>> good morning, everybody welcome to "squawk box" on cnbc. we're live from the market site in times square. i'm becky quick along with joe dow indicates up by 126 points it's now been six days in a row we've seen the dow close higher. that's the longest winning streak we've seen in 13 months s&p 500 is up. 15th day in a row. it's up another 15 points. the nasdaq up by 62 points it's been up five sessions in a row too. take a look at roy happened overnight in asia. you're going to see the nikkei was up by a third of a percent the hang seng up by thr three-quarters and shanghai up about 2.5%

the cac is up and the footstsef. the yields something we've been watching closely >> ticking up a little more like it was yesterday and that was a big difference in yesterday's market rally compared to the risk on tone to the sector performance. >> thanks for that if you're looking for a negative, we did come off the highs. a couple of offsets, but it was a more constructive. >> we're getting back. i'll tell you. i can tell you week ago -- what's -- a week ago when i was sitting in for melissa, everyone was bearish. >> really? >> monday was a big week.

>> it was the s&p 500 and nasdaq both down. >> but that had been after six straight -- five or six straight weeks, so everyone was bearish the guy from morgan stanley, very bearer? oh, i remember. >> swe'll see. >> bo jo, ten more people backing him. he had powder all over his nose. >> that's derailed his campaign. >> really? >> they're down to ten candidates. >> ten. >> boris johnson will make the final two. >> less than the democrats you know, watching what happens in italy and all these other --

conservatives bonding together with the liberals and all the crazy stuff that goes on in all of these countries, i is have offered to rent out the constitution to you people you can copyright it for a little bit you can use our method of government for a little bit if it would help. >> it does work perfectly here there are never any little issues. >> i agree are you saying that in some facetious way? >> i think he is being facetious. >> you can't tell it works very good here, will? >> i think -- that how many different parties are going to have to band together to actually form a government and what will it last, about eight months or so before you have another recount. >> less than 30 months >> yeah. that's a good way to run a country. and are you staying or -- >> the only thing is sterling has touched a low. >> are you keeping that currency or not you're in the union but didn't

day take the currency? that makes well too. >> we had some good jobs data this morning yesterday some terrible gdp growth for april. >> i'm glad -- aren't you glad you're here? >> i'm always glad -- >> you give me something -- >> can i just say -- >> go ahead. they're going to celebrate it. it's a good wage growth data have to hold on to the small positives sh the dollar's weakened which can be good. >> that's because they think the fed's going to lower rates the question is will that actually happen. they brought that up what the wall street's wrong what if a rate cut doesn't come. >> how does the mark react. >> it's ticked up. it's so low you've got the scope for both yields to rise and equities for a little bit. but the question will be when will they get a little higher

and can we get above the 2900 on the s&p or back past the recent highs. >> the yield's climbing as you speak, 2.71%. >> i was nervous as soon as i say middle ground on the markets. >> powell is in a pickle he looks like he's sum coming to orange man that's the summary orange man bad that's what they come up with. cnn immediately fact-checks for us lucky than cnn is the arbiter of facts. that's what -- i really like that. >> i went to check it out. >> most of it they didn't even fact-checked they just mocked. >> i'm know. and another guy -- they both did. they're great. anyway, we doan -- we don't want to trash any competitors. >> no, no, no.

>> importantly, cnbc dissected it and talked about it all day i would like to say accurately. >> okay. i stopped looking after a while. you somehow are complicit in giving this guy a podium, which -- i don't know whether you considered that. >> i think if you listen, if you want to know what the leader of the free world is thinking a jd you listen to him for a half hour, i think that's the benefit you can possibly do. you decide whatever you want, take from that, but you should be able to hear his thoughts. >> i agree, i agree. >> it was very important. >> and for the markets which, of course, were up yesterday and have been for five or six sessions in a row, it's a more positive tone. yes, the tariffs will come. >> i kidnapped of took awnd of u think anybody can talk him out of this, these are very long held deep beliefs he has and he thinks they're very effective and he's going the use them.

>> i don't disagree with that but there was a possibility that a meeting with zee shing pea wouldn't happen. again, for all of the bluster and a tweet that all of these tariffs are never going to change, he's backtracked and said he's meeting with xi at g20. we're moving toward a deal even if we're not. >> there was definitely progress made with mexico last week and whether there's a safe third country that's going to come through, but watching pence with bret baier last night, he actually went over the exact details of how many new ports there are, howpeople can be deported. >> 6,000 rather than a couple hundred a day before that. we'll see. it with us funny the comments on my emails and texts were totally different it's just twitter. twitter is -- i don't know it's the people on twitter i think they're millennials. i think it's about 90% --

>> i think people on twitter is anybody. people on your email or text are people who are actually friends. >> i was saying earlier i would look at two comments and the next one would say -- you can't see it because it's blocked two. more because it's blocked. two more and it's blocked. and i think, i have blocked every third tweet -- i couldn't see. >> it's that way around. it's not that they've blocked you. >> no, no. >> he's a blocker. >> i'm an tev blocker. what do you expect they're unhinged they're hysterical you've got to hear both sides. >> they're jumped up and down. they don't accept the election it's 2019 and they're still jumping up and down and kroying. >> i'm hoping president xi is going to phone in today, right, joe? >> it used to be trump tuesdays and i would be willing to

entertain the notion of resurrecting it. i wou would you? >> oh, shufrm i'm not sure the president is. zbik tech is expected to come under fire today. the house judicial committee will be looking at companies including facebook, amazon, and google they'll look at how news content is spread on information and misinformation online. joe. all right. president trump talked about big tech when he called in to "squawk box" yesterday, and here's what he told us. >> every week you see them going after facebook and apple and all of these companies, these -- that are, you know, they're great companies, but there's something going on i will say the european union is suinging them all the time we're going to look at it differently. we have a great attorney general. we're going to look at it differently. they're attacking our companies. we should be doing what they're

doing. we think there's a monopoly. i'm not at sure they think that. think think this is easy money we'll sue apple for $7 billion i think obviously there's something going on in terms of monopoly. >> staying on the topic of technology, china telecom giant huawei is hinting that u.s. pressure on it is hurting sales. the company's chief strategist said it would have become the world ee top phone maker if it were not for unexpected circumstances. they're on a black list. the u.s. cannot by its goods without government approval. here's what president trump said about huawei in his interview with us yesterday. >> it could do vel well with respect to huawei and our trade negotiations with china. china wants to make a deal that i want to make a deal much more than i do. >> that's one of the questions you walk away with is huawei going to be part of

the trade deal or be part of the sanctions with regard to security we've got wilbur ross on today we can ask him. >> people try to make a controversy about everything trump says we said it was only a national security threat and i think even cnbc did something on that i think dot-com did something. then i watched again pence said obviously we think it's a national security threat, but obviously when we're looking at remedies or whatever we're going to ask, huawei could come into that discussion, and there would have to be obviously remedies as par of the overall trade negotiations so it could be -- >> cte. >> right so it could be part of the overall negotiations going on, but it could be both it could be nuanced and neither either or. it's either a national security threat or a chess piece in

overall trade negotiations it could be both. >> still confusing why you don't have other national al lies on the same page which does suggestiosugges with some of the tone -- >> -- that it's partly true. >> -- that it's partly true. a couple of the european telco companies, not the government, came around and said we're not going to use huawei. >> british telecom has been saying that since december. >> yeah. so it is unclear, but i do think it's fair to picket because the secretary and vice president have maintained a national security tone. when the president hasn't, he's let it slip in certain comments which he may not have meant. >> part of the infrastructure the way it's set up, if china's the enemy, they can use the structure of huawei to get in. that's part of it. the big earth part of the security issue is if you're not

allies and not getting along, you're part of a bigger -- >> do you want a huawei smartphone >> i don't. >> i fear the future in terms of what happens five years from now. i would like to -- i'm reading about the decline of the holy roman empire. >> a little light reading? >> no, but we've got a real threat i think we've learned that about and it's not going to be solved when we list the giant tariffs this is the main issue facing the united states and you've got to give trump credit for highlighting that, that by 2025 it would be nice if we're still a pre-eminent power. i would hate for china to dictate terms on us on anything. >> china no longer says 2025 i don't know that that means they're changing any of their behavior, but they're no longer trumpeting their plans. >> they black us out if we talk

about it or they've got people in training camps and they call it job training you're with me. >> i'm not defending that. of course, not. >> okay. >> still to come on "squawk box," longest winning streak in more than a year the biggest drivers. but first as we head to break, here's a look at the biggest winners. it all started under this buttonwood tree. twenty-four people came together to sign an agreement that created the stock exchange. just the right elements coming together. it started when scores more people came together, just down the street and traded bonds that helped pay for the revolution, and the nation it created. it started in an office on the corner where the right people witnessed the telegraph and brought information and humanity together forever.

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. we should be entitled to have a fair playing field, but even without a fair playing field because our fed is very, very destructive to us even without a fair playing field, we're winning because the tariffs are putting us at a tremendous disadvantage. >> that was -- did you know this that was president trump actually talking about it. he called in yesterday were your ears burning, hearing me talk about you? >> i did, yes. >> a week ago i thought you were very bearish a thousand points higher on the dow. that was "fast money" last week. >> yes, it was. >> are you doubling down on the

bearishness? >> no. i'm sticking to 2900 as a year-end target, which is where we are right now it never flat lines. we go up and done a lot. if i had to bet on it,what's not priced into the market is the potential economic boost from moving companies back to the u.s., from actually bringing jobs back to the u.s i think part of -- i think those aspects of economic growth aren't necessarily priced into the market what's priced in is margin pressure, rising input costs, lower exports. i feel like the market is

targeting more of the possib negatives,s he of the positives. it's it's led to more defensive save-haven areas. it's been led by utilities and all of these sort of low beta safe defensive hedges, and i think what could actually happen as we move through year end is cyclicals could take leadership. so i'm a big fan of cyclicals. i guess buy rather than sell, but from here the real money can be made by playing sector rotation. >> if tariffs do escalate, they would fall on the short term you're saying it's a potential long-term benefit. >> yes i think you're exactly right the positives will take a longer time to perfect late in the meantime we'll see a fallout from supply chain, et cetera if you take a long view, you've got a super accommodative fed,

u.s. corporations continuing to make money margins haven't necessarily collapsed even though costs have increased a little bit that suggestion they're starting to expert some pricing power and our economists don't see another recession for a year and a half or more. >> how important is the fed in that enchoir equation? >> i think they're critical. >> same thing in december. every time the market pivots >> exactly they're critical in the bull market and have been since 2009. i think where we are, if we start to see growth improve in the second half and say we start to see improved economic trends, see companies spend more on capex, they're starting to plan

a little bit, that could keep the feds on hold, but growth could drive the market higher. i think it's important and their mek niches are probably the most critical right now. >> would you buy any stocks right now? >> i'm a being fan of u.s. tech. china tech looks like they're in trouble. i doable see them stopping the purchase of u.s. semiconductors. they buy the chips an seppet for $4 i is hard to argue that they're going to stop importing semiconductors from the u.s. i do think china relies on the u.s. more than the u.s. relies on china, so i'm not necessarily ready to step in. >> you like u.s. tech but you said sell f.a.n.g. >> i do. software is where you want it to be software has crushed it for most of the year.

semiis interesting but f.a.n.g. is where i'm most concerned about. they're super crowded and have led things for three or four years. so you've got monopolistic issues rearing for a couple of these companies, corporate, data privacy. they've had a regulatory free ride forever and now all of a sudden it's in the crosshairs of the regulators so that's the key risk for f.a.n.g. it's not about china but what's happening. >> if you were to do a ben frachg lynn close -- do you know what that is in in a brokerage, you draw a line, put the positives and negatives and make a decision and do one or the other. i just think interest rates are so low right now you can get 4% in stock.

i do end know what the average yield is on a stock. you know what might be theal alternativive? cash there's all these positive things globe ially you might lo at and sentiment. >> i agree. >> the market is back to where it was in january of 2018. what month is it it's june, isn't it? is that a year and a half we've been in this rolling sort of consolidation of gains we've made no headway. only since 1999, only 4% annual returns. >> at the same time, the ten-year is lower than it was when the fed started hiking

rates. >> i worry about the law of diminishing returns. >> that does suggest -- >> i don't think they can do it anymore. we've got one year of 3% maybe we do. >> but on the low of diminishing returns, yu look around at the rest of the developed world and central banks really have a low of diminishing returns so, again. >> you can't go out of the ten-year to a german bund. >> that's an option. >> everything in life is relative. >> i don't know. maybe we're too complacent. >> i agree we're not at euphoric levels no one's at a 3300 antarctica.

>> target. i see you shaking your head. you know what? you can stay bearish forever and you'll also be in demand, people that are bearish they always think they're smart and ahead of everyone else and usually you lose money. >> playing devil's advocate. >> savita, thank you when the facts change, i change. i wanted to hold you you're bearish, last week. now you're good. >> i like value. >> you like value stocks, i know you like defensive. >> no, i don't like defensive. i like financials. exactly. >> financials were the big egest yesterday. >> yes. >> thank you for that. skip the straw movement took the nation by storm. now the olympic games are getting into the anti-plastic games as well.

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2020 organizers say they'll stand on podiums made from recycled plastic waste the materials will be collected from national households oer the ocean.

they're trying to collect 4,500 tons of plastic. going green. >> i'm not sure. metal for the olympics should be good quality gold. >> how much is used in mobile phones you can't make -- you know, maybe a plating. >> i think they deserve a good quality metal for how hould they -- what did it used to be made of high toxic waste it could have been wood. ship it from london to wherever the next one is. >> you're right. they're traying the make a point. i think it will be a nice metal anyway even if it's recycled. >> from a mobile phone. >> once you melt it down, it's all the same.

>> we'll see they deserve it if they win the olympics that i think they'll get nice metals. >> coming up, beyond meat. i've got a lot more on this. beyond meat. in new numbers on investers betting against the hot ipo. as we head to break, here's look at yesterday's s&p 500, winners and losers through the at&t network, edge-to-edge intelligence gives you the power to see every corner of your growing business.

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good morning u.s. equity futures at this hour slightly higher. up 131 points on the dow nasd nasdaq's strong, almost 60 points 59 almost. the s&p back above 2900 if it were to open there. >> beyond meat, short sellers are getting crushed. they lost $400 million since the plant-based burger maker went public the stock is up 600% this morning jpmorgan downgraded last friday they raised the stock to $120 a shafrmt at the time the analysts said at some point it will be priced in jpmorgan says that day has arrive and the stock this morning is down about 6.3% all of that came after the company came out with its first ever profit numbers.

>> it blue past all of the price targets in those buy notes within a matter of days as well. those are bullish at the time. coming up here on "squawk box," ahead of its direct listing. we'll dig into the numbers and then at 7:00 eastern don't miss our squad news maker of the morning, wilbur ross wl ilbe joining us stay tuned you're watching "squawk box.

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we're back to "squawk box. they expect slowing revenue. it came ahead of the direct listing which is expected next week for more let's turn to the analyst. senior re. analyst at davidson. thanks for joining us. awidening bottom line lost that doesn't bode well, does it? >> thank you so much for having me great to be here look as i talked to investors yesterday after the numbers came out, i think they ooh is the concern is the deceleration on the top line, especially if you look at guidance when you're talking 80% growth last year to 67% growth.

i'll caveat that the m.o. for these software companies is to guide very conservatively the actual numbers may prove to be very, very different from the ones they're talking about right now. you know, in terms of the bottom line, i will say that was probably one of the silver linings from my perspective. caps came in above my expectations you know, once you strip out the one-time charges related to the direct listing, and i do think, you know, especially if you think about the back half of the year and into next year we can start to see some real levers and see them start to approach they'll break even. >> a lot of people point to the fact that they get such a huge proportion of their revenue from a very small percentage of clients. is that something you see as a risk or opportunity, shoring space to grow into in.

>> i look at the stat around the 100 k customers and the 40% contribution as a really positive thing in my mind. i think there was a narrative of the slack being the startup tool, but really the fact that you have the large startup companies that are a big part of the revenue base tells us that you have a lot of businesses that are using slack they have wall the wall deploim that's something that not just the i.t. teams or software developers are using it's something that markets and finance and legal and everyone is using i look at that as a good thing i think to your point it's important to future grouk and that's where the biggest opportunity is to take that longer company outside of the larger ones and help them graduate up. really i think that's where the biggest opportunity today is with them. >> direct listing so the employees, the early investors, the likes of them, they can sell

on day one as opposed to typical post sites her at lockup here. does that concern you? >> it's one of those things difficult to predict and the only analog we have to look at for a company of that was spotify last year. if you look at day one trading, it was swinging wildly all over the place. i would not be surprised to see the same thing with slack. i think there's a lot of appetite from institutional investors. but at the same time, you have people working there for a long time that are going to use the opportunity to take advantage of the liquidity, so i think it's definitely one of the risks that anyone looking at the name has to be aware of you don't have that rockup or locking up. >> what's your recommendation? >> i'm neutral rated on the stock. it's one of the valued names in

software, but i think the valuation for slack is clearly there. as i do my customer checks, i think i talk to 30 or more slack customers. not only is it ubiquitous, but it's something that people who use it really, really like using, and there very much is that viral nature out of it. i'm very, very positive on the company and the potential for slack to be the multi-billion-dollar slack company. my sticking point now and why i'm neutral rated on the name. >> rishi jaluria, thank you for joining us. >> thank you. we'll talk about what washington's inquiries could mean for companies like google and facebook as we head to break here's a check on the european numbers and we have positive numbers there, green, germy inandog the best we'll be right there

all right. welcome back, everybody. tech under fire in washington. today the house judiciary committee will begin a probe into the market dominance of some of the industry's largest industries, including facebook, google, and amazon joining us now is the business ed tr for axios, also gene munster who's the founder and managing partner and, dan, i want to start with you. kind of lay this out with you, what's at play at this point, how is this shaping up, what will happen today. >> there's a lot of stuff in flux you have two pieces here, the legislative piece, and i don't even think it's for show

there seems to be a bipartisan consensus. you need anti-trust rules, 21st century anti-trust rules that would come from congress that will happen behind closed doors. >> in terms of needing this to be kind of resolved, there's a few different ways legislature could take, congress could take. what are those scenarios and what is most likely? >> the think they could do, they could take the old kind of sherman anti-trust and clayton anti-trust and rewrite them in a way that data privacy is specifically included. when you look at the way it's interpreted right now, i it's all in terms of price. if something costed more, therefore, it's potentially bad

for consumer welfare you could rewrite the rules to include it. >> dan, there is a little bit of a consensusout there that this is going to take years we're not going the see anything that really comes through for several years. you think that's the case, too, right? >> i think right? >> yes and from a pure political calculation, you know, break up big tech is a great thing to be able to say on the campaign trail. >> sure. >> you don't have an election for another 18 months. >> sure. gene, moffettnathanson upgraded facebook this morning, despite concerns about what's going to happen with global regulatory. and you also think that the headlines here are going to be worse than what actually happens in the end, right? >> yeah, exactly i would also caution that everything we're talking about, like you said, is going to take years to work out. these headlines will likely weigh on some of these stocks, and in particular google and facebook, which is going to be at the center of today's house judiciary committee, really helping legislators understand but the more rhetoric that we hear out there that's typically not good for the multiple.

i do have some concerns about facebook longer term i do think that google is well positioned longer term, but nonetheless, google is probably at the greatest risk over the next two years related to different practices in terms of specifically how they display search results >> why do you think google's most at risk >> well, if you look at 90% of their business is search, and search is impacted by the ranking that they show the results. and google historically has put their own rankings ahead of other competitors. i think a perfect example would be to search for a restaurant. typically, google maps shows up as the primary result. so, things like that are easy for regulators to wrap their heads around, and i think, ultimately, how this could play out is some sort of shift in the algorithm of google that could better and more fairly, if you will, rank some of these results, which could obviously impact monetization.

again, i want to stress, i don't think that this will have a material impact on the business, but i do think the headlines will have a measurable impact on google's multiple over the next year. >> which means you do what if the stock is under pressure, would you buy it at those times? >> so, i think this separates the investors from traders i think traders, there's really nothing to do with google. i would just stay away for the next year or so because i think that these are material questions that investors are going to ask i think if you have the better perspective of owning things for the next three to five years, google continues to be the oxygen of the internet i think this company will prevail, whether it's around search or other bets, autonomy, all the great things that they're working on the side. so, it depends on what your time horizon is, but very different action steps based on those time horizons. >> dan, if competition and antitrust law is rewritten in order to address this broader issue for the tech stocks and the way in which these businesses have changed, are there any other sectors that

will be impacted that as a second derivative effect and which sectors do you think could be most affected >> well, obviously, it depends on how they're rewritten, because there's really two choices here, right? you either write something very specific for tech and tech platforms -- for example, you see what elizabeth warren's proposed in terms of marketplaces that's really tech-specific. but more broadly, if you look at the u.s. economy and u.s. corporate economy, consolidation, big consolidat n consolidation, kind of duopolies or monopolies, you see that in health care, in big agriculture, you see it across the board. so i think ultimately, if congress really wants to take this on, the question is are they going to be real narrow with tech? and i think they could be. they could just go with tech or do something much broader, which honestly makes more sense if you're trying to rewrite antitrust law. >> dan, the privacy issue -- i was wondering what you were going to say, because if we -- i think of antitrust, i think of consumers. i don't want to go the european route where every new competitor needs to have, oh, my gosh, you know, you're hurting a competitor you know, you're an entrenched company that has a mote and you're really good, and that's

not our problem, you know? the competitor can't -- so, you said it would have to be rewritten in terms of privacy. why would it have to be antitrust? couldn't you address the way that we're not compensated for all the information? couldn't you do that some way around, that didn't involve antitrust? stick with antitrust the way it is >> you could you could. you could leave it, as i said. and to be honest, joe, i think the way you do that, and an answer to will's question is, are you going to write something tech-specific or look at antitrust broader? because again, joe, there is this broader question -- you look at health care, big agriculture -- the consolidation and the pricing pressure is real going specifically at tech, absolutely, you could write a privacy law. >> because i don't feel violated i've talked about it with -- privacy, that's one thing. i'm not on facebook, so they're not stealing all my data but everything's free. i just -- you know, i don't want to change antitrust -- i don't -- >> it depends how you define free that's the question, right are you paying dollars or are you giving them something else in exchange? >> i just look at the whole

inflation picture and just the world we're living in, with amazon and transparent pricing everywhere, and it's just such a -- you know, we really do look at all the stuff and don't even appreciate how much it's changed our lives and held down inflation and been a positive. and to be looking at it and say, yeah, we've got to do something about this there's, well, let's see, there's -- you know, you've got to search to find something that's really -- that's why i think elizabeth warren is, you know -- i think that whole approach is misguided. >> joe, can i just say one thing, joe >> yeah. >> the question -- there's two sides of pricing, right? so, right, facebook and google are free for me and you to use, right? >> yeah. >> but ultimately, they're getting paid by companieswhich are advertising on them. are we ultimately, and this is a question for regulators, paying on the back end to get that product to facebook and google, are we paying more because -- >> no, because amazon has driven down prices. so the whole ecosystem is an advantage for consumers. now, for competitors, then we're headed down what i think is an ill-advised system that they use

over where wilfred's from, you know, among a lot of ill-advised things they do over there, right, dan >> yeah, my fault. >> i'll let you go with that, joe. >> i knew you would. i knew you would. >> gene, you think that apple and amazon, though, are relatively safe. how is that? >> well, it really is the tale two of cities. it's easy to wrap all these companies together because they're large tech, but undoubt undoubtedly, apple has been more progressive with their view that it really is about the device and privacy has been an essential theme for the company for the last four years. i think that that narrative will play well with regulators. and amazon is, even though they have a larger percentage of e-commerce, call it 20%, it still is far from a monopoly so i think that, really when you think about this debate about regulation and large tech, you need to break it into two camps, and apple and amazon are in the safer camp apple by far is the safest. >> gene, dan, thank you both good to see you this morning

>> thank you. >> thank you still to come, the "squawk" newsmaker of the morning commerce secretary wilbur ross will join us from the select usa investment summit in washington. plus, we'll welcome our guest host for the next hour, former defense secretary ash carter you're watching "squawk box" on cnbc ♪ i know how difficult it can be 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

is china ready to strike a deal >> based on a lot of facts and a lot of knowledge, china's going to make a deal because they're going to have to make a deal. >> commerce secretary wilbur ross joins us to discuss the latest developments, the president's comments on trade, and much more. big tech heads to the hill we'll preview today's hearing and talk privacy, regulation, and much more with our guest host, former defense secretary ash carter plus, the market rally is looking to make it six days in a row. we'll find out what's driving the latest move higher and discuss what you should be doing with your money, as the second hour of "squawk box" begins right now. ♪ >> announcer: live from the beating heart of business, new york, this is "squawk box.

good morning, and welcome back to "squawk box" here on cnbc i'm joe kernen along with becky quick and wilfred frost. andrew is out today. in studio for the hour, former secretary of defense ash carter. great to have you, mr. secretary, and we're going to -- >> thank for having me back. >> that's a great shot of you on this book. >> great shot of a soldier, too. >> yes, you have a great shot of a soldier, but you look determined "lessons from a lifetime of leadership in the pentagon." and i've talked to enough people that -- i had a long interview with another secretary of defense, gates. >> yes. >> and he's still -- >> a good friend of mine >> he still is affected by that. i think his entire life has to do with being in -- having soldiers that you're really in charge of, because you feel particularly -- >> particularly now since we're at war continuously. serious business, not a game. >> and i think you did the same thing. i mean, you wrote an vidleindivl

letter you felt responsible. >> trips to the hospital, to dover. it's hard to believe now, but in '09, '10, there were a dozen kids a week showing up at walter reed. >> young kids that are willing to -- >> now, that's not going on anymore, but that was tough. my wife and i'd go out there every weekend that we were in town, and there's always a fresh batch of kids, and dover's a very different experience. >> and i'm sure you touch on a lot of that in the book. >> i do. it's not about me. it's a different kind of book. it's not a memoir or an autobiography. it's about the pentagon and running the largest institution in the world, but also there's things, the serious gravity of the responsibility and just try to convey that. >> well, there's bureaucracy, too. and i remember secretary gates, there was a way that those ieds could have been minimized by a

hull that would disperse the blasts, and he couldn't get funding. it couldn't -- >> yeah, yeah. >> it's so frustrating -- >> i came in, he put me in charge of that when i was his weapons buyer and technology guy, and the first thing he said to me when i took the job was, he said, "the troops are at war, the pentagon is not. i want you to change that. i'll never forget that and he always backed me up when i did something that was -- that, you know, made people jump, because you know, people in washington and the pentagon, they're preoccupied with the next budget and sort of the -- >> ten years from now we're going to be fighting a different war and we've got guys on the ground right now. >> so what's the point of buying something for today's war because we're focused on tomorrow's war well, you've got kids who are losing limbs there because they don't have a vehicle that will protect them so, that was my major preoccupation. you might think the jet strike fighter and tanker and so forth were, but really, job one for me was always -- i had to do the other stuff as well, all the big

program -- >> people think, oh, yeah, he's a cabinet member, he wants to be in the administration. well, when you serve as the secretary of defense, you're doing it for something a lot bigger reasons than that anyway, thank you for your service, too, mr. secretary. >> thank you. futures this hour indicated up triple digits we've had i don't know how many straight days this is. >> this will be seven, if we end up today. >> seven. president trump calling into "squawk box" yesterday he commented on many topics, including striking a trade deal with china >> the china deal's going to work out you know why because of tariffs because right now, china is getting absolutely decimated by companies that are leaving china, going to other countries, including our own, because they don't want to pay the tariffs. and china will, in my opinion, based on a lot of facts and a lot of knowledge, china's going to make a deal because they're going to have to make a deal. >> joining us now to talk tariffs, trade, and much more is u.s. commerce department

secretary wilbur ross. he is coming to us live from the select usa investment summit and secretary ross, thank you for being here today it's good to see you >> well, thank you, becky. good to see you. >> i know that trade and tariffs have been an issue -- or the tariffs have been an issue that you have long been a proponent of we heard from the president yesterday, but what do you think's going to happen with china? >> well, i think the president is exactly right -- either we will collect more and more tariffs on more and more products, or we will make an arrangement with them that deals with both the current situation -- soybeans, lng, planes, things like that -- and more importantly, the future -- intellectual property rights, getting rid of forced technology transfers, all of the abuses that we've been talking about, and finally, codifying all of that in a way that at the end of

the day, if there are violations, we can take unilateral action to cure them unless we have all that in a package, it doesn't make sense to go ahead. >> that's a very tall order and probably not something that we're going to see get resolved later this month at the g-20 how long do you think this process actually takes >> well, the g-20 is not a place where anyone makes a definitive deal the trade deal is going to be thousands of pages at the g-20, at most, it will be a 40,000-foot level, some sort of agreement on a path forward it's certainly not going to be a definitive agreement. >> the markets have been anticipating that a deal will eventually get done, although i will say that there's been more depth that's kind of seeped into things in the last month or so what's your thought? do you think there ultimately is a deal between the united states and china? >> well, i think there

eventually will be even shooting wars end in negotiation. so, i think eventually this will end in negotiation but you know, the markets get a little too jumpy and a little too trigger happy. when we were having this with mexico, people were getting hysterical -- oh, my god, tariffs on mexico, sky is falling. it only took a few weeks, and now we have a resolution that appears likely to help solve the border crisis and also did not involve big tariffs. so, i think what people have to learn to do, judge this administration by results. don't judge it by interim sound bites. >> although -- >> interim sound bites are not how you make big things happen. >> you did bring up the idea of comparing these trade wars to actual fighting wars ash carter is here, the former secretary of defense, and he just said, we've been at war kind of nonstop. that's the way things work

today. do you anticipate with the president's admiration of tariffs and how effective he thinks they are as a tool, do you anticipate that this is kind of going to be a constant trade war that we're dealing with from here on out, too >> well, no. think about what has actually happened despite all the moaning about trade wars, the fact is we have, first of all, the usmca deal with mexico and canada, which i think is a very good deal for all three countries, but especially for us. we have a new deal with korea called korus now we have the deal with mexico and others that actually helps the border and doesn't hurt trade. those are incredible accomplishments in less than a three-year time period so, if people had a more balanced view of life, people would say, gee whiz, that's a lot, especially on top of a very

strong domestic economic environment. so, i think that people -- it's easy to get mired down in this little worry, that little worry. look at the big chorus look at what's really happening. look at the results. don't get too obsessed with the in-between details those are just a road stop along the highway to success >> mr. secretary, good to see you again. this is ash carter how are you? >> hi, ash how are you? >> good. can i take you back to china and we don't have to call it a war -- >> sure. >> -- if you don't want to, but it is not a cold war, either, because we had an ideological competition with a communist dictatorship before, which was the soviet union, but we never traded with it and so, we are in a more complicated situation. and you were talking earlier, it seemed to me, about the entire

playbook for protecting our companies and our friends from what is a country that can bring to bear on competition military, economic, and political tools altogether, which a country like ours obviously can't do. and so, we do look to our government to protect our companies from that. and tariffs are obviously a piece of that. but can you go back to your very first remarks? you were talking about, if you like, what was the entire table of contents of our new playbook for protecting ourselves and competing fairly, or at least on some even kind of playing field with china >> right the content is a very simple one. it's america first, but it's not america alone. we actually have gotten more cooperation from our allies, particularly vis-a-vis china, since we've been using tariffs, than we ever had before. on multiple occasions now, both

the eu and japan have been co-signatories with us on letters attacking various practices used by china. that never happened before i think what it proves is that when you put things in stark reality, people have to focus. and at some point, they have to figure out what's in their enlightened self-interest. we are carrying the cudgel for lots of people around the world, but we also are requiring they must do their part they must do their part in supporting nato. they must do their part in securing their borders they must do their part in cooperating against evil practices, wherever they come from that's the difference. people before were assuming that world leadership meant being the world's easy mark. we don't view it that way.

we view world leadership as taking risks, taking strong positions, reasoned positions, and really pursuing them that's the philosophical difference. >> i'm glad to hear you say that about other countries, because it does seem to me part -- and what you're saying is that part of the big-picture playbook, in addition to tariffs with respect to china, is sticking up for our friends as well and them sticking up for us, because you know, china's just one country and so, to the extent that everybody else is pushing them the same way we're pushing them in terms of leveling the playing field, that strengthens our hand as well. >> exactly >> secretary ross, you're -- >> exactly look at -- >> go ahead, sir. >> look at europe. we had this global steel forum, which was basically a talking society. every quarter they would meet. every quarter they would babble about this and that and nothing happened we put on the steel and aluminum

tariffs, and all of a sudden, europe started protecting its border, japan introduced a system for the first time of policing their border and having trade enforcement. those are things that are not visible. they don't necessarily make the headlines, but they do change the playing field. >> but mr. secretary, in taking on china, you could have brought the eu, mexico, canada, and japan alongside you much more effectively than you have done >> i totally disagree with that. first of all, if you have three people on your side against one guy on the other side, you're going to waste half your time trying to get a consensus among three people in the room it's too hard. we believe more in bilateral arrangements, because that's a one-on-one kind of a mano a mano arrangement. when you have multiple parties

involved, everything gets diluted down to the lowest common denominator that's one of the historical problems with these deals -- >> i like that -- >> -- with multiple, multiple countries. >> i like that stated as fact, though, instead of could you have done better if you had brought in -- >> that wasn't the question i was asking. >> you could have -- >> well, we'll never know, but we're doing very well. we're doing very well. >> there's a contempt vote now, tomorrow, apparently, on the census issue elijah cummings has scheduled a committee vote for wednesday the trump administration is basically not honoring any subpoenas. is this just getting caught up in that? why are you not -- >> well, wait a minute, let's not say we're not honoring this and that what we are respecting is longstanding practice. we're not accepting the unredaction of documents that three lower courts, two appellate courts, and the

supreme court have gone along with let's make sure we define exactly what's going on. we have produced to the house oversight committee 14,000 pages of material. i testified before for almost seven hours. we're producing three more witnesses, the only three that they've requested, including one today. so please don't tell me we're not cooperating. >> okay. >> what we are doing is cooperating in a rational way that's consistent with the rules, the regulations, the laws, and prior practice >> secretary ross, your commerce department is responsible for the ban on american companies providing technology to huawei we've heard from president trump, and he has mentioned in the past that that could be a situation that gets wrapped up into the trade talks you also led the way on bringing the charge against zte, and that was later negotiated down.

would you be upset if the ban on huawei ends as part of the trade talks with china >> well, first of all, what we actually did with huawei is a different situation from what we did with zte zte's situation was the result of their violating an agreed-upon -- a court-agreed-upon settlement of a litigation, so the frame of reference was different. so, they were put on a denial basis. huawei we have put on a basis where they are on a list, and that list requires americans who are going to sell them things to get a specific license for those actions. so, it's not quite the same situation. it is the same in some ways in that both are doing practices that we think are potentially

injurious to our national security and whatever is the outcome, we're going to make sure that our national security is protected. >> hey, mr. secretary, i'm just reading this elijah cummings statement. he mentions the word bipartisan like three or four times in terms of the subpoenas how many republicans are they talking about? is this like the justin amash impeachment bipartisan subpoena? i mean, how many republicans is elijah cummings referring to here on the contempt -- or the subpoena >> well, i have no idea, but it really doesn't matter. the fact is, we believe we're on solid legal grounds for the position that we have taken -- >> you expect that there's going to be -- >> we are cooperating -- >> will you be held in contempt tomorrow, mr. secretary? >> i have no idea. the committee will have to vote. and then next, it will potentially go to the full house. >> okay. >> but the important thing is

not that the important thing is the supreme court sometime between now and the end of this month will make the definitive decision about whether we put the citizenship question on. they're the ones that are important. and this is just a side show designed to disrupt the supreme court process. >> i'm a littlnfuseds to whether you say you're bringing certain allies along with you or not. now that the issues with mexico are settled, can the eu expect to face more tariffs >> well, they're different things we don't have a migration problem with the eu. we had a border problem with mexico this recent go-around was meant to deal with that. i think it's dealt with that in a very effective fashion with the eu, our issues are much more purely trade issues

and you saw with mexico, we resolved very complicated trade issues with a very innovative, and i think, very effective agreement that will be very good for american workers and american farmers so, they're different situations >> secretary ross,thank you fo joining us today we do appreciate your time >> well, thank you very much for having me on i enjoyed chatting with you. >> thank you by the way, don't miss other newsmakers from the select usa investment summit on cnbc today and tomorrow, including energy secretary rick perry, larry kudlow and agriculture secretary sonny perdue coming up, a check on the markets, plus raytheon and united technologies plan on creating an aerospace giant. we'll talk defense and much more with our guest host, ash carter. stay tuned you're watching "squawk box" on cnbc ♪ ♪

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president trump weighing in on the mega deal between united

technologies and raytheon right here on "squawk box. >> it's a great company, but what i hear united -- and i bought a lot of carrier, too, by the way -- when i hear unitend i hear raytheon, which is another incredible company -- the missile systems they make are incredible -- when i hear they're merging, does that take away more competition? it becomes one, big, fat, beautiful company. but i have to negotiate, meaning the united states has to buy things and does that make it less competitive? because it's so already very -- it's already noncompetitive. >> joining us now, our guest host for the hour, ash carter, former u.s. defense secretary during the obama administration. he's now with harvard's belfer center and is author of -- and we already referenced it -- "inside the five-sided box: lessons from a lifetime of leadership in the pentagon." secretary carter, that's all -- that's not the only job you had. we already talked about all of the things that you did as

secretary of defense, but procurement is a big deal. you probably know theins and outs of what's happening with this merger. and i'll bet you could do a pros and cons of these two companies getting together, couldn't you >> and if i were still the top weapons buyer, i would and the policy the president's referencing is right we need to have leverage as the government the taxpayer and the war fighter need to have leverage in the business deal with the industry that serves us we don't make anything in the pentagon we buy everything in private industry, so we need a healthy defense industry >> nobody wants to -- >> at the same time, we need a good deal with them. and i'm afraid i cannot -- because i wrote the policy and i formerly occupied the position, talk about that and rate the deal i will say this, though -- i think that acting secretary shanahan and his staff will do a kind of before-and-after comparison what is the government's situation with respect to the

strength of the industry and a deal-making with them before and after? and it has the right to deny, if it feels that net leverage has been lost, but there are ways that net leverage can be gained as well, and they'll need to look at all of that. >> what does the rules say that you wrote? >> it said that we were going to look very carefully and with a presumption against large, very similar companies continuing to consolidate in the defense sector. >> with presumption against, that's important. >> yes, thinking mostly about the big platform-makers at that time and this is a very different situation. >> but if you want companies to take advantage of synergies and cost savings and rationalizing operations and driving down costs, if you can trust them not to -- if they get some type of increased monopolistic, i guess, power, you wouldn't want that, but you would hope that they would be able to rationalize and

make them cheaper. >> don't want competition -- >> we need a successful, financially successful, technologically vibrant defense sector, so you've got to weigh that in the pan as well. you know, when you don't have head-to-head competition, which is many times -- and by the way, you know, apple, when it buys the components for its phones, some of those components are only made by one supplier. so, everybody at some point runs into this one supplier game. now, what do you do in that case it gets down to the contract you negotiate. you make them compete with themselves so, for example, to take the joint strike fighter -- the contract we wrote -- and this was controversial at the time because they didn't want to do it -- said for the early airplanes, here's the price. if you underrun, you get to save 50 cents on every dollar if you overrun, you have to pay 50 cents on every dollar and if you overrun too much, you've got to pay the whole thing. we wrote that contract -- because we didn't have another supplier for the joint strike fighter. that was the only one.

so then they're competing with themselves for profit, so you're not completely helpless, even in a situation where you face a monopoly, which sometimes we do in the defense sector, but kind of everybody does also. >> to what extent has china's innovation in the defense sector caught up with the u.s. over the last -- >> i don't think it's caught up with us, but i worry about that. and one of my big priorities -- and i believe this is continuing in the department today -- it certainly should, and i think it is -- was to sort of swing us from counterterrorism and counterinsurgence -- and we talked about that. joe was saying just the importance of that i was all in for afghanistan/iraq you can't be otherwise when you have troops there. on the other hand, does that take your eye a little bit off the big guys, russia and china and the high-end conflict? it did we have to admit that. and the decade before that, in the 1990s, we all hoped things were going to turn out better. so, for a long time, we kind of took our eye off that ball now we need to get back to that

ball and be competitive with china, not just in the trade sense, which we were discussing with secretary ross, but in the overall geostrategic and military sense as well that means continuing to be the firstest with the mostest with technology and there's another point for the health of the defense industry, is leaking it to the tech industry. and when i started out -- and i say this in the book -- as a physicist getting into defense -- everything that was done that mattered in technology -- the internet -- all that came out of defense it all was american and it came out of defense those days are one we still do a lot of important stuff. we do more r&d than apple and microsoft and google combined. some people don't know that in the defense department so, we're a big dog still, but we're not the only dog anymore and what that means is that the links between us and the tech sector is very important to the health of our industry and our ability to compete with china. and i did a lot to build those

links, try to get past the snowden business and -- >> so do you get frustrated when you hear leaders in silicon valley going to china, trying to work with china very closely, almost trying to pretend that they're global citizens and not u.s. companies >> that does bother me, because i think to myself, look, if i were reasoning with those folks, i'd say you're an american company. you're protected by american law. that's what guarantees your business environment and your profits. you come to work you drive on american roads. where do you think they come from you hire employees who can read and write. where do you think that comes from it's an education system and so, you can't escape being an american citizen, and you can be a global business, but you also have to recognize that with the privileges you get of being an american company come some responsibilities to the country as well. >> very quick, raytheon/united, do you think it goes ahead

>> i really can't -- i mustn't comment on that because it was my policy and my responsibility. it's a particular regulatory matter let them work it through according to the principles that i've described. >> if it looks likely, raise your right eyebrow. >> i can't i can't. >> i can't do that either, actually it'd be totally confusing. i still wouldn't know. okay >> we will have much more from secretary carter in just a bit, including his thoughts on today's hearing on technology regulation right now, though, as we head to a break, let's take a look at the u.s. equity futures. been in the green all morning long, and right now it looks like the dow futures are indicated up by about 122 points if we end higher today, that would be the seventh day in a row. already yesterday with six days in a row, that's the longest winning streak we've seen in 16 months "squawk box" will be right back. a company that controls hiv, fights cancer, repairs shattered bones, relieves depression, restores heart rhythms, helps you back from strokes,

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that recently ipoed meat alternative producer is downgraded to overweight, going from $121 to $120 target price it's a valuation call shocking after the massive run from the ipo price, saying at some point, the extraordinary revenue and profit potential embedded in beyond will be priced in, and that day has arrived meanwhile, you've got shares of facebook up over a percent or so right now, roughly 60,000 shares premarket. the social media giant gets upgraded from buy to neutral by moffettnathanson while keeping the $210 price target. they think underlying fundamentals offsets the scrutiny and cited potential growth drivers in commerce and messaging. shares up 1.5% and we'll end on shares of lyft. the ride hailing company is now up nearly 4% in the premarket, roughly 16,000 shares of premarket volume helping things along, an upgrade by analysts at susquehanna to positive from neutral.

the target goes to 80 bucks from 57, citing among other things lyft being more levered to america's more rational promotional pricing and improving multiples and better industry trends. so, wilfred, one red, two greens we'll send things back over to you. >> 2-1, we'll take it, dom thanks very much. some technical indicators are pointing to a possible rally in the back half of the year here to explain, christopher roan, partner of strategic securities thank you for being here. >> good to be here. >> first, this is based on 52-week highs and positive signs from that. >> yeah, i think one of the important characteristics of adorable advance is participation broadening out this is probably the third or fourth time over the last 18 months we've been in this 2,850-2,900 range. but i think the 52-week high data is starting to expand here, so more stocks are participating in this rally. and secondly, very quietly, money growth is starting to reaccelerate so i think liquidity here is getting a little bit better. listen, i know seasonality is not great here over the next number of weeks, but i think ultimately you don't want to get

too bearish or too defensive here. >> looking at the yield picture, what's that telling you? >> well, i find it curious that despite a pmi miss and payroll miss last week, you already have yields back above where they were at the start of last week, that 2.10%, 2.15% range i think is important i think yields will stabilize. the ten-year yield is two standard deviations below trend right now, very oversold i would expect at least some type of a bounce here. >> we saw that playing out yesterday and financials did well on it emerging markets, what are you looking at there >> i find it curious, you know, all the attention is on u.s. and china, but brazil's at a new high, india at a new high, russia at a new high, aussie stocks so when you move away from just the china story, there's actually some really good things playing out in em, and i think specifically emerging market credit has held up really well here typically, we think of, you know, big problems in equities typically led lower by debt. that really hasn't been the case here the last four, five, six weeks. we think that's a positive for the em space going forward.

>> and s&p closed yesterday at 2,886. everyone's talking about the 2,900 level again. what are the key levels for you? >> listen, i think when you look at the old highs, the 2,925 neighborhood is important. i don't think we'll break out any time soon, but towards the back half of the year, it would not surprise us to see new s&p highs. i think it's important, unlike 2018, there's a lot of the world actually getting better here economic surprises bottomed. we have yields we think starting to bottom. semiconductors look oversold enough to rally. i think those are the cyclical components we want leading this market into the back half of the year. >> chris verrone, thank you for joining us good seeing you. still to come, the dow on its longest win streak in a year we'll find out what's driving your money higher. and then, big tech heads to the hill we'll preview today's hearing and talk regulation, coming up and at the top of the hour, how many rate cuts are on the cards? we'll talk fed, the economy, and much more with stephen moore "squawk box" will be rightac bk.

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when we come back, house

democrats begin their investigative hearings into the dominance of big tech. we're going to talk legislation and regulation after the break ash carter is here he'll tell us what he thinks is happening, too at the top of the hour, stephen moore of the heritage foundation on the fed, the economy, trade and much more. "squawk box" will be right back. geico makes it easy to get help when you need it. with licensed agents available 24/7. it's not just easy. it's having-a-walrus-in-goal easy! roooaaaar! it's a walrus! ridiculous!

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hey! i live on my own now! it's geico easy. i've got xfinity, because i like to live life in the fast lane. unlike my parents. you rambling about xfinity again? you're so cute when you get excited... anyways... i've got their app right here, i can troubleshoot. i can schedule a time for them to call me back, it's great! you have our number programmed in? ya i don't even know your phone anymore... excuse me?! what? i don't know your phone number. aw well. he doesn't know our phone number! you have our fax number, obviously... today's xfinity service. simple. easy. awesome. i'll pass. lawmakers on capitol hill are starting their investigative hearings into the dominance of big tech ylan mui joins us now with more.

good morning >> good morning, joe this is the first step in the judiciary committee's wide-ranging antitrust investigation. lawmakers have already put amazon, facebook, google and apple on alert, and they say that this probe will include hearings, roundtables, and discussions with top executives. the chairman of the antitrust subcommittee, democratic congressman david cicillinie, has said that he plans to issue a final report once the investigation is complete. he also said that he expects the companies to be active participants in this process and that he is prepared to issue subpoenas if not however, republicans say that they didn't agree to all of that, and they're trying to walk back some of this rhetoric i'm told that republicans have not signed off on forcing tech executives to testify. still, this effort today is being billed as a bipartisan move, and today's hearing will stick to common ground -- the impact of big tech on the local news media but industry groups, though, they're already on the defense

netchoice, which represents e-commerce giants like alibaba, google, and travelocity, they put out a statement calling the hearing an attack on social media by big media companies who are upset that they no longer control our news and views guys, it is still unclear how many hearings we will get out of this effort, but cicilline said he wants to wrap this up with the current class of lawmakers becky, back to you. >> thank you very much. president trump shared his concerns about big tech and antitrust issues yesterday on "squawk box. >> every week you see them going after facebook and apple and all of these companies that are, you know, they're great companies, but there's something going on but i will say, the european union is suing them all the time we're going to maybe look at it differently. we have a great attorney general. we're going to look at it differently. they're actually attacking our companies, but we should be doing what they're doing they think there's a monopoly, but i'm not sure that they think that they just figured this is easy money. we'll sue apple for $7 billion

and we'll make a settlement or we'll win the case so, i think it's a bad situation, but obviously, there is something going on in terms of monopoly. >> for more, let's welcome back our guest host for the hour, ash carter, who is the former u.s. defense secretary during the obama administration he is now with harvard's belfer center and the author of "inside the five-sided box: lessons from a lifetime of leadership in the pentagon." secretary carter, thank you very much what we just heard from the president almost sounded like he's of two minds himself. he thinks that the eu is coming after our companies and just taking it for easy money, but he also thinks that there could be some monopolistic issues here. what do you think? >> well, i think there are a couple dimensions to this. if you back up from this, what we're trying to do is eliminate some of the darkness that comes with social media, while keeping the good that comes, so community and commerce there's hate, there's

intimidation, there's falsity, and so forth, in social media. now, i think that in the big picture, becky, what we need is a mixture of self-regulation by the companies -- we've left it since the 1990s to these companies -- >> and they haven't done a great job. >> and they haven't done a great job. that doesn't mean it should all be done by government regulation either and government regulation needs to be intelligent regulation so we're looking for a mix here of self-regulation and regulation, trying to find out the method for each one. >> what needs to be attacked there are so many ways you could come at this, if you're looking at government regulation. >> it's what's going to guarantee content that you and i would regard as acceptable for ourselves and our children to watch. it's that simple you know, when i was a kid -- this is a long time ago -- to give you a sort of exaggerated example -- and a couple went to

bed on tv, they had two single beds separated by a table with a lamp on it and we think that's kind of silly now, but it was viewed as necessary to protect public morals and children. something like -- >> well, now we have things like the christchurch killings being broadcast live on facebook. >> yeah, yeah. and to get to the government-side regulation now, i think what your correspondent said was right, this is, thank god, not something that's gotten partisan i think people are mostly sort of bewildered by it, and they know it's a problem and they need to do something about it. antitrust is one tool. it's not the only tool and an antitrust breakup is the only thing you do. everybody talks about antitrust breakup. for example, anybody who remembers at&t, at&t was not broken up, but antitrust was applied to it. and so, for example, it was told you have to string a wire to the end of a street to a little old lady on a farm because that's a

public good. and the rate base -- people in cities who cost less to serve -- sort of paid for that. and that was thought to be good for the country and the development of the country, but it wasn't breakup. ultimately, at&t was broken up when the technology changed. but when the technology didn't permit that, wasn't very upset -- so it didn't have to be breakup. it has to be some rules that the government applies, but that doesn't get the companies off the hook also policing themselves so, there's some mix there whether it's 20/80 or 80/20 is what the architecture's about, but we need to do both of those. >> away from antitrust and back to national security when it comes to the big tech companies, which fall into that sphere and cross into that sphere of operating around a national security issue, and which would you like to see do more to work more closely with the defense department as opposed to just think about their bottom line? >> yeah, well, they all do but it's the big tech companies, but there's a whole tech sector

that's driven by venture capital that is small companies. i want them to consider the defense market in their future they don't -- they won't necessarily serve the defense market, but i want them to serve -- that's why i put an outpost in silicon valley when i was secretary of defense, why i put one in boston, when i put one in austin, so they can kind of get to know the defense department, because there's a whole generation of people who, unlike me, didn't come up in technology where working with the government was part of their culture. >> well, what about google now saying it's not going to renew its defense contract in 2019 because its employees put up an outrage over the fact that they were working with the defense? >> yeah, that's the question i'm asked most, becky, what about google and i think you're referring to project maven. >> right. >> which was an example in which some -- a small number, actually, relatively small number -- of employees objected to a so-called artificial

intelligence project that google's doing for the government and google withdrew now, subsequently, they've said that they will work for the government and they're an american company and all the right things but if i were going to talk to somebody there, with those people who objected, i'd say, look, if you don't want the defense department to do -- first of all, congratulations, you're thinking ethically. so, i share that with you. you ought to think ethically about everything that google does number two, if you're worried that we're not going to carry american values into the battlefield, which by the way, we do, then get in the game. who's better than you to participate and steer us in the right direction? and by the way, how comfortable are you with working with china? and so, you've got to make them think about these things they take a stance, and you've got to reason with them and try to get them to a better place. >> we're running out of time did you have anything to do with the united tech/honeywell, not

letting that go through? is that your -- >> no. what i did way back then, that wasn't an issue. it was, i created the policy or annunciated the policy -- >> so because that didn't go through. do you think this one -- i'm trying to get back to the united tech -- >> oh, you're not going -- >> you're not in a position again, you can say something. >> but i was the acquisition executive who wrote the -- >> so that's why you can't -- >> yeah, so i ought not do that. >> let me ask you about boeing do you feel the relationship between boeing and the faa was too close? >> well, i don't know if it was a close relationship, but the faa has weakened its own internal technical capacity to make certifications. and, so, it has ceded to the companies a lot of responsibility for doing that. now, when you do that, inevitably, some of the incentives of the company, rather than the incentives of the faa, kind of enter that process, and there's no question

that's what we saw going on here so, i worry about the technical health in the long run of the faa -- >> is that an ethical or leadership issue >> it's partly a funding issue, but it's really, it's one of those agencies that needs to kind of renew itself technologically. they've had a new air space system on the logs as long as i can remember, and it's never been completed so, it struggles it's an essential function, but is it functioning the way we'd like now no and it didn't in this case as well so, i think that's the boeing story. >> thank you for being here today. >> thanks. thanks for having me. >> former defense secretary ash carter you're going on faux joe "morning joe." you know why he calls himself joe? because his name is charles and chuck scarborough is taken, so he took my name "morning joe." and i've been on longer than him. he is a faux morning joe.

>> i'll remind him of that. >> say that tomorrow call him charles >> okay. coming up, heritage foundation chief economist stephen moore joins us with reaction to yesterday's teiewi psintrump and much more. "squawk box" coming right back across my business. starting here, in procurement, helping us find the right suppliers. then here in logistic, to avoid disruptions! here in sales. even here! i'm talking about ai we can build to work... here, predicting trends. and here, wherever our data lives! and here, working with all our other ai! i think we're done here. expect more from ai. ibm watson.

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market muscle. the dow has a six-day winning streak going, the longest in a year and futures are pointing to a positive opening this morning. d.c. lawmakers get set for hearings on big tech what do they mean for stocks in the sector ann win blood, longtime investor, will join us with answers. and does anyone know what the fed is going to do next? stephen moore might. he'll join us on set for the final hour of "squawk box," which starts right now ♪ oh, yeah >> announcer: live from the most powerful city in the world, new york, this is "squawk box. ♪ good morning and welcome back to "squawk box" here on cnbc live from the nasdaq market site in times square i'm joe kernen along with becky quick and wilfred frost. andrew is off today. futures indicated up 130 points,

where they've been for much of the early-morning session. we gained 5.5% last week, back from that six-week slump that we saw in the averages where they were averaging about a point, one percentage point loss a week, and then we got most of it back last week we're not far from new highs. >> 2% on the s&p off the highs. >> unbelievable, isn't it? and here's treasurys, which have also kind of normalized. i guess we were down at 2.05% on the ten-year, back to 2.17%. here are the stories investorses will be talking about today. it's big tech's turn in the spotlight on capitol hill. the house judiciary committee is beginning investigative hearings on the dominance of the biggest companies. today's hearing will look at the impact of online platforms on a free and diverse press lawmakers say that the probe will eventually include roundtables and discussions with talk tech executives short sellers have lost more than $400 million betting against beyond meat's stock since it went public very

recently that's according to research firm s3 partners the stock of the plant-based burger maker is up about 500% from its $25-a-share ipo price last trade $152.95 however, you see it is trading down about 9% today. that's because separately, jpmorgan securities downgraded the stock to neutral from overweight, saying that it's above the street estimates now appeared to be priced into the stock. and a key economic reading is about 30 minutes away we've got the government going to be issuing producer prices for may. that's coming up at 8:30 eastern time the fed has mentioned that the failure to reach its 2% inflation target is one of the keys to its interest rate policy president trump calling into "squawk box" yesterday, touched on many topics from trade to the merger deal that was announced over the weekend between utx, or utc, and raytheon. we also talked about the fed, and the president says that the central bank still isn't listening to him >> no, they haven't listened to

me and you know, we have people -- it's more than just jay powell we have people on the fed that really weren't, you know, they're not my people. but they certainly didn't listen to me because they made a big mistake. they raised interest rates far too fast that's number one. number two, they did quantitative tightening. they were taking in $50 billion a month, $50 billion a month and they've now eased that, but it's still $25 billion a month, which is ridiculous. now, china's doing just the opposite they're pumping money in so, i'm not -- i'm winning, but i'm not winning on a level table. >> joining us now, our guest host for the hour, the heritage foundation's stephen moore and whenever you say, you know, "you people," "my people," whatever he's saying there, i think he's saying they're not my appointees or he could have meant more subliminally, they're not people that share the same mind-set that i -- but whatever he meant, let's talk about the fed and

whether, stephen, trump's critical -- "wall street journal" -- "trump's critical drumbeat complicates the fed's next move. and i see what the "journal" is saying. >> right. >> it's that, you know, when someone wants me to do something, i really do everything i can to resist because i don't want someone telling me what to do. >> what to do. >> we're not puppets >> but powell could always fall back on the fed funds, right, say this is not me, this is just getting where -- this is just getting where we're supposed to be he could fall back on where european rates are, or he could fall back, if he sees ppi today or whatever he sees that looks like inflation is really low, he could say we're missing our inflation target and fall back on that. can he do it, or in the back of his mind is he saying, this god, darn it, i don't want -- what do you think? do you think it's complicated? >> i think there's a little bit of cognitive dissidence for jerome powell right now, because i think you're right -- i do think he's resistant to being seen as kind of caving in to

what donald trump is saying. on the other hand, donald trump happens to be right here i mean, the fed is too tight you mentioned inflation, joe i don't think the problem is inflation. i think that the problem is deflation. i mean, you look at commodity prices they've been falling very significantly. that's one of the reasons that the farmers are suffering so much because prices are so low i think the fed has to cut rates not to stimulate the economy but to get level prices. and by the way, if you do that, i think you will see a nice boom in the economy so one of the things that always annoyed me was people said, back in september and december, when the fed raised rates, especially in december, a lot of people think that the fed did that in response to what trump had said, because remember trump was saying, you have to cut rates, so the fed then went out to prove its independence by raising rates. well, you remember what happened in december. it was a catastrophe the stock market fell by 1,500 points and so on so, my only point is the fed should do the right thing.

no, the president shouldn't dictate fed policy, but i do think that the president has the right to weigh in on these things and to express his opinion. >> is he taking the right approach, do you think, if he were a psychologist -- >> who >> president trump -- >> trump or powell >> no, yesterday president trump could have said, you know what, i was really early on this, and the fed didn't listen. they did that in december. but you -- >> that's not trump's style. >> but then he could have said, you know what, now they're talking about -- they're listening to me! they're finally seeing the light. and i think that i started them on the right track and now -- that's how maybe i would -- but he doesn't he just is relentless. >> you may be exactly right. i mean, i do think the fed is going to cut at least once, maybe twice. i'm certainly in favor of reversing the december rate increase, which was a disaster but look, trump -- you're not going to get this guy to close his mouth. you know you've talked to him many times. >> right. >> he wants to weigh in on this, and it's appropriate he took a lot of flack for mouthing out about what the fed is doing, and i don't -- look,

he's the ceo of our economy. he has the right to weigh in on this, and the fed has the right to -- >> but do you think it makes the job more complicated for jay powell and company >> maybe maybe a little bit and so, you know, he's made his point. at this point i think he should sit back and let the fed make its choice but the president, i believe -- i don't know if he said this on your show yesterday -- he's been on record for a 100 basis point decline in interest rates. that's a lot even i wouldn't be in favor of that i'd be in favor of one or two. >> how necessary are the cuts? how weak is the economy? or is it just inflation you're concerned about? >> i'm so glad you asked me this, because look, i read the "wall street journal" this morning, i read bloomberg, all these other -- and they're all saying, oh, my gosh, the fed has to cut rates because the economy's slowing down i want to be very clear on this -- that's not the reason the fed has to cut rates the fed has to cut rates because prices have been falling and once those prices stabilize, you just stop cutting rates. and so, there is this mythology out there in the investment community that, somehow, printing money is going to improve the economy.

that doesn't work very well! i mean, if that worked well, zimbabwe and venezuela would have the strongest economy so, i've always believed the fed's central role should be to keep prices stable you guys mentioned, what is it, the last four months the fed has been below its inflation target of 2%. the alarm bells should be going off that they're too tight once those, you know, once the inflation rate -- by the way, did you say we're going to get the ppi numbers? >> yeah, 8:30. >> well, let's see what that shows us i mean, if that's below their target, it's more indication that they have to cut rates. >> is deflation on the cards globally again is that a genuine fear or no >> yeah, but deflation is all a function of monetary policy. i mean, all you have to do to reduce -- you know, to get rid of deflation is reflate. it's not -- >> i thought we were. >> i thought we were, too. >> but we're not we're not doing it enough. look, the proof in the pudding is meeting, right? people say they are pumping

money into the economy well, where is it? if they are, why do you see the price of soybeans and oil and all these other things falling >> president trump talked yesterday about quantitative tightening. >> yes. >> just kind of letting the balance sheet wind down and doing some of these things i thought all economists were pretty much in agreement that that needed to happen, that we're no longer in emergency measures, and if anything, we wanted to get that back in shape before we even raised rates. what do you think? >> look, i think there's two sides to that equation you know, eventually, yes, we do want to reduce that balance sheet. on the other hand, it is true when you're, you know, taking money out of the economy by reducing the balance sheet, that actually contributes to a deflationary effect. so, i think the fed is -- i mean, i think there are two sides to that equation by the way, there are some economists, like my friend, david, who is now the head of the world bank, who actually thinks -- and i think there is something to this -- that actually when the fed reduces its balance sheet, that actually has the opposite effect that some people think it would in

terms of -- >> so you can tell me that -- >> i was hoping you could say, steve moore's been vindicated, because i've been saying for four or five months -- >> i'll say that, but that's at this point in time i mean, there's a lot of indications that, i guess you forgot the cover of "time" that had greenspan, larry summers and bob rubin as the three guys that saved the economy right before the financial crisis, okay >> right. >> so, i mean, it's hard to -- you don't know how long your victory lap lasts, and that's what i'm worried about and i want you to tell me i don't need to worry, because i want to be told that the next time a recession comes, we will be able to manage it >> recession -- >> i want to know that with rates this low, there's something in the tank that allows -- because i think that there's a law of diminishing returns and that these guys are going to be pushing on us -- >> here's where i disagree with you on this, joe -- >> no, no, i'm just depositing it i don't say -- >> the rationale -- people say, oh, the fed has to keep rates high so that they have ammunition to deal with the next recession, that they themselves are causing by keeping rates too

high so, that's why i don't like that -- >> so there's not bubbles built up by easy money staying -- >> no, we have two problems with the economy right now. one is the fed is too tight, and the second is this trade war with china. >> there's not a bubble, stephen? there's not a debt bubble built up globally? >> sure, rates -- >> is it because we can't raise rates because we can't handle it >> if you think there's a debt bubble out there, why do you think interest rates are so low? come on. >> that doesn't make sense, right. >> so, i mean, the fact is, if there was this massive explosion of debt that was going to blow up in people's pockets, people wouldn't be lending money to -- >> i know all the usual suspects you know the guys i'm talking about. >> you get one or two rate cuts, and if you get a trade deal with china this year, 2020 is going to be one of the great years for the economy. >> do you think that's likely? >> because i think we're fundamentally sound on the economy, except, joe, you're right, for the debt situation. >> we had secretary of commerce ross today and his point was this is going to be a complicated 20,000 pages or

longer trade deal that's needed. do you think we actually get a trade deal this year or this is something that will play out over years >> this isn't going away any time soon. this is the issue for the next decade, right, this dispute between china and the u.s. what i've told the president is, look, get the best deal you can with china now, get this thing resolved for now then you go into 2020 with a really strong economy. i mean, i think -- >> do you do a deal just in order to have a strong economy just to win an election? >> well, get something, you know, get some concessions from china now because -- >> you think he's going to do a soft deal no matter what >> i want to get president trump re-elected because i think it's incredibly important for the american economy the way you do that is you get what you can now and i think you'd agree, if they get some agreement, the economy and investors will be very -- >> the market would -- >> and that means you're doing a once in a generation trade deal with the second biggest economy in the world to juice the economy for 12 months to win an election that's not sensible strategy if president xi's watching this, he'll be rubbing his hands.

>> no, what i am saying is that if trump gets -- look, we all know trump is a very hardliner when it comes to china nobody believes that he's going to cave in to china, and i'm not suggesting that. i'm just saying try to get some good, decent deal, and then you continue these negotiations in 2021 and in fact, trump can spend a second term really beating up on china, really going after some of these abuses -- >> so, first one wouldn't be a deal it would be a temporary agreement because the deem deal's still to come >> this is complicated stuff there's so many things on the table, intellectual property, currency manipulations, opening their markets, tariffs it's hard to get that all resolved in one deal. >> i'm sure. >> so we'll see how this progresses i just don't want to go into the presidential election without some resolution to the china situation, as a trump fan, and i think -- >> three minutes ago, the president tweeted -- >> i was just going to say the

same thing. >> -- "the united states has very low inflation, a very beautiful thing. >> does he see the ppi number? >> that's a good question. he's not supposed to put that -- >> i thought that a different way. i thought uh-oh, he's watching again and heard stephen moore say that the fed -- >> he just tweeted that out? maybe he is watching. >> he was watching yesterday. >> you have low inflation, low interest rates, you've got the tax cut, the deregulation, a pro-business president what's not to like about this picture? >> because he's tweeting about that, too. all right, stephen moore, if you were on the fed, you might have said, i have some people, some of my people on the fed, right >> he's got two open seats. >> he's got two open seats. >> by the way, he gets two people in there that think like i do and herman cain and he does, then i think you will have a potential change in the way the fed operates. >> all right, welcome, you're with us for the rest of the hour i'm glad to say it and i'm going to be monitoring @realdonald a trump. >> much to come with stephen

moore. also coming up, a new report on bookseller barnes & noble days after agreeing to be acquired and we'll go live to arizona where names in tech are gathering to attack the use of digital privacy to policing inflammatory online content and more stay tuned we're back in a couple minutes ♪ ♪♪ ♪♪ ♪♪

welcome back to "squawk box. the conference is under way in arizona, bringing together some of the biggest names in business and tech jon fortt has some of the early highlights jon? >> reporter: hey, wilf last night, this conference kicked off and really controversy pretty much immediately. we had youtube's ceo and amazon web services ceo andy jassy, among others big themes here were privacy, regulation, and content standards. one particular controversy stood out, when it regards youtube last week, box journalist carlos maza said that creator steven crowder had been harassing him with homophobic slurs, but youtube judged that crowder's videos did not violate its community standards.

and wojcicki was asked, did she agree with that decision take a listen. >> i agree that that was the right decision, and let me explain to you why i agreed that was the right decision, okay so, when we get -- first of all, like when we look at harassment and we think about harassment, there are a number of things that we look at. first of all, we look at the context of was this video dedicated to harassment or was it a one-hour political video that had, say a racial slur in it those are very different kinds of videos. >> reporter: wojcicki clearly under a lot of pressure, got lots of critical questions during that interview. later on, aws ceo andy jassy also addressed the privacy question and to what degree we need to trust companies who are putting sensors, cameras all over that are feeding data into the cloud. listen to that >> the promise and the

capabilities you provide customers is really amazing, but you're going to want to make sure, whoever you use, that you understand their rules on privacy and how they manage their data, and you have to believe they're going to keep the data secure. and if you don't trust that company, then you shouldn't use them >> reporter: well, it's tough to know sometimes who to trust these days guys, back to you. >> all right, jon. appreciate it. i was looking at something else, another tweet that i think is worth mentioning the president basically talking about, you know, tourists not coming here from europe and saying it's because the euro has been devalued. like a lot of currencies around the world. because the fed is way too high and way too much quantitative tightening has made the dollar too strong, which is -- actually, we have it here. "because the euro and other currencies are devaluing against the dollar, putting the u.s. at a big disadvantage the fed interest rate way too high, added --" what is it

>> added to ridiculous -- >> no, sic after the "to." added to the ridiculous quantitative tightening. they don't have a clue. >> what's so interesting about that is who is the president's chief economist? >> um -- >> larry kudlow. >> do i know him can you give me a hint >> king dollar, right? you know, so, it's interesting that larry kudlow and president trump might have some, you know, differences of opinion about the dollar look, i like a strong and stable dollar one of the things people don't probably understand, because i didn't realize this until i started looking into it -- when tourists come to the united states and spend money here, did you know that reduces our trade deficit? >> yes we actually had this conversation last week. >> yeah, so when you get tourists coming -- so, trump is very obsessed with the trade deficit numbers, so he wants tourists to come here, spend their money here, you know if a chinese nationalist comes into the united states and spends money, that reduces the deficit -- >> not to mention he's a real estate guy who likes low interest rates to begin with.

>> he likes low interest rates, no doubt about that. >> stephen, we can park emerging markets to one side. you don't believe that the ecb is doing this on purpose purely to get a trade advantage they have a strugglingeconomy for all sorts of reasons they don't want to have negative interest rates deutsche bank's being crippled by this. >> you're right. >> you don't believe that is their primary -- >> no, the ecb needs to reflate just like the fed has to but my view is, look, the dollar is the world currency. and every other -- in other words, when we don't have our monetary policy right, it affects the whole world. and one of the reasons the ecb is too tight is because u.s. fed is too tight you need -- i mean, you're right -- what do negative real interest rates mean? that's a sure sign of deflation, isn't it i mean, so, how do you get rid of deflation you reflate. you get more euros into the economy. >> so, the point being then, for the content of the president's tweet, that, in fact, that this is a bigger by-product of the

fact that the u.s. economy's in a better position, and that's something to be celebrated. >> i think there's a lot of truth to that. i mean, i've always believed that, that our trade deficit always goes up when the american economy is strong and our trade deficit always goes down when our economy goes into recession or is weak i used to jokingly tell the president -- because look, i agree with him on 90%. i think he's overly obsessed about the rate deficit number, and a good recession will get rid of the trade deficit. >> you heard the thing about big tech do you think we should be going after them >> i hate it i hate it. i love the fact that five or six of the greatest companies in the world, the most profitable companies are american companies. we don't want them to be chinese companies -- >> the goose and the golden egg. >> i don't always agree -- i don't even have a facebook account -- >> i'm sure they hate you. you'd be shadow banned on twitter. >> facebook, google, amazon, apple, microsoft, netflix are american companies i love that! we shouldn't be going after our own companies. my goodness. all we're doing is benefiting our -- >> preaching to the choir here

i know. >> are you with me on that, joe? >> of course what's your favorite big tech company that started in europe in the last 30 years >> this is -- >> oh, that's right, there aren't any there isn't one. >> wilf has named it, s.a.p. >> yeah, great. >> and one thing about this, joe, these companies that are the giants -- >> you're out -- >> no can. >> we've got to go we'll return to this, stephen. mi uwi hse moats --p thou

still to come, we have breaking economic data it is just minutes away. the latest producer price data will hit after a quick break we'll be watching the numbers and market reaction along with guest stteen mreho sphoo, and based on his tweets, the president, too we'll be right back. for your heart... your joints... or your digestion... so why wouldn't you take something for the most important part of you... your brain. with an ingredient originally discovered in jellyfish,

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that's amazing welcome back to "squawk box" on cnbc live from the nasdaq market site in times square we're just seconds away from the latest producer price data futures right now are strong seven days in a row, if we close like this. rick santelli's standing by. i wish he was here, but he's at the cme in chicago the numbers, please! >> the may read on producer price index, up 0.1%, as expected remove the all-important food and energy, up 0.2%, as expected if you look at trade, month over month, up 0.4%, double what's expected final demand year over year, 1.8%, a little light of expectations and year over year food and energy up 2.3%, perfectly as expected all of these numbers pretty much in line, outside of the trade number and if we look at the revision side, there are none sequentially, a couple things stand out. on that final demand year over year at 1.8%, that's 0.4%

lighter than our last look the year-over-year data coming in a little bit light just on a comp, but generally as expected. you know, we don't have any robust inflation out there and interest rates are coming in a bit hotter, depending on which maturity usually the last couple of sessions of last month is the last time we were at these levels and when you look at what's happening with regard to foreign exchange, the dollar index is definitely idling at lower levels than expected maybe that's the general outlook that we're not going to see a lot of interest rate hikes and that seems to be the key point. it's interesting, joe, every major publication, a lot of research this rally is just about the notion that the fed's going to lower rates. i doubt if the national federation of independent business optimism was totally affected by that and when the fed meeting comes and goes with no interest rate cut, i doubt if the markets are going to give anything back. back to you. >> i noticed that nfib thing,

too, rick. there's so many -- i mean, it's like there's two kinds of people in the world, people that think we're on the cusp of a recession and people that think things are great. i don't know someone's going to be wrong, i think. >> well, that's life, though there's always people that know and people that don't know. >> yeah, they don't know what they don't know. yeah we'll know within a few months, but then we'll be worried about what happens after that. >> right, because if you're going to worry, you're going to worry constantly people talk about rising uncertainty is the best -- we're always uncertain nobody knows what's going to happen. >> do you remember a period of certainty? >> you can have a certainty where you think you know what's coming you don't. there's always something that surprises you. rick, thank you. stay with us let's get more reaction to the numbers with steve liesman our guest host for the hour is stephen moore from the heritage foundation steve, what do you think >> this is good. inflation under control. there's been a bit of a separation from the producer prices and, say, consumer prices, or the pce core. producer prices held up relatively well.

there's a weird number i want to put an asterisk around we have to look at this later. trade services it's like the profit that is made by middlemen or middlepeople, i guess, whatever you want to call it -- >> is that number down >> it's down half a point. one thing we do is we look at the number ex-food, ex-energy, and ex-trade services because of the weirdness and the volatility of this number -- >> i would guess they get squeezed first dealing with tariffs coming in or higher prices in different places >> the trouble is it's a new entry into the ppi, when they redid the ppi a couple years ago. nobody knows what to do with it, so we kind of get rid of it to look at outside -- we get rid of all that and prices are up a little bit more. you have 0.4%, rather than the 0.2% reported as the core. so i'm not saying there's inflation. i'm just saying let's just footnote that and come back and look at it a little later to see what happens you have a pretty firm on the producer prices. and i went back and i look at cpi over the long haul, say back to 2012. it's between 1.5% and 2% on the

pce core, the number the fed looks at and comes a question as to how much tweaking the fed ought to do $20 trillion of goods and services are produced, right and in that time frame for the last six years, we've had price rises between 1.5% and 2%. how far off of its mission is the fed really now, i will tell you, the federal reserve has two schools of thought on this one is the kind of, i'll call it the close enough for rock 'n roll school, and the other is we're persistently below, we ought to do something about it and i get both sides of it and to me, i think there's a middle ground of just sort of watching it and watch persistent deflation to the down side but not get too concerned about a half-point miss, even if it's consistent >> all right stephen, your thoughts

>> so, yeah, i generally agree with that. look, the fed is not far off from where they should be. i think they're a little too tight, but you know, i mean, and that's why i would favor a quarter percentage point, you know, rate reduction, and let's see what happens you know, let's see if -- you know -- where's the inflation out there? i mean, you don't see -- >> stephen, there's a lot of research on this problem of what happens when the fed moves and i guess you call it the signal value. >> yep. >> how much concern do you think there would be if the fed moved any amount, a quarter point, even an eighth of a point? people say, oh, my god, what does the fed know that i don't know and all of a sudden, it signals greater weakness than the fed ever, ever intended to signal. >> except right now, i think that it would be really bad if they -- i mean, it's already kind of, you know, built into the market that this rate cut is going to happen. >> right, right. >> so, i think not cutting the rates at this point would be detrimental. the other thing i wanted to

point out -- you know, there's a big debate going on about these tariffs and who's bearing the burden of the tariffs, especially with respect to china. is the burden being borne by american consumers in higher prices, or are the chinese eating the costs and it's interesting if you look over the last year, import prices have not been rising in fact, i think they fell slightly -- >> stephen, don't go there. >> what? >> don't go there. i've been looking into this for weeks now. >> some of the costs -- >> hold it just -- >> what about the undervalue >> just wait -- >> okay. >> because what's wrong about that argument -- >> okay. >> import prices as recorded by the government -- >> do not include -- >> -- are pretariff. >> that is true. that is true. >> so, here is the story i've looked at 52 series of import prices from china they're mostly stable, up, down a little bit so, here's the math, okay? they're down on average 1% if tariffs went up by 10% and the pretariff price is only down 1%, the only place that could

have been paid is on the u.s. side >> okay. >> tariffs would have to fall -- i'm sorry, import prices would have to fall by 10%. so, by the government's own data, the president doesn't necessarily have this right. >> except people do shift out of buying stuff from china and they buy stuff -- >> what do you want to talk about, rick? i know you're still there. it's tough to get a word in. what do you want to talk about >> you know, i'm just always so shocked, whether it's steve or the other steve. the markets would be upset if we don't get a quarter-point, it's built in. >> i didn't say that. >> it is not built in. it is not built in the next meeting does not have anything built in, and the meetings beyond that -- if anybody trades based on what's built in there, that would be like trading a stock price that you say today has to be there three months from now. well, it's not going to be the market moves if you look at four weeks ago, it was built in, and then four months before that, what was built into those deferred contracts, it's like a yo-yo detrimental.

detrimental. >> rick -- >> we're a couple percent away from all-time highs. why would a quarter-point make any difference hold onto the insurance! >> rick, i want to make sure i understand you you're saying -- let's say the fed -- jerome powell made an announcement this morning, we're not cutting interest rates you don't think that would have a negative effect on the market? >> first of all, that would be a dumb thing for the fed to do why would they say that? of course they wouldn't! because there's people that don't understand they think when the fed says something like that, they know the future they don't know the future nobody knows the future. we all spend too much time -- good thing freud wasn't alive -- or the fed wasn't alive when freud was there. he would have created a whole chapter that had nothing to do with our mothers it would have been all about the fed! >> rick, what's your estimate -- >> hold on, steve. stephen moore, why does the market move matter you said earlier that the december rate -- the december rate hike was a disaster because the market collapsed. >> yeah, and the real economy.

>> is there too much focus on the market versus on the actual economy? >> i misspoke. i'm not just looking at the market i'm looking at the real economy, too. let's face it -- >> but it hasn't collapsed like the economy, like the market did -- >> no, the market's been strong, but it has -- look, the gdp number we're looking at now for second quarter is 2% or slightly lower, so growth has fallen a bit from the 3.25% that we had, so i'm concerned about that. and i think the fed bears some of the responsibility for that. >> you guys -- rick, how can you -- i just don't see how you can say that both steves are wrong when they're complete opposites. i'm so confused. >> we're not complete opposites. >> they're so different -- >> first of all, i didn't mean to say they're wrong i disagree with their opinions nobody's wrong -- >> but they're the yin and yang! >> nobody knows the future. >> that's means you're in like -- >> you can have more than two opinions. >> can there be? >> there can be. >> what maybe separates stephen moore and i is a quarter point >> everything. >> we're a quarter-point difference a quarter-point difference here. >> in life

i'm not just talking -- >> we talk a lot about a lot of things we both agree -- >> he's with the heritage foundation, not media matters. >> the heritage foundation believes in free trade and no tariffs. >> i don't like tariffs. >> don't they? >> i don't like tariffs. >> doesn't like tariffs. he doesn't like tariffs! >> -- in new york, nobody complains about that >> what? >> i said, you know, all's i hear about is tariffs or taxes i get it, they are taxes and everybody goes nuts over it! does be in go nuts when california raises taxes, when new york raises detriment detrimental! open your eyes all taxes are bad! >> low taxes, don't like social change -- >> ticker -- >> boy, when we get this show going -- >> republicans didn't like any taxes until they were tariffs. >> steve, we were talking earlier about quantitative tightening, how that has an impact on less money being around, that could impact the economy. would you be okay with the fed ending quantitative tightening, doing it that way, rather than lowering rates >> you know what the most important thing to me is

we don't talk about this enough. actually, the fed funds rate is not the issue here you know what it is, steve, to me it's the interest rate that the fed is paying on bank reserves and you lower that rate, you'll get more of a money -- a lot of banks are sitting on money because they're just taking the interest rate. and what i would do is just gradually lower that rate a bit over time -- >> where does it stand now >> what is that rate now >> the ioer i believe -- i'm going to get this wrong -- is just a little bit above the fed funds rate it's designed to allow the fed in a world of excess reserves to control the funds rate so it keeps that money locked up and not sloshing around in the fed funds rate -- >> but talking about capex being down, if that -- if banks were incentivized a little bit more -- >> i need to search this >> banks are not lending money at the rate they normally would because they can hold onto the money and just get a low interest rate -- >> loan growth remains positive. we're late in the cycle and there are pockets of quite extreme amounts of loan growth

because of leverage loans and direct lending -- >> but i feel like bankers would say -- >> i want to see more. >> i feel like bankers would say we're loaning out to anybody who wants to come in and ask for it, that companies aren't asking for so much because they have so much. >> i think banks would say they're doing a risk-reward assessment and they're lending out where it's warranted. >> that's true, they do a risk-reward assessment, but they do take into account, if i don't lend them money, what do i get for not lending it and that figures into their equation. >> just as a flip side, i know this is not an apple-and-oranges comparison at all, but it's not like the tltros in europe where you have a negative rate has led to a big boost in lending. >> that's true, thank goodness. >> but i'm saying you don't artificially boost the economy by forcing banks to lend. >> no, no, no! look, we didn't -- until -- when did we put in place the interest on the reserves in the first place? that came in, what -- >> early '07 or '08. bernanke -- >> '09, i think. and the congress didn't even

have interest on reserves and that's a policy that came -- i thought it came after -- >> i think the ioer below the funds rate >> it's about ten below. >> five below, rick, plus or minus. >> right in that neighborhood. interest rate on excess reserves to me is a horrible idea that it's going to get harder and harder to extricate themselves from because it's becoming instrumental to control, you know, the way the overnight funds trade. i think dr. judy shelton is really good at this topic. and steve moore, i completely agree with you here. something needs to be done it doesn't make any sense, all that money sitting there and i know it's an ongoing debate, but in the end, you know, once again, these crisis-era leftovers need to be taken out of the fridge and put in the garbage disposal. >> but i'll just end this by saying, you look at the economy, these fundamentals of the economy, i mean, you're going to tell your grandchildren there was a time you could get a mortgage for less than 4%. i mean, this is a beautiful -- a pretty beautiful situation we've gotten in -- >> not only that, steve, but all

of the haranguing around the table and all of the anger, okay i think if we get through this month, it's the longest expansion in postwar history -- >> june 2009 is when it was. >> june 2009. >> yep. >> wouldn't it be awful to be complaining and awfulizing and hand-ringing through the best of times? >> not the best, but -- >> take my job away now? >> wouldn't that be a waste, not to enjoy it? >> i just want to make sure this goes on for another five years, that's all. >> it can get better and we can talk and tweak about the end of it, but almost the longest expansion in u.s. history. >> what did judge judy scheindlin say about that? >> dr. judy shelton -- >> oh, judy shelton, not judge judy, okay did she weigh in on -- >> i'll tell you, if the president's watching, i'll tell you what, there's a pick -- >> i love judy shelton -- >> from top to bottom -- >> didn't she support the gold standard >> judge judy for the supreme

court and dr. judy for -- >> okay -- >> well, she's for making our money worth more than the price of a piece of paper. i kind of agree with that. >> all right >> she wants to support the dollar isn't that what the president doesn't want >> all right, liesman, thank you. santelli, thank you. stephen moore's going to be with us for the rest of the hour. now you go. all right, coming up, despite mishap after pr mishap, the biggest tech stocks can still be reliable money-makers check out the sector since last tuesday, up nearly 9%. when we come back, noted tech investor ann winblad will talk to us about what to do next and whether the threat of a government crackdown is real or not real stay tuned you're watching "squawk box" on cnbc

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later today, house lawmakers will begin their hearings into the dominance of big tech. the sector's already under scrutiny from federal regulators let's find out how this could play out for tech investors. joining us now is ann winblad, hummer winblad ventures co-founder and managing partner. do you have a high degree of confidence, ann, that the goose will continue to be able to lay these what i see are golden eggs for america and, really, the world, or could we really mess this up bureaucracywise? >> well, there's always a way to mess things up buicksywireaucra, but it's going to take years before anything is cracked down

upon in the tech industry, and we're going to see the competitive landscape change many times during those years. take advertising, for example. who's going to dominate? amazon's growing in that sector. new entrants are entering. how will that affect the revenue of companies like google and facebook >> i guess someone finally connected the dots, that if there's only a few companies controlling who does the advertising that the companies doing the advertising would have to pay more, and therefore, consumers are somehow eventually harmed by advertised, you know, companies having to pay too much for advertising. what is the real issue is it privacy is it horrific content that makes its way onto these platforms? or is it that these companies have monopoly power and are too big? i don't understand what we really need to fix >> well, i don't think it's the cost of advertising dollars. certainly, it is the massive shift we've had in media

the digital media platform is dramatically different than old media. i think, first of all, old media is unhappy and getting unhappier. we're not going to dial back that history and history. it is challenging to manage these digital platforms as churchill says it takes half a second for lies to go around the world and takes a long time for truth s to put on its pants. facebook has thousands of monitors trying to manage the contents on these sites. other platforms are looking at different ways to manage the quality and even what is the content. i think eventuallyinto a new world what is media and how is media managed and not just who

owns the media >> it is not as monolith, i guess, is it would you say who's the most vulnerable and who should not be under the cross hairs and who should well, we are going to continue to dominate in tech globally unless we do something really stupid here. tech is the backbone of the economy, the economy we have been talking about for the last hour of how strong it is if you look at the most valuable companies that we have they are primarily tech companies. i don't want to destroy that on the other hand we really do have very competitive environment out here i don't think if you ask google, they'll say they dominate anything you can see how their advertising dollars have been under pressure they're competing ing in the cld

amaz amazon is competing with walmart everyday they're competing for new advertisement dollar on google and facebook so the competitive dynamics are not one that would indicate monopolies, it does indicate we have strong growth in the tech area that every enterprise in the world modernizing their software staff and buying these products for these companies digital advertisers are going through these companies to reach the consumers that they sell goods to that's not going to change and does not indicate a monopoly >> when you hear elizabeth warren talking about some of the things they like to do, what would you tell them or what would you say to them if you let

yourself go? does this look insane to you of some of the things we are considering? >> it looks like we have a presidential campaign in process. polarizing rhetoric is the statement of the day polarizing rhetoric. i think the elizabeth warren billboard at our train station finally went down yesterday. i think we'll see a lot of these candidates get on the tech bandwagon. our young voters are digital nativ nativ natives, everybody lives in a tech world now i think canada thinks that the way you bring voters in is to put out these polarizing statements which claims that tech is bad. i don't know how young voters view this. it would be interesting to

survey them. >> i work for a conservative organization washington, i am pretty conservative myself i talk to conservatives everyday you talk about the risk of the high-tech sector, the antitrust, potential violations are a problem. conservatives are not happy with i-tech and they're not happy with facebook and google and some of these companies. they feel they are discriminated against and they're not happy with the way these companies sometimes conservative, the question i have for you is how attentive do you think these tech companies are to a potential revolt you are there in silicon valley where it is a liberal place. it is not america. i wonder do you think these companies are doing anything to reach out to conservatives and more pro in a way that would

keep their customers >> i don't think these companies are playing political games with their content. th i think they are very challenged on 2 billion users putting on content everyday we never had platforms like this where contents are being created by billions of users every single day it is very, very challenging for any of these companies to manage sensor and control everything ranging from a suicide being committed online to other acts that companies are trying to build a basically a structure for management i think they're actually asking the u.s. government for help on this i really don't think political gains are being played with content. >> ann, thank you.

>> i would testify because i still think california does represent america. >> ann, thank you. jim cramer joins us right now. jim, you were ahead of what we were watching on beyond meat today. you have been telling people before to be careful of this jp morgan had a note and jumping on it. you have been telling people for a while including yesterday. >> 500%. it is a chemical based product, there is a shortage. impossible got a shortage. they're strong demand. $10 million upside, they gained $3 billion in market cap this one gotten silly. i don't want people to get hurt. i think when you get hurt and when i go anywhere, this is all people talk about. i am afraid for people take your profit already you won.

what do you need do? you won. congratulations. you won with a bad taste of burger congratulations. joe, in the new york times, incredible as said on cnbc, i could not win if must to kill. >> andrew is not here to stop it >> that was what it was. thank you, jim 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, we could enable surgeons to dissect around the cancer so we can precisely remove it.

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steven moore, thank you for being here >> economy strong. >> wilfred frost thank you. >> i will be watching you on the opening bell you are wonderful. make sure you join us tomorrow, "squawk on the street" is next ♪ good morning, welcome to "squawk on the street. i am scott walker with jim cramer at the new york stock exchange, carl quintanilla is at the conference bringing us great news and david faber is off. the s&p 500 would open higher by 19 points. dow jones and industrial average good for about 160 at this