"squawk box" begins right now. ♪ >> live from new york where business never sleeps, this is "squawk box. good morning, everybody. welcome to "squawk box" on cnbc we're live from the nasdaq i'm becky quick and andrew is off today. watching u.s. equity futures at this hour and things are looking like we would open down. dow futures down by about 80 points this comes after yesterday where you had seen the gains give back in the course of the day actually closing yesterday's session near the lows. the s&p indicated down about nine points right now and nasdaq off by 39 and yesterday was the first time in seven days we had seen the dow close lower if you're looking at the gains that had been built up, at this point for the month of june, we already erased about 70% of the losses that we saw back in may

we'll see what happens as we get closer to the opening bell this morning. take a look at what happened overnight in asia. the nikkei down about a third of a percentage point and we'll talk more about the things we're seeing happening overseas this morning particularly in hong kong. let's take a look at what is happening in europe with the early trading place there p right now red arrows across the board. the ftse and the cac is down by 0.5% back here in the united states and the treasury market keeping an eye on the yield and the ten-year is yielding 10.9% elon musk says the company has in his words a decent shot at a record quarter on every level. >> the sales have far exceeded production and productionhas been pretty good so, we're actually doing well

on -- we have a decent shot at a record quarter on every level. if not, it's going to be very close but we've got a shot at a record quarter >> exactly what i just said he was going to say he said it the same way i said it >> you're right. he said it a little better i wanted him to be a little more excited. but some analysts had been worried about weak demand, which is what we've been hearing that is the first time we considered that with these tesla sedans musk says the company is on task to hit production goals and the shares up about 2.5% and back above well above 200 some deal news for you this morning. french tech firm dassault is buying medidata solutions for

$5.8 billion software that is used in clinical trials and you can see their shares are down by 4.3% this morning in other news about a recent deal, major utx shareholder bill ackman wants it to call off its planned deal with raytheon pushing utx to streamline its business, which it has been doing. but a merger with raytheon makes no sense fellow shareholder also opposes the deal. >> why i know they said it makes no strategic sense, but every analyst we have spoken with and every person in the industry said it would be better to be bigger when you're trying to negotiate. >> i'm sure it is about money. i don't know how ackman and, you know, they're both, little peas in a pod in this case. i don't know >> i just want to know -- i mean, the last i saw ackman had 3.5 million shares and i wonder if there are other positions >> didn't we finally decide that

utx was the acquiring company. >> yes, yeah they're going to own more of the total percentage of the -- >> the acquiring company typically, you know, the praise goes up. >> i guess it depends if you're a short-term or long-term investor if you're somebody who wants to be out sooner, this would be pressure on what would be a great play once the spinoff takes place. if you're a longer term investor and looking at this over the years, it might be a better strategic play i'm not sure if that is the answer >> i can't imagine that utx and raytheon are going to say, bill ackman doesn't want us to do this >> no bill ackman out there and saber rattling you don't know who else they stir up along the way. it's not something you want to deal with as management as you're trying to take on all these different moves that you're making at the same time a spinoff and putting this

together who knows. i don't think it will stop the deal but i wonder if they'll come to the table and talk to these guys >> utx market cap is how much and what do they own $106 billion what do they own at most couple billion dollars >> i don't know. all i saw was 5.3 million shares >> yeah. exactly. >> yeah. i'd say less than $1 billion i don't know that for sure shares of mattel are jumping this morning mga said it rejected the merger offer last week. made a proposal to buy mattel after overtures to the company that started last year you can see mattel shares this morning are up by 9.8% so, some questions about whether that is in play or not investors, obviously, think there is more to the story >> have you been called -- >> about this next job i have not >> buffett -- >> didn't offer it to me >> what about him.

probably doesn't want to do it. wells fargo having trouble finding a new ceo. the bank's approached executives from jpmorgan, pnc financial services and others only to be turned down. former ceo tim sloane resigned in march running wells fargo seen as a tough job right now. the new exec will have to fix key parts of the business and rehabilitate the bank's reputation following the 2016 fake account scandal and you've got, you know, people like elizabeth warren rising in the polls and she wants, even if you don't know about something happening, she wants you to go to jail. i don't know if i'd want -- >> both charlie munger don't think it should be somebody who came from one of the traditional wall street bank not because they don't think the people there are qualified to do it, but it would make a huge target in an election cycle for all these people who have been complaining. the reason tim sloane stepped down is because he faced such

huge criticism from elizabeth warren and occ and congress. it's going to have to be somebody who isn't going to attract -- >> i was thinking about elizabeth warren this morning. aoc is reportedly weighing, they're both vying bernie and elizabeth warren -- >> vying for her endorsement >> a 29-year-old that is a progressive star, but a lot of other people think she's kind of an embarrassment, obviously. but she's a progressive star in the party and her endorsement is a huge deal. and she had been -- >> for younger voters to turn out. >> she had been firmly behind bernie, obviously, in the past that would be a changing of the guard and elizabeth warren keeps plugging away. and she's got the answers to the native american thing. she's got that down where she just like, it's almost, you

know -- >> had biden in the lead, but had sanders and warren >> she keeps answering it the same way you know, it's just like this answer that doesn't really explain any of why she, you know, embarked upon that in the first place. they never follow up with the questions like are ask you still saying that your grandparents tried to stop your wedding because they really thought that the grandparents of your husband really thought that you were -- did that really happen no one is really talking about it any more with her a bizarre -- and that means as we get further and further away from that, maybe that doesn't become an issue. it happened. >> you are probably saying that about a lot of candidates. a lot of baggage that every one of these candidates bring to the table. >> but before she really embarked on it, she did the dna test and everything to get it off the table, even though it didn't turn out very well for

her. >> but, again, i think each of these candidates have things that they don't want people talk about from the last 10 or 20 years. now to the u.s./china trade fight. huawei is pulling the plug on its new laptop and blaming the u.s. no longer making the matebook. it used intel chips and microsoft software the u.s. blacklist effectively bans intel and microsoft from selling its products to huawei consumer division is calling this move unfortunate. and we are following a developing story out of hong kong tens of thousands of protesters have been taking to the streets proposing a proposed extradition bill to china. fired tear gas and a live report from the ground later this hour. this is interesting. and, obviously, for the global implications just of everything we want in terms of freedom and ending tyranny everywhere, but

it just comes at an interesting time as we're facing down china on a lot of things that, you know, that we have in this country that we have a problem with in terms of trade and intellectual property and theft of ip and all that stuff and this, this is hong kong, but it doesn't look a whole lot different than what they had to deal with a couple decades ago, which they never really dealt with >> in tiananmen square in hong kong five years ago, the umbrella protest five years ago when they first started locking out the democratic leaders at some of the protests there at that point >> you know, if this, you know, i guess mainland china most of the populous sees the progress the ccp has brought. so, maybe -- that's been one of the things that we have talked about a lot. how do they keep all these things

>> hong kong is a very unique situation. under british rule for 99 years enjoyed freedom of speech, democratic processes and i was listening to some interviews this morning on mpr of citizens there in hong kong who said we had a taste of democracy, we're not going back >> that's what i mean. and everybody has -- they're all censored they don't see what we see in china. but they have an idea. they have an idea that there is some pretty attractive things as far as lifestyle goes that come with more freedom and more human rights and they're going to have to deal with that as they're dealing with donald trump. i'm talking about president xi. this is weird and it starts slow >> similar situation with that we'll see. when we come back, futures pointing to a lower open on wall street today's big drivers straight ahead. dow futures indicated down by

about 93 points. s&p futures down by 10 and the nasdaq off by 43 right now as we head to a break, the biggest premarket winners and losers the dow you'll see united technologies is leading the way. up 1%. 124.17 hey! i'm bill slowsky jr.,

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welcome back to "squawk box" trade war and slowing economy, stocks still remain near all-time highs is the consumer in better shape than some investors think? what about the economy, too? chris marr is the chairman of ocean first cooperation and ocean first bank one of the largest commercial banks in new jersey. chris, thanks for being here today. >> good morning. nice to see you. >> let's talk about what you see in the economy in terms of commercial banking. >> everyday economy seems to be very good right now. we are still seeing signs of strength our customers feel good in both the consumer side. some concern if you're trader tariffs and luxury housing market that is something that we've seen pull back a little bit. but the broad indicators are very good. >> what do you hear when it comes down to tariffs? >> you have to break it down into a couple different classes. folks that need to make capital

investments and reluctant to get into a situation making a significant capital investment that next new warehouse or barge or something like that folks may trade a commodity or something, they're looking for alternative suppliers and less impacted >> so, i mean, that's a huge issue because we have seen capital expenditures not keeping pace with what we had anticipated, particularly given the tax changes that went into play you think this is part of the reason why >> there is a direct link there. everyday decisions if you're making smaller decisions about a higher or something like that, you feel good about the business in the short term and you're making those decisions but the decision to put 10, 20, 50, $100 million into a new plant and new equipment, you want to have some certainty about the longer term future tariff and trade is about the longer term future >> does it slow companies from capital expenditures they are making in the united states. i can see if you were thinking about building a plant in mexico, even with the deal that has been cut this week, i can see how you can say, forget it

on a whim, my cost of producing things can go up by 5% to 25% in a number of weeks. but here in the united states, it feels like the economy is still doing well does that really slow down capital expenditures for here in new jersey or the tri-state area >> it keeps capital on the sidelines. you have the ability where the economy could be growing faster or if you see this potential slowing in the second half of the year, we might be able to dampen or avoid that if there were more capital spending but standing on the sidelines and saying we don't want to make the giant investments. >> we have nothing to fear but fear itself. we don't know what is coming next. >> we could very well talk ourselves into a recession i was with one our of clients who runs a restaurant group and he's refreshing his restaurants and opening a couple new ones next year making thoughtful,

careful investments and that makes a great deal of sense. what you don't see is the very large investments that would be dependent upon trade or warehouse or transportation or those kind of things >> what do you hear in terms of hiring from your customers are they having a difficult time finding people are they looking to hire >> there is a couple things coming together. first, they're having a difficult time hiring and also making it much more expensive to have an employee on the books. those two issues come together not only is it difficult for you to find your staff, but now with new work rules in new jersey and new rules around, we, for example, last year which really placed a burden on a lot of small businesses when they have a labor outage because people take extended leave, that could really hurt their bottom line. they're looking at auto natiima. i have clients who are automating things that they wouldn't consider two, three years ago. when they can find the labor, it's frightfully expensive >> the new tax law affected some of the salt states, the states

that used to have big deductions on state and local property taxes. what have you seen you mentioned that the luxury market has been hit a little hard is that a reflection of that >> the most surprising thing is that really smart people paid no attention to the law we have a lot of clients who were very thoughtful and until they filed their tax return this year, they haven't done the math over how it will impact them even though the law went into effect a little while ago, they are understanding how much the property taxes hurt. we are seeing in the luxury housing market people thinking twice about getting involved in real estate property where you're paying, you know, some of the properties are $50,000, $100,000 a year in property taxes. nondeductible and your state income tax is nondeductible. >> and probably climb for some of the luxury clients in new jersey. >> yes >> nice to see you >> thank you, becky. amazon is giving up on one of its businesses. those details coming up next

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weeds are lowdown little scoundrels. draw the line with roundup. the sure shot wand extends with a protective shield to target weeds precisely and kill them right down to the root. roundup brand. trusted for over 40 years. welcome back to "squawk box" everybody. time for the executive edge. amazon says it is ending its u.s. food delivery service on june 24th. that business was launched in 2015 in seattle and then expanded to more than 20 sdcitis order meals separate from the grocery delivery and it isn't totally out of business took a stake on deliveru.

>> can you order food like taco bell >> i don't know. uber eats. i'm sure thrilled to hear this news amazon is out. >> the healthiest of the fast foods. >> yes >> all these things you finally realized >> but all of relative all the fast food chains maybe it's healthier than pizza or chicken >> or dog food that frank was eating the other day >> my dogs love that i brought some home. >> you're going to be going high end and getting more expensive food >> as we're serving the dogs -- >> you tried some? >> no. i have not succumb to the impulse. >> it was like a pumpkin smelling biscuit >> chicken and rice. in sports news check out what we found. the stanley cup, someone misplaced it there it is. game seven of the nhl championship is tonight in boston the boston bruins and the st.

louis blues will face off in the series deciding game people pray and hope in any sport for a sevaenth game. in hockey if it goes to overtime, it is going to be good there hasn't been a game seven since 2011 which happens to be the last time the bruins won the cup. won a last-minute seat and prepared to pay up tickets are going for at least $1,500 on ticketmaster if not, you can watch the game tonight. oh, see i didn't realize that. it's on nbc. i actually did realize that. >> you know what they did with this cup this is the most amazing trophy of any trophy in any sport you know what they do that thing. they have jumped in pools with it and drink beer out of the top. i have a cup of water here >> there are guys here, why are you trying to jinx it against the bruins because you're a ranger fan yeah

that's -- trying to whammy that thing. so, the bruins have had, the blues, have they ever? they've never won, have they they have won. i don't follow -- that shows you. the rangers i used to follow, but i don't know any of the iplaers aipl players any more lundqvist is still there we digress that's cool. 8:00 tonight. >> on nbc. >> i can't wait to watch the finals as the basketball continues, too because it must be on either tonight or tomorrow or at latest on saturday so i can watch it, right? yeah and then the next one after that isn't until sunday it's not on friday or saturday >> well, you can watch tonight >> no, i can't it's on at like -- i can watch this >> you can watch this. >> i'll dvr.

i'm sure i won't see who wins. >> you'll wake up at 2:00 a.m. >> i get alerts on this. after the iphone, you can no longer hold out. >> turn off the alarms. >> cani you do that when we come back, this morning's stocks to watch. as we head to a break. 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. from finding out what's selling best... to managing your fleet...

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welcome back you're watching "squawk box" live from the nasdaq market site in times square. good morning, everybody. welcome back to "squawk box" we have been watching u.s. equity futures. dow futures down, but only by about 61 points.

down by more than 90 point just a little bit ago s&p is down by 7.5 >> the blues the oldest nhl to never won a stanley cup. blues never won the cup. >> i thought you said bruins, too. >> the blues >> i thought you said bruins >> of course, the bruins is one of the original six, right they must have won multiple. >> he was touching the cup >> trying to jinx it people at home heard what i said because they're saying, tell -- let's get to something it mass demonstrations taking place in the streets of hong kong today protesters are clashing with law enforcement. that's where we find our chery kang who joins us live be interested to see these shots, chery good morning, good day

>> good morning, joe but, of course, it was a very difficult day for a lot of people here in hong kong, especially for the thousands of protesters who took to the streets, once again. of course, this is together with the sunday's protest one of the biggest show of force. a show of objection to what the hong kong government is trying to do. change the law to add mainland china on to its extradition list you know, this is really one of the biggest civil actions since the handover in 1997 and i believe you are looking at some footage from earlier today. we did detect some violence used by the police officers using tear gas on many occasions, as well as batons, too. really control the froprotester as well as clear out the streets. looks like in this main central business a district area the streets have been cleared

out, but certainly looks like the protesters are not really being swayed by this, you know, show of force by the police. and at this point the protesters are saying we're trapped and they did manage to lead the hong kong legislative council, which was supposed to do a legislative debate today to scrap that plan. so, nothing happening today. but the government is not really getting any statement out at this point so, it certainly looks like that is not the hong kong government is not budging by the way, it has the backing of the mainland chinese government in fact, ministry of foreign affairs of china saying just over the last couple of hours that it fully supports the amendment of the extradition law in hong kong guys, back to you. >> chery, thank you very much. shares in hong kong were under pressure today they closed down by 1.75%. >> nothing happens in a vacuum

>> you're talking about the broader trade talks. >> i guarantee you, president xi and the others are looking at this and, i mean, once things get started, it's just hard to put which one you want to use. toothpaste back in the tube or genie back in the bottle humpty bu tty dumpty together an >> the violent protests over the weekend and that was families and some grandmothers and types that were out there. this was younger students and more resolve >> they don't need a weakening economy because of a trade dispute in the biggest country on the planet. >> right >> with this going on. we'll see. when we come back, a big call on alphabet we'll tell you why one analyst says breaking up the company would be a major to

shareholders stay tuned you're watching "squawk box" on cnbc

time for this morning's early movers dom chu joins us do you have anything really good if not, i really don't want to talk about stocks. there is nothing happening in golf this week that i am aware of >> there is something going on at pebble beach, i hear. >> not the greatest venue to have the open and they make it hard i can't wait i'm so psyched >> you get to prlay it every year >> i get to play a practice round with no one on it. like you have died and gone to heaven >> i think i read somewhere that jack nicklaus said if he could play one more course, itwould be pebble beach. i mean, i love it. i'm a native northern californian. so maybe i'm bias. >> you can play pebble and then cypress and then people go back and forth on which is better but i digress. i wanted to talk soccer because i can't believe this score

i'm worried about the rest of the world cup. if there is a regression, no more goals scored for the entire tournament. >> i'm just hoping there isn't a let down by the u.s. nationals women's team. >> what do you call a hat trick plus two what is that even called that's what it says in the journal. >> has to be some kind of eagles and birdies and turkeys in bowling. >> but what do you do when you're up like 7-0 and then they said that they felt bad for thailand like were like pouring it on and then if they let up, then you're insulting the team even more >> by the way, i'll take the over >> we have to go, dom. no, i'm kidding. but that is unbelievable 13 -- that is very exciting for the defending champs >> and i feel as though we'll be talking about it a lot more because of all this. but i will because i'm sure producers will kill me at this

point. i will give you the movers because that's what i'm here to do start with shares of cisco systems which are moving this is the computer networking company and shares are down 1.5% and only 17,000 shares premarket so far analyst william blair downgraded to market perform and they see signs of tightening demand for i.t.infrastructure and more stretch valuation. and we're also going to watch shares of mcdonald's which are down just fractually analysts rate it outperform and $225 price target. they cited better same-sale growth and digital menu and revamping efforts and those shares moving, as well we'll end on shares of nxp semi conductor. not a lot of trading going on. fractual moves to the downside when things get going, we might

have an upgrade to morgan stanley and those analysts say they're factoring that thesis. an equal weight. and the target price goes from 114 from 99. improving trends in profit margins and expansions and off 0.5% early on, joe the u.s. women's national team crushing it. u.s. open at pebble beach and so much to talk about, joe. >> tiger's won there >> yes, he has >> an open, hasn't he? >> 2000. remember that 2000 one he won by seven or eight strokes. >> koepka the favorite >> can you imagine if it's three in a row >> no. >> i can't either. i cannot imagine that puts him hall of fame right away >> it does if you played or you haven't played >> i have played pebble. i have played pebble >> you have done that seven,

eight, ni8, 9, 10. >> you know what i was most surprised about when we played it we always think about pebble in the water but only like four or five holes that are really on the water and everything else kind of moves towards the inside >> those four, well, then there's 18 that is unbelievable, too. we digress, once again >> dom, what is wrong with you how did you take us off course >> now i'm looking at unis did you see this tweet if you want to follow. she put a video of cnbc and she says it's harder and harder to see what's happening in hong kong because it's a constant struggle and it keeps going out. going out. you know, the guy starts talking and then it goes black he starts talking and goes black. >> the feed in beijing >> constantly turning it off

right now. >> there is a lot of coverage of these protests today >> not in china. need to put a note out on alphabet the firm calculating a 50% upside for shareholders if the justice department decides to break up the tech giant. joining us now is another analyst who covers alphabet john freeman from cfra and has a buy rating on the stock. so, is it that simple, john? some of the parts is worth more than the whole or is there a beautiful synergy when you put them altogether? what would you rather have >> here's the thing. i definitely agree with you. thank you for having me this morning. i agree with needham that some of the parts would definitely be more valuable and break up along the very sort of clean lines with youtube and the search business, but i don't think that regulatory risk is the most likely or the most damaging. i think an intrusive, you know, regulation of google's core

search business which represents 80% of its revenue is the more potentially damaging, you know, outcome with really kind of unintended consequences. the reason is because for google and for facebook, as well, they pose a real risk and influence and power now over politicians themselves who are writing this legislation. that was kind of the new sort of also twist from the judiciary committee announcement last week that was, you know, they're not only going to enforce anti-trust regulations on the books but look at writing completely new regulations specifically for, you know, facebook and google is really what they sort of implied and quote/unquote influence on society and so forth so both of those entities, both of those companies directly impact, you know, the outcomes of elections and things that, you know, politicians take very personally so, they have a lot of personal

motivation in it, which you didn't see, for example, with microsoft or aol or really any, you know, anti-trust situation that i can think of at least in tech in recent memory. >> there's just no way that you can say to people, oh, don't worry about the regulatory issues because the parts are worth more you don't know how long it will take you don't know what it is going to look like you don't know what multiples are in the entire stock market two to three years from now and tech value and no way to say don't worry about it because the parts are worth more than the whole. this would be an awful, uncertain and protracted and ittic loo it looks likely to be that. i don't know what is a good idea regulators, there is a reason we have them, but you also need a light touch and in a country that is totally based on free

markets. >> free, market capitalism absolutely how do you regulate a search algorithm and set of search algorithm that are constantly improving themselves and google does this all the time go and experimenting and just sort of destroy that whole model and i don't think it is really necessary. i think a lighter touch, you know, one of the things refrain is cooler heads will prevail so, you know, hopefully it's tough to say cooler heads even in this political climate. but, you know, i think for now we can hopefully stick to that, stick to the faith in that, right? >> well, you sound very credible because of that nice backdrop you have there actually, that's not always the case when we're talking to people it could mean you're a politician and then you're not credible at all. >> that's right. >> ya >> john freeman, thank you very much. when we meco back,

highlights from last night's tesla shareholder meeting.u havt let's make open source software the standard. let's create new plastics that are highly recyclable. it's going to take input from everyone. so let's do it all, together. ♪ ♪ let's expect more from technology. let's put smart to work. ♪ ♪

tesla shares rising this morning after the company's shareholder meeting. phil lebeau joins us with the biggest headlines. >> part of this is a par rally and also perhaps renewed enthusiasm by tesla investors after elon musk said, look, we do not see a demand problem. >> sales have far exceeded production, and production's been pretty good, so we're actually doing well, and we have a decent shot at a record quarter on every level if not, it's going to be very close, but we've got a shot at a record quarter >> that could mean that they come close to hitting the estimate that is out there on the street for model 3 deliveries hitting 73,900 vehicles even if they don't get to that but get close, that could give

support to the shares. meanwhile, in regards to production and the gigafactory, elon musk says their product plans in terms of new models and when they come out, the model y, and after that, the pickup truck, et cetera -- those product plans are being driven by battery production capacity, and that ultimately could lead tesla into a new business. >> as we scale production to very high levels, we actually have to look further down the supply chain, and we might get into the mining business, i don't know, maybe, a little bit, at least >> into the mining usiness insurance is expected to come out relatively soon. so, guys, they continue to say, look, if we need to do something in terms of expanding what tesla's all about, we will do that shares of tesla doing well after markets. the stock moved up higher. don't be surprised if that continues this morning guys, back to you.

>> is that because of the rare earth minerals and the potential ban from china, that's why he's talking about maybe getting into mining >> well, there's a number of not just the rare earths, but when you look at things such as cobalt, lithium -- i mean, it's not just rare earths, becky. eventually, as the number of electric vehicles expands, you're going to need more of those in the industry. >> they can just start, as they're digging the tunnels, they can start looking through the earth. >> boring tunnels? >> can't they? they're there anyway. >> and you keep a straight face, joe. a straight face. >> use a flame-thrower to burn away -- they've got all these synergies, you know? >> and if you have an issue, you can file an insurance claim. >> right solar-powered. i don't know why is he so low-key, phil i want him to be excited he's low-energy elon. >> yeah, he didn't have the same energy we usually see from him look, he's had, in terms of his

energy, when he gets a little too exuberant in the last year, we've seen what's happened, so -- >> yeah, it's not always good. >> perhaps he said, i'm going to be low-key. >> phil, thank you great to see you. >> you bet. joining us is jeff sonnenfeld of the yale school of management and a cnbc contributor, and craig irwin, an analyst at roth capital partners craig, you raised your rating from hold to buy this week even before you heard him why? >> yes i was in china last week and met with several of the key suppliers, a couple of the key producers of electric vehicles in china and got hold of some of the production data out of china. and you know, the april number was 2,300 units. you look back to 1q '17, the full quarter, second quarter they had production or sales into the u.s., we had 1,550 units. so this quarter we're looking at something like 7,000 to 8,000 units credibly in china. china's growing much faster than people expected. they really only got to 8,000 units in the u.s. in their third quarter. china's going to surprise. it's going to surprise to the up side.

>> okay, china may surprise, but we also heard that there's no demand problem here, jeff. and we also, while he said there's no demand problem, he did say that the inhibitor to buying a tesla is affordability because people literally don't have the money to buy the car. what do we read into that? >> we read the usual tesla turbulence that goes unexplained. yesterday was a little disappointing for those of us who enjoy the drama and glamour of it all, but i will agree moderately with craig, who is quite the optimist today, that for investors, that was not a bad meeting. it did seem like he's certainly putting out a rosy picture on demand, which doesn't seem to match the facts beyond craig's on-the-ground research, and the production's been down by a third. they've surprised us badly in q-2. in fact, end of q-1. but q-4, they told us he's going to be profitable for every foreseeable quarter in the future he couldn't estimate it, even just, you know, three months out. he was so far off.

but also just taking a look at the continued turnover in management -- they have a huge delegation problem some 40 senior people in a year -- two generals counsel, two vice presidents of communications, hr, engineering, even people working on batteries and things that have been leaving and the automatic pilot, where they've had the terrible crash that "consumer reports," of course, has trashed them on this these are unexplained issues, didn't come up but he did bring two people who seemed to stay employed all the way through the meeting up there on the stage with him, and they've been with him for a while. so, the chief technology officer and the person in charge of batteries. >> right. >> so, that's a good sign, i guess. we see some look at stability. but boy, this whole array of products insurance, digging more holes in the ground for mining, instead of the boring company and all of the rest -- as joe says, leaf blowers from -- i guess that's good to bring on the set to check out people's hair -- to flame throwers and all the rest, it's -- henry ford once said,

you don't build a reputation by telling people what you're going to do. you know, let's see him actually hit some of these numbers, instead of being off by 25% and 35%. >> craig, your response? >> so, the stock's already rerated, right i mean, the stock was down 50% from when we put out the fact that, you know, impartial data from mehdi and japan shows the battery price is actually double what they were claiming -- >> ah hh, see? >> and investors have calibrated this so yes, the cost of the cars is dramatically higher than it would be under ideal circumstances, but they're still able to sell them, and i think they deserve a lot of credit for being the leader you know, number one in dollar volume as far as vehicle sales, number four in unit sales in the u.s. they deserve credit for this, and i think investors have just been too bearish. >> craig, you sound like you're somebody who's a fan of it now because the price has come down. at $222 at this point. where's your price target? where would you say, okay, this is appreciated again >> i personally would consider myself still a little bit of a critic, but i do think there is still some upside.

so, my target was unchanged when i upgraded at $238 i think it probably does go to the mid-200s and then remains range-bound until we see the impact of competition later this year. >> jeff, we have about 30 seconds left yesterday he said 90% of the orders are coming fromcustomer who aren't holding a reservation for the model 3. is that good or bad news >> he sees it as good news there is pent-up demand, like harley has had problems and long ago when they couldn't meet the surging demand -- >> but it also means people who are there for reservations maybe aren't staying on the list. >> yes, it does mean that. and you wonder if people are giving up and they're frustrated, so that's the other way of seeing it and the model cuts and price cuts and things, it's amazing craig knows what he's talking about on this. but you look at analysts, adam jonas who says it could be worst $490, it could be worth $10. so he comes out saying it's a distress case. so, i'm putting it at $230 or something like $235. it's all over the map. at least, craig, you've been

consistent and you know what you're talking about, and you revealed the news on the battery pricing being way higher than it truly is but there's a lot that went unexplained, and i don't think shareholders pushed him too hard. >> he's a musician what's he know about -- adam jonas -- what's he know about tesla? >> i don't know. >> i mean, i commend him for trying, i mean, branch out and everything, but they're hot. they're unbelievable they are they're the hottest -- right i'm kidding. >> but a lot of his models aren't that hot. number one was nikolai tesla himself, who died in a hotel a hermit, but a genius. >> thank you for your time. coming up, breaking news on the mortgage market. we'll try to fix it. here peopled to form the stock exchange which brought people together to invest in all the things that move us forward. every day, invesco combines ideas with technology, data with inspiration, investors with solutions.

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the great rate debate. breaking news on the mortgage market is straight ahead. elon musk's bold call. >> we have a decent shot at a record quarter on every level. >> the highlights from yesterday's shareholder meeting and where the stock is trading this morning. plus, cnbc's millionaire survey how do the rich really feel about being taxed more the results and the debate is just minutes away 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, everybody.

welcome back to "squawk box" here on cnbc i'm becky quick along with joe kernen u.s. equity futures at this hour have been a little lower we've come off our lower levels that we'd seen earlier today when the dow was down by almost 100 points now you're talking about the dow futures down by about 32 points, s&p futures down by 3 1/2 and the nasdaq futures off by 23. mortgage applications out just moments ago let's get the data now from diana olick. diana. >> reporter: yeah, just a huge reaction to the big drop in mortgage rates last week total application volume surged nearly 27% for the week, up 41% annually, according to the mortgage bankers association's seasonally adjusted index, and most of that was thanks to a refi boom. the average rate on the 30-year fixed fell from 4.32% to 4.12% for loans with a 20% down payment, and that is 71 basis points lower than a year ago and the lowest level since september of 2017. refis reacted, up 47% on the week and up a striking 97%

compared with the same week one year ago lenders must have been busy, for sure volume is up 63% in just the past four weeks on these falling rates. home buyers also finally saw the light. they hadn't really reacted to the rate drop the week before, but purchase applications were 10% higher for the week last week and the same from compared with a year ago. now, purchase applications might have been even higher, but there may be some pullback from buyers who are concerned about all the uncertainty with the trade war buyers are also still facing a tight and pricey housing market. but these are just huge numbers. they're usually in the single digits back to you guys. >> i've had people asking me about it, you know and i've said, why, really is it enough thanks, diana. for more, let's bring in bob broteman, president and ceo of the mortgage bankers association, cnbc senior economics reporter steve liesman. i didn't know that was enough to refi but this finally looks like,

bob, like maybe we'll see some better activity overall in housing. it's been one of the laggards in what has been such a strong economy. >> yeah, i think that's right, joe, and we've seen 14 straight weeks now of purchase application volume up year over year, so it's been a strong spring season, but we think it could get even stronger as the summer proceeds, as inventory improves a little bit, and the job market continues to be so strong >> so, whenever we talk about this, it's not monolithic. so, there's places that skew our overall perception of what's really going on, because there's some inventory, but not where you really want the inventory, where the demand is really strong is that why we struggled to see sales go up? >> it's true that inthe entry-level part of the market, the inventory is the tightest, and we're seeing that builders aren't able to keep up with demand because of high land, labor, and lumber costs and restrictive local zoning, so that's been one of the problems in the lower -- the entry-level

part of the market >> we've got these millennials, too. i mean, isn't there going to be a huge -- i mean, it just seems like a lot of pressures are building, and when it finally opens up, it just seems like we may be surprised at the quantum move it may not be gradual, to a much stronger market. am i wrong in that >> no, you're not wrong. the demographics are really behind a big surge in housing demand and as you rightly point out, millennials are hitting that age where they become the highest percentage of homeowners so, the demand is really there to support the market strongly >> bob, there's a little bit -- a couple mismatches that are going on here. on the one hand, if you look at it, the homebuilding industry is not building enough homes for the number of households being created. in fact, when i look at household growth versus housing growth, we're under one. so it's below that so, you don't have one housing unit being created --

>> for every new household that's being created. >> -- for every new household being created, so that creates demand on the other hand, the jgenys an the gen zs, they don't want to own homes like our parents did, so that's the other side the other thing that's interesting, bob, is you have a wave of sales that are going to come from baby boomers, right? and the question is, are they going to want -- are the millennials and the gen ys and the zs going to want to buy those homes from the baby boomers? >> so, i see it a little bit differently on those younger generations. >> okay. >> we're actually seeing that they do want to buy homes, but things are being delayed a little they're marrying later they have some student debt, maybe, that's delaying their home ownership but our data says they do want to own homes, and we're seeing the millennials follow that track. and in fact, when they have kids, they move to the suburbs, too. so, we're seeing the patterns that held for the older generations happen with the younger generations as well, just a little bit delayed.

>> is joe going to be able to sell his home? that's the question i have i mean, i feel like there's no way i am i'm the last year of the baby boomers. i'm 63 1963 is my year. but you, actually, you'll be easier than me -- >> i'm not selling >> you're just -- >> my kids will be selling my home. >> well, exactly people are aging in place. so actually, boomers are going to sell a lot later -- >> what was i going to say about these millennials? you can't live in an urban area and, like, go out to an oxygen bar every night and, like, you know, hang out that's not -- >> right. >> sooner or later, they're going to want to actually make something of their lives, other than looking at their phones, right, bob they're going to do this they're going to have kids they're going to finally get married, if anyone will have them don't you think? >> i do think. and in fact, as i said, we're seeing them buy in the city for their first house, and then they move to the suburbs when they have kids and they want to get to the right school districts and all the things that

motivated you and me. >> look at you >> i have had a series of millennials work for me over the years. they work really hard. i don't know which millennials you have been -- >> well, that might be exception to the rule. >> -- in contact with. >> that might be the exception to the rule. >> they work like they're afraid for their jobs they work harder than i would expect them to work in a way that i wasn't afraid, where i was like, i can get another job if i want. they work super hard. >> they grew up through the great recession and watched their parents lose jobs and they lost -- >> i think it's a generation of fine, fine values. >> the next one, what is the next one the next one is different. they're much better. >> millennials -- >> i think it was the obama years! i think they got totally screwed by -- >> what is it about the obama years? >> just everything that happened. >> can i ask bob one more question before we go? bob, i just want to know, what is your up side here how sensitive is the refi market, the mortgage app market to this decline in rates i have us down a percentage point in mortgage rates, is that right? >> yes we're seeing the lowest rates in

a couple years and the highest refis in three years the thing that will be a govern on the refi boom is that the rates through the 2010s didn't go through that wide a band, so the loans that are in the money now for refis are generally the newer originations from the last year or so. >> right. >> although it is worth checking, because you can get a zero-point loan for under 4% now for a 30-year fixed and under 3.5% for a 15-year fix, so people are looking to get a 15-year loan, get under 3.5% and pay that loan off earlier. >> i think it's worth repeating, what measure, how much of a drop in rates is it worth me calling up my banker, looking around to refi is half a point the golden rule? >> i think that's in the ballpark and your mortgage lender can easily walk you through how much you'll save every month, how much it will cost you to refinance and what that break-even point is. >> and it depends how long you're staying in the house. >> it does, and it depends how

far you're into your mortgage, because if you're really far into your mortgage and you're amortizing it a lot, then it's less worthwhile to refinance if you're newer in your mortgage, then it makes sense more quickly >> you're still paying off more interest than principal -- >> are you happy to refi >> no, i've got a great low rate i have 2.99% on one of mine. >> for a 30? >> fixed 15. >> i have mortgage envy. >> call your mortgage banker because they can walk you right through it. >> on one of hers. >> right neither of them are as big as yours. >> you haven't been. >> i think this is a time for me to leave right now i don't want to get involved in that conversation. all right, breaking news overnight. mass demonstrations taking place in the streets of hong kong, where protesters are clashing with law enforcement police fired tear gas and high-pressure water hoses against protesterswho had massed outside government headquarters in opposition to an extradition bill that's become a

lightning rod for concerns over greater chinese control and erosion of civil liberties the law would allow criminal suspects in hong kong to be sent for trial in mainland china. criminal suspects doing anything including demonstrating peacefully, speaking out against the government. >> being, you know, being an iger >> we are monitoring this situation and we will bring you any developments as they happen. in the meantime, here's what's making headlines this hour activist investor bill ackman is opposed to the merger between united technologies and raytheon his pershing square has a stake in united technologies the "wall street journal" quotes an email sent by ackman in which he tells ceo greg hayes that the deal makes no strategic sense. he says the company is using what he calls massively undervalued stock to buy a business of inferior quality the "new york post" also reports that dan loeb opposes this deal as well. wonder where the "journal" got the email. probably not from greg hayes.

>> no, but massively undervalued is in the eye of the beholder, and we know that ackman thought that jcpenney was massively undervalued. he doesn't know any better than anyone else. >> look, it's a difficult time to try -- >> what are raytheon's assets compared to united technologies? >> the analyst we talked to basically said raytheon -- he's trading out -- what greg hayes is doing is trading out carrier and otis for a better-quality asset, which is raytheon, and matching these up. >> right. >> we've also heard that in this era where the pentagon is getting a little tougher about negotiating, it's probably better to be bigger in some of these situations we heard yesterday from the former secretary of defense, ash carter, that when he was there as the chief procurement officer, he wrote the rules that said you couldn't get any bigger because they don't want fewer customers to be dealing with from the pentagon's perspective on these things. obviously, it depends on if you're a long-term shareholder or a short-term shareholder, though, and some of the benefits of the deal could take a little time to work out. >> if you own a company that's doing the acquisition and are using their own stock, you

immediately feel like you're getting diluted and you're not sure you want to -- >> and buffett has always said he doesn't like to do deals using stock for precisely that reason. >> exactly all right, coming up, john rogers, chairman, ceo and cio of ariel investments and tim ryan, partner at pwc, joins us to discuss boardroom diversity. and then, a poll shows a majority of americans support raising taxes on the rich. what a shock but what about the millionaires who would actually pay them? robert frank has been crunching the numbers and joins us with the latest millionaire survey. >> what do you think, do they wa tnto pay more >> yeah. not them, but -- >> yeah.

the honest to god stanley cup is here, for now game seven of the nhl championship is tonight in boston the boston bruins and the st. louis blues will face off in the series in the deciding game. game sevens are so great there hasn't been a game seven since 2011, which also happens to be the last time that the bruins won the cup, among multiple -- how many times that's why you hate them, because they've won so many times. you can watch the game tonight on nbc, of all places. game seven in any sport is --

and especially this. it's going to be great. coming up, we're going to talk boardroom diversity, the markets and much more with john rogers of ariel investment, and tim ryan of pwc. and you're not right now, but hopefully, you're going to be looking at -- yeah okay, i don't want to lie. you're looking at a live shot of capitol hill in a few hours, lawmakers will hold the first of several hearings looking at the dominance of big tech. we'll have a preview "squawk box" is coming right back

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. welcome back, everybody. two years ago, the ceo of action group set out to promote workplace diversity and inclusion in u.s. companies. joining us now to talk about its latest efforts on its two-year anniversary is john rogers, the chairman, ceo and cio of ariel investments, and tim ryan, who is u.s. chairman and senior partner at pwc gentlemen, thank you both for being here today. >> thanks, becky. >> tim, let's just talk a little bit about what this group is, what you saw and why you created it. >> yeah, thanks, becky two years ago what we saw was a big opportunity for ceos while we're all doing a lot at our companies, to step up the game, make inclusion a reality in the workplace and we went specifically after ceos and chose the word action because ceos get stuff done. they have a remarkable ability to make things happen, and we need action and we need more action so we asked ceos to make a

commitment to make inclusion more of a reality in the workplace. >> when you say we, you mean you, because you are literally on the road all the time, almost a traveling salesman, meeting with all these companies. >> yes. >> what did you do >> in the early days, we said this has to be a group effort. so while i did have the privilege of starting it, we got a small group of ceos together and we said, this is not a competitive issue. let's come together and see if we can all raise our game. because what we know is if we get inclusion to be more of a reality, we all win, not only our businesses, but society overall. so, what i did is started reaching out to ceos saying this is something we can do together to raise our graeame and i was blessed to have a lot of people jump in and help. >> what does inclusivity mean >> the opportunity to make workplaces more inclusive. the more we have a better understanding of what it's like to be a minority or woman in the workplace, the more we understand, the better we can help each other. so we started foundationally, how do we make sure we all understand what it's like when we come to work. and what we've found is the more we talk about it, the more progress we're making. >> john, as an investor, what's

this mean to you >> well, it's really important we tell people all the time that we want to invest in 21st-century companies that are growing. if their management team, their boards look like 1940s companies, we can't invest in those types of companies. >> why >> it means they're backward-looking, not forward thinkers. >> what do you see in companies that actually have more inclusivity in terms of their returns? does it make a difference? >> i think it really does make a difference you bring more creative ideas, you bring diverse perspectives that's really, really important. understanding of the diverse customer base, that's critical and so, we always say, baseball became a better sport once jackie robinson started to play. so you need to make sure you create that environment where all the best talent will come and join your organization. >> in terms of what you're asking companies to do, there's a new plank that you're kind of adding this time around, and that's to make boards look a little more inclusive, too >> yes this is our second-year anniversary, and what we're announcing today in connection with the second anniversary is a fourth pledge, and the fourth pledge is we're asking ceos and their boards to commit to annually doing a diversity

inclusion strategic plan, where they'll actually prepare a plan that has everything from measurement to programs that you'll have in place, accountability, and that plan is reviewed not only by the ceo, but by the board as well, and there is oversight around it. >> and you're not looking for exact numbers or perfect commitments for any of these companies, it's just kind of a goal >> yeah, and the reason we're doing that, becky, is we have today 650 ceos that have made the commitment to sign up. and as you can imagine, there's a wide range of practice at those companies, so instead of setting clear targets, what we're doing is setting broad commitments, and this fourth commitment is a way for every company to go from here to here, but move at their pace. >> john, there have been states and localities that have tried to make rules -- i think of california saying that you have to have a certain number of women either on the board or in companies. and the same thing happened in chicago, but that rule was kind of watered down to point where it wasn't going to be numbers. it was more of a statement saying this. you defended that. you're okay with that. why is that. >> i think it was a starting point. you know, we had to start somewhere. so, i think in illinois now, all

the companies will have to really expose the data and have it out there all of a sudden, i think people will be able to take that data and put pressure on those companies that haven't moved into the 21st century to do the right thing. we saw that in california, where black enterprise did a great job of exposing the lack of diversity in silicon valley. reverend jackson took that information, went to the annual meetings, and all of a sudden, those companies started having diverse boards for the first time because the data had exposed what was happening in silicon valley >> tim, are there companies that said no when you reached out to them and said, "would you like to sign on with us?" >> in the early days, a lot of companies questioned why should i do this? i'm doing a lot of good things within my four walls, why join a broader commitment over time, we've seen hundreds and hundreds of companies join so early days there was a lot of skepticism -- >> that was just a couple years ago. >> and that's what we're proud of just for a sense, 650 ceos we now have connected over 2,000 executives -- ceos, chros, cdos,

who can share best practices we have 600 best practices on a public database anybody can look at, ceoaction.com. and we're making free resources available. >> that's interesting, because what i've heard back from companies sometimes when kind of pushed on this is we can't find qualified applicants what do you say to that? what do you tell them? >> yeah, so, without a doubt we believe that's the false statement. like, in other words, the reality is the talent is out there. and as john talked about, we know when we get more inclusivity, we win. we may have to look in different places at talent, but most places, we have to start within the four walls of our companies and our organizations. what we know is that talent exists we've got to find a way to nurture it up atthis point. >> john, how much of it is building networks and finding those people >> i think it can be done. one of the things that we do is that when we push our companies in the small and mid cap space to have diverse boards for the first time, we often help the ceos source talent we send them names of talented people we've met over the years, and we also make sure we're recommending people, women and people of color who have a history of fighting for civil

rights, who are willing to push forward and make a difference. and i think that's why the work the pwc's doing is so important, is to create a welcoming environment so those diverse directors and leaders can be themselves and push for more inclusion once they're there in the boardroom. >> what's the biggest hurdle to the movement at this point >> i would say the biggest hurdle right now is making sure we don't give up we've had a great two years, but we need to continue. this is the long game, but we need to make sure we're making progress and what i worry about is that there's a lot of distraction out there in the world, when you look at trade and businesses this is part and parcel. the reality is that we've got to keep going at this point and not give up, even though we've made some good progress. >> tim and john, thank you both for coming in. >> thank you. >> thank you. >> good to see you. coming up, we're going to talk tech and calls to break up some of the industry's biggest names. but first, as we head to break, here's the futures and what's happening this morning everything's red down 7 on the s&p, down 65 on ou33wnw, nasdaq indicated do abt "squawk box" coming right back ♪

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pricing its shares last night at $34 each that was above the expected range. given a valuation of $6. 8 billion. it will begin trading on the nasdaq today under ticker symbol crwd the ceo will join "squawk alley" later this morning. still to come on "squawk box" today -- taxing the rich. latest millionaire survey is out. find out what the nation's wealthiest are saying about raising taxes on the top 1%. plus, regulators taking aim at big tech. a big hearing on today's agenda. we'll tell you what investors need to watch. and president trump telling china he has no interest in moving ahead on a trade deal unless beijing agrees on as many as five major points we'll tell you what those points "sawbo wl d quk x"ilbe right back. johnson &n is a baby company. but we're also a company that controls hiv, fights cancer, repairs shattered bones, relieves depression,

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polls show that a majority of americans support raising taxes on the rich, but what do the millionaires who would actually pay them say? robert frank joins us with a new cnbc survey. good morning, robert. >> good morning, becky well, surprisingly, most american millionaires actually support a wealth tax, and half of those making over $10 million or more say the wealthy should also pay an income tax of 70% or

more the cnbc millionaires survey, which polls those with investable assets, say they support elizabeth warren's plan of a tax of those worth over $50 million. even the richer millionaires, those worth $5 million or more, support a wealth tax 49% of millionaires support a tax rate as high as 70% for those -- now, this is the income tax side -- who make more than $10 million a year the poll comes as several millionaire groups like the patriotic millionaires and fair share connecticut, are saying they want to pay more taxes to reduce inequality and generate revenue, but the results are highly partisan. 88% of democratic millionaires and a majority of independents support the wealth tax compared with 36% of republican millionaires that's still higher than i would have expected. >> me, too but, like, how much of it is how you asked the question do you support a wealth tax when you're worth $5 million and the wealth tax is only going to go

to people who would make more than $100 million? are you voting to tax other people than yourself >> there is a subset of the group who will be taxed -- >> but there's a suck subset who won't. >> yes, which is why americans have long been in support of the rich paying more 60% of americans back a wealth tax, the majority also supporting a higher tax on those who are the highest earners. now, one thing millionaires don't want any changes to are deductions in the capital gains tax -- >> well, deductions, that's a key -- i mean, yes, we should be in theory paying more, as long as i can keep all of my deductions so i'm not actually paying more. >> like the '50s when we had 90% and no one paid it. >> these are people with investable assets of $1 million or more, so they're investors. so the capital gains tax also relevant to their income -- >> but maybe not necessarily something that is a tax for people making over $10 million or something. >> that's right. that's right. >> and you could quickly make a specious point that, wow,

democrats are not as greedy as the republicans because of the 88% versus 36%, but democrats all think that if you throw money with a government program at something, it's going to help those that need it and it's going to help income inequality, when, in fact, if you do the math, many times it doesn't. and republicans are probably people that believe more in growing the overall pie, growing the private sector, and hopefully, organically, wages start going up and a strong economy and everyone does better. >> right. >> so, i mean, the knee-jerk analysis of how you'd interpret -- well, let's actually get to this and also, what are we using the money for? >> right no, taxing should be the secondary question to what do you want to do first and then how are you going to pay for it second. >> is $22 trillion enough, or do we just tax and then just spend that >> but i would say on the campaign trail, it's sort of been flipped where the first

order of business is tax the wealthy and then second -- how high -- and then the second order is the green new deal or paying for college or whatever else. >> politics of envy, which -- >> yeah. >> in this country, that's one thing that sets us apart from a lot of places. >> but i will say, having done polls like this or looked at polls like this for over 15 years, these numbers have gone up in terms of the wealthy supporting higher taxes. it has changed >> yeah, okay. 10 million or more i don't think i'm ever going to have that problem, $10 million or more income a year. >> income. >> what is -- >> i don't know, you might. >> i'm trying. >> it's a great show. >> it's ari's -- they pay him for. it just means i've got to pay him more what is the cutoff for $10 million? is it point -- i mean, you need decimal points for who makes $10 million. >> oh, the portion of the population. >> it's small, small -- >> it's 0.001%.

>> well, that makes a difference thank you. that is another -- 0.001% -- >> everyone wants that tax. >> so, there are 12 million millionaires in america. i think the tax would apply to around 175,000 people in total. >> right, of the -- that's fine with me. let's stick it to those bastards all right, for a debate on taxing wealth, let's welcome mattie dupler, national taxpayers union senior fellow and president of forward strategies and mr. tax himself, jared bernstein, wants to stick it to everyone, former chief economist -- >> get your wallet out >> why did biden need a chief economist anyway he was vice president! i don't even -- i'm still trying to figure that out he's now a senior fellow with the center on budget and policy priorities, a cnbc contributor and a future treasury secretary, if things go right maddie, jared, thanks for -- is that right or would you head the fed? what would you do, jared >> i wouldn't take out that bet

yet. >> yet, okay we've got to wait for a while. we'll see what happens maddie, listening to -- you heard my comments. i hear polls like that and i try to figure it out just what are your overall impressions of what that poll indicates about people in this country? >> -- president, i would tell them, don't listen to the millionaires of this country as to what you should do for tax policy i said earlier that this is the backwards way of creating fiscal policy, and i totally agree. if your objective is to raise money, a wealth tax or a high marginal tax rate is the wrong way to do it look no further than the '50s when we had the highest marginal tax rate of 91%. barely anyone paid it. the effective tax rate on the top 1% was more like 42%, and when you back out the other business taxes there, the income tax rate was about 17% so people weren't actually paying these taxes and what's more, if you believe white democrats running for president believe that we need more money for more spending -- these are poor revenue raisers when you look at the 1950s, the share of gdp coming from

individual tax receipts was under 8%, something that we saw grow as taxes were cut on the high top rates in the reagan era and then heading into 2000. >> jared, what do you want to do with all this big pot of money do you want to just expand entitlements and grow government, or do you want to maybe pay down some of the debt that we have >> no. i think that it'd be good if we could actually pay down some of the debt while we're in a close to a full-employment economy, instead of adding to the debt. i think that's kind of bad fiscal policy. but the things that i would think are so important -- and by the way, i believe that the folks who answered this poll were probably thinking about this the same way i am -- are things like pushing back on climate change, dealing with our infrastructure, making the kinds of investments that would make us a more competitive economy in our global competition and i think what's going on here -- you know, it's interesting, joe, you're talking about growth effects and you're worried about growth effects of providing benefits to low-income people i'm actually worried about the

growth effects of such high inequality, and i think some of these millionaires and billionaires probably agree with me when so much of the nation's income -- and we now have over 30% of the wealth accumulating to the top 1% -- when so much of the nation's income is accumulated amongst folks who have a high propensity to save and a low propensity to spend, that's actually been shown to dampen growth rates. and so, i think it would be actually pro growth to implement these kinds of ideas and getting back to mattie's point, which is a good one -- you're going to get the tax avoidance and evasion that you fail to pay for. in other words, in order to make these plans work, you'd have to strengthen the irs and the tax collection mechanisms. that could be done it should be done. i wouldn't assume, as mattie does, that we're not going to collect what we say we're going to collect i think that will happen if we don't try to, but we have to try. >> jared, i have a question -- >> oh -- >> i don't know to what extent you're still advising or are in touch with joe biden, but unlike all of the other candidates, he

has not presented a detailed tax plan as i reported earlier this week, he is talking a lot about the capital gains tax, something that he has always felt is too low. do you think that will be the center of his tax plan, and does it have a chance of going anywhere >> he's looking at everyone else's now to try to pick the best one. >> i don't know if it will be the center, but it will be certainly near the center. and specifically, he's talking about ending up step-up basis. i don't want to get too deep in the weeds here -- >> that's interesting. so he's never talked about that publicly that i've heard recently you think step-up, which we could do a whole other segment on, you think that's going to be a target for him >> i believe so. and i think -- and just so our viewers know, this is the idea that if you're an heir who inherits a capital gains, that's money that's been untaxed. and because of this step-up basis, the heir doesn't have to pay any tax on that inheritance, and that's a big, fat loophole. >> hey, mattie, we saw the expansion of the safety net during the obama years that

jared was hoping would somehow help income inequality, and we saw the participation rate go down i mean, the safety net during those years -- i mean, everything expanded, every part of government-assistance expanded, and i think we got a growth rate to match is that -- >> right. >> can't we somehow -- if opportunity inequality can be addressed with taxes, i can maybe see it, but just pure handouts, i just don't see how that works how do we use the bigger pot of money for equalizing opportunity for people that aren't getting it right now >> right the federal -- >> they have no answers for me. >> yeah. >> they still back -- biden's still in the pocket of the teachers unions and everyone else, so they don't have any way of actually helping here, other than just trying to hurt people that have money. >> yeah, expanding federal spending never seems to have the intended effects that its proponents want, especially when you don't have the means of paying for it, you know. and the thing about democrats running for president always coming up with these new wealth

taxes, talking about capital gains -- you saw the disconnect here where there's a disconnect between republicans and democrats on what kind of taxes they'd like to see on millionaires, which, by the way, is not on them if you're a $1 million investor, the $5 million threshold feels very far away, so that's why you're saying it's okay to tax those other people but also, the one point of consensus in this poll was keeping those deductions and credits and not taxing capital gains because that's where a lot of millionaires and ultrawealthy people make their money. and i'd also say, if you're looking at these wealth taxes, i know it's really popular on the campaign trail to say these would be revenue-raisers, even though that won't be the case. it's also important to know that the kind of dynamic effects you'll have in the stock market will decrease value in the stock market and guess who the corporations are in the stock market it's not just rich people, it's retirees so, headed into an election year, you're arguing something like the widen proposal for cap gains, for increasing taxes.

that would just depress the value for most of the people participating in the stock market right now, and that's certainly something you don't want to be heading into an election year, proposing higher taxes on retirees. >> can i make -- >> jared, hold on. we're finally seeing some wage gains, and most of these wage gains are with people that actually are the ones that need it the most, from -- >> i agree. >> -- from the strong economy. >> yep. >> you don't give any credit to the corporate tax cuts or tax reform you think that was a bad move and you don't attribute anything that's happening there -- >> i don't, no, not a bit. >> anything that this administration has done or -- >> well, no, that's not quite true, no let me -- >> not quite true. >> first let me respond to mattie look, mattie, if none of these tax increases raise any revenue, then why do all these rich people oppose them so much basically, you're telling me that they're just going to avoid and evade. >> yeah. >> and i just don't think that's the case then they're not costly to them. >> we have the example for this, right? we have an example for this. 75% of the countries who have tried a wealth tax over the last

30 years have abandoned them because administrating them is mess they never raise the revenue they're supposed to, and they don't actually do what they're intended to do. >> if they don't raise the revenue, they wouldn't be squawking like they are, so i disagree with the fundamental point. >> it's not just greed, jared. people philosophically don't think growing government helps -- >> joe, let me talk about -- first, let me talk about the economy. so, here's what i give team trump credit for in terms of the wage pressures we're facing right now -- >> this should be good. >> -- which i do think are good for middle and low-income people and it's basically a keynesian stimulus they threw a tremendous amount of fiscal stimulus on an economy that was actually already closing in on full employment be, and guess what, that pushed the unemployment level down to the lowest level in 50 years and i give them a lot of credit for that but what you don't see, and this is back to our earlier debate, is you don't see any further capital investment in fact, capital investment is looking really meh right about now. and the other thing you don't see is the tax cut coming anywhere near paying for itself. so when mattie says we have a

revenue problem, i totally agree, and that's why we need to raise taxes. and the place to start is at the upper end of the pay scale where so much income growth has accumulated. i don't think -- here i'm going to separate myself from the typical progressive viewer i don't think we can raise the revenue we need exclusively on those at the very top of the income scale, but that's the right place to start. >> mattie, does anyone really view that tax reform as just keynesian? i mean, democrats know all about keynesian stimulus, but that was fundamentally different than your shovel-ready cash for clunkers that did clunk. >> yeah, it's quite a bit different. and i would just say that if millionaires think they need to be paying more in taxes, they can write a check to treasury any day they want. i don't think treasury's getting any of those checks coming in the door. >> they have a good reason for not doing that i'm not sure what it is. it's like, oh, that's ridiculous, why would i? mattie, thank you. jared. >> thanks, guys. >> i want to kiss up to you because we want to have you on a lot. >> yeah, i'm looking forward to that. >> if i see your -- if you had a dream about your name being on currency have you thought about that?

i know you have. don't lie. >> you think about that way more than i do. >> you've been practicing your signature! don't -- >> i have no >> you've never practiced your signature? >> you're going to tank the markets if you keep going. >> you're probably right. >> he's projecting don't worry. wllhank you >>e' be back in just a moment big tech versus big government

lawmakers held the first of several -- or are going to hold the first of several hearings. they held them yesterday, and it's going to continue looking at the dominance of big tech now the states are taking on the

sector with their own investigations ylan mui joins us now with the details. good morning. >> good morning, joe well, tech companies run the risk of fighting a war on 50 fronts, or 51, if you count d.c. the states are conducting their own investigations into the way these companies handle data and potential violations of antitrust law. and some are even joining the calls to break up big tech just take a look at some of the action here. new york has opened investigations into apple and facebook mississippi is preparing an antitrust case against google. and in louisiana, attorney general jeff landry says tech companies should be individually examined to see if they've gotten too big >> whatever nascent industries come about and they gain economic power and they gain monopolistic control over a particular market, we've seen our government come in and break those particular companies up. and in each and every step of the way, our economy ends up better off

>> now, landry is also head of the national association of attorneys general. he says they're the ones who have been pushing federal regulators to act. the state ags met with the department of justice last fall and today they're meeting with the ftc in nebraska to talk specifically about antitrust 39 states and the district of columbia are now calling on the agency to get tougher in enforcement and do more to protect consumer data. guys, they said they don't want to see new technologies get, quote, snuffed out back to you. >> ylan, thank you very much joining us is the chairman of the house antitrust subcommittee, which is leading the investigation into the technology industry. congressman david cicilline joins us >> good morning. >> congressman, what do you want to hear today? what do you think the problem is with big tech overall? >> well, i think the purpose of the investigation is really to look at the digital marketplace broadly. these are very large technology platforms that have tremendous market dominance we're looking at and we will look at kind of how the markets

are working. what does congress need to do in terms of responding to these deep concentrations of economic power? we're concerned, of course, about anticompetitive behavior we're concerned about kind of taking over rivals we're concerned about a blatant disregard for privacy, for ensuring that consumers have control over their data. but look, these are huge monopolies or duopolies, and we want to make sure that we're doing everything we can to make these markets work we all benefit from competition. these are markets that are not working properly we're in this very serious monopoly moment. and this investigation is going to give us an opportunity to collect the best information, the best data, hear from the best experts in this area as we think about what's the right way to get these markets working properly. >> you know, you are not alone in your thoughts on this obviously, you have the department of justice, the ftc, and now states attorney generals who are all getting involved -- attorneys general -- all getting involved in this movement. >> yeah, the one thing i would

say about that is those are typically -- certainly, the ftc and maybe some of the state attorney generals are related to sort of particular prosecutions of wrongdoing or some complaint. ours is really different ours is not a prosecution investigation. it's about informing the development of good public policy, making sure we have the ability to gather evidence, hear from the best technology gists in the country and from around the world, making sure we are understanding how the markets are working, how these platforms are operating so that we can develop solutions by way of legislation or regulatory approach, but it really is not about a single company or a single act it's really about how we fix a broken market and a broken internet. >> what do you think's broken about it >> well, i think there's a lot of anticompetitive behavior that some of these large platforms are engaged in there is certainly evidence that they are extinguishing rivals and eliminating competition, making it difficult to enter the market, reducing innovation, reducing entrepreneurship as a result of their market dominance. there's obviously been serious

breaches of privacy interests of consumers, loss of control about what happens to your data and the misuse of that data. so, i think there are a number of big challenges. it's easy to diagnose the problem. i think the more difficult challenge is going to be developing a solution that responds to it that helps to create a competitive market so that we can have all the benefits of robust competition. >> we've had this conversation a lot here on this program, and maybe we're dumping it down too much, but a lot of the ways we've looked at it is in this country, we've traditionally looked at monopolistic behavior being a problem when it's harming consumers. it sounds like you are looking far beyond just that simple definition and maybe something that looks a little more like the way europe is regulating things is that too simple of an explanation? >> well, no. i think there is some evidence that it's harming consumers, but you're right, one of the things i think we have to look at is our existing antitrust legislative infrastructure, you know our institutional statutes were written principally about 100 years ago in response to the railroad monopolies and the oil barons, and i think the time has

come to kind of look at, top-to-bottom look at our antitrust statutes, determine are they working to promote competition in the new economy so, that's one of the issues but it's also important to realize that, you know, consumer welfare, which has been the standard -- maybe we have to think about what that means. i mean, consumers are giving very valuable data, giving their attention that's then monetized for advertising dollars, so monopoly in that context has real significance. >> congressman cicilline, thank you for your time. we'll be watching today. >> my pleasure. when we return, the latest on china trade and what's happening in that situation. plus, mark zuckerberg getting a taste of his own medicine. >> imagine this for a second -- one man with total control of billions of people's stolen data -- all their secrets, their lives, their futures >> -- of the facebook ceo -- >> what? >> -- posted to instagram. we'll talk about it when we come back ff is in ok hands. just ok?

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your daily dashboard from fidelity. a visual snapshot of your investments. key portfolio events. all in one place. because when it's decision time... you need decision tech. only from fidelity. the next tariff war, tensions with mexico ratcheting down, but can we get a deal with china? former new corp steel's ceoand heidi heitkamp look at the chances. and elon musk tells investors a

more durable car is coming, but is there enough demand and who gets to write the rules of the road for big tech we'll ask house minority leader kevin mccarthy how he sees washington's latest regulation debate playing out the final hour of "squawk box" begins right now >> 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. andrew is off today. the futures are indicated down about 70 on the dow. we finally ended up down about 14 yesterday after what looked like was going to be the seventh straight winning session didn't happen, and we're weak again today. treasury yields, saw yesterday they were above 2.15%, weren't they now 2.12% this morning. let's get you caught up on the stories investors will be

talking about today. tesla ceo elon musk says his company could be looking at its best quarter ever. musk spoke to investors at tesla's annual meeting yesterday. >> sales have far exceeded production, and production's been pretty good so, we're actually doing well, and we have a decent shot at a record quarter on every level. if not, it's going to be very close, but we've got a shot at a record quarter >> musk also told investors that it won't be long before tesla produces a car with a range of 400 miles to a battery charge. the shares this morning are up by about 3.7%. activist investor big ackman i opposed to the merger between united technologies and raytheon the "wall street journal" quotes an email sent by ackman in which he tells ceo greg hayes that the deal makes no strategic sense. ackman's pershing square has a 0.7% stake in united technologies

the "new york post" also reports that dan loeb is also opposing this deal. raytheon's shares up by about 38 cents. utx up by 6 cents this morning. and then there's toy-maker mattel, which has rejected a second takeover offer from mga entertainment, maker of the brats doll that's according to an email that their ceo shared with reuters. in it, mattel tells them that the proposal is not in the best interests of its shareholders. mga had attempted to buy mattel in april of last year. mattel's shares this morning had been up almost as much as 10%, now up 4%. the trade and tariff debate roiling the business world it's now starting to heat up on the presidential campaign trail as well. kayla tausche joins us now with more do tell, kayla. >> reporter: well, joe, with 500-plus days to go before the election, both president trump and vice president joe biden were in iowa yesterday and the trade debate came front and center president trump talked about how he is doing well for farmers,

for the members of that critical swing state. he signed a new ethanol policy he signed an executive order streamlining some regulations for the biotech world and also said he's helping farmers with a $16 billion relief plan to help them offset china retaliation, but the former vice president took the other side of that debate, telling a crowd across the state, "apparently, he has a secret important document with mexico, and i'm sure that there are a heck of a lot of iowans being crushed by his tariffs that would like to see that document." he said he was anxious to see it of course, now with just three weeks to go before that critical meeting on china at the g-20 with president xi jinping, the focus is now shifting from the neighbor on the southern border to the neighbor on the other side of the world. reuters is reporting that expectations for that xi meeting are low and that preparations have been limited within the white house as president trump figures out how he is going to approach that meeting and what the u.s. position will be. but i had a chance to talk to a former top white house trade

adviser, cleet williams, yesterday, and he actually says that meeting could be a breakthrough. >> there won't be a deal at the g-20 i think what the g-20 could do is catalyze a productive period of negotiations where the deal closes what we really have here is a little bit of a political problem where president xi needs to manage things at home with his hardliners, and i think that the only way that that political divide can be crossed is by president trump and president xi really getting together -- >> reporter: he said the meeting in buenos aires ushered in a productive period of several months, four to five months, back in november he said that could do the same now. becky? >> all right, kayla, thank you very much. kayla tausche. let's talk more about the trade conflict with china. joining us is former new corp ceo dan d'amico. he served as a trade adviser to president trump in 2016. and former u.s. senator heidi heitkamp, who is also a cnbc contributor. so, folks, what do we think? are tariffs effective or not

i'm imagining i'm going to get different answers from each of you. senator heitkamp, i'll start with you. >> well, absolutely not. let's quick calling them tariffs. let's start calling them taxes so, we're imposing taxes on the american people to basically achieve a political result in china. okay, so, you can say, well, what has happened in the past, that's been successful we can talk about what the other strategies are going to be, but what we need to understand is that now we are engaged in a trade conflict i won't call it a trade war. with china and china is very strategic. so, what did china do to american farmers they didn't just impose a 25% tariff on soybeans, they quit buying soybeans. and so, when you look at what the possibilities are for retaliation in china on this policy, it has tremendous effects on ongoing and historic relationships with where we're going to head with china so, are we engaging --

>> but -- >> no, joe, are we engaging -- >> i know you're a moderate democrat, but is this the first tax you've ever spoken badly about? i don't understand you always want to do taxes to effect social change in this country. now this tax you don't like because it's against -- >> no, i'm saying if you're going to do it, call it a tax. let's be realistic about what it is -- >> so you do like -- >> no, what i'm saying is let's understand that the consequences are on the american consumer. >> okay. >> the consequences are on the american economy, and we have not evaluated them now, this is a president who literally thinks tariffs, taxes, are the solution to every problem that we're having in the world, and that is a dangerous economic analysis and a dangerous economic policy. >> dan, what do you think? >> i don't know where to begin after that rant. my goodness, senator there are significant democrats that don't agree with you at all and are very supportive of dealing with china harshly and for good reason, because we're in an existential battle

i represent a number of farmers and ranchers in my coalition for prosperous america, which i am chairman of, and they all support the president because they get the bigger picture. they get the fact that we are in an existential battle with china that is much more than about soybeans or steel or corn or anything else. they get it. they know what we're involved with here. and you can call it a tax for political purposes because tax is like a four-letter word during an election season, but it's a tariff, no doubt, it also puts a tax on imported products to a point but i'll tell you what's actually going on here is that -- and i've had a number of people in the transportation and commodity business tell me this -- what happens is the chinese get together with the domestic folks, and they say, okay, we'll absorb half the tariff, you absorb half the tariff, okay this is not driving itself through to the american consumer inflation has not gone up. we've put a study out and several other people have, too,

that the american consumer has not seen a negative impact here, and they're all forecasts of $800 a year. what price do you -- >> dan, what about mexico? did you agree with this for -- >> absolutely! >> you do? >> absolutely! >> that's a totally different -- that's not trade it's not an existential threat that's a trading partner. >> no, i'll tell you exactly what mexico was, joe it was a president who has gotten no cooperation from a do-nothing democratic congress and a crisis that exists at our border, which is real, and anybody who says otherwise is just talking politics and not reality. so, he used the only tool he could, because the congress was not working with him, to get mexico's attention, and he did, and it's a major victory, and the farmers will be just fine -- >> you know what -- >> -- senator. the farmers will be just fine. >> i think it's a pathetic to say the only tool the president of the united states has to engage in diplomacy -- >> it is, because you all would

not work with him -- >> -- viable trade policy is a tariff that is the only problem -- >> i see you're a bit more angry this time. >> the reason he uses tariffs, let's be honest, is it's the only thing he can do unilaterally it's a shortcut for what we should be doing for establishing long-term trade relationships. >> he got the results, senator you can't argue with that. and he is working for the american people -- >> don't listen to me. >> not for the politicians -- >> honestly, don't listen to me, listen to the national retail federation, the chamber of commerce, all of the trade groups that are basically app president-electic about the utilization of tariffs to solve every problem -- >> the same trade groups that got us into this mess to begin with, senator, the same trade groups that got us into this mess >> oh, my -- >> the president knows what he has to do. god bless him for taking the strong action. china's not our friend, our enemy, and -- >> can i ask both of you, do you anticipate that at the end of this negotiation there will be a trade deal cut between the united states and china? dan, your expectation?

>> i don't have strong expectations that there will be a viable deal. the chinese have already demonstrated that they're not serious negotiators. i know the president knows that. where it ends up is anybody's guess at this time people can forecast it i don't see that a strong trade deal's actually going to get done. >> do the farmers and ranchers that you have in your coalition, do they feel okay with that, if the end result is no deal, because most of the farmers we've spoken to say we can understand what the president's doing right now, and we're on board if we do get to the point where this is involved >> well, at the end of this entire process, whether there's a deal or not, the american farmers and ranchers will not be impacted they will be supported they will find other markets for their products they're very resilient and they understand that this is a major existential -- i can't overuse the word -- battle between china and the united states, and the trade war -- and i'll use the term trade war -- that china started 25 years ago.

we didn't start it they did we finally got a president who says enough's enough the american people are with him. >> the idea that you can replace on a dime in a short period of time the soybean market in china -- >> you can't do it in a short period of time. >> -- is ignorant. it literally is an ignorant statement, because you should talk to the people who market soybeans, because that's not what they would tell you. >> senator, even the "washington post" said that this latest deal -- we've extracted more from mexico in terms of assistance in, you know, being able to -- maybe not a safe third country yet, but maybe, we're hearing there is a deal understood there if this doesn't work, but this is more than -- even the "washington post" said this is more than anyone thought we could actually get from mexico's leaders in terms of assisting us with border security you don't think anything good happened from that tariff threat at all >> no, i don't >> you don't think the agreement is good? >> i think at the end of the day, there were very many things that could have happened --

>> ignore the facts. >> so -- >> nothing good came out of that just a total -- >> what i'm saying is that we basically have said -- >> zero credibility. >> -- to the american people that we are going to threaten disruption, and in fact, violation of whether we call it the usmca or nafta, to advance a purpose that is not economic or trade-related -- >> how well the democrats treated the usmca -- >> -- utilization of economic policy to achieve a national security result. now, the one thing thati think that absolutely has to be discussed is the unilateral utilization of taxes to achiev whatever purpose it's almost like, you get a tariff and you get a tariff and you get a tariff there is no problem in america -- >> great tool. working very well. >> -- that can't be solved by tariff i guess at this point but the president has unilateral ability to impose a tax, 25% tax -- >> which he was given by congress. >> -- and actually then waive it right, given by congress years ago, and the idea that a president could be more responsible than this

president's been with that power, and that needs to change. >> the president is working for the american people. i wish you would, too. >> the unilateral tax, that sounds like obamacare to me. >> oh, my. >> doesn't it, though? unilateral levy -- >> that was passed by congress -- >> there is no subject that can't be introduced relative to tariffs, my goodness >> unilaterally -- >> obamacare passed through congress. >> without a single republican vote. >> yeah, but it passed -- >> unilateral -- >> and the taxes passed without a single democratic vote we'll see how that goes. >> thank you very much dan, good to see you senator heitkamp, thank you for joining us good to see you both. coming up, lawmakers on capitol hill starting a new discussion yesterday on policing big tech house minority leader kevin mccarthy is going to join us to talk regulation, trade, and much more i think we should play some sound bites from the last interview from mccthy arand without senator heitkamp here. we're really going to gang up on her. we'll be right back. they're changing by the nanosecond.

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welcome back to "squawk box. yesterday the house kicked off the first of what will be several hearings on the tech industry's biggest companies joining us now, house minority leader kevin mccarthy. >> good morning. >> you know, leader mccarthy, i'm trying to figure out, would

i rather have more impeachment investigations or would i rather have more investigations about breaking up big tech it's tough for me to pick! i mean, they're both -- you know, that's like, you know, that's like choosing, like the worst of a couple of scenarios what would you rather be focusing on right now? >> well, really, what i'd rather be focusing on is getting usmca, united states, mexico, and canada agreement, because it creates more jobs. it actually makes us stronger in our debate with china going forward, because this is the right time and the right moment to have this discussion with china before their economy gets bigger and their military gets stronger their economy is in a little difficult place, the lowest gdp growth they've had in 30 years you look at the new car sales. you also look at from manufacturing jobs and even their clothing sales inside domestically this is an opportunity that most other presidents backed away from, but president trump has not. i think it's looking really to the future of where america's strength is going to be. >> you know, leader, there have

been instances in the past that in hindsight where antitrust or government oversight may have actually played an important role in opening up markets and opportunities to the new innovators i'm thinking, maybe, you know, there is an argument that microsoft -- >> well, as therein argument -- >> do we need to look -- >> yes, we do need to look at it. >> say apple's not google, google's not facebook, facebook's not amazon. i mean, sheer size -- i think elizabeth warren, just based on their size, she's ready to take them apart but are any of them really egregious in their acts and we need to write new antitrust law to address the new world >> i believe we do need to look at this. and if you remember, in 2012, google was actually found guilty from the ftc of anticompetitive behavior, using their monopoly to actually harm yelp and tripadvisor. so what you really want to have, you want to have innovation. but when i look at what the

democrats want to do, when they want to break them up, it does nothing about our privacy. 90% of all searches go through google you look at some of the things that they have done in the past. if you end up on the second page, 90% of all eyes drop off so, i want to have innovation to be able to growth in technology as well. but what the democrats are trying to do is just create another utility company, and that creates no innovation that doesn't help us build towards the future but really, if you break a company up, it does nothing about our own privacy. i want to have a discussion about privacy. i mean, if the united states postal service lets you mail for free but they're allowed to read your emails so they could advertise to your mother-in-law who's about to come and visit with you, or a new book or a trip to disneyland, people would be upset but if you use gmail at the beginning, that's exactly what they did i think we need an honest approach about what privacy is being used and what portability we have and accountability in this so, it is right that we look at this >> do you have a high degree of

confidence that in an election year that the light touch for technology will be the one that's finally employed, or do you see people moving, you know, further and further down the political spectrum on the left to, you know, for political reasons, and this becomes even a bigger issue for these companies? how do you think it plays out? >> well, i get concerned with all issues when it comes -- because this is not the same democratic party of jfk. this is a new, socialist democratic party of bernie sanders, of congresswoman aoc. that's the difference of what we're seeing it's more socialism versus freedom. >> i don't recognize the republican party, either i mean, are you now an advocate for tariffs? and it's funny, because we just had former senator heitkamp on she doesn't like taxes, all of a sudden, because she says that tariffs are taxes, and now she found a tax she doesn't like because we're trying to effect some type of change based on taxes. i'm like, wait a second! so, now -- but see what i mean democrats don't like taxes

anymore and republicans are embracing tariffs. where the hell are we? >> no, you have to understand -- >> how did we get here >> in a perfect world, yes, we want a fair, free market where we don't have the ability of tariffs on both sides. but when you're sitting and dealing with china, when they're stealing in the process -- >> what about mexico >> this is a wake-up -- do you have tariffs on mexico or do you have an agreement to actually stop something that's happening on the border? >> people are saying there's nothing -- i -- when the "washington post" says that we actually extracted something, i mean, it kills them to admit that, and they even admit it so, was this an agreement that actually has some teeth that could help >> yes, it does, because look for one moment last month, 144,000 people were stopped coming across the border illegally. we're about to have 1 million, the highest we've had in the last 13 years. when we have a million people apprehended, those are just the people we apprehended illegally coming across. that's twice the size of the capital city of california, of sacramento we have a crisis down there.

so, what is mexico going to do now? they're putting their own military on their border so the real challenge is coming from the triangle, three countries down there, and they're claiming asylum because you have america, the congress that is not acting here we have a judiciary committee with a chairman nadler that even "the new york times" have done not one editorial but two editorials to do something on the border. what does he do? he brings a former individual from watergate, john dean, who was found guilty in the process, in to give a testimony they are only one view, one-sided going down a path that is not solving what america really wants to see us solve >> unbelievable environment you're in down there now as leader, too, of that part of -- it's going to be -- the next two years -- just strap yourself in. i'm excited about it because i can't believe -- i can't look away from car wrecks, either, but this is going to be a dumpster fire to end all dumpster fires, don't you think? and it's starting in iowa. you see the back-and-forth

today, joe biden is calling himself -- he says, i guess i'm a low-iq individual. he's throwing back the insults that trump gave him and staying them in stump speech so, i don't know just stay tuned. >> this is a battle between socialism versus freedom, and it's a fight we have to win. >> you can look at it like that. when you frame it like that, you really got me. anyway, thank you, leader mccarthy. >> all right, joe. when we come back, breaking news this morning on uber's push into self-driving vehicles we'll bring you those details. stay tuned you'reating qu wch"sawk box" right here on cnbc 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

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we have some sad news to report this morning. renowned economist and frequent cnbc guest martin feldstein has died after losing a battle with cancer he had been a professional of economics at harvard for five decades and an adviser to presidents from both political parties. he was one of the architects of president reagan's sweeping tax overhaul in 1986 and also served on president obama's economic recovery advisory board. he's known for mentoring many well-known luminaries, everyone from larry lindsey to larry summers, people on both sides of the aisle, obviously, and was an early critic of the euro a lot of his concerns about the euro have actually been playing out as we've watched over recent years. >> many times i've come in here armed with one of his editorials, one of his op ed pieces, just to talk about, you

know, what -- he was very clear, very logical, and he did represent a certain perspective that i will miss a lot and i looked forward to whenever he would set things straight and opine on certain issues. he was brilliant, really brilliant. >> martin feldstein is gone at the age of 79. johnson & johnson is a baby company. but we're also a company that controls hiv,

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welcome back to "squawk box. some breaking news rick santelli live here on the cme floor. cpi for the month of may expected up 0.1%, arrives as expected, up 0.1%, very similar to yesterday ppi, ex-food and energy, up 0.1%, actually 0.1% light versus expectations year over year, 1.8%, 0.1% light to expectations. and year over year, ex-food and energy, is 2%. now, here's the interesting thing. we know that all of this is about as expected. now, if you look at the rearview mirror, no revisions once again to any of last month's, and sometimes expectations are important, but i like to know where we came from, especially

cpi year over year at 1.8% the reason that's interesting is, of course, the 2%. we've been looking all these long stretches of year-over-years of 2%, not there. and year over year on core was 2.1% and moved down to 2%. i know i'm probably splitting hairs. i continue to say the interesting news about inflation isn't that it's disappearing, it's that it's not aggressively reappearing. and if we look at earnings, hourly earnings year over year, which is out today for may, that was 1.3%, 0.1% better than rearview mirror. and if you look at weekly earnings year over year, 1%, although 0.1% better than 0.9% in the rearview mirror dollar index continues to slide, nothing aggressive, but moving a bit lower. and interest rates have given a little back. i guess the streak in equities excited rates a bit, and it's not a big giveback, but we have fallen away from intraday highs closer to 2.16%, back to 2.11% but i always say, it isn't where you ride the train, but where

you get on and where you get off. the close is what we'll want to pay closest attention to becky, back to you. >> rick, thank you steve liesman joins us now with more on this steve, you've been digging through the numbers. anything else jump out at you? >> yeah, a lot of interesting stuff going on here. first of all, the owners equivalent rent -- that's the housing costs in the cpi -- has been up pretty fair 0.3% the last three months. and this gets to the housing segment we did in the 7:00 hour, which is all these millennial folks are renting and the vacancy rates are plummeting, and we see rents going up. and so, that's something that's going to -- this is a nice piece by ian in pantheon thinks this is going to affect the cpi down the road, not necessarily -- so, that's one aspect the other thing, i don't know if you remember we talked about this new big data in the cpi we did a story on this -- i'm not sure you were here, so i'll give you -- >> remind me >> so, the bls -- a store did not want the bls price checkers in the store

>> a major store -- >> a very large, unnamed retailer a. >> walmart >> a very large, unnamed retailer -- >> target. >> a very large, unnamed retailer we could do this for a while so, they decided to give the bls a very large file with actual sales on it. >> huh well, that's interesting. >> one of the potential results -- write this down at home, folks -- a minus 1.9% and a minus 0.8% fall in apparel prices in march and april. >> because the actual sales were a bigger decline than what bls had -- >> maybe promotion, seasonality, too many mittens on the shelves. we don't really know the inners of that. >> but the bls wasn't measuring it as accurately as they now have the information, i would say. if you've got a scanner who's walking in and taking, you know, 800 price checks, versus the 8 million they gave them >> this is actual sales data -- >> that's better numbers. >> this is part of the series we've been doing about the ability to prove the data using big data anyway, i bring that up only to tell you that now it's zero.

so, maybe that effect is working out of the data. and so, that may be some stability down the road. >> i missed that first story that's interesting. >> it's a good story we have got a couple more stories on this, actualactuallye the fed is using big data, too. >> it's actually better data maybe you get better government numbers. >> there are interesting upsides, but also some downsides, which is interesting, aminity from the government, how much you want the government to have anyway, a energy price fell of 0.6% that was a long way of telling you that apparel prices did not rise. >> hey, rick, what's up? >> gasoline at minus 0.5%. go ahead sorry, rick. >> you know, interesting now, we've had the second of the inflation cpi more important to investors, short maturities, two and three-year have fallen three basis points since where they were right before the number i find that interesting. there are not many numbers, even unemployment sometimes, that doesn't get such a quick response in treasurys. >> yeah. >> it's more like a slow fuse. so, something to pay attention to the short end is leading the

entire curve, whether it's flattening or steepening, on all these big inflation numbers. this one particularly exaggerated, and i think we should be cognizant of that. >> rick, i'm looking at the fed funds market i don't see much change. we're still baking in that 80% chance of the rate hike in july, 21% for june looks about the same there's really not much change in that. >> yeah, no, that's not moving much but two and three-year note yields, even five-year note yields, same thing five-year were trading around 1.89%, they're 1.87%, but the two-year captured my attention maybe it's just the thin market, but with the fed meeting next week, i think investors are looking at this number and trying to make a play that maybe this could underscore the conversation topic potentially of what the fed discusses considering both these numbers, ppi and cpi today really didn't have any upside surprises. >> right so just to be clear, rick, what happens is the fed uses the pce

core, which takes some of this data from cpi, and it runs about a half a point to 0.4 percentage points below the cpi in general on the core basis. but in general, the fed is not going to see a whole lot of inflation here and not see a whole lot of firming, perhaps. i think that's the key so, the guys who are out there betting on the rate cut, i think they get a green light this morning. >> well, you could also make a bet that, you know, investors are looking towards the notion that should the fed want an excuse to give up the nuts that the squirrel should protect, those nine quarter-point increases, that these types of inflation data afford them that exit ramp to do so >> we're on the same page on this we want to protect the -- well, never mind >> are you nuts? >> i was going to say that he leads me down this -- i didn't want to say that. i realize that i was setting you up with a big lob that you could hit out of the park -- >> not an uncommon --

>> we want to protect the rate hikes, the cuts that are available. >> i'm with you. >> nice job, rick. >> gentlemen, thank you. we've got some uber news i don't know, is it about china? is it about -- or is it about uber oh, it's not uber news, it's news about uber. deirdre bosa. >> the company. >> what happened >> self-driving cars. >> oh, okay. >> so, elevate, right? this is their third summit and they're announcing their latest version of their self-driving car, a car made by volvo and it allows uber to install its own self-driving system. ultimately, the idea is that uber deploys its software and network to bring autonomous vehicles into the mainstream, and at the same time, of course, carve out a path to profitability. now, uber spends a lot of money on its drivers they receive about 70% of each fare, and of course, there's a ton of incentives to recruit and incentivize them, to motivate them, and that reached $1 billion last year. so, one of uber's biggest costs, autonomy theoretically reduces this of course, there are no shortages of challenges. it's expensive

there are a lot of well-capitalized competitors in this space, and of course, regulations will need to catch up for uber specifically, remember it suspended its entire pilot program for nine months after a tragic accident killed a pedestrian and just before its ipo, though, it secured a $1 billion investment from softbank and key players in japan's auto industry, valuing that autonomous driving unit, atg, at more than $7 billion, guys >> i mean, regulation needs to catch up that's putting it lightly. where can they possibly use these cars if they were to roll out today? >> well, they're being used in pilot programs but my point with uber having to actually get out of the game for nine months and test them on the roads, that is so critical that's what waymo's doing. that's what a lot of the other self-driving car companies are doing. so, in order to get regulations, you need those miles you need to show how these cars are actually operating. >> does this make it tougher for uber when they're in a position where they've been saying, oh, we rely on our drivers so much, they're great, we care about you as we're trying to replace you >> well, what they say, what has

been a company line -- and we'll talk to someone who knows this well -- is that it won't replace drivers. it will be on top of drivers so when autonomous driving begins, you'll have these, like, ropes that are very commonly used and you'll need the drivers for the wider -- >> you point out that drivers are a huge cost, and they are. 70% of every fare they bring in. however, the drivers are contractors. they don't make any benefits or anything beyond that they bring their own cars. and it's going to be really expensive to create a fleet of vehicles like this, too. when does that start to pay off, up-front capital expenditure when is the point that that becomes profitable >> great point, right? drivers right now are already one of uber's biggest costs. they become even bigger if regulation on that side requires them to be treated like employees and get benefits when does it start to pay off? good question. you could theoretically think an autonomous vehicle fleet in terms of efficiency may be even more expensive than the drivers bringing in their own cars and driving these. >> let's speak to the company itself about this big news

eric mihover is ceo of the technology group for uber. what happened? this is a huge step. how did you get to this position >> what you see behind us is a result of four years of our working together with volvo, and that's our engineering teams, our executive teams hand in hand to build the first vehicle that is intended to be driven by a computer, rather than by a human. now, it still has brake pedals and a steering wheel and traditional controls because we see a period of time where we're still in development as we're transitioning this technology to be able to drive without a person behind the steering wheel. so, this thing has what we call fail operational brakes, fail operational steering, redundant power, and these are the fail-safes so that if something happened to the primary braking system, if there was a failure, it would still be able to stop safely every time. >> so, in a car like this, if i'm the uber passenger, instead of getting in the back like i normally would, i'd get in the

driver's seat? >> no, no. you would still get in the back. that's the intention this car will have -- it has three seats in the back. and the idea is that you would get in it just as you would like an uberx vehicle. >> eric, can you put an actual timeline on when we can see these autonomous vehicles on the road and i'm talking no safety drivers. when do they become commercially viable >> yeah, so, there are a couple layers to the question you just asked. there's when you can see them at all without a vehicle operator, and then when they're commercially viable. and commercial viability comes to scale, and that's one of the things that we've been working so hard together with volvo to do is to design and execute something that can be manufactured at scale. so, this is part of the ingredient set required to go to scale, but for us, we're going to be going to market in a very small area of cities and not at some massive -- 1,000 cars aren't going to show up overnight with no safety drivers. that's not how we'll go to market we'll do it slowly, with

society, with the local residents, with whatever regulators there are that are monitoring this space. we're going to do this slowly and gently this isn't going to be a cold-water moment for the world. >> so, eric, when is that? i didn't hear a date from you. and i think it's amazing because the elevate team is willing to say that we'll see flying taxis by 2023. but in terms of this pilot, at least with no safety drivers, is that one year away, five years away, ten years away >> in 2020 we intend to do our first limited no safety driver operations in very select, small areas of cities. >> okay, eric. and then follow up to that, when does that become commercially viable when do you start having a wider network of passengers riding in these vehicles, beyond a pilot program? >> so, commercial viability happens right away, but when does it become profitable is i think the crux of the question, and that comes to, it depends on how many vehicles you have operating in a particular domain it's not worth, quote, launching a city, if you can't put enough

vehicles in that city to cost justify it, unless it's there just for development work, which is where we are now. for us to actually land in cities that are profitable, we have a handful of cities selected that we are going to use as our go-to-market cities we haven't disclosed them. but we will be doingthat through 2020. >> but eric, the idea there would be that there would be a significant number of these cars on the road, and that would probably replace many of the drivers that you have in those cities >> right i think it's important to understand, one of the challenges uber faces with its rides business, it's having trouble maintaining its growth the amount uber grows is phenomenal, as we have all seen, and we want to keep that growth rate continuing. and getting driver partners on the network and getting them to stay on the network, that's a very challenging thing for us. and with self-driving, we're going to be able to stabilize our growth a little bit more and add more of the service that people love so much. >> eric, want to thank you for

your time. deirdre, good to see you. >> thank you guys. all right, coming up, analyst michael nathanson on his big facebook upgrade ♪ got a plan for us >> do you know that song ♪ i'll bet you didn't know that i was dangerous ♪ >> date him. >> i thought you meant you >> no, that's the group. i got it from liesman. the social giant getting a taste of its own medicine, when we return imagine this for a second -- one man with total control of billions of people's stolen data -- all their secrets, their lives, their futures >> which was faster than you thought. we did return. believe it or not, that was not ceo mark zuckerberg. it's what's being called a deep fake, where video is manipulated to look real you can see his lips didn't really match so, will the facebook -- will it remove the video from its platform we're going to discuss it when "squawk box" returns

calls to break up facebook are growing with one of the main concerns being its dominance in the digital ad market, but another area that could prove to be a problem is the time that users spend on all of facebook's platforms. julia boorstin joins us with more hi, julia. >> hi, becky well, that's right, facebook dominates the social media space, and the numbers are eye-popping. facebook's family of apps is the leader in time spent on social with facebook and instagram combining for over an hour per day by americans that's more than double the time spent on snapchat. then there's messaging facebook messenger and whatsapp each have over 1 billion monthly active users, both beating imessage with 900 million active iphone users currently another area facebook dominates is news. just yesterday, the house judiciary committee began its big tech antitrust review by looking at social media's impact on the news industry pew research shows that

two-thirds of americans get news on social media with most of that news coming from facebook and youtube at 43% and 21% respectively now, that's a lot of time spent on facebook's platforms. now, critics point, though, to existing antitrust law not taking time spent into account but regulators see it differently. yesterday, doj antitrust chief made the case that the department's view on competition is not so narrowly focused, saying "many recent calls for antitrust reform or more radical change are premised on the incorrect notion that antitrust policy is only concerned with keeping prices low." and antitrust scrutiny's only going to continue to grow. today the ftc is holding a hearing with several states attorneys general to discuss competition and consumer protection back over to you >> julia, the deep fake video of mark zuckerberg that we've been

playing, interesting way to make a point. two artists putting this together and saying, oh, yeah, you guys think it's okay to run fake videos? how about this one they posted that on instagram. do you think facebook's going to let that stand >> well, facebook said it is going to let it stand. this is, of course, controversial because it did not remove entirely deepfake nancy pelosi video -- or sorry, altered nancy pelosi video deepfake is something where you make it look like someone is saying something which is totally made up. so they edited it with special new tools to basically put words in mark zuckerberg's mouth nancy pelosi's video was manipula manipulated, but facebook is saying they will deep prioritize those videos but say they'll treat this altered video of mark zuckerberg with the same rules that they treat all other videos they do not violate their rules. they're just not going to allow people to sort of find them in their news feeds in the same way. they won't be promoted in the explorer tab you're going to have to seek it

out more definitively. but this is more controversial, becky, and we'll see if facebook changes its policies on this because a lot of people not so happy about the fact that they're letting this stand >> thank you, julia. all right, joining us now, michael nathanson, senior analyst at moffettnathanson. he put out nathansan >> the past year we were cautious on facebook our revenue is going to decelerate and government is going to get more activists. there was no third act over the years we have seen all these worries that we had except for the government regulation die away our view on organization was antitrust pushing hearing. we are done working this we don't think antitrust is the winning argument here in terms of breaking these guys up. maybe fake news and antitrust is

a jump too far when the stock sold off last week, look, this is a chance to look at the stock and come back. it is over sold on that. >> on the regulatory concerns, i would have agreed with you before i heard yesterday when he laid out all his existing rules in antitrust that he thinks can be applied sounds like he could be laying the case for aggressive treatments s >> yes, tehe's saying he has the able to do it with low prices. did facebook get the advantage because hthey had network e if e c

effect >> look at twitter and snap chat they have not grown nearly as much the question by instagram, what about these snap chats, right? i am much more concerned of -- >> at&t and time warner, they laughed almost out loud at this argument, right? >> this is not a guy that suddenly says yeah, it makes a lot of sense he's compelling and dead wrong >> even if he's wrong, how much does facebook take their eyes off the ball or something. >> you better read into the antitrust line >> last year we had a geeky day the judicial has embraced this view, what he laid out, i think is correct

the question is can we take it to joe's point, the natural substance that the courts will see it the same way. >> feceven if they are not brok up, you will have the state's attorney general trying to prevent some of these additional deals. you got much more, basically big is bad is the message coming from government. >> we are on that. we downgraded stocks last year but, the fundamentals just gotten better. the messaging of commerce stories are getting better, too. now everyone sees what we see. regulatory is a problem. big and bad is not necessaril necessarily not an argue in court. i remember i cover my space which was own by fox my space was bigger than facebook and it does not exist today. >> i understand the privacy stuff and political stuff.

>> yeah, i do like citing the star trek reference. do you remember that one >> this is bork. >> robert bork >> yeah, it was your birthday last weekend >> yes >> i knew that aqua man >> i did >> sometimes -- i forget things. >> anyway, thank you, michael. say hi to craig. >> i will. bringing up at&t and time warner for us >> let's get down to the new york stock exchange with jim

cramer you want talk about uber or facebook >> i love nathan's piece yesterday. we had the peak of intervention when it comes to facebook. you got to recognize it. it is now kind of fatigue and facebook fatigue we like the site and it is still doing well let's move on. when i listen to musk, i always say how can you be sure of this guy. it is remarkable how great things are he walks back on the robo taxi and not sure of the insurance. he's the master. i now asked him on twitter give us some numbers. i am hoping he'll respond. he follows me on twitter he's fun >> i bet he gets in trouble these days he clears up with his words maybe. i don't see why he can't respond. >> i can't believe you are trying to get him to do that

>> yeah, that sounds something like joe would do. >> you are bathing him >> you got to love dan was he fabulous? >> that was my take. depends on where you are sitting though, does it? there is as right and wrong. >> um, jim, with elon musk -- >> i got a sandwich, can you see this i am san witched by closing bell and it is a great concern for me i am literally between sara and wolff and i am a little uncomfortable. i think i can handle it but it is a strange feeling >> are they gluten-free? i know sara is >> will is telling me beyond meat is too much sodium. >> what? >> i want to see it. >> exactly right >> a lot of chance

>> go bruins >> will, 13 goals in one game. oh my god. >> i knew you would say that >> i thought you like soccer when it is the usa winning which i understand i get behind it. nobody else is going to take the goal >> i will take it as a win >> that was the entire cup world cup's total last year. this is amazing. thanks for wearing a tie i rather hang myself with a tie than not wear a tie. >> that's extreme. good-bye guys, we'll see you in just a few i've even built my own historic trading model. and you're still not sure if you want to make the trade? exactly. sounds like a case of analysis paralysis. is there a cure? td ameritrade's trade desk. they can help gut check your strategies and answer all your toughest questions.

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we got to go 8:00 tonight, game seven "squawk on the street" begins right now. ♪ good morning, welcome everyone, i am sara eisen with jim cramer and friwilfred frost. carl quintanilla is at the code conference with us he'll have the highlights, david faber has the day off. take a look at futures right new. we did great on the six-day winning straight for the dow yesterday and sort of backtracking