks in washington today aimed at trying to avoid new u.s. tariffs on mexican goods. president trump says not enough progress was made during talks yesterday on ways to curb illegal immigration. it is a busy morning for economic numbers just about 90 minutes times we'll get revised unit labor cost numbers also weekly initial jobless claims and the april trade deficit. music streaming services radio and television stations also others are facing the prospect of higher costs for licensing music. the two major music licensing services are operating under rules that were established way back in 1941 the justice department has now announced it's going to be reviewing those rules. right now, they are required to license music to anyone upon request. and any dispute over pricing is settled by a judge

maybe that's why we're playing the music we're playing these days. fiat chrysler withdrawing from its merger with renault, just one of the two big stories that phil lebeau is covering for us this morning. phil >> reporter: andrew, let me run down exactly what happened between fiat chrysler and renault. chrysler said they're dropping their offer of a 50/50 merger with a renault they claimed it is basically down to the political atmosphere in france. that's code for, we don't like the way the french government wanted stipulations to be made, whether it's dividends, special dividend to renault shareholders or a seat on the board as well as special voting rights as a result, fiat chrysler said, you know what, this doesn't make sense anymore. take a look at shares of fiat chrysler, keep in mind this is a management team that's still very much open to the idea of a potential merger with another auto maker if it's the right fit, whether or not that's pujo or another auto maker that will be speculation in the markets.

take a look at shares of renault and nissan, remember, the nissan renault alliance remains in tact renault a few minutes ago out with a statement saying there's a lot of logic behind a potential merger with fiat chrysler but is disappointed it will not be happening. this comes down to fiat chrysler saying we can make some concessions to the french government but there's a limit. >> phil, bmo opened a new plant in mexico but now the auto maker is caught up in these tariff threats. what do you know about that? >> reporter: it's a no-win situation. look, we're at the plant here. we're about hour and a half hours from mexico city this plant has the capacity to build up to 175,000 of the 3 series sedans. some of those will be going to the united states. they're already being exported to the united states the real question becomes what happens if there's a 5% tariff

put in place at the border starting next monday and remember, the u.s. is the second largest market in the world for bmw right behind china. even more business in the u.s. for bmw than there is in germany as you take a look at shares of bmw, keep in mind with the capacity of 175,000 vehicles here, having to pay a 5% tariff at the border, that would be devastating. we'll talk with some of the board members from bmw who will be here later on this morning and ask them what they think about the on going trade tensions between mexico and the united states. >> phil, thank you very much phil lebeau. for more on the president's trade fight, let's bring in our guest, joining us now is former commerce secretary carlos gutierrez. mr. secretary, i think kevin o'leary made the right point earlier this morning, 5% tariffs that in itself could be de devastating for certain companies, probably not the economy. the idea of tariffs coming out

of left field. this is not something that's going to be used for open economies. and it creates all kinds of problems about what to anticipate in north america just from the business agreement itself what does this mean for nafta and the business community >> well, i think that's the question because it was such an abrupt decision that you wonder if -- you know, if there's another objective behind it. mexico is going ahead with the ratification of usmca, so i think that's good. i think that's wise to just go ahead, get it out of the way and not stall it but, you know, the interesting thing is i can't imagine how you can negotiate a comprehensive immigration agreement or agreement for asylum seekers over the weekend so it seems to me that the president wants to put the tariffs on he wants to get this going as a way of pressuring mexico i don't think 5% is going to destroy the mexico automobile market if you look at the fluctuation

of currencies, that 5% will be less a lot of the times. but the problem is, you know, just the logic behind it we're taxing american consumers and american companies in order to punish mexico for not doing enough about asylum seekers. so there's no logic to this. and you have to imagine and conclude that there has to be a political underpinning to this whole strategy >> what was your reaction when you first heard this >> i thought frankly that this was a diversion because if you remember this was happening a couple of days or right after this happened right after mueller testified. i don't want to get cynical. i don't want to get into conspiracy theories, but the following day all of a sudden out of the blue here comes a 5% tariff on mexican goods. >> this is a president who likes having tariffs and using them as

negotiating tool, likes having them in place. >> it was a tremendous distraction from one thing to the other. all of a sudden we're all focussed on mexico, yes. he believes tariffs are a great leverage he believes tariffs are a gun to the head of whoever is negotiating with him and that is his way of getting a good bargain. >> so he wanted to distract from the report that showed no collusion? >> i'm just saying there are so many theories. another theory, joe -- >> i heard that from some of our far left -- austin had that. >> oh, no, no, no, no. you're hearing this from a right guy, a conservative. >> never-trumper. >> from a never-trumper. >> what about the core issue at hand stemming the flow through mexico or at least keeping more of them in mexico which is really what the administration wants to move up the agenda. that has worked. you're obviously seeing discussions between two countries about that very issue.

and mexico has had a lot of criticism levered at it about that that they haven't forced their own laws about keeping immigrants in mexico while they get processed. is that going to get addressed or not it looks like this president is going to make that an issue around these tariffs that's the core issue we should be talking about here. >> yeah. look, i agree. i think the thing is the president going to be effective? it's easy to make something an issue. it's a lot harder to make something effective at solving issue. this can be solved and you're right a lot more can be done it takes a plan. do you build detention centers in guatemala do you do something at the southern border? do you do something throughout mexico but it requires cooperation between three countries, a negotiation. it takes a little bit of patience because it make take six months, but you're not going to do it over the weekend. another thing -- another theory that we just need to think

about, another is that this 5% is something the president can point to and say that is the payment for the wall remember i told you that mexico was going to pay for the wall. congress were not allow the president to appropriate that money, but it's a fantastic talking point for the elections. i tried. i brought the money home and it's the democrats and other republicans in congress who are pro-crime. so, there is a big political foundation to this whole argument republican or democrat, you know, let's look at this objectively. >> so what do you think ultimately happens >> i think the 5% will go in, will go into place it's very interesting that republicans are pushing back so it may be that republicans or the congress passes something between the first 5% and the

second 5% -- the second group of tariffs -- >> ramping up. >> -- yeah we stay at 5 mexico will decide whether they move up or stay. it's a bit ironic because what mexico can do is say i'm not going to tax my citizens i'll leave it alone. and let the u.s. stay at 5 i do think the president will get a lot of pushback. i think we have overplayed our hand on tariffs, not just here but with china and i think everybody has had enough >> secretary gutierrez, thank you for your time today. >> thank you. the trade turmoil will be front and center at cnbc's next capital exchange event on june 11th in washington, d.c. you can visit cnbc events.com for details on how you can join us. coming up, beyond meats first quarterly report since its ipo is today after the bell. been a big winner obviously.

who knew uber, you know, goes down. beyond meat triples. we'll discuss the meatless craze with guest host kevin o'leary. you like it? >> i tried all these products. >> sodium, sodium and sodium seems to be the reason they taste so good. >> they taste good they don't taste quite as bad. >> the point is there's a tremendous amount of salt they use in all these things to give them flavor. that will be a pushback people a third of us that raises our blood pressure that's not cool. that's an issue. >> it does taste good, though. >> yeah. anything with a lot of salt tastes good. >> yeah. >> a fry tastes good. >> i haven't tried beyond meat. >> tomorrow right here on "squawk box," stanley druken miller he was averaged 30% when he was running money. s owhe has so much he just runs hin. you're watching "squawk box" on cnbc hey! i'm bill slowsky jr.,

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real traction. s&p futures up by 10 points. naz dam up by 32. coming up, is beyond meat beyond the hype? we're going to preview the company's quarterly report and find out if "shark tank" co-host kevin o'leary would be a buyer of these companies we are monitoring the president's visit to france where d-day ceremonies took place earlier this morning president macron meeting with president trump before heading back to the united states. check out the european markets right now ahead of an ecb rate decision. quick look that's going to happen at 7:45 a.m. eastern so we have green -- not bad, across the board we'll be right back. >> announcer: time now for today's aflac trivia question. on this day in 1934, fdr established the securities and exchange commission. who was its first commissioner

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established the securities and exchange commission. who was its first commissioner the answer -- joseph p. kennedy, sr beyond meat getting ready to roll out quarterly results after the bell today its first report as a publicly-traded company. i just have to laugh if you weren't here, we would have like a hologram of jane wells, i think. >> i think i am a hologram. >> but there are some things that are just your domain, i think. >> food? >> when you were over there, what did i say >> you said porn, pot -- >> pot, porn or bacon. >> yeah. >> or something grilled or something -- >> yeah. >> and you said no, beyond meat, which is perfect. >> no. this is my wheelhouse. >> did you when you tried it, just tell me, yes or no, would you eat it again >> yes, i would. here is the thing -- >> he says he would, too i had other people --

>> would i pay $3 more than a regular burger for it on a regular basis, no. their beef product is good you put mustard and catsup on anything but their pork, which they have in canada more, their pork breakfast patty is off the charts -- you would think -- you would think you were eating -- >> less calories and cholesterol are the same. >> no cholesterol. >> but your sodium and your calories are higher. no cholesterol, you think okay >> you realize that you could do -- you're an expert on bacon. >> yes. >> you could merge your two tastes. >> i'm waiting for the beyond -- there's nothing like bacon. >> can't do it. >> and why >> jane, the premise of this whole sector is the concept that somehow meat long-term is unhealthy for you and this is a way to enjoy the taste of that old unhealthy -- >> is that really the premise? >> no. i think it's more sustainability, less -- >> it's cow farce and climate change.

>> and if you want -- i don't think they're promoegt it as a healthy alternative. it's not. >> if you look at all the products with the amount of sodium and the calories, if you're counting calories, this is not a great solution. >> no. >> better off with a piece of chicken. >> well, but yeah, chicken had to die for that. so i think that's -- you know what i found interesting, are we just going to blow off what i was going to say about earnings and talk about it. >> let's go there. long term it's sustainability of earnings. >> we'll go back to that in a second, that animals are a poorer processer of plant materials and protein ethan brown of beyond meat give him the same amount of plant material, he can develop more protein than actual cow or pig that the pigs and cows haven't evolved as well as man-made processing technologies. >> less efficient. >> but is it beyond hype are these fake profits well, there are no profits we finally get an idea today wall street expects the company to report a loss for the first quarter and this year and next

year though it anticipates sales growing substantially and losses shrinks. shares up 300% and estimated available to trade in a short position, expect volatility if shares pop after earnings come out. okay things to watch for, new partners everyone is waiting on amazon -- on mcdonald's. what current partnerships are doing to same store sales growth at places like carl's jr are people trying it once? ceo told me they're stocking up twice as much product as they expect to sell this summer when might they be profitable? they have a market cap of $6 billion, 15 times larger than delta koe and 29 times this year's revenues. the company needs to grow like google did for a decade after going public to justify the valuation. where were we? >> back to this question of what the market is. i was saying, look, i'm fine

with the veggie burger, morning star grillers. >> becky, you're not the one -- they want the big mac guy. they're not going to get at mcdonald's they want somebody to say go into carl's jr. and say, you know, it's $3 more, i'll try -- that's pretty good >> do you think it's an i'll try and then -- >> yes. >> but this is tissue, is it so good, is the margin of goodness so much higher that the next time you go back you try >> or you bring your friend who doesn't want to eat red meat man, i had the burger -- >> don't eat red meat because you're concerned about the slaughtering of the animal. >> yes. >> this may sound far out, you think plant's don't have feelings >> kevin. >> come on >> what are you going to eat, kevin? you'll eat everything. >> since the ages of a caveman we have had a balanced diet. >> you're reducing the plants you're hurting you're slaughtering -- >> someone has to die for me to live. >> they say they use less land,

less water. >> did you see that song "circle of life". >> i have no problem eating -- >> i know. but there are times i feel bad i'm not a vegetarian but times i feel bad about it. >> free range lettuce. >> falling off trees. >> you know, i love people who are pescetarians i won't eat cows or pigs but i'll kill a fish >> that's my point everybody dies eventually. that's it. >> i don't know if it's a health thing. i don't know can they ever make these things healthier? >> well, that i don't know they con stlastantly work on th technology they work on the taste and supply chain so they don't have to charge $3 more. they need to get more farmers to provide them with the materials. >> what would you guess, a fad or something that takes off? >> i don't know. i don't know >> don't either. >> that's not good for profits long-term. there are none, right? we have to wait five years. >> yeah. you know, here is the thing, are

people who are their target audience, what's the repeat buying pattern >> right. >> in the short-term you're going to see same store sales growth at these restaurants grow because burgers cost more so you buy one. oh, look, sales grow do you go back and buy it once every five times >> does that become your staple? >> or part of your rotation? >> right >> i don't know. >> jane, wonderful to see you here in studio >> that was fun. >> that was fun. >> nice to see you. >> come back we miss you. >> he's not buying any of it. >> at the end of the day, where is the profit. >> where's the beef? >> where's the beef? >> had to say it i love hamburger and steak i don't know i'm fine my cholesterol is fine my blood pressure sfien. >> wait for profits sometime maybe. >> i make up with my dogs what happens to the cows. i'm sorry. i would be mad, too if i were the cows. >> mad cow. when we come back with inflation and the fed and focus for investors, we'll hear from the european central bank later

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still to come on "squawk" this morning, the rally on wall street looks like it will roll on they're monitor any investments on trade front. then, s.e.c. chairman jay clayton will join us to discuss some new rules on conflicts of disclosure we'll talk the ipo market, crypto inflation and so much more 8:00 a.m., walmart ceo calling on congress to raise the federal minimum wage nothing -- noting that starting wages at the retailer have risen 50% to $11 an hour over the last four years we'll debate that hot button issue. is it enough "squawk box" returns right after this ♪

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a visual snapshot of your investments. key portfolio events. all in one place. because when it's decision time... you need decision tech. only from fidelity. dom chu time time for this morning's market moves. i look forward to this time, dom. why is that? >> i don't know. i feel as though it's because every once in a while i'll go through these things and then we'll talk about golf or something like that. >> that might be it. what tournament is it this week? when's the open? it's coming. >> we have the u.s. open coming up and then obviously with the open championship or aka the

british open people want to call it, i get a lot of grief from the government community when i call the british open. it's not the british open. >> i wonder what koepka is. >> the last i checked a few weeks ago koepka was favored in every major through next year's masters. it is what it is. >> i guess so. thanks, dom. we'll see you later. >> thanks very much. i appreciate that. i'll speed through this because i just killed a good amount of time here. advanced micro devices check those shares out right now because they're up be 2.5% rough half market shares premarket value. it's now equal weight. it was under weight. the price target goes to 28 from 17 they said they were wrong in being more cautious on the shares it was the wrong call though challenges still remain. those shares up big now. also shares of electronic arts up by 1% or so. more analysts started coverage of the video pregame coverage $120 price target and elect

strong gain prices it's also got a pretty robust pipeline of games. so those shares are up about 1%. end on shares of whirlpool up 1% or so on very, very thin premarket volume getting upped to an overweight from a prior sector weight new price target of $150 by key bank they think whirlpool remains u.s.-centric story with possibility of more upside in europe sometime down the line, though china still remains a vast unknown, becky. i apologize for that time suck i just had. >> o'leary's tournament. did you know that? >> really? >> the canadian open. >> i'm a 23 handicap. >> it's the canadian open. the rbc canadian open. i thought you would know that, dom. >> i'm focussed on the ladies this week because the ladies. >> what? >> the ladies tour, the lpga. >> specify lady's tour >> i told you i watched that last week. i didn't watch the memorial. it was boring. i was watching the lady's open.

>> i watched five or six hours of the coverage of the u.s. women's open and maybe watched five minutes of the memorial tournament. >> li sixth. did you see jessica korda hit 270 yard driver off the deck >> off the deck. >> those gals are good >> that just shows you it's just timing you know what i mean and the pendulum that's all -- i don't know what i'm trying to do i hit it so hard thank you. you got it the dow above its 200-day moving average since april for the first time here to break it down is john roek, managing director at wolf research of course our co-host is kevin o'leary, the chairman of o shares etf john the last time you talked to us was may 24th. you told us at that point you should be investing like a lion buying everything. looks like a good call given where we've come but what do you say now? >> well, when we talk we wanted

to avoid the weak ones the lion metaphor of trying to kill the weak ones. we think the market is rallying here but we still have some concerns. >> what are your concerns? >> number one, we think the fed's too tight here by 50 bases points the three-month treasury note yield is higher than everything on the yield curve which seems odd to us. >> number two, there's some momentum divergences where be the s&p is hanging up but the interior momentum is deterior e deteriorating. that has to be desolved. >> gold is building here is number three something is afoot those three put together besides trade and everything tells us it's better to be cautious than aggressive. >> when you say the fed is too tight by 50 basis points you expect them to cut twice >> i'll leave that to the economists we thought rates would come down >> yields the market has been

determining rates forget about what the fed. >> exactly we think they'll raise by 50 we don't know how it's going to happen but that's what we think has to happen. we think yields will continue to stay low i'm not certain that's an economic effect or just a bond market effect. i know that may be a distinction without a difference we think the market has some issues they have to work through. >> there was a technical analyst at merrill lynch yesterday that looked at the performance of the fang names those four stocks and said that there were serious problems like a head and shoulders pattern that was setting up and that spelled problems for the broader market too. would you agree with that? >> i don't like the pattern guess. what we like to say is that the momentum for those items is detear -- the momentum is deteriorating for those items. we think they have further to let's say consolidate or work lower before the market puts in a good oversold reading. >> we are now looking at crude oil in a bear market down more than 20% from the highs that i think were set back in april what do you think when you look at that chart? >> so our call on crude was that it was going to go to 50 we don't think it's a stretch to

get back to the late 2018 lows around $42 you really took a look at the long-term chart for crude, you would see it's a distribution that is very volatile and looks like it's coming in further. you can see the chart there. just look to the bottom of that trend line it would be cataclysmic because it would mean other things are going on which none of us have any idea about, me included. the low from the 2018 period is $42. we think that's in the ballpark for estimates. >> are you referring to a lack of demand when you say other things going on? >> global price may be going off a cliff. >> kevin what do you think when you hear about that? >> i'm intrigued by your comments about gold. it's been very dead money. so, to have you say gold is interesting when oil is collapsing and the ten year could go below 2, what is going to be the stimulus when usually inflation is the only thing that makes gold move. >> not necessarily gold has worked and inflation has been high and gold has

worked and there has been no inflation. perhaps go through another round of qe. systemic failure i'm not predicting. >> you need a catalyst to get through. >> 1,400, our estimate is that gold in the next cycle will make a new all-time high. >> well, music to my ears. we have been waiting for that. >> six and a half years it's done nothing. >> music to your ears but only 5% of your portfolio if there's a cataclysmic event that happens, what happens to the 95%. >> takes the end of the world to make gold move, you're only going to get one good trade out of that. i leave it at 5% because it's an old-timers way of saying i'm going to hedge inflation but it's not working then there was the bitcoin story about that working instead of gold that's not working either. so it's very interesting to see a commodity that's been around for 2,000 years and always performed well have this long period of i don't know who i am

anymore. it's lost its identity. >> well, it also had a long period of that prior to 2001 when it first started to move at $280 so gold has gone through sort of sleepwalking periods and then when it's emerged, i don't know, rising like the phoenix so to speak, it really had a tremendous move went from $280 to $1200 and gone sideways now for six years. so if it gets through 1375, 1400, the likelihood that it can get to a new all-time high is good given its history. >> what's that suit run? >> this suit >> yeah. >> hand tailored about -- >> what's it run >> 3,000. >> so that's where gold should be. >> that's cheap. >> that's the historical. >> a good men's suit is worth. >> that would be a nice outcome. >> great to sit beside a gold guy because i'm feeling so lonely. >> custom suit for 3,000 bucks. >> i don't remember the ratio. >> go differently. that's messed up. >> and so oil had its run but it was not in a commodity bull

market which was always curious to us, but we think gold -- if gold works, gold is usually the precursor but i don't want to get ahead of myself here just looking at gold by itself and above 1375, 1400 we think could have enough gas in the tank not a mixed metaphor intended to get to an all-time high. >> kevin, if gold started taking off, is there a price you would just dump it >> no. what i do for gold worked for all of my investment career keep at 5% waiting and sell it down to 5 when it's working and when it corrects which it seems to always do, buy it back up to 5 and it's been sort of like a governor in terms of volatility of the rest of the equity portfolio. that's what it should be and always was but it has remarkably fallen out of favor. i own physical gold and played li liquidity. i love the bring the bars out on sunday dinner. you need a job because i'm not

giving you this. it's a great conversation piece. >> it is pretty impressive. >> how many do you have? >> i have big chunks of gold, yeah >> lying around? >> i have to take them out of the box and bring them back. it's fun kids love it. >> it feels great. it's so heavy. >> it's so heavy, it's crazy. >> a maple leaf if you hold it -- >> the best gold to buy is that issued by the swiss banks so you get a certificate. >> use that at the border. i swear it's good. >> you can bring gold in you can bring in a swiss bar with its actual certificate and say -- you never have to say it again they will take mark to market at the window walk in a swiss bank with a slab of gold and put it down. >> how often have you walked into a bank with your gold. >> liquidity. >> there you have it the great thing is you live and learn with these things. that's what's interesting. >> gold and a glock. >> my dad is a swiss citizen i learned the ways of gold from him. >> john, thanks for coming in. >> rainy day. >> oh my goodness.

we'll talk more gold in the future. but right now don't want to miss this, coming up right after the break, s.e.c. chairman jay clayton will join us and talk regulation the ipo market, the volatile crypto market, new law just put in place. then later, minimum wage a hot topic not only for walmart but the 2020 election. we're going to debate whether or not calls for a raise in the minimum wage is right for business "squawk" return with the commissioner of the e. rht tethiss.c.ig my ideal cloud? 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. and also be able to use apps to book super-personalized trips on shiny new phones from the future. plus, i need freedom to move my workloads wherever, whenever - but manage it all from right here. and that's the cloud i want. simple, right? expect more from your cloud. ibm cloud.

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welcome back to "squawk box" this morning the securities and exchange commission voting to approve a new rule that would call for brokers to act in the best interest of their clients when advising them on investments. the decision coming one year after they first proposed their changes. joining us is the "squawk" news maker of the hour s.e.c. chairman jay clayton we're thrilled to have you here this morning. >> thanks, andrew. >> tell us this new rule about what you think it means and we'll get into some of the debate about it. >> so, look, there's a lot in this new rule package. it's thousands of pages, but let me summarize the three key things the first is we're raising the standard of conduct for broker dealers. the obligations that they owe to their clients. the second thing is we're covering more of the advice spectrum one of the things we're covering that's key is account type when you're rolling over your 401(k) into a different type of account, that advice is now covered by our standards of conduct whether you're a broker dealer or an investment adviser.

>> before this there was no dan standard >> you know what, it wasn't clear enough it wasn't clear enough that when someone was telling you, hey, you have a lot of money in your 401(k), you saved it for 30 years, this is what you should do with it it wasn't clear that that advice whether you go into a brokerage account, investment advisory was covered. that's one of the most critical decisions an investor makes and that needs to be covered then the third thing that's important is we're making it so if you're at a broker dealer or investment adviser you have got to tell people how you make your money. >> very quickly the ecb leaving rates unchanged. ecb leaving rates unchanged. we'll update you with that as well. >> just to get back to this point and this is the thing i never understood, what is the difference between working in my best interests and the fiduciary rule or in my -- to have a

fiduciary duty to me. >> okay. let's talk about what afy daesh ya fiduciary duty is. investment adviser fiduciary duty is care and loyalty you owe somebody a duty of care and you can't put your interests ahead of their interests best interest on the broker side has many of the same elements but we want people to understand the broker dealer space and investment adviser space are very different they're very different in the way people get paid. the broker dealer space, you get paid usually a commission on a transaction by transaction basis. >> right. >> the investment adviser space it's more of a long-term relationship where you get paid, you know, on a quarterly fee, pay a quarterly fee, pay a yearly fee and the adviser has a, i would say a more portfolio lifetime relationship with you those are two very different relationships and we want to be clear. >> can i ask you a question on

behalf of the advisory industry, i'm a participant in the national services the number one growing cost we have is compliance there's nothing that's inflating faster than the cost of complying. i'm not whining not to the chairman i'm just asking -- >> you can whine. >> let me whine. you talk about 1,000 new pages that's going to cost me a lot of lawyers to go read that and figure that out. and then actually put it into play and maintain it to stay complia compliant. i have to stay come compliant. i want to stay compliant >> no. no look, i think what investors need to know is how much of their money is going to work for them and the key part of this rule package is whether you're an investment adviser or a broker dealer, you're going to have to be very candid with them how you're making your money you do a good job managing your money, you should be paid. but your investor should know --

>> real transparency it's how you maintain that transparency and the cost of doing so our cry if we're going to whine is tell us what we have to do but make it easier for us to do it that would be great. >> we're trying to do that put it on two pages. if you're both an investment adviser and broker dealer, put it on less than four pages tell people how you make their money. tell them what your conflicts are. they can make good choices look, you know what's happened in this industry, the power of competition has enured to the benefit of investors when we started in this business the drag for retail investor was 2, 3% a year if you invest your money in index funds these days we're talking 10 bips. people are putting in extra 2.5% in their pocket every year that kind of competition -- >> forced consolidation. can't start a small business anymore -- >> kevin, on the other side of this and chairman i want to ask you about this, people think this rule does not go far

enough that's the flip side of this rick flemming, the s.e.c.'s investor advocate i anticipate the same confusion will exist a decade from now. the commission had an opportunity to help investors by brightening the lines between investment adviser and but instead they have formalized its long standing acquiescence to the preferences of the brokerage industry tough stuff. >> tough stuff. >> you have to serve both markets, i guess you have to listen to that criticism and got a guy like me whining about costs. i get it. >> if you don't like criticism, you don't take this job. >> i get it. we have to ask you about crypto currencies. >> okay. >> where are you at on that? so many people want this to become a regulated space so that we can issue etfs and do all the things we can do yet there's been a real resistance the tonality -- >> we're talking -- let's level set. we're talking about crypto currencies we're not talking about tokens that are securities. we're talking about -- >> i agree with you on that. to me, that's garbage, that stuff.

i'm talking about doing an etf of a bundle of crypto currencies and having you said i'm willing to -- >> we're engaging on this. there are a couple things about it that we need to feel comfortable with the first is custody custody is a long-standing requirement in our markets that is, if you say you have something, you really have it. >> then you're treating it more like a stock than a currency. >> when we get into the retail space, custody is important. the other thing that's important is you look at the trading of these crypto currencies and our retail investors look at that and say, that looks like a stock or a bond that trades. we have sophisticated rules and surveillance to ensure that people are not manipulating the stock market those crypto currency markets by and large do not have that we're working hard to see if we can get there, but i'm not just going to flip a switch and say this is just like stocks and bonds because it's not >> mr. chairman, elon musks an

interesting guy. i haven't seen him tweet anything that i thought was inappropriate since your last settleme settlement, i see these emails sent to his staff that gets leaked out what do you think about elon >> so, look, i'm not going to comment on a specific matter or specific -- i try not to comment on specific companies or specific ceos, but let's just be clear, when you speak to investors and you're a senior part of an organization, you have to be candid and you have to, you know, fair >> do you think there's been situations where that's not the case do you think you have to be very vigilant >> i think we have to always be vigilant most public companies are very good about communicating with investors. >> different context, how do you feel broadly speaking about the business community using mediums like twitter or other forms of social media that have a

restricted character count or things like that as a means of communication? >> i think it's great when used responsibly. look, you can communicate some things in a very short burst but things as complicated as a merger or other things where investors want to know more, a short burst may not be appropriate. >> are there a lot of actions that you feel like you have to go around chasing this or is it a rare case where you actually feel a ceo is misusing it >> look, it kind of comes and goes but i think -- let me say this, i think our public companies understand their obligations to shareholders for the most part we scrutinize them people make mistakes, we enforce our rules. but i have been lucky to travel the world in my job. we do do it better here than anywhere else. the amount of transparency, i would say the quality of the

information. these are the best markets there's no doubt >> i would agree with that just look at market capitalization more people are more comfortable with more money here than anywhere else on earth you're doing a hell of a job still i like to whine on cost. >> whine when ever you want. we're open for business. people aren't telling us what's wrong, we're not doing a good job. >> just to bring it back to where we started -- you know what, we're going to run out of time we have music playing. i was just going to ask, what do you think the long-term impact of the new rule because you have been working on this the last year will ultimately be? >> i think investors will have more protection. there will be more -- there will be more transparency and that comparison shopping is going to continue to drive prices down for investors. >> okay. chairman, great to see you thank you for joining us this morning. >> thanks for having me. when we come back, walmart ceo calling on congress to raise the federal minimum wage we will debate the hot button issue right after this break and moments ago, the ecb leaving rates unchanged. mario will speak just about 35

minutes from now futures this morning have been up, even after the gains we have seen in the last couple days in the market dow futures up right now up by 85, nasdaq up by 31. "squawk box" will be right back. to find the right father's day gift. but you can't go wrong at dick's sporting goods. we have gifts for every dad. if he's into boats, bikes, or camping there's plenty to choose from, including yeti. and if he likes golf he'll love the latest drivers from callaway and taylormade. plus we've got a great new selection of footwear to fit any runner and every athlete. so make it a day he'll remember with the perfect father's day gift from dick's sporting goods. if you can't get to a store, shop us online plants capture co2. what if other kinds of plants captured it too? if these industrial plants had technology that captured carbon like trees we could help lower emissions. carbon capture is important technology -

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♪ here we go again, the countdown to new tariffs is on as president trump says not good enough to the latest negotiations with mexico out of gas fiat chrysler proposed merger with renault falls apart just ten days after being made public. and what do a pair of reported $80 million real estate deals this week including one from amazon's jeff bezos mean for the housing market this year and beyond final hour of "squawk box" begins right now ♪ here i go again on my own >> announcer: live from the most powerful city in the world, new york this is "squawk box. ♪ twister i was born to walk alone ♪ good morning and welcome back to "squawk box" here on cnbc live from the nasdaq market site in times square i'm joe kernen along with becky quick and andrew ross sorkin our guest host today shark tank

and cnbc kevin o'leary maybe we don't want to claim you. i haven't heard we don't any way, the futures right now are indicated up about 80 points on the dow nasdaq indicated up 29 and the s&p indicated up 9 or so and once we got down to about 2.1 on treasuries on the ten-year, not a lot has been happening about 2.11 right now i honestly don't know what the next 20 bases points is. i would say up again >> i might take the opposite. >> okay. >> especially after what the technician told us >> you know what, you know who spoke to me yesterday, paulson i think paulson was a breath of -- >> he was very calming. >> let's not get too tied to -- where is all this recession? we need more numbers to really see whether it's staring us right in the face. >> we'll get a big one tomorrow with jobs report. >> do you think recession this year, o'leary? >> i see the cash flows weekly this is the best period and it's been this way for now almost a

year of cash flows increasing week to week to week to week consumers -- i don't see a recession here i really don't from where i'm looking at domestic revenue in almost every state, we're on fire it's like the '60s it really is, 1964, '65. >> are those companies all hires as a result? >> they can't find people to hire we're trying to hire everywhere. the economy -- i'm a big advocate for regulation, it's not really tax reform yet, i don't see -- we're in a really crazy long cycle here. i think we have a few more years to go. i'm very bullish very bullish trade, mexico all that stuff, that's noise the underlying economy is on fire let's get you caught up on some of the stories investors will talk about this morning kevin mentioned u.s. and mexican officials are set to keep negotiating on trade in washington as that 5% tariff that president trump has threatened on all mexican goods approaches on monday yesterday, president trump tweeted that not enough progress was being made during those

talks on ways to try and curb illegal immigration. and on the china trade front, trump told reporters today that he could see increasing tariffs another $300 billion although he also said he thinks china and mexico want to make deals with the united states. fiat chrysler withdrawn its $35 billion offer to buy renault auto maker rival conditions in france would not allow the deal to proceed successly the. shares of both companies, chrysler up by 5% and renault is down by 3.6% the deal was announced officially just ten days ago it's a busy morning for economic numbers at the bottom of the hour, we'll get revised first quarter productivity and unit labor cost data and also weekly jobless claims and the april trade deficit, too. minimum wage hike was front and center at the walmart annual meeting wednesday. walmart ceo doug mcmillen called on congress to boost the federal minimum wage and senator bernie

sanders spoke at the meeting advocating for a $15 minimum wage so, who is right in this age-old debate joining us now ryan born of the kato institute that should sum up where ryan stands and bazos michael. now a lecturer with the city university of new york just warn you, ryan, we had bazo on before and we actually have been able to talk civilly and actually i think if we were in washington we might actually be able to do something. >> get something done, yeah. >> but then again, i read his notes and i do have a problem of what we're saying here i'm just going to start -- you tell me whether i'm wrong, ryan. let's say that we don't view corporations necessarily as adversaries but as the people that -- the entities that actually create the jobs so that we have policies that try to make it a positive

environment for businesses they do better they're able to raise wages organically like a walmart so that the $7 federal minimum wage is almost antiquated, so far below where market forces in a strong economy have put wages that it's kind of taking care of itself do we really need wage controls to make things better? >> well, i think what democrats and particularly bernie sanders are saying is that we have to find ways to protect the worker. if you look at what the trump administration has done in terms of rolling back protections for the lgbtq community over time pays being reduced, wages are being pushed down in the trump administration and you look at the supreme court's decision, what democrats are saying is if we have an economy that's largely on demand, that's sort of the gay economy, how else do we protect workers especially when individual states are

pulling back on uncollected bargaining. >> where are wages being pushed down, i'm sorry? >> what the argument is that the trump administration is finding ways to not increase the minimum wage and to find ways that -- to disincentivize companies from -- >> wages are going up -- >> they have been going up slightly not substantially. >> protecting workers mean protecting jobs. it's been seen if you go too far on mandating higher wages the entry-level positions go away and a lot of time -- if 2 million workers get a 1 or $2 increase but 500,000 workers go down to 0 because there's not jobs, that's not protecting workers. >> listen, i understand the concerns look, i'm a new yorker i notice and read all these stories how restaurants having to close because of 15 dollar minimum wage i had a friend who owned a restaurant for 15 years and he said he had to close in part because of the minimum wage increase and paid family leave so i understand the tension

there. but i think democrats need to -- trying to reaffirm this connection to the worker. >> ryan, i mean, if i just let myself totally go i kind of agree with you on a lot of stuff. employer's responsibility to pay employees for the work they do, not to ensure they have some type of societally agreed upon level of livable household income does that sum things up for kato >> certain extent the debate we so far is a bit of a misnomer. lot of city governments have been raising their own minimum wage take into consideration the populations that fall under those remits, already the affected minimum wage across the country is almost $12 an hour. >> yeah. but you didn't support that either, just so we're on the same page. >> no no but to the extent that you have minimum wages, it makes more sense for them to be set at a local level where policymakers hopefully take into consideration the local labor market conditions. but look, you're right on an

essential point. ultimately in the long-term wages are determined by productivity and if you try and push up wage floors too high and don't take account of employer's ability to pay and people's productiveness particularly in the grocery sector which is a very low productivity sector sadly -- >> i thought i was going to hear the end of that. >> then what you do is employers have to adjust in some way that might mean laying off workers. it might mean cutting off hours. cutting other perks or benefits or may well mean investing in labor saving technologies. one of the reasons why walmart are more amenable to a federal increase in the minimum wage than other companies is because i think they think as a big company, you know, we have sophisticated logistics they would be much better to deal with it than perhaps some of their smaller up start competitors. >> i actually agree with that. and going to ryan's point about what states are doing, remember back in 2016 hillary clinton was advocating for a $12 minimum

wage in part because she realized that not all companies are going to be able to get to 15 and that individual states might not be able to get to 15 that quickly so let's do this on a more gradual basis. >> there's two issues. >> yeah. >> there's a philosophical issue. and then there's the question of just what the number should be what's the right number both on a national basis and to the agree you want to do on state basis? >> it's tougher. >> i mean, that is tougher because there are a lot of states that won't be able to get to 15 and there is a good argument for letting states -- >> do you think it's a mistake for bernie sanders to push for $15 across the board nationally. >> i actually don't think it's a mistake. i think that should be the target. >> because of the realty of the math of it. >> i think the politics of it is very strong at this point quite frankly because there are a lot of voters democrat or republican, independent, that want us to get to $15. >> but you recognize there might be an economic impact? >> i do recognize that

as a democrat but also just as a person as i said that is seen how small businesses are impacted, i know there's a reaction to it. >> as a new yorker, can we do a little hindsight now. >> yeah. >> a lot of issues go into the decision about amazon not coming to new york. how are you feeling about that in. >> i'm okay with that. they're looking for space elsewhere. i'm okay with that people are always going to want to come to new york. >> you know this is a real issue for me. >> of course, of course. >> they want to come to new york city, manhattan. they want to come to brooklyn. they don't want to come to long island city. let's make a point of that that jeff bezos made buying a apartment down here and they may be building more real estate or buying more real estate for the company, but it is not in long island city. so long island city is still going to be the capital of taxi cabs and parking lots. >> well, no, no, no. i would disagree you look at where long island city is today versus where it was ten years ago, 20 years

ago -- >> it's better off today >> it's a vastly different place. not to mention the fact that i would be very concerned if my mayor and my governor didn't actually sit down with the community and talk to them how amazon being there was going to affect them positively i'm not saying they shouldn't be there. i'm not saying they shouldn't be there. what i'm saying is if they're going to be there, you have a real discussion with the community about the impact that didn't happen >> what kind of a message is that to other companies that may want to consider that jurisdiction i don't think it's a positive one. you can't be happy that 20,000 jobs went to another geography. >> i'm not saying i'm happy with it what i'm saying is that if you're going to do this and it has substantial impact on what's already there, let the community know that. that's all i'm saying. i'm not saying that businesses shouldn't be here. i'm actually a little more pro-business than maybe most of my party is at this point. but i also care about the labor force. i also care about organized labor very specifically.

and i wanted my elected officials to actually have that discussion rather than just come to the community and say, look, we're going to bring this here it's already a done deal that's just not the way you do politics and so it's not really a question about economics for me. it was more a question about the political process. >> ryan, you want to just finish up here, comment on any of this? i don't know whether you want to comment on amazon or in general. >> well, bernie sanders often says if a company can't afford to pay a living wage, then perhaps it shouldn't exist you know, there's a political choice here. you can go down the french model of the labor market where you say actually companies that don't pay a certain amount just shouldn't exist and those jobs shouldn't exist. but the consequence of that is a 9% unemployment rate rather than the sub 4% unemployment rate that we currently enjoying in this booming economy today. >> all right we got to end it there we have been talk about this for a long time. both sides have -- they both

site studies that prove their point. that's economics, right? ryan, thank you. ryan, mr. potter standing in for him and basil, thank you i'm trying to think of -- i guess, bernie. taking the bernie side of things mr. potter good or who is simon legri? i don't know who is the worst >> mr. potter is pretty bad or mr. burns from the simpsons. coming up, when we return, it has been a big week for real estate here in new york city couple $80 million deals reported in the last coup days including one we just discussed him from jeff bezos. didn't want to buy in long island city, though. we want to know if this signals is smooth sailing for real estate or something much different? we'll speak with a top new york broker about demand, market trends and much more in just a moment stayun ted you're watching "squawk" on cnbc at carvana, no matter what car you buy from us,

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two giant real estate deals in new york city this week is this a sign of a market rebound or something else entirely robert frank joins us now with more you're talking about the 80 million one? >> yeah. two of them actually we had two deals at 80 million

announced just in one day. spike in sales in april, dropping inventory, brokers cheering for what they say is a possible turn around in manhattan real estate after six straight quarters of declines. but a closer look reveals probably a different reason. taxes. the new mansion tax kicks in on july 1st so buyers are rushing in to close deals before they have to pay that higher tax. the tax increase ranges from a quarter of a percent to 2.9% for homes over 2 million that's on top of the existing 1% mansion tax. there's also a new transfer tax of about quarter of a percent. so what did jeff bezos save on his $80 apartment where appraisers miller samuel crunched the numbers for us. he will pay 2.3 million in mansion taxes when he closes but after july 1st he would have paid 4.5, so he is saving over $2 million just by closing this month as opposed to july 1st that's enough to buy an average

new york city apartment. lenders and lawyers saying many buyers are requiring a prejuly closing as a condition of the sale after july 1st, we will likely see, of course; a dropoff in sales. >> robert, first of all, thanks for trying to make us feel better about ourselves but raise your seat. we put you down so you're six inches shorter than us. >> we figured out how much bezos makes an hour. if he was watching you, he would say -- i could care less. >> it's lunch money for him. >> literally how much does he make in an hour >> he just gave away $30 billion and he's still worth 110 billion. so he gave away more than just about -- >> is he that bad that he would know about the 2 million that he saved, do you think? >> yes i don't know anyone who is so rich they don't care about saving $2 million in taxes don't you agree, kevin >> divorce is the give away. that's not a gave away you're talking about the 30 billion? that was extracted from him. >> i don't know about extracted.

he was legally entitled to have. >> i'm not disagreeing >> okay. so his wealth was reduced by $36 billion is what i should have said look, i think brokers adds vising him would say, look f you want this place, let's do it now. >> you get a discount. >> everybody likes saving 2 million bucks. >> joining us right now is co-founder of bespoke real estate, managing over a billion dollars in properties and manhattan. you think we'll see a big dropoff starting july 1st? >> i think you're going to see a quick flurry happen before the july 1st cutoff, but in all actuality analyzing the 10 million up segment, we're right on par with where we should be so i think it's a motivation to make things happen because as you said everybody wants to save money. nobody wants to spend more money in taxes but in all actuality, sophisticated buyers are going to leverage this impact and pass

on that delta to the sellers from a negotiation tactic. so i do think you're still going to see deals happen post-july 1st probably at a wider spread than we anticipated before july 1st. >> that means the market declines by 4% then? >> it could very well. but if you look at the data, 2015 is a banner year for new york real estate i would argue the last cycle everybody was jumping for joy, sentiment was high, market was good, analyzing the market on sentiment and on fact, there's 210 trades above $10 million in 2015 in manhattan. this year we're on track to match it so in q1 2015 sets the pace for those statistics those 53 trades in the first quarter 2019, 52 trades in the first quarter. you can argue statistically speaking we are exactly where we should be. >> we have had six -- we haven't had six-straight quarters in

declines in manhattan when ever they've been recording for over 30 years the challenge with manhattan right now is that sellers aren't being realistic about price. they're still back in 2015 first it was the market adjusted then it was salt and they had to adjust down. even though the buyer is supposed to pay this tax the sellers are paying this tax and they have to adjust down again so with 20,000 apartments scheduled to come on the market, new apartments this year, how does it go up any time soon? >> well, i think there's a general ameshment of the overarching market from zero to infinity dollars if we're talking about bezos territory or falcon territory, that supply shrinks down pretty significantly and so do the players who are acquiring real estate you can say the overall market is suffering and it's on a steady decline, but if you segment that out, which i think you need -- >> but a lot of these builders were building for the very high end because that's where the money is -- was for years.

>> right. >> if you look at 10 million up, 20 million up, 30 million up there's a lot of property on the market -- coming on the market. >> there's downward pressure there's no question. nok real estate, manhattan, hamptons or miami are luxury markets in general, you saw unruly price appreciation. >> i don't see anywhere in the country right now where luxury real estate is not in a correction is there any place i mean, miami was doing well for a while but now it's dead. >> california. >> hamptons is dead. l.a., too many mansions. the high end i don't see anywhere where it's going to go up any time soon. >> well, i think you have to be very specific again. in the last ten days i have seen 7, 30 million dollars plus contracts signed did four of them you have to look at it very myopically i agree with you the downward pressure is necessary because buyers in this price point don't need to buy. this is a pure desire, not a necessity. they're looking at the game and saying, i'm patient money.

when the right thing comes, i'll negotiate a harder deal so the tax implication is being used as an advantageous arrow to drive better value. >> do you get 6% on a 30 million -- >> never if you're happy to pay, i'll take it. >> what do you think the commission was on the bezos place, 3, 2? >> when you get into that stratosphere, brokers are happy to do much less. it's general rounding errors no one wants to give away money. a broker who is in this position, i think they're happy to just take the recognizable name and notoriety of the deal but they're getting paid handsomely for what they did. >> i want to ask you quickly on the developments in new york 20 or 30 con dose and the last two are the penthouse split in half. that's all the profit. >> typically. >> yeah. so as a guy sometimes finances on the debt side, i look at their there's so many they haven't sold those 12 to $15 million units, everything else is 3 million these guys are going to lose

money. >> they need to restructure the capital stack. i think that's what happening generally. look at miami, new york, they typically wait for that bonus at the very end for the unicorn to come in and take it. so, i wouldn't say they're losing money, but their value proposition certainly changed typically for the negative so i think new york real estate and these big developers are waiting for this pop at the end or a bezos-type deal which often doesn't come in the manner that they want. >> cody, thank you. >> robert, thank you. >> tha ynkou, guys. "squawk" returns in just a moment johnson & johnson is a baby company.

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still to come with new tariffs on mexican goods set to kick in next month, president trump says not enough progress is being made in fresh trade talks. we'll bring you the latest developments and breaking economic data the latest readings on jobless claims just minutes away. we'll have all those numbersor f you and instant market reaction when "squawk box" comes right back (henry) i thought it was unfair. when-- when you hear those words that you get diagnosed with cancer. (osamah) successfully treating it still remains one of the most enormous challenges facing us today. we realized that, if we developed the technology that could take 2-dimensional patient imaging and convert it into 3-dimensional holographic renderings,

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welcome back to "squawk box. we're seconds away from latest data on jobless claims rick santelli in chicago, the buzzer is about to go off. the number >> all right, andrew here we go, three, two, one and on aprils trade balance pretty darn close to expectations of course, it's red ink, minus 50.8 billion in the rear-view mirror, slight revision, 51.9. if we look at non-pharm productivity quart final numbers a nice jump here, about as expected 3.4 that follows 3.6 these are pretty good numbers on productivity unit labor costs minus 1.6 a little bit larger, but that's not necessarily a bad thing when productivity moves up, one would expect that. initial jobless claims for the

most recent week, a wash a goose egg. very unusual to see that actually it was originally released if you all remember 215 now 218 which is the current read as well on continuing claims, week in the rear-view mirror 1.662 to 1.68 million slight increase there. synthesizing all the data, nothing too wild or earth shaking here i don't see anything in the trade balance that will have any major inputs in amoultering our perceptions of gdp the voltyty and some of the short maturities has been incredible the last few sessions, making the big curve steeply mostly and short curves more inverted closely and we'll continue to monitor as negotiations with regard to u.s./mexico. joe, miss you.

miss being at the desk back to you. >> it was great to have you here, rick stick around joining us now michael gape and chief u.s. economist and barclays and cnbc senior markets commentator, mike santoli i think we'll see tomorrow for an extended amount of time. let me start with you, michael, is a recession staring us in the face right now >> i don't think so right now. i think what we are looking at is something that feels more like the industrial recession of 2015 and '16 maybe localized to the goods sector, that's at least what the trade data is telling us but the job market data overall things are still good. >> one of the people talking about this, and there are a lot -- >> sure. >> what's the main data point that they're using it to judge the yield curve? >> so, no, i would say three data points in april that bothered types like myself, the industrial production report and the durables report.

and then the april trade balance. all three of those took our tracking estimates from equipment spending from kind of plus five to minus five. >> you think that explains what happened in the ten year >> no. in terms of it suggests there could be a lull in activity that you believe the fed should respond to in a risk management mode, but it does not yet signal recession in the u.s >> do you think there's nothing -- do you think that mexico worries about china who already -- maybe we haven't seen it in the actual numbers but has it already caused people to pull in their horns in terms of investments and planning for hiring and things like that? >> i can't prove it, but i think that is part of the narrative where there's just enough uncertainty about trade policy going back to a year ago that the average corporate says maybe we should hold off on some of these projects it's not that you need the tariffs in place to have things slow the threat of them and the extended environment of uncertainty just could cause

things to slow historically that's not a recession. right? 2015 and 2016 gross slows down to half a percent but consumption was okay, services employment was okay and the economy accelerated. >> rick, did the -- not being able to find people for positions, did that explain the 27,000, the disappointing number on wednesday you think the participation rate is a big pool of people that could still come back, don't you? how do you explain wednesday's number >> you know, i can't explain wednesday's number, joe. adp. i looked at adp, great organization, but i think they're trying to morph the number to been early kind of replica of our early friday bureau statistics number we do have a pool workers we can draw back in that flies in the face of analysts interpretations, late cycle, employment isn't going to give you the picture, it's lagging. i get all that and also the notion that the

demographics are really going to take hold. i still believe that the uncounted will slowly come back into the workplace and on a separate note, i notary riffs are all the rage and our guests are right, it's the threat of tariffs. ism responded to some of the information released yesterday certainly seemed as though the common denominator was that much of the service center activity wasn't seen any effects of tariffs. they saw some higher input costs but also raised their costs and their business was good. so you can slice and dice it any way you want there's always threats i've never known us to come on "squawk," joe, and say okay, we have nothing to talk about because the world is at peace. we have a kumbaya business moment there's always threats of something everywhere i don't necessarily want to discuss climate change, but business change, landscape change, that's part of everyday operations for these ceos and cfs. >> we always find uncertainty. and that's the one thing we say again and again, just seems to be a lot of uncertainty right

now. and i don't know ceos that aren't ready for uncertainty shouldn't be -- that's why you pay them $20 million a year they ought to be able to have some uncertainty in their life, right? >> true. but the counter, is they spend three decades building global supply chains. if it morphs beyond china and mexico looks potentially likely and do we do something on europe, it's hard to hide from that. >> you're not -- you're an economist and not a market guy, obviously, but we were talking about a stock yielding 4% versus a ten year at 2%, why just by definition why shouldn't the market be supported somewhat by the interest rate environment? >> they are. it is. and i'm just -- i also think the equity market may expect the fed to validate bond market pricing. so if the data does slow -- >> the camp where the fed does two cuts 50 bases points >> we moved to 75 after the april trade data and revisions, what it did to our revisions we

went to 75 this year we were looking for two cuts that would total 75 bases points. >> santoli, three hours tomorrow and you know, then for me santelli, santoli, very hard very difficult what do you think of all of this, mike >> listen, i just -- >> see >> when it comes to investing in markets, it's always uncertain, but when people are focussed more on the uncertainties when the market has discounted something. today the market will benefit from the fact that we spent may going down 6% in the s&p and punishing the trade exposed sectors a lot more than that because we were built up on a lot of these worries about trade and tariffs. yesterday a little bit of follow through. talk about the support where treasury yields are, the s&p now yields the same as the ten-year yield, just about. in terms of dividend yield so i do think that's providing some kind of a support where you have bed speakers again today. so i do think there's still a sense out there that maybe the market has taken enough pain for the moment, any way, although

yesterday is still a very defensive move yield sectors, defensive stocks that did do very well. that can work for a while. again, also the market is acting somewhat similar to 2016 as well when we were talking about these yield differential stocks and bonds and talking about industrial slow-down but not really a full recession. and all the rest of it brexit was kind of this weird shock we didn't know how to price. still hasn't been resolved here we are at 2800 on the s&p. >> rick, what were you thinking, rick something? >> michael is a great guy. i had him on as a guest. but i want to really make sure i understand this. i have no problem thinking that many firms and analysts think we're going to have eases, maybe 25, 50, 75 maybe none. bar clay really believes that the fed of today will come off a 50 right off the bat, one-time 50 i find that hard to believe. >> historically they have done that the last two cutting cycles started with 50. >> throw historics out the window how many -- >> judges success by how much it

surprises markets. if you're afraid of the zero lower bound, markets are pricing 80 bases points or more of cuts, just get there, don't tiptoe into it. just get there. >> my high school graduates envision their parents are going to buy them new cars, too. >> mario is speaking right now in his comments he's saying that they are determined to act and adjust the instrument if needed. the threat of protectionism and geopolitical factors are dampening sentiment in europe, he's saying. despite somewhat better first quarter gdp, global head winds still way on the outlook also keeping an eye on what's been happening to the german boom during there and yields have comen under pressure. the german boom, the last tick i saw was negative .21%. >> all right, gentlemen. thank you. see you tomorrow. >> bright and early. >> okay.

>> tease next but there's an intro. you figure it out. >> there is. we'll talk about the time growing short before president trump says that mexico will face a new round of punishing tariffs. kayla has been monitoring all this and she joins us with more. kayla, good morning again. >> good morning, becky day two of talks on border security and migration controls are happening today. small breakout negotiations are scheduled between u.s. and mexican counterparts and taking place at the state department. a senior administration official tells me talks have been positive and that president trump wants s ts t s ts to wrae situation soon but that won't happen before monday the likeliest outcome is a deal sometime before july 1st when those tariffs hit 10%. president trump briefed last night offered these thoughts from europe this morning >> as you know, mexico was in yesterday. they're coming back this morning in washington. they'll be meeting at the white house. i think a lot of progress was made yesterday, but we have to make a lot of progress they have to step up and they

have to step up to the plate and perhaps they will. we're going to see they could solve the problem. >> reporter: that sentiment echoed by the vice president this morning but so far mexico's proposals have fallen short. mexico's offer to reprogram other joint funds to the border and help strengthen central america's economies were well received but i'm told that the white house still wants mexico to agree to keep migrants on its side of the border until immigration cases are processed and to become what's called a safe third country, meaning mexico must accept asylum seekers before they get to the u.s. mexico said that specifically is a red line, andrew we'll see what sort of compromise, if any, can be reached. >> kayla, thank you for that. when we come barks, we have a lot more to talk about, what a government crackdown on big tech could mean for the industry and your money it's a biggi issue in washingto. we'll talk regulation, the market dominance of fang names and how those companies could be vulnerable to anti-trust investigations

stay tuned u n'wayodot nt to miss this. "squawk" returns in a moment let me ask you something.

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southern company welcome back to "squawk box," everyone washington taking aim at big tech and amazon could be vulnerable to anti-trust action. diedra bosa has more on this story. >> good morning, becky we don't yet know what the fdc's plan are for amazon, but certain businesses within the company could be targeted. one of bezos's top executives jeff wilke told cnbc that

they're focus on consumers, and he wouldn't say if he would rule out any businesses that might not be good for competition. so it's that drive to deliver the lowest prices if combined with willingness or ability to forgo profits that creates a hardball competition for other companies that could cause more scrutiny now, on top of that, amazon is creating more of its own private label products lawmakers like senator elizabeth warren argued that amazon could use the data it collects as a plat form for third party sellers to help its own private label business allow it to unfairly compete there could be more. a source sited saying the ftc is quietly gathering information like the prime bundle. it's a program fba charges sellsers more when they want to ship through competing others not amazon we could see more transparency the company is famously secretive about a lot of its

numbers and may have to share more to prove that it is not using unfair tactics to compete. back to you. >> diedra, thank you for that. bring in allen patrickof managing partner and it sounds to me, alan, like you think there's a real problem here. you think there's a very legitimate challenge to all of these companies at this point. >> there's no question in my mind there's legitimate challenge. we think back to the original anti-trust, sherman act, clayton act long before all of us were born, they were attacking people who were controlling pipelines the access to oil and rising prices, railroads raising prices now we have a situation we got anti-competitive action and by these three or four companies that are fortunately or unfortunately resulting in lower prices so, it has been kind of new form of competition or -- >> the question is are they really lower prices?

so, yes, to us it looks like lower prices but i imagine the argument you would make is actually that these services are effectively a tax on all of us, sort of a stealth tax, right that's part of the argument here in that when kevin needs to advertise on facebook or google, the prices are higher than they should be and that ultimately is passed on to me. >> they come into programmatic advertising and put a lot of companies out of business. they garnered market share, as you know, the share of their advertising is overwhelming today. >> this is not going to be easy to prove prices have gone down and the cost of acquiring customers has been very efficient in productivity for small businesses to destroy these companies or even put a huge burden on them through these investigations, huge mistake for small businesses that's what i think. it's just crazy. >> i disagree. the fact is they had access to data that they have used which we have given them voluntarily at no cost and they have been able to use that data to effectively bring down prices

and be more economic than anyone else who competes with them and who are -- >> who has been hurt >> well, that's the point. companies in general, the small business community, companies -- >> kevin is going to -- i'm going to ask kevin a question that relates to this today, if you needed -- if i told you that you could not advertise on facebook, instagram or any of the related items, i won't allow you to advertise on google, and i won't allow you to advertise on amazon. do you think you could run a business >> no, i couldn't acquire customers. that's my whole point. we have enabled small businesses in america to grow very efficiently with tremendous productivity and all of a sudden now there's some concept and i'll make this claim -- >> i think it cuts both way. >> i don't agree we should do this because of privacy issues. >> no, no, no, no. i'm not arguing to break up the companies. if these companies are so important to the livelihood of your company, is that not a

problem? >> my point is the market will take care of this. i used to spend a lot more money on some platforms that i don't even use today because things like linkedinmo morphed into a much better platform than it was two years ago. let the market take care of the market. >> how many people won't start up if they depend on facebook or goog toll get access to the markets? they are at unfair advantage, unfair competitive position. >> microsoft dominate and we regulated them into allowing to become the behemoth now? >> the government -- i think it's a very legitimate investigation that's going to go -- >> gates missed that search. he missed it his books, never talked about it they figured out the market. the market did its own job. >> you try surviving today without going to google search today. >> do you believe that one of the reasons that microsoft may

have missearched or mismobile because of the government investigation? that allowed more competition to emerge -- >> i don't agree with that. >> absolutely. it was held up for six, seven years while the trial was going on they were they certainly did not -- the consequences were -- >> do you want a regulatory environment like europe has where there are no tech companies that is your arrive and become scaled and all they do is litigate us to extract the tax they would have had, had they had real european company. >> that's another article. >> it must be discussed. if you want a regulatory environment that stifles innovation, we're going down that path. >> i have a different question for alan wir, which is apple. >> except they have a toll booth. >> they have a toll booth in the app store. >> yeah. >> i personally feel when i buy the phone, i'm buying the phone, the software, the hardware and access to the app store. it's like a membership that's what the deal is. so, i go into it, thinking that.

but there's obviously a lot of app developers and consumers. >> who pay 30% every time they want to buy anything. >> who say this is unfair. >> i pay 12% to put a food product on a grossers like krogers. what's the difference? >> there are more krogers around apple is a unique baby, compared perhaps with goolg and the penetration of, in this country of ios. >> you have a problem with apple as well? >> apple less but i think there's an issue all of these companies can solve the problem by making a lot of the data they have available to other people and put them on a level playing field. >> are there solutions to whatever you think the underlying problem is that doesn't require breaking them up >> yeah. i think it has to do with making the data available that they're using to an unfair competitive advantage, in my opinion and i think if there is a way -- i'll leave it to others. i can't spend my day studying

this but i think there is a way, making data available that is now not available so that others can access in equal opportunity and let them compete that way instead of taking data, putting their own private label items ahead of everybody else, not sharing the data. >> but, by the way, what do you think happens at walmart, at costco they see batteries are selling well they say hey, guys, we should do a white label version of our battery. >> and they do. >> they do. >> whole different position than amazon i mean, amazon is -- what is it now, 40%, 50% of the online advertising, retail business. >> that's an interesting question hold on. if you define retail in the broadest context. >> you should. >> mom and pop stores one way, they're tiny, 10% less, i don't even know what the number s look at it as an e-commerce business, electronic commerce, it's 50% of the business.

>> exactly. >> that's the question how do you define the market >> the irony of ironies is that you go down main street america and see all the stores that are closed because of the amazon and online effect. now amazon is going back and putting in the stores that they wiped out. they're now taking their locations. >> you fund these great company. >> you're going to go after me. >> no, i'm not but you fund them and work so hard in the early years and say gosh i hope this works. god, you're doing great. can you expand in then they get big and really excesuccessful ad then it's oh, my god, they're too successful. >> is it because you sold? you already sold >> we're talking about a very narrow group of companies this is applicable to. >> can you name any out of europe do you think it's a coincidence none come out of europe? who did mobile who did search who is doing -- >> out of israel.

>> that's a market cap we dominate so much. >> why do you want to kill the goose that lays the golden egg >> that's a whole other discussion we're a much more risk-taking country. >> i'm so happy i have my apple ecosystem. >> i have an apple also. i mean, we have to either talk about the potential social good. >> if you can have a legal monopoly, peter thiel's book, that's the best kind of business to have. >> i don't agree with it peter thiel has a different point of view. we are in an unusual position where we're going to -- i think this investigation will go on, what, the next 18 months we'll learn something about just how vulnerable all i can tell you, small number of companies that have to depend on these platforms feel very vulnerable and it is discouraging start-ups in these areas and they put young companies out of business because they just can't compete with them. >> how come you have a different -- >> television.

>> i have a real index of real men and women running real businesses, supporting their families and what we really don't want -- i speak on behalf of them, they are the essence of job creation in america. the words of terror for them hi, i'm from the government and i'm here to help you that's exactly what we're getting with this entire investigation. i think it's a horrible thing. don't turn america into europe it's a big mistake. >> you think we should be free form and let it loose? >> the market is so efficient in tearing down monopolies when it's set free to do it, it works. you have to let it do its thing. only thing we're doing here is retarding market forces and it's very bad. >> google on its position for 10, 11 years what's on the horizon? >> please keep doing my job and cutting my costs. >> you're raising your prices? >> lowering my cost of customer acquisitions google has made it easier for me to acquire companies

if i'm a small company in champlaign, illinois, i -- >> they still can't get to inflation. >> is google a utility >> you want to regulate it that way? >> alan, they told us. >> what? >> reporter: they promised never to do any evil anyway. you don't believe them >> you are the essence of the best discussion we should be having in america and we should have it. we really should. >> nice to hear you say that. >> thank you, alan. >> dom chiu knows what we should do maybe not. mario draghi is speaking right now. normally we hear about stocks but he is a renaissance man. >> he is a renaissance man. >> no, you are. >> well, i am. >> now you're covering this. >> folks that normally cover this stuff are out and about mario draghi, q & a portion of the press conference started about ten minutes ago.

session highs right now for the u.s. dollar, german government bond yields, a jump there as well inflation and growth expectations have been taken up by the european central bank for 2019 although they've been taken down in 2020. some of the key moves here are tied to their expectations although inflation remains muted. we'll keep an eye on what's happening right now, bring in more details right now atth's the reason why markets are moving "squawk" returns after this break. you should be mad at forced camaraderie. and you should be mad at tech that makes things worse. but you're not mad, because you have e*trade, who's tech makes life easier by automatically adding technical patterns on charts and helping you understand what they mean. don't get mad. get e*trade's simplified technical analysis.

and we're out. squa "squawk on the street" begins right now. ♪ we're going riding on the freeway of love ♪ good morning welcome to "squawk on the street." i'm carl quintanilla along with sara eisen and david faber earnings, blow-ups in tech europe is solid. ecb making