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 headlines, sees rates unchanged for another year oil in a bear market from its april peak road map begins with stocks shrugging off these trade tensions plus trump's tariff warnings, saying china tariffs could be raised on another $300 billion worth of goods and mexico tariffs will kick in monday if they don't get a deal. uber rally surpassing the ipo price for the first time, looking to extend the gains at the open today. >> stocks aiming for another day of gains, each posting back-to-back gains for the first time since mid may dow is up 3%, on track to snap a sks-week loss, s&p and nasdaq in the green. the best start to june since 2000, as we've got almost 3% since the first of the month. >> a real comeback week. you have a few things underpinning it. top of mind, the federal reserve. there's almost 100% chance in the bond market that rates will

be lowered by the fed since december is that too optimistic who knows. what we got from the ecb today, a surprise they said we'll keep interest rates at these levels six months longer than they previously said australia cut rates, india cut rates. central banks are moving into action usually the market likes that, david. the big question this time is, will it work and how much juice can that really give >> it's funny, speaking to a couple of people this morning. if we were to actually cut, good news could be bad news it could actually raise concerns and right now, you know, a lot of people don't want to step out on the risk curve. trying to figure out what's going on with commodities continuing to go down, with the yield on the ten-year right around 2.1 it's interesting time. if, in fact, they were to go there, sara -- and you follow it much more closely than i do -- i would be curious tosee what th

action would be. what would it be if they really did cut? >> you might get a clue from draghi, speaking right now you alerted this headline, saying some members were talking about the possibility of qe if things get worse if markets were really, really excited about the prospect of more qe, say, in europe or elongating this season forever, you might see a different reaction. >> meantime, some headlines from the president, who, of course, is celebrating, commemorating d-day on the 75th anniversary, talking about he will not make a decision on china tariffs until after g-20 here is what he said this morning. >> our talks with china, lot of interesting things are happening. we'll see what happens meantime, we're getting 25% on $250 billion and i could go up another, at least, $300 billion. and i'll do that at the right time but i think china wants to make a deal badly. >> so, so many swirling currents

in china trade dod is looking for alternative supplies of rare earths. you've got taiwan confirming a request to buy a couple billion in weapons and arms, which beijing is denouncing today. >> first place i'll look at the open today has to be the retailers. if he does go through on that threat, which he reupped in this war of words overnight, that's who gets hurt. it's the apparel, footwear and consumer goods brought into this country that so far has been spared, to spare the american consumer look at some of the biggest losers so far this year, nordstrom, macy's, gap, kohl's all down 20, 25% they've got other problems with department stores but it's indicative of the fact they don't have the pricing power to pass along if we do get them on the extra $300 billion. >> basically everything imported from china into this country and would be a significant ratcheting up. we heard from so many of the

guests we brought on and discussed of the tensions between the two countries. so much of it is based on what the president clearly, regardless of what advice he's getting it seems, wants to do. that implies to mexico as well, where he may have republicans in the senate against him he certainly has members of his own cabinet who potentially, at least said may not be a good idea he seems again, judging from his comments and his tweets, to be determined to go to 5% next week unless he gets seemingly everything he wants from the mexicans, but we're still trying to define exactly what that means. >> 5% monday morning there will be talks today. i wonder if it will take 5%, let's see what happens, let's see how high our produce prices go, what happens with the automakers, see if there's any exemptions before, say, republicans step in with more action. >> with a disapproval vote i don't know.

>> whoa don't know. >> if jim were here, he would be saying it, too it's all about his tweets. >> tariffs. >> and tariffs and what he's going to say next. >> let's bring in our own mike santoli to talk about where we're headed with this jobs number barry, you were early in calling for 2750 fair value. you think the fed needs to cut at least a couple of times, looking for earnings to come down to 156. is this all coming your way? >> it did. however, one of the things that happened monday is that powell pivoted yet again. when he did, he simply reiterated what -- and affirmed what the market already expected, a rate cut by doing so, he added half a turn to the pe instead of 17.5, i could see 18 times half a year earnings, that 80-point move describes the first 2 1/2 days of this week. >> right. >> so he essentially moved the

market's fair value up to 2800. >> barry, his quote was that the fed would act appropriately amid various trade issues where do you hear the words rate cut in that? >> well, when you just heard the president talking next to that helicopter, that sound, what he was basically saying is that tariffs are a tool that they intend to use and they don't expect any quick deals the economy is already weakening. we're seeing the low inflation in the most recent releases and as a consequence of that, i think the odds are that they will cut by year end as the futures expect. >> we were talking before the show, mike, about cut cycles. >> right. >> and how stocks don't usually bottom until that cycle is done. >> right i mean, right now from this level where the market is, and the way that the yield curve looks, implying that there should or will be one or two cuts but then the world will be okay again because the yields further out look higher.

that's the structure, the implied message of that rate structure. that's kind of threading the needle that's saying this will be the exception to the rule of one or two cuts is a confidence booster. it is risk management, proactive, insurance it's not treating a condition that's worsening every day in terms of the economy we've been range bound for a year and a half. 2011 is the level we traded at after election day, 2800 is the level we traded at last spring i don't think it's all about the fed. what's interesting about today, you would have thought the market could have taken the slightly negative news about the mexico talks, that they're not going to have an agreement today, saying this is a head fake rally the day is young we're not done yet. >> ten-year yield right around the lows we haven't seen in quite some time. >> yeah. >> i know it means people think

perhaps we're slowing. you interviewed the ceo of u.p.s. >> 6% u.s., 3% global. >> he was surprisingly positive but is worried about the trade conflicts. i think he's trying to tell investors they've overreacted in his stock which, as you know, dow transports have been hit harder than the rest of the market and so has his. he said we've got the flexibility and can deal with it yes, he sounded optimistic. >> you think more of a message there than -- although there is that tension in terms of how strong barry, to you. how strong is the u.s. economy right now from where we've been? >> you look at the thing that we followed most closely because it correlates with earnings is nominal gdp. it peak aid few quarters ago at 5.5% year-to-year growth we have it dropping to 3%. 2.5% is a nominal recession. every recession since ronald reagan's inauguration is about

2.5% nominal growth year over year we're going to get pretty close to a nominal recession, we think, by the end of this year, beginning of next year as a consequence, that's why the fed is going to cut. one thing i'll say, though, is here we are. fed is entertaining a cut. 1.8 is the post 1979 average for real rates it's pathetic that the markets caught on a hamster wheel of needing free money to stay aloft. that's why the multiple has stayed up here. >> it is a good question, though he wouldn't say that everything is looking good in the u.s. if it weren't hilton ceo last week told us u.s. economy looks great right now. we're getting this message from ceos, a lot of them on the consumer side saying things are fine why do we need a recut >> main street and wall street are divided in terms of how things feel. the consumer isn't going to be the first, i think, casualty of this downturn if there is a

downturn not a lot of household debt. it's not overextended. there's tight labor market all that stuff is working in favor of the consumer not necessarily bearing the brunt of it it's more corporate margins, global growth. >> we've had a parade of ceos from retail companies who have not been meeting expectations, who have been blaming, at least in some fashion, the consumer. it's hard to read exactly what the message is. >> barry kaplin is on the tape saying the downside risk is to business confidence and capex, but could start to effect hiring and therefore household spending job cuts up 46% in april auto job cuts up 200% year on year i mean, it's starting to fill in that picture is starting to fill in isn't it >> yes and the adp number yesterday was extremely weak on the jobs so, you know, the fed better get

busy as i said before, it's amazing that they give up the rate cycle at 75 basis points real rates. but it could be worse. it could be the ecb having to have our negative 40 basis point deposit rate in the minus 1.9 real rate, missed the entire cycle and all you've got is depressing the euro, which we see today is getting harder to do. >> barry bannister, mike santoli. mike, you stay close barry, see you next time a milestone for uber and red hot beyond meat preparing to release its first quarterly results as a public company. that should be fun tonight futures briefly going negative and now back up. dow futures up 18, continuing this winning streak we've seen in the markets this week live from post nine at the nyse live from post nine at the nyse when we return experience with a has been excellent. they really appreciate the military family

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nose after surpassing that level for the very first time earlier in the session wall street firms initiated cover of uber with pretty bullish calls. beyond meat, the other big ipo, set to report earnings since going public uber is interesting, guys. went public may 10th and it took up till now, almost a month later, to get back to that ipo price. i'm taking it as a sign that risk taking is back in this market after tariff announcements and scares others say it improved its earnings last week and once the underwriters can start covering this company. >> there are some of those bullish calls, which we noted earlier this week. only one at the actual ipo price, all up fairly well above that always important to point out, of course, uber's market value

is $67,76 another reason you see those moves. interesting to see for both companies when those lock-ups are undone and employees and others are allowed to sell and there's a lot more supply in the market what that will mean particularly for perhaps beyond meat some say it's a simple shortage of shares that's been helpful to that move up. >> i don't know how you gain out expectations for a stock up 300% from ipo. >> no. >> especially when their sales are, what, in the 40 million or something? >> 205 million for the full year is what they're looking for for '19? >> quarterly basis, yeah high hopes for this one. we'll see how it trades. when we come back this morning, a lot more to get to, obviously. we'll talk to art cashin about what to expect from today's trading session. lot going on, whether it's central banks, trade or the jobs

number tomorrow, which some say could be critical to the fed, obviously. futures here, shooting for four days in a row up on the dow, first time since march more "squawk on the street" from more "squawk on the street" from the nyse straight ahead.set int. today's merrill can help you get there the people, tools, and personalized advice to help turn your ambitions into action. what would you like the power to do? but we're also a cancer fighting, hiv controlling, joint replacing, and depression relieving company. from the day you're born we never stop taking care of you.

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we won't rest until we see this technology being able to change lives. a private company but doing the buying is google, which we always like to point out $2.6 billion, a unified platform for business intelligence, data

applications and embedded analytics, part of google cloud. google in that fight with microsoft nas's azure and, of course, getting organizations to use it the various annualytics will he them market their cloud services data remains untapped resource for many organizations and the addition of looker will provide customers with a more analytic solution and visualization, sara, as well. you'll be able to do that, so you can visualize things, not just read about them. >> maybe that's why it's called looker i would just note that the timing is sort of interesting, you know google and facebook have had tough weeks. market is up 2.7% this week. alphabet is down 5.5% after it

got battered on the anti-trust, while analysts we talked to said look it's going to be hard to prove anything on anti-trust there's clearly worry on these names and it could be a political overhang just interesting that they're making the acquisition in the middle of all of this. you wonder what the impact internally is going to be on company focus, getting larger. >> there are those who say that the doj should have given a more critical eye to what were very small acquisitions over time youtube has now grown into a giant that, again, extends into so many parts of americans, people's lives all over the planet and is part of any sort of review that would be done. >> what's interesting is a number of deals that we thought might happen and are not happening. db commerce bank for one fiat pulling renault, as we

know not buying campbell's. of varying sizes. >> and for varying reasons french government's not opposition but certainly putting up some -- well, depends fiat chrysler saying they changed their demands and wanted nissan, obviously, to assent to the deal and that didn't happen. so fiat chrysler pulling away. >> opening bell in a few minute n'gonyere.s.

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talk to your advisor about brighthouse smartcare. brighthouse financial. build for what's ahead℠ opening bell in four minutes. busy thursday morning, of course, as we digest trade headlines, central bank headlines. director of floor operations art, good morning to you. >> good morning. >> talking about the divergences we've seen, commodities to the s&p, all-time low. obviously, yield spreads to s&p. what's going on? >> well, that's why the next couple of days will be very interesting. i mean, tuesday you had an

impressive short covering reversal you had a follow-through in the averages yesterday but the rest of the market was absolutely neutral so, old fogies like me get a little suspect you want to watch and see how the market is going to trade over the next couple of days the other thing is the president is coming back we're all on tweet alert obviously you couldn't get any good news when he was away and you're sure that the underlings, even if they cut a deal, would wait till he comes back to announce it. should we see weakness develop, the viewers should take a careful look at 2800 in the s&p. that bailed us out yesterday when we started to go south. they hit 2800 and turned on a dime that will be critical support here. >> if they don't come up with a deal and we see 5% tariffs on all mexican imports into this

country monday morning, is that already in the market or not >> not quite the market is almost willing to tolerate it being imposed but won't tolerate it if it lasts. it gets imposed but they assume it will come off within a week certainly a long-term 5% is not priced into this market. >> what about the remaining $300 billion in chinese imports, which the president threatened to put a tariff on last night? >> china will look very interesting. swine flu, bird flu. the amount of protein available is shrinking rapidly we have the 30th anniversary of tiananmen square it was not about human rights but food prices when it first began, then it morphed into something else all the chinese governments, going back nearly 1,000 years,

have suffered whenever there were food price pressures. they'll be very aware of it. i think that may move them in the trade talks to get pork, other protein from the united states, chicken, whatever. they'll need it. that will be pressure. >> adp we talked about yesterday. no good. if tomorrow nfp ratifies that, what happens how soon would a cut come? june, sooner >> july, i think, if it were but be careful if there are surprises, there's a chance it could be to the upside adp might have been a one-off. let's see what happens. >> obviously adp raised some eyebrows art, thanks. see you soon art cashin let's get to the opening bell. s&p 500 at the cnbc real-time

exchange big board today, celebrating ipo, gsx, education provider for k through 12 students in china and at the nasdaq, dsp group i think it's a crazy idea. we've had a lot of chinese -- not just chinese but education-related ipos i'm not really certain what this company does anyone bueller, bueller >> no. i'm focused on the food stocks today, david smucker's. the stock is up 34% so far this year and the food stocks are catching a bid in this defensive

kind of market outperformer looks like the stock is going to open down. smucker's has been trying to spark sales. it's a company that's got three businesses one of them is pet food. there were high hopes for pet food especially after an acquisition last year. that was kind of disappointing coffee is actual ly doing bette. double-digit increase in dunkin donuts, which they distribute. so overall kind of mix jp morgan out on smucker's, saying they were encouraged by the guidance actually. and that calls for a 2% year over year rise, we'll see what the stock does yesterday after a forgiving attitude with campbell's soup rising 10% on a better quarter, i guess, but still a lot of weakness in the

underlying trends. >> yeah. that was a strong move up, note bid a lot of people. one name, not a large company, but worth noting, certainly in positive territory actually, that's understating it stitch fix, adding more than a quarter of its value this morning in market cap after reporting numbers that are well received third quarter, 29%, year over year growth in revenues, 409 million. also 3.1 million year over year being well received. as has been overall since it went public, i guess 43% this year. >> it's volatile it went public november 2017, lost a third of its value. >> right. >> and then has had quarters like this. i think, david, there's still more than 20% that's actually short sellers in this name but they continue to get disappointed by some of the strength in this business. they're expanding in the uk. and, i don't know.

i don't know if investors understand what they do. the company hasn't presented itself as a subscription service. they ship you clothes. you buy what you want to keep. they're kind of stylists for you. they try to pick what you might like and then they have that sort of algorithm and tend to ship it to you if you're a fan. they can do cross deals with vendors as well. >> google, 2.6 billion acquisition of looker, which is the biggest acquisition for google since nest in 2014. pretty big sized for them, historically, at least down 30% plus premarket. their guide for 20 is week they removed the guide for '21 ceo departure. we'll watch some of these smaller names.

>> a ten-year low. another very disappointing quarter for the jewelry company. comparables, though, store sales come in light, 1.3%. that was even more than the market was expecting everything was down in terms of the business units from kay jewelers to zale's, except piercing pagoda. they also lowered the guidance the ceo for at least a year has tried to put in this turn-around plan and has taken a long time and has not worked and consumers have lost a lot of patience. they were not as high as they needed to be, 6.6%, same-store sales down that's a challenging one they're not buying the path to brilliance strategy as she calls it. >> you spent time with her it was a while ago. >> when she first came on.

>> positively the plan. >> there were high hopes, yeah. >> then the narrative changed. and it became too much of a mckenzie consulting playbook and not enough of actually attracting consumers into these stores. >> stock down 64% over the last 12 months. that is suboptimal as somebody else would say. >> worse than tesla. >> yeah. >> couple of interesting calls whirlpool gets upgrade over key bank to overweight a price target of 150. they say although upside catalyst might be lacking they're looking at, for example, down from 190 when tariffs were put on some of these samsung washers. their argument is north american margins held steady in the wake of that and able to pass on those price increases to the consumer so return to 150 would be a decent upside on whirlpool amd, morgan stanley, upping to equal weight i'm sure cramer would have an issue of them being at

underweight in the first place obviously they made inroads on intel. >> semis have been a key group to watch these days, one of those sort of tells on the market it was down yesterday. they've been caught in the center of the trade concerns, the huawei concerns, you name it they're also still more than 15% off the recent highs another call, wall street call that i noted this morning, bank of america initiating contour brands as underperformed spin-off from the jean business. they make lee and wrangler jeans. not too optimistic here, forecast, tough environment, multiple contraction and under investments in the core brands also, guys, lot of jeans are made in mexico so, i don't know exactly this company's exposure courtney reagan has been doing a lot of reporting on this, especially men's denim is made south of border. men's maybe more so in china we could have tariffs on that as

well. >> you mentioned tesla they've been getting quite a bit. 3rd of june, the stock was high 170s tesla is above 200 right now, up another 3.4% not a lot of news i can point to not sure if you guys have seen anything either but it is a noted -- you can see it right there at the end over the last couple of days. >> s.e.c. chairman was asked about that and kind of punted on that, whether it represented some special case or major headache. >> speaking of autos, we mentioned it earlier we're coming back to it gain fiat chrysler and renault, no longer in talks. fiat chrysler pulling away from the negotiating table. at least from the reports, and i don't have this directly, saying that they wanted to renegotiate some of the terms they had already brought to the table and thought were more or less agreed upon remember, they had been proposing what would have been a merger of equals, 50/50

ownership. ownership of 40% of nissan certainly figured into this, french company wanting nissan to be in favor not just neutral it's over. would have created the world's third largest automaker. >> is it over? they said currently in the release. >> it's not over till it's over. right now it's over. >> did you see my conversation with carol gohsn yesterday >> i saw part of it. >> thought it was a conspiracy orchestrated by nissan, french company, japanese government they wanted fiat/renault not nissan. >> did she have any proof to offer us >> no. that's what their defense is going to be. she couldn't get too much into it he's still in pretrial and can't interfere with his legal team. they're pretty convinced that's the story. costco with pretty good

comps for may. we were looking for 4.6. interesting, costco has had quite a run. all-time highs around 250. we're just shy of that we continue to look for any winners in retail, as you mentioned earlier, sara, some of the worst stocks of the year include macy's, kohl's, gap and nordstrom because -- i would argue more about exposure to tariff-laden countries than the consumer weakness itself i'm sure that's also increasing part of some people's thinking. >> for sure there's the tariffs exposure for department stores like kohl's, which does its own wholesale branding, which comes from china, its own label. so more exposed than others but just general weakness in department stores. they haven't managed to attract traffic or same-store sales that have been higher and you see that in the price. >> always stop at macy's dividend yield, which is 7.26% right now.

quite a high yield and the structure of the company, conceivably at least at this point, would withstand what those dividend payments mean we'll see if it helps. the stock, of course, down 48% over the last 12 months. >> we were just mentioning google's acquisition of looker 2.6 billion in cash. biggest acquisition for goog until about five years here to talk about more of what they see, what this means. >> this is big, carl thomas curian, long-time top executive over at oracle joined the head of google as google cloud. one of the criticisms had been their lack of enterprise commitment and really a deep bench of enterprise executives and really that culture. the question has been whether thomas curian will be able to bring that part of the way that google will have to go to bring that is do big acquisitions in the cloud area for one reason

or another, not given google cloud the green light to do. and this acquisition is a potential sign that that's beginning to change. looker, in the area of business intelligence, think of it as a dashboard for the enterprise, being able to understand the data flowing through the enterprise, what that means for projections, being able to analyze it, chop it up of course, microsoft has its own suite, power bi, for doing things like that google, that's an area where they were arguably weaker. google has google analytics for web-based stuff, mostly nonenterprise type analytics this gives them a different type of layer this is also interesting in light of this week's announcement that microsoft and/oracle are getting closer in the cloud. it struck me as a little strange bed fellows. you don't see that kind of cloud announcement between names like that, typically. but you have to remember, you have an oracle veteran now

that's at google cloud that's not necessarily just an alliance against amazon. they're also probably guarding against google. >> what's the value proposition to the customer here when they go in to try to sell their service? what's google now going to be able to say to them that they might not be able to say, don't do azure or as aches you would >> google has largely been about quality of technology. the criticism of google and, i guess, the benefit in the cloud is they've said we've got this amazing technology this is stuff that people ought to be using. it's what you're going to want in the future. google hasn't always had what people need right now to run their business looker is that type of a service in business analytics that people do need right now, cutting edge right now not necessarily something that's going to benefit you in three to five years out. >> google is down today. it's now down just about 20% from the highs, putting it into bear market. remember, it had that disappointing quarter on sales

and wall street was upset that it couldn't really explain where the weakness is coming from. and then this anti-trust news in terms of an investigation. it's the worst performing in terms of the communication services of the week does this do anything to change the narrative? >> absolutely nothing. it does absolutely nothing to change the narrative of google's core business, which i think investors are mostly reacting to the possibility that this anti-trust scrutiny will affect that if you're thinking about google needing to have an enterprise story long term, investor cloud as being an important part of where they need to go this is an important story at least as a benchmark. your question from here, is this a one-off? it's a big acquisition, more than $2 billion. >> real quickly on looker, do we know anything about it was it a unicorn to begin with capital g and buyers >> certainly looks like it i'm going to go and look at the numbers so i can give you a better answer. >> "squawk alley." >> yep. >> see you in a bit.

welcome home, john. >> thanks. >> s&p moved to their best week of the year. actually, since november let's get to bob pisani. >> great week. up about 3%. lot of hope, to be perfectly frank. just before the open, the mr. draghi saying risk to euro area to downside powell said the fed will monitor trade. senate pushback on the mexican tariffs and mr. mnuchin, treasury secretary, meeting with chinese counterparts at the g20 over the weekend lot of hoping, not a lot of facts. take a look, we moved 75 points in the s&p 500 almost 500 points in the s&p

since tuesday here draghi costing us 10, 15 points on the s&p ought on not a lot of facts, that's pretty good here. one reason we may be having a lot of issues, kind of running out of steam a little bit. energy is a little better. banks are doing better nothing going on with industrials either part of the problem is a lot of the oversold sectors on monday going into the start of the week are not as oversold as they used to be. take a look at materials, siem conductor stocks major markets moving for the week s&p 500. some of the other global markets are starting to emerge this was about equal a week and a half ago germany is 9% away from its historic high. and shanghai has been slipping this week. very bad night overnight, down

2.5% big divergence between the u.s. and china. 52-week highs, not where they are year to date elsewhere, oversold sectors this week, if you look at material stocks, transportation stocks, semi conductor stocks, all of those have had a nice bounce this week, up about 7%, 5% on transports and the semi conductor stocks up 3% ipo today, it is a chinese education ipo here, k-12, online after-school tutoring. gsx techedu. that price right within the range expected here. ipos done great this year, guys. sara we're up 30% in the ipo itf this year. sa sara, back to you. >> and uber finally trading above that price. >> in that ipo etf they just put it in. rick santelli in the bond

pit in chicago good morning, rick. >> good morning, sara. even though everybody is paying very close attention to three-month to ten-year on that spread the inversion was minus 22, minus 23 earlier in the week, now minus 21-ish you could say maybe it steepen aid little bit although i wouldn't. twos to tens, twos to 30s, indeed it is giving back its steepening one week of two year and you could sort of see why. today, you look at two-year. it's hovering kind of quiet at the bottom of the range. consider this. it's unchanged on the day. the range on that one-week chart covers 2.15 to 1.76. that's a two-year note yield that's a lot of range. one week of 30-year bonds are down four basis points, tens are down three you see the flattening of the curve taking back the recent steepening due to the big drop in two years what's the range on the 30-year

on that chart? 2.70 to 2.52, big ranges finally a lot of talk in concentration, as it should be, on what mario draghi in europe, ten-year ends in october what's he going to do? certainly not any snugging, inflation dropping one week of intra-day of bunds first. bund yields popped up, and they did, until you look at one week of bunds certainly they're off their worst levels historic, negative rates in europe how did the currency get impacted one week of the euro versus the dollar surprisingly well. doesn't look like the other european charts hovering not too far from 1.13 earlier, although it's now giving up some ground optimism of positivity that mario draghi is continuing and doubling down on problem is, will it actually deliver? back to you, carl. >> rick santelli, see you in a little while stitch fix soaring on a surprise profit.

we'll talk with ceo katrina lake meantime, dow and s&p briefly hit their best weekly levels of the year, goinbag ck to november, in fact dow is up 26 back in a moment

looking at shares of beyond meat down for a change. more than 2.6% the alternative meat company set to issue quarterly results after the bell today first report sinceoi gng public last month "squawk on the street" will be right back you know i'm going to be the first bunny

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to see it in theaters. seeing nice outperformance in big oil companies this morning. exxon and chevron led the dow at the open, crude not doing a whole lot this morning closing the bear market officially yesterday, down 22% from the april peak. the third bear market for crude since the beginning of 2017. so maybe any stabilization leads to buying of the producers a lot going on there >> yesterday closed at the low e est level since back in january. you have the supply guide and you have that further confirmed. ample supply coming on this at the same time as the trade war with china, stoking concerns with japan. >> as the u.s. threatens to impose tariffs on mexican goods, bmw opened a new final assembly planned in mexico and making news this morning.

phil lebeau has details. >> reporter: just wrapping up a press conference, bmw executives they knew the questions would be coming about the potential for a 5% or greater tariff at the border for vehicles built here and shipped to the united states this is oliver zipsy responding to my question about if this goes into effect, will you change your production plans here's what he had to say. >> we will keep our plans and we will see how far that goes and as i said before, our production network is flexible, but at this point in time, we would not see any reason to change our current plans >> reporter: as you look at shares ofbmw, keep in mind the big question for bmw and all automakers, will they pass along a potential 5% tariff in terms of higher cost to the vehicle or will they eat it and cut into the profit margins they dodged that question when it was asked several times today. unclear what they will do if this tariff goes into effect

next monday. >> phil, we expect to see you later on today big story, phil lebeau when we come back, trade tensions and the impact on american business. we'll talk with the ceo of ao ut supplier dana. supplier dana. don't go anywhere. 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.

♪ good thursday morning. welcome back to "squawk on the street." i'm carlquintanilla with sara eisen and david faber. dow is shooting for four days up in a row for the first time since march. that's in doubt, gone into the red with the s&p and the nasdaq. >> road map begins with no deal. the fight between the u.s. and mexico over potential tariffs continues. we'll take you live to a city that might get hit the hardest. >> crude realities oil prices taking a nose-dive. we'll break down what is fueling the sell-off. >> retail wreck. four out of ten of the worst performers on the s&p, retailers. we'll break down the losers and see if we can fignd bright spot.

>> investors largely shrugging off trade and tariff fears christine lagarde warning about the impact of trade wars on the global economy >> what we try to do is to actually try to model and figure out what will be the impact on growth of what had been announced and is being implemented. and what is now being threatened that alone would shave off the forecast that we have by .5% but if you look at global growth at 3.3% this year, and more so next year, 3.6%, you take off .5 in 2020, which is when we have calculated the impact of the trade restrictions, you're not talking about 3.1%. >> really sounding the growth alarm. the imf over the last 24 hours on tariffs with us, cole smead, managing director and co-portfolio manager. and dan clifton, strategic

research partners, head of policy research. what happens with the mexican tariffs? >> it comes down to what mexico puts on the table later today. if they put out a proposal that would restrict asylum from three countries as a person comes through mexico and into the united states, they would be able to claim asylum we could get a deal. mexico has been resistant, resistant to make that deal yesterday. and i think the odds are more than likely that the tariffs are going to go into effect on monday at 5% and will continue to negotiate through that process. >> the republican party, just going to stand by, be okay with it they don't seem like they like this idea. >> i think there needs to be a distinction in the media we see. there clearly is a veto proof majority in the senate to overturn inaction like that. there is not a veto proof majority in the house of representatives. so you can see the senate take action, the house take action, thepresident veto that measure then you have to have those veto

votes and it is very unlikely the house is going to get to 281 votes. for mexico, that means the threat is real that these tariffs can go into place, that creates a very high stakes negotiation later on today. >> dan, we got fitch cutting their debt rating on mexico. you got moodys putting it on negative outlook how do these tariffs help mexico combat the migrant flow? >> i don't think they do i think this is being used as a tool to try and get mexico to do something on immigration that they have never done before. carl, we can argue whether that's the right thing or the wrong thing to do. but now the pressure is there. and i really don't believe that it is going to have an immediate effect in stemming some of that. mexico wants a long-term solution, and a lot of what we're talking about are short-term and medium range solutions. so this is a head wind for risk assets, even if the tariffs don't go into effect, carl, now you have to start saying do you do this with nato on defense spending is it an effective tool to get

other policy changes and i think that's dangerous with the inverted yield curve. >> so i know you are sort of long-term value investors, has the trade scares created any opportunities for you? >> there is nothing that dan said that i would disagree with. my only issue is that that is already reflecting the stock prices jpmorgan had a chart out this morning showing that we are in the 100th percentile of the price of low vol stocks. the other place to play on the trade fears, that's incredibly cheap that is cyclically oriented businesses. so the biggest risk to stock and bond markets the next two years is that these trade fears are much talked about now, and in two years we wake up with the situation where the economy is incredibly strong, that two year period, bond markets get pounded. that would be the worst of things but you're cyclically oriented business in the u.s. economy,

you're going to be smiling ear to ear while people lose money in certain places of the asset allocation world >> dan, a note this week on a macro level, 30,000 feet you argue that the president has moved from a tax cut mode and a deregulatory mode to one in which he's looking toward the election, trying to delineate some differences from democrat challengers. and that's why we're in this tariff new reg mode. you don't see this changing for another year and a half. >> i don't disagree with the other guests stocks will be able to adjust to this because interest rates are going to go down and the fed is going to respond to this if you look at this poll that came out in texas where biden is beating trump in texas, biden beating trump in ohio, those are not just the michigan, wisconsin, pennsylvania states and that's with a great economy. so they're trying to find the political wedge, these trade issues are there, and in the short run that creates a risk.

carl, the good outcome could be that the fed starts lowering interest rates and then we actually fit the trade deals later this year, trump goes into 2020 with low interest rates, better certainty and lower tariffs as a tailwind into winning the election so the short and medium term are very cloudy. it is more of an economic risk as business confidence and capex come down, but clearly the administration's policy changed from tax cuts and deregulation to tariff increases and regulating sectors to draw a wedge with democratic candidates and try to boost the polling numbers. >> carl, can i jump in on the fed rate cuts. we disagree with that. and let me explain why brian moynihan was on television this week explaining he does not see any fed rate cuts this year. and that from what bank ceos are saying, a local bank here in washington, federal, on your show last week saying as well, where why are bank executives so

comfortable with this economy and where the fed is at right now. and wall street, the smart people on wall street, all believe that we're going to have two to three fed rate cuts this year the spread between that is where money will be made and lost this year in the u.s. stock market. >> so your expectation is for no rate cuts then, correct? >> well, why would bank ceos see more of the economy than you or i could day to day, be thinking that, as where wall street is pushing towards a very dovish stance i would argue that wall street wants to be dovish because it allows them to be bullish on stocks if the fed doesn't cut rates, it gives them less ground to be bullish on stocks. that's -- i think personally that's what is going on wall street now, versus, you know, jpmorgan's -- jamie dimon and brian moynihan and smaller banks are saying the same things. >> dan, just wanted to switch the topic with you, find out what you're hearing from sources as to what the administration is doing here with antitrust. and looking -- investigating the

big tech firms, google, facebook, amazon and apple. >> i think it is important to remember, this didn't just pop up yesterday the administration has been moving on this for two years they started really in august of 2017 when they started to assemble the team at the federal trade commission there were hearings, there was a review on whether previous mergers were anti-competitive. and now you're starting to see that plan b put into motion. i think it is important that the department of justice will oversee google but these are long winded investigations that are going to take time to resolve but clearly the multiple contraction on some of the stocks are going to be in place. it reminds me of hillary tweeting about drug pricing in 2015 when a lot of clients were bullish on biteotech stocks it took a while to realize there say significant political risk even if nothing passes the way i would explain it is companies now have to focus on the government investigations rather than growing their

business this is what hatppened to ibm, this is what happened to microsoft. >> google did announce multibillion dollar deal today dan, cole, the final word on the tech stocks. so you think they act like drug stocks into the election, big overhang on valuations >> i think it is like people being worried about fat free foods and coca-cola's business in '96 coca-cola was going to underperform because people use less of the product. it is a long tailed event like dan said that's the problem for tech. it is long tailed. it is a contraction of multiples ultimately and it is going to dent margins in the long run >> cole and dan, thank you, both. >> thank you when we come back this morning, global growth fears have taken some wind out of oil's steam. we'll hear what the ceo of auto parts manufacturer dana has to say about possible tariffs

his company has plants in mexico a bright spot in the retail wreckage as stitch fix shares are up seven straight quarters don't miss the ceo coming up on "squawk alley. dow is up 28 be good while i'm gone.

[ laughing ] woo hoo. ♪ welcome to my house mmm, mmm, mmmmm. ball. ball. ball. awww, who's a good boy? it's me. me, me, me. yuck, that's gross. you got to get that under control. [ dogs howling ] seriously? embrace the mischief. say "get pets tickets" into your x1 voice remote to see it in theaters. time for etf spotlight oil etfs in the green this morning after falling to a five

month low. this over concerns over stalling global economy, rising middle east tensions. with us now, john kilduf and helene kroft are we oversupply? >> i don't think we're oversupply if you look at this market right now, the physical market is actually tight if you look at brent spreads there is incredible concern about what is going to happen to chinese demand because of the trade war. there is growing u.s. stockpiles making people concerned about rising u.s. production right now, we're not physically oversupplied but sentiment is in a bad place. >> john, what has been behind that move down over the last whatever it has been six weeks, not even. >> for a few weeks, i've been trying to get the petroleum

complex to claim the mantle. the petroleum demand center, that's the whole ground zero for it to the extent those economies are damaged, and the numbers keep coming in, worse and worse. it is esoteric you talk about various countries, heavy truck sales plummeting, there is tea leaves at the bottom of the cup that say the economy is headed for a bad place and that's what oil is pricing in. >> chinese growth, oil demand has been very high this year what happens, that pillar of demand growth falls. we see a contraction in chinese oil imports, that is going to be really bad for the demand picture this year. >> what happens? fell me. tell me. >> i think if we get signals that we're going to have an off ramp on this trade dispute, think that's how oil moves higher >> when at if we go to 10 or 25, which seems more likely than not? where do we go you got to assume what happens to chinese growth, which what

does it mean for the commodity >> we have aggressively priced in much of the worst case scenario hitting that $15 and change yesterday. we bounced ff, saw -- we will head lower still we'll break 50 and head down to low 40s. you have economic chill across asia that i think you would not have expected. everybody was counting on a deal to be cut. now all of a sudden the chinese are saying they're going to fight to the death over this so the rhetoric couldn't be any worse on that front. from that regard, and you have u.s. production that just keeps going up and up. 12.4 million barrels, new record. >> one of our best calling cards now. >> just at 11:00 >> watch the exports there has been about three there is six or more supertankers that pulled in, 12 million barrels worth of i'll. the weekly number could be phenomenal in the next couple of weeks. >> ubs used 50 as a magic number in terms of getting worried about leverage loans

does the energy complex see 50 as magic as well >> i do. it was significant resistance on the way back up. should serve as significant support on the way back down but even with all the talk of lower break evens, it is a tough slide. >> we're going to be going into an opec meeting and the real challenge for them is going to be how do you target sentiment are we going to see a strong statement from the saudi oil minister saying we're going to be very nimble in taking down production at any sign the chinese imports are falling. that's the real challenge for opec because they have much higher fiscal break evens than these u.s. producers do. saudi has a budget break even of close to $90 >> i'm wondering about the mexican tariffs if they go into effect on monday 5% on mexican imports. does that impact the energy industry don't they have -- isn't there a lot of exposure there?

>> we take in a lot of crude from them, send them a lot of gas, natural gas i haven't seen the retaliatory list yet from mexico i got to believe those commodities are on there. >> mexican imports over the replacement product for venezuelan heavy imports into the united states. so that is a big problem for gulf coast refiners. >> finally, where can we go in u.s. production? 124 now. hutch higher can how much higher can we go? >> 13, 14, 15. there is a lot of pipeline infrastructure being built out now going to make some of this install capacity permanent and impervious to price. it is pretty high, pretty high ceiling in my view. >> again, this is existential challenge for opec you can keep cutting production. at a certain point, they have to wonder, are we just making way for the u.s. what is the limit in terms of how much they're willing to cut to make room for this. >> halima, john, thank you both.

appreciate it. >> fired up today. when we come back, four of the ten worst performing stocks on the s&p 500 this year, retailers. nordstrom, macy's, gap, poll getting hammered a deal to mention. google binloeruyg ok "squawk on the street" will be right back heading into retirement you want to follow your passions

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build for what's ahead℠ walmart preparing to make announcements on the future of the company at its shareholder week in arkansas court ney reagan is there. good morning, courtney >> reporter: good morning to you. so walmart shareholders well under way here in northwest arkansas the shareholder business meeting kicking off the events yesterday, attended by senator bernie sanders who presented a proposal on behalf of an employee today executives giving store tours. we're here at a sam's club in springdale also some media briefings.

and each year walmart has for the last several years given us some kind of announcement during this week. typically a pilot program, largely connected to e-commerce. if you look back the last several years, many of those announcements have not panned out to be big material ads to the walmart business so in 2016, walmart announcing it was partnering with uber and lyft to do a grocery delivery test in denver and phoenix two years later, it add postmates and door dash. by may of 2018, walmart had ended its partnership with uber and lyft and still continues to work with other local providers in many areas. shareholders 2017, walmart said it was testing employee delivery of online orders in new jersey and arkansas with its own proprietary app. but around six months later, that program was quietly ended and last year, walmart said it launched text messaging shopping concierge service jet black in new york city. the retailer says it is still testing that program in new york city, but still remains just in

that one location. so while there is still a lot of time left, you don't yet have an announcement, but it is just worth the context and perspective we get a lot of good talkers during this week so far haven't added materially to the business. back over to you >> courtney, we have been reviewing the carnage and some of the department store names so far this year. walmart is having a pretty good year up 12.5% it is a consumer staple, which also has been in demand, but what is driving that kind of strength in walmart? in traffic, e-commerce, and whatever they're doing that you just outlined that is making them such a strong outperformer. >> sure. so walmart is doing a lot of things you mentioned it is the world's largest retailer they play in a lot of areas. but in the u.s. business, which is the predominant and the largest business, more than half of what walmart sells is grocery. and that's an area that the retailer has been heavily

investing in not just in the product, but also at the prices at which that product is sold. it is a traffic driver we know that from the store traffic numbers that we get every quarter. as well as same store sales walmart has been able to put up. grocery is a very, very important part of walmart's business and everything that they're adding for the online options for that grocery you can get it delivered to your home in many of these locations you also can choose to pick it up at a store. sam's club also is rolling out a number of digital enhancements which is part of the walmart business so that's going to be a big differentiator between a walmart and, say, a macy's, which is a very discretionary spending type of segment walmart is a staple. it offers consumers right now what they want at the prices that are very, very competitive. >> courtney, thank you courtney reagan. look at names like nordstrom, macy's, gap, they're all down more than 20% for the year rounding out the bottom of the s&p 500. on the opposite end, stitch fix shares surging on its earnings

beat after reporting its seven consecutive quarter of more than 20% growth in revenues joining us to discuss the retail landscape, jay rogers, cnbc contributor. welcome back such a divergence in retail names right now. you got an under armour up 40% this year, a lot of the department stores, even foot locker down double digits. what is this picture telling you? >> pretty straightforward. if you're walmart, amazon, target, costco, home depot, you're winning, right? that whole sector is winning if you're online, you're winning. online is growing more than 100% of all of the growth so online was up 12% last quarter. total retail, nononline down about 2.7% so all the growth came online. unless you're winning in the omni channel or multichannel business, you're going to lose now, macy's is pretty good at that kohl's is good at that foot locker is good at that. it is still a very tough

business when you have people like amazon moving into apparel and accessories. we know what they did in books and electronics. so you look at apparel and accessories, you say that's where they're coming next. you have all this other business going to these guys like walmart and target that are winning online >> you've been talking about this for years, of course. would people looking at the results from some of these mall-based retailersmake a mistake if they assume the consumer was somehow getting weaker >> the consumer is not get weaker they're not as strong as they were last year the consumer is still very strong employment is very good. it is hard to blame this on the consumer this is really just the transitional phase, moving to new kinds of retailing, have to be able to invest to do that and be in the right places and being on the mall is not the right place. being off mall, off price, local, resale, rental, is the right place. >> who do you stay away from if

the president follows through with the threat we heard again overnight that $300 billion in chinese imports that are not already under tariffs could go through? >> you stay away from everybody, right? because it is going to really slow things down a bit so probably wipes out one year's worth of retail earnings but if you want to stay with somebody, you're going to stay with the ones like walmart that have great supply chain, lots of clout, well capitalized. stay with people like target that have the same sort of characteristics. and you're going to run away from people who are mostly apparel and not strong it would be a hard play if you wanted to be jcpenney, right they're weak and a lot of apparel. so those kind of names are going to have a tough time the strongest supply chain people and the biggest players with the most capital are going to sustain the best as they move out of china and deal with the tariffs. >> speaking of moving out of china, we heard this from g-3 last night i know you told me in the past that four years ago, half of

apparel and handbags coming into this country were made in china. today that number is 15. from 15 to 15? >> that's correct. >> it already happened to a large degree how much more can we do? >> this had nothing to do with tariff tariffs. this had everything to do with vietnam was cheaper, blang de c was cheaper. we'll get the rest of that out relatively fast if in fact these tariffs go through otherwise it will be this gradual process like it has been right now, the factories are all full we'll be building new factories, we're looking at 25% tariffs. >> what are you hearing from retail executives when it comes to the changes in the supply chain? to your point, where are we in that process >> it is pretty straightforward. the first thing you do is say, what am i making in china that can i just sell in china and quit importing into the u.s. and change the production to some other factory that is not in

china? if you're selling into china and into europe, out of china, that kind of works. so you just change your production around so that 20% or so you got in china is being sold to places other than the united states. then the second thing you do is look at how to move the supply chain out. the second strategy takes a year and 18 months to get done. >> i just wonder how much pain is already felt. i'm looking at some of these names, forget department stores, which had their own problems, but, you know, the specialty retailers were thought to be turning it around. capri holdings, michael kors down 56% from its highs. pvh down 50% from its highs. tapestry down almost 50% from its highs. when do you look at the names and think there is some value there? >> we were praising stitch fix and they're down about 50% from their highs too. so it is not just the apparel people that we traditionally looked at. it is also the online guys like

stitch fix that they haven't stayed up with the rest of retailing either you look at that business, you say, well, right, we have got a big problem here, and it will be much worse with a 325, with a 25% tariff on it however, that will go away over time and you'll want to own the companies, the ones that make it, like nordstrom's and macy's and kohl's and foot locker it will be hard to like gap or anybody else that is mall-based or anybody that is weak from the point of view of capitalization. it is only going to be the strong that survive and it will take them a while to get everything back in order >> jan, thank you. >> let's go over to sue herera with a news update at this hour. >> good morning. here's what's happening at this hour president trump, french president macron and wives paying their respects at the normandy american cemetery near omaha beach where allies landed in the d-day invasion 75 years

ago. rows of white crosses marked graves that were decorated with u.s. and french flags to mark that anniversary earlier president trump paid tribute to 94-year-old russell pickett of company a that stormed omaha beach, calling him one tough guy. pickett is the last known survivor of the legendary unit >> believe it or not, he has returned once more to these shores to be with his comrades private pickett, you honor us all with your presence and as the sun rose over the normandy coastline, a fast diminishing number of world war ii veterans remember d-day hundreds of people, civilians and military alike, from around the world, gathered at the water's edge to pay their respects and that is the news update this hour. i'll send it back downtown to you. >> sue, thank you very much. when we come back, border

cities bracing for possible mexico tariffs we're going to take you live to one of those towns in texas. plus, the ceo of auto parts manufacturer dana is with us his customers include ford, gm, deere and tesla. he's got plants in mexico. how his business is bracing for those potential tariffs when we co bk. w wn7.meac i don't know what's going on. i've done all sorts of research, read earnings reports, looked at chart patterns. i've even built my own historic trading model. and you're still not sure if you want to make the trade? exactly. sounds like a case of analysis paralysis. is there a cure? td ameritrade's trade desk. they can help gut check your strategies and answer all your toughest questions. sounds perfect. see, your stress level was here and i got you down to here, i've done my job. call for a strategy gut check with td ameritrade. ♪

these next cmexico u.s. tra talks resume in washington this afternoon. the president taking to twitter last night to warn if no deal, there could be a major economic effect for some border communities. that's where we find contessa brewer >> reporter: last year we imported $352 billion worth of goods from mexico. 10% of that came across the far international bridge here behind me that's according to u.s. census numbers. on this side of the border, you have mcallen, texas.

it is a hub for international trade and distribution on the other side of the border is reynosa factories take raw materials they have economies so intertwined, they're promoted together in economic development efforts. across the border, you have companies like whirlpool, black & decker, panasonic, alpine audio and many others many are already blaming china tariffs for significant head winds when it comes to higher prices for raw materials now they're bracing for 5% tariffs on their mexican manufactured goods the industries that are most affected are cars and car parts by large amount. computer equipment, electronics, oils of different kinds, precision equipment and vegetables by the way, guys, this bridge is the top port in the nation for imported avocados.

we talked to the company responsible for 10% of what the nation consumes. they say, look if the 5% tariffs go into effect, we're going to try to absorb that cost through cost cutting measures. cost efficiencies. any higher -- >> open dialogues with retailers to make sure that they understand that these costs at the end cannot be absorbed solely by our company. so sooner or later, they're going to affect the retail prices. >> reporter: he worries it could mean fewer avocado buyers. businesses worry about the uncertainty that the tariffs are bringing guys >> contessa, thank you very much appreciate that. contessa brewer. also bracing for the tariffs, the auto sector. and not just large car manufacturers, auto suppliers which import from mexico face some risk. joining us this morning, the

president and ceo of auto supplier dana incorporated, jim simkus jim, dana has been around for over a century you have seen plenty of cycles you have exposure to mexican production what is your thinking if 5% comes and then 10% and 15% and so on? >> well, at least for dana, we're fortunate, we set up the business model the right way about 50% of our business is in north america. more than 40% of that is in america. and therefore the way we set up our supply chain is largely just component business but we'll work through it. on overall, you know, we work for the 232 as it related to steel and aluminum on that situation. and whatever happens here we'll work through it. if it continues to be extreme, that will be a whole other situation. let's see how things go over the next week or so. >> when we hear numbers like 5, 10, 15, what is a reasonable pass through to your end consumer >> well, ultimately, dana, like

most suppliers, we're a b to c company. so we're selling to the oems i can't speak for what they can pass through i can tell you this, when you think about the 232, that was 25 and 10% respectively on steel and aluminum we found a way to work in partnership with our oem customers. i think we'll find a spluolutios we go forward here. >> what do you mean you found a way? >> we worked through it. in our business you have to find your way to work through your share, that's in vav and cost production, shop floor, logistics, whatever. the customer works with you as well through that process. that's what we did in this case. >> how do you characterize overall when someone asks you just how much is the auto sector and the auto parts sector exposed when it comes to mexican tariffs, even the 5%, likely it

go through on monday >> well, i think the numbers are pretty well published out there. about 165 million on two-way trade or 452 million on a daily basis. certainly exposed. we can all do the math on that we need to navigate through it i don't think anybody is a fan i'm not a fan of tariffs in general. so if it is to a better means to an end, hopefully that's the case i can tell you i'm pretty positive on what came of everything else relative to usmca and the status of where that's at. >> when it comes to china, for example, you manufacture in china for china, correct >> yeah. we're very much our whole business model is very much a build where we sell model. the only chance to be successful in the mobility parts business is to have a global value stream and so that's what we do for large things like actuals

and driveshafts and so on and so forth, transmissions, we largely build where we sell. >> do you think you come under pressure for some of these -- the auto manufacturers, though, who may be facing increased tariffs? let's say bmw is making a car in mexico, 5% or 10%. does that translate down to you in terms of pressure to reduce your cost? >> all the customers today, if you think -- i like to call it a crisis as a terrible thing to waste. if you go to 08, 09, everybody was in a crisis mode on how to navigate through that. the way this works, no different than just annual cost reductions with our customers you sit down with them, you try to take it out through pure waste elimination, whatever amount that could be there may be some give and take. but it is not so material that an example of dana, you'll never see us communicating too much about how much cost downs if at

all relative to our earnings reports and we have seen earnings over the last three or four years has been spectacular. >> jim, when you think long-term, over decades, people have argued for a while now that global supply chains had already gotten stretched prior to really even the president coming into office i wonder if you think there is any return to that prior level and how much tolerance overall manufacturers have to higher costs and their willingness to repatriate or nationalize supply chains. >> i think it is all going to come back to their ability to be not just a domestic supplier of vehicles and -- but also be able to export that and, again, it will come down to the oem, which has more of an export model than others and that toleration factor will come into play i can't speak for, you know, we don't get that publicized information, we don't spend a lot of time on it. some do more exports than others

the tolerance will be less will be interesting for them they'll navigate through it. intelligent people running oems around the world they'll work their way through that. >> there have been concerns on wall street that this is just rubbing salt in the wound of an industry that has already faced major structural challenges. peak auto cycle, for instance, the rise of ride sharing and americans, you know, ultimate desire to own less cars. how do you respond to some of those worries? are they legitimate? >> i think there is a legitimacy to it. larger concern is really just getting to a point of stability and having being able to predict where things are going to go i'm not -- i don't think as concerned about what is happening in the immediate term because i got to say, the good thing is that let's take this situation with between the united states and mefl cxico now as i said, not to overcook it, but even getting to a new nafta

with usmca will be positive. i think you'll find that on both sides of the aisle i hope and expect it will be short-term if anything at all. and in the end, it will be a better means to an end hopefully that's how everybody else is seeing it. >> when you think about manufacturers who did bring some production out of china to mexico, only to get hit with this, i wonder if -- has there been a more challenging time to be a supply chain manager? is this as bad tass was in the '80s in japan or worse >> it is not even close. i can tell you in the whole top 1,000 things i've had to work on in the last yar ear or two or three, this isn't close. you have a lot of moving parts when running a multifaceted business our example, we have 145 facilities around the world and 33 countries there is a moving of the shelves a lot and things have been relatively short-term. take the 232 example again you navigate and react as it is.

i don't think it is the case at all. >> have you moved any jobs back to the united states >> i would say big picture no. we haven't needed to we kind of did -- you don't pivot in a capital intensive industry leike ours you don't pivot in a in second as i like to call it there could be some movement, but could be movement both ways. there is plenty of domestic manufacturing in those countries. things move around as well >> jim, really enlightening. appreciate it. hope you'll come back. >> thank you very much >> as we head to a quick break, watching shares of uber. the stock did close yesterday. at its ipo price of $45 for the first time after surpassing that level earlier in the session going for its fifth straight day of gains now, almost up a percent. major averages, dow is higher. 58 points. extending the winning streak of the week except for the naaq, sd which is pretty much flat. communication services only communication services only group lower for the weekrcycle.

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top strategist scott ren says we're one bad headline away from another brutal sell-off find out what has him so nervous about e rkthmaet on tradingnation.cnbc.com more "squawk on the street" coming up.

welcome back to "squawk on the street." rick santelli here, live on the floor of the cme my guest today, professor ken rogoff the ecb had their meeting and i thought maybe we would find out they were preparing to nerp in the bud, negative interest rate policy, doesn't look like it is in the cards what is your take, professor >> the fed had lower for longer. the european central bank right now looks like lower forever they don't really seem to have the tools to get inflation going, to really recover as fully as the united states has >> you know, tltro seems to be

their favorite tool now. i understand it. targeted long-term refinancing operations and they try to keep restocking the banks so they can lend and create transmissions that seem to work. in the end, these are only half measures do you see anything between now and october when mar yes drio d term ends. >> i think it is very tough. i think their tools are very limited. these tools that they're using are basically having the ecb lend to the private sector and they're reluctant to push that too far because obviously they take some risk at the end of the day. the federal reserve did that at the height of the financial crisis but very, you know, leery about doing a lot of that going forward. >> now, i see that the euro currency, albeit backed off a bit, but it was targeting around

113. now around 112.6 what do you think investors were looking at to give rise to the euro currency versus the greenback considering the bleak outlook of their central bank having no insurance for what may be at some point a -- >> i think the euro is raiding a lot low ethan it was a while back and people are nervous about europe yeah, they don't have obvious tools b and pistol policy because of their various euro wide agreements. ecb will definitely act but its tools are very limited to do everything possible to save off a recession so does the fed and bank of jap japan. they're all nervous they don't have the tools, but the ecb really doesn't >> the big conversation, we need the ease markets are demand iing it

all stimulus is spongeable isn't it possible that policy, which is an off chute, meaning if europe and japan remapmain e, does that take some of the pressure off the u.s. market to the central bank >> yes and no. having europe and japan grow is good for us. increases our exports and demand on the other hand, it pushes up the to dollar it's not so horrible, but it's not good i think the fed is in a position where they would much rather see inflation overshoot 2% and have a recession. if inflation overshoot, it just builds their credibility, their target is symmetric, they know how to bring inflation down. if there's a recession, they think they have the tools, but they're really not sure.

>> professor, thank you for your observations today and we will continue to monitor how the u.s. markets continue to react as we approach fed meetings. thank you for joining me today sarah, back to you >> thank you >> all right, near session highs here dow east up more "squawk on the street" after this

welcome back to "squawk on the street." stocks modestly higher now we're seeing strength in energy, health care and staples while the financial industrials underperformed we've got w trk i and brent crude struggling to stay in the green. down b about 30% from recent highs in may despite the weakness in crude, energy is up after rebound uing yesterday among the names leading, eog resources, concho and occidental petroleum back to you at the stock exchange >> look at occidental changing course there with wti down right now. i know that's one of the many things you'll be tracking later on the closing bell. of course beyond meat, too >> that's the headliner on earnings beyond meat gearing up for its first report expectations are all over the

place. the stock is up more than 300% from its ipo we'll break down the numbs i'm curious to see whether they talk about the competition like at tyson foods, trying to get into the alternative meat craze. tilman will be our guest we'll find out what he thinks. also ceo of chegg will be here to discuss a new initiative. they're going to help employees pay off student debt following in the steps of the millionaire. will business step up and follow chegg? >> sidewa"squawk alley" is up n. don't miss the ceo of stit stitch fix stock up 16%

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♪ good thursday morning. welcome to "squawk alley." back at the new york stock exchange obviously watching these markets. we'll start with the continued head winds for technology. our next guest adds that mexico tariffs could be quote devastating to the tech sector gary is the ceo of the consumer technology association gentlemen, good to see you gary, what do you mean by

devastate iing? >> well, june 10th, monday 5% tariffs on products we've been