♪ ♪ show me what you got time to shine ♪ good wednesday morning welcome to "squawk on the street." i'm carl quintanilla with jim cramer, david faber at the new york stock exchange. another morning of minimal premarket volatility as earnings roll on with b of a, csx, goldman cut league tating retai sell yields do drop as housing starts fall for a second month. road map begins with big techs international head winds

amazon, the latest in the eu cross hairs, facing a probe over possible anti-competitive business practices. >> plus, ralph lauren and le le strauss in the red, both downgraded to sell at goldman sachs. >> and a tariff fueled strategy shift. apple reportedly set to begin trial production of air pods outside of china and into vietnam. another case of big tech under international scrutiny amazon facing a formal eu antitrust investigation into its dealings with third party merchants. european competition commissioner margaret says based on the commission's preliminary fact finding, amazon appears to use competitively sensitive information about marketplace sellers, products and transactions on the marketplace and response amazon issued a statement saying, quote, we will cooperate fully with the european commission and continue working hard to support businesses of all size and help them grow. this is the last thing some of these companies --

>> i would point out that they just brought an agreement with germany that was very -- very acceptable to germany. i think the eu will do it. we have a segment run by afternoon people at the network. called check please. i think that's applying to all of our tech companies. check please >> they want the money. >> right >> they -- they don't want them to talk, they want them to pay and that's what's going to happen and they'll pay and then we'll move on. this is not like naming names with alphabet. >> the documentary i did on amazon five years ago, i know that -- john oliver used it a lot in something recently and made fun of us for no reason, by the way. >> now you'll be back on with him, why did you do that >> but we highlighted the fact that it is obviously a platform for other sellers and it also is a first party seller and they gather data on everything and,

of course, yes, they can go in business against you, conceivably if they realize there is a market opportunity and they can make your product or source the product as well. it is not, you know, you look at the massive amount of revenues from amazon, profitability of where it comes from, a lot of it being amazon web services, not a huge part of their business, but it is important. it is always been an issue it continues to be an issue. it is not clear where anything is going to go in terms of how you investigate that, and it is not the first time we have heard it. >> the germans, if the germans reach an agreement, eu, look, i'm not saying it is a shakedown, okay? i'm saying it is a shake rattle and roll shakedown little more inventive. let's face it, we have known about this forever, all right? >> yes. >> by the way, amazon web services, i know there is an antitrust investigation in america too. but they're talking about how they squelch small business. it is half and half here amazon web services is good for small business. >> it powers

when you go into business, with the startup, in terms of whether it is amazon web services, whether it is welcome day, whether it is shopify, which basically can run everything if you're a retailer, it is incredible how little capital you need now to get started. >> i have looked at shopify and sustainable clothing, i can tel you right now during the break, i can develop the program that looks just as good as macy's >> we'll get to why goldman thinks that's a liability for some for suppliers 2 billion for google fine 5 billion out of ftc, we think whatever number this may be on amazon if it turns into a fine, when does the market ca ir t >> remember when -- remember when cary grant got in trouble at north by northwest at the end? >> the anniversary of the picture. >> seven parking tickets one of the great last lines, better than nobody's perfect,

they're parking tickets. they're not even moving violations in points here. >> you're worried about consent decrease, right? >> yes something that says, look, amazon web services has to be split off, something that says -- >> the antitrust authorities, the ftc and doj undertaking investigations of all of the big four. >> their job to investigate. >> we'll see that they can come up. >> the democrat in charge of antitrust was not that great about the rhode island democrat, he was not so great last night >> no. >> but the point is that we can't -- these are -- they're two cents, throw cents that's my two cents. i want to promote the afternoon. check please. >> seems to be determined to tax, just in general, tax, because you're sucking data out of the country if you're one of these companies and they want to get paid for it does it become a reoccurring 3% to 5% hit to earnings. >> do we do it like that that's a good thing. >> there is -- it is a taxation

you're in, not that it necessarily -- >> you can argue it is taxation without representation >> you could >> yeah. >> they say that in some parts of this country. >> you can go back and take a close lyric at tar look at the . it wasn't at all about that. >> his hair is on fire. >> about all the people actually importing tea illegally and it was -- they were the ones, like -- >> can we stick to the topic >> sorry. >> the promotion of david's stock over your stock. >> that's what it is all about. >> that's the last one i did he obviously is on the news. >> my father's last -- one of the last things he ever watched, this violates the 13th amendment, you should tell david faber he uncovered slavery in america. >> i know, somehow they figured it out -- whatever show that was they did >> the washington post. >> a great american. one of the greatest. >> jim and david mentioned the evolution of e-commerce, it is a

tough start for ralph lauren, for levi strauss, for pvh, goldman downgrades from sell to neutral. levi's, they see an elevated valuation compared with peers. they say the ordering season for back to school is extraordinarily tight as they overordered in the past. >> also i think that this -- first of all, this is not an early call, except for ralph lauren, these stocks have been pummeled ever since levi. this is a watch issue. it is a walmart, amazo costco, home depot it is about power. it is who has pricing and leverage bryant cornell can call any one of these companies and say, you know what, i'm paying -- i'll pay half here is my offer nothing. they're paying the licensing that's a reference to the senator -- >> the godfather.

>> yes, i had to brush up on my godfather reference. >> that and shakespeare, you have to brush up on. >> that too. kiss me kate. >> you bet it is i feel like you read this report, it is one more time, guide this with matthew boss' piece, you can't own the retailers other than the burlingtons, the tjxs. by the way, david, continuing team about dollar tree and dollar general is a huge winner. >> this tjx, you can find some real bargains. >> you go to that tjx, that's a 9 for 1 underwear. >> not even -- >> buy one, get eight. >> high end brands that -- >> you've never been there do you know how to get to it where is it? >> it is up the block. >> down the escalator. >> he's been -- must be frightening for him. it is black mirror for david faber. >> are you going to start? kohl's has early hints on seasonal hiring. are you going to -- are those going to be disappointing or all

in warehouse jobs? >> my travel trust owns kohl's i don't like -- look, matthew boss, who used to like kohl's a lot is talking about kohl's just to be okay the main thing about kohl's that you want to see is the amazon return factor. and how much it means, driving traffic. >> driving traffic >> this note, boss' note is chilling the companies that are making money, shopify, important to point out that's not matthew's takeaway goldman takeaway if you're a discounter, you're making money if you're anything else, you're hurting. that's okay. >> also, you can launch an apparel brand fairly quickly these days, given all the tools we talked about that competes, where you don't need a lot of capital up front, it is all over -- online for the most part and you're taking shares from -- >> you know this ozzy fest, good promotion by you, there as a judge with alex rodriguez,

anyone who comes in with anything that looks like clothing, i'm going to give them $100,000 a1 100 and tell them to go to shopify. >> is this ozzy or aussie? >> ozy >> ozy fest. >> i know oz is not oz, the mentalist, there were 50 stocks, disney he is scary. congress should -- peter thiel should be after him. he is the one that really has got noon our heads >> dr. oz? >> no. oh, my god dr. oz, mentalist. >> the mentalist. >> you're frightening. >> yes, i am sometimes even to myself. >> we are going to watch the impact of the retail, what is weird is we had retail sales for the year are gangbusters, doesn't seem to have a sell on the big retail names seems -- it

is hard to square. >> if i were oz pearlman, i would say i'm taking the actual aggregate retail over these because they're not -- the aggregate retail indicates what bank of america did today. and what jpmorgan did yesterday, the consumer is spending very aggressively, but within reason when it comes to the balance this is a remarkable time. jay powell, at csx, how bad it was, and not looking at jpmorgan or bank of america, hope he's not looking at citi. maybe he's looking at wells. >> maybe >> do you think wells will never have a ceo just asking? >> no, i believe they will. >> why >> because it seems hard to imagine they won't i think they will probably have one -- i'll say the not too distant -- >> which happens first >> i'll go cbs and viacom. >> i heard 28 for symantec

give me a little credit here do you know david's stock -- >> don't wander into my area >> do you know the heat i'm getting on juul. people are saying why aren't i promoting -- >> i've gotten a few of those. >> do you want to know why i'm not joining the juul crowd to give people early on cancer growth path if i do like drinking. >> that's why it is pretty fraught. >> you say -- my mom died of cancer, my father-in-law died of cancer i guess i got embrace this because of my family. >> a lot other movers to get to including as jim and david said, csx, ual, bank of america and netflix tonight after the bell along with ibm and ebay. looking at the premarket here, been a tight range the past few days more "squawk on the street" from more "squawk on the street" from post nine in a minute. ♪♪

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news this morning involving microsoft and at&t to josh lipton in san francisco. good morning, josh. >> at&t is signing up to be a bigger microsoft customer. the company just announcing a new multiyear collaboration. source tells me the deal is worth more than $2 billion here are the details at&t communications will move workloads that the business itself runs on to microsoft's azure. so, for example, that can include finance, accounting, and hr management. in addition, at&t communications

will provide much of its workforce now with microsoft 365. that's a bundle of cloud apps that includes office 365, windows 10 and security tools. and the two companies will work together to create new 5g enabled products for customers in the future. this partnership does speak it a broader trend. companies don't just want to buy microsoft products they want to work with microsoft to figure out how to best use that technology. it is a customer need that the ceo tells me his company is well positioned to capitalize on. >> i think the next phase of the cloud and edge and ai era will be led by what i broadly call more production than just consumption. that means retailers creating new experiences. if you think about microsoft core business, that's where our strength lie, both the architecturally because we build for this cloud plus edge and

from day one and that's where i think we shine today >> microsoft has now announced the strategic partnerships with a range of companies so from walmart to volkswagen to chevron, but microsoft has competition too. companies decide who their cloud partners are going to be, just yesterday at&t announced that in addition to microsoft it will work with ibm. it is a multicloud world where people look to different cloud vendors for different cloud services back to you. >> this is what i said the other day, when we had ginni on with -- it is not go to be limited to ibm >> for trying to sort of make sense of this and having a difficult time, is there a way to explain very quickly what -- yesterday's announcement was more about 5g. and the edge and cloud computing. this is azure and at&t taking things, i guess it had in-house and moving them to the azure cloud. >> yes, but, look, ibm is cloud.

azure is big cloud you bring in red hat, red hat is ecumenical, they can work with anybody. microsoft is the dominant player it comes to 5g, as josh mentioned, they have it, 5g is at&t, ibm. look, these are all important. what they hoe is there is a lot of business to go around and i know that jim whitehurst -- his philosophy is, listen, we're to be neutral. we'll send business to ibm, we'll send business to microsoft, send business to amazon web services. >> new business created from the data that is going to be created as a result of 5g, i guess. >> 5g, if we did nothing but talk about -- i love to do the 5g show. i would. just kind of a -- >> got to be able to demonstrate, yeah, yeah. >> download a movie in four seconds, can't do that right now. >> no. 5g is -- >> so much more than that. >> it is >> the internet of things and -- >> that's why it is so important. >> and autonomous vehicles,

that's a ways in the future. >> we're so concerned that china that huawei has the better 5g product. >> and also enables the surveillance state in a way we're not at all -- >> you got the zeitgeist, zeitgeist is scary hearing anything >> really? >> yeah. give me a heads up there. >> thank you >> we'll keep our eye on that. again, big weak for deals whether it is ibm, at&t, apple, doing podcasts, door dash. >> door dash, they are so aggressive, that was -- >> yeah. door dash, they appeared at one of our restaurants as a partner. not sure but hey, nobody isperfect. >> we'll see if that has further impact on uber in the weeks to come cramer's mad dash. one more look at the premarket one more look at the premarket on this wednesday.

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♪ time for a mad dash here on what we like to call our hump day. got about eight minutes before we get started with trading here a little abbott labs >> i went to arthur murray classes, i found out how to dance to that. abbott labs, winner, winner, abbott dinner. this is the largest company that has accelerated revenue growth in the vast universe that i follow, okay certainly top 20 raising four year guidance to 7% to 8%. there are 40 million people with type 1 diabetes.

they have a device that actually is the answer for diabetics. it is remarkable that you get this full year guidance raised people didn't -- they look small and thought -- i was thinking all that, there is a two cent shift for next quarter to the quarter after that, someone says it might be light on that. that's ridiculous. this is going to 90. people should get on board because -- >> let's -- couple of things, device does what and just remind people -- >> monitor miles white is the dean of the medical device the dean of healthcare there isn't anyone that -- he's been long-standing he split it up with abbvie wanted to be device. much more lightly regulated. >> glucose monitor. >> yes >> it works very well. >> yes it is against dex com, the high end, it is affiliated with varly, not known part of the -- that peter thiel points out that i know of. we are going to have a david faber un-american activities committee and get right to the bottom of this.

>> yes >> there were a number of people that named names and those that didn't saw their careers ruined. >> exactly right david, what you need to know about abbott labs is that we're looking at a company like boston scientific, the devices are on fire, versus j&j , it has becom a litigation company, less than a drug company in terms of headline risk. >> headline risk talc or opioids. >> i think that they're right, but i feel like i'm being drowned out. abbott has no negative headlines. the deal you talked about endlessly, they're starting to work diagnostics is doing great >> you bring up the leer deal,

the word endless >> endless. >> i like to do endless reporting. it never ends. >> right >> it is the abbott that never ends. >> neither does this show. >> will you stop i'm trying to make it go as fast h possible. myair is

you're watching cnbc's "squawk on the street" live from the financial capital of the world. the opening bell in about two minutes time busy wednesday as earnings roll on, jim. and david. today it is three out of ten companies that have beat on revenue. >> you know, i think we have to focus on bank of america for a second here is a company making fortunes, all right. it is one of the five largest in terms of profit companies in the world. but, again, they missed the line, they missed net interest margin you got to think bigger. this is a technology powerhouse, 37 million people want digital and the digital efficiency, so much better. machines make so much more money than people. so they can continue to slim down and grow. when is it going to get its due? i do not know. should it get its -- >> this thing has been doing nothing for two, almost two years. >> plus david has the head and shoulder pattern you don't like. >> i'm looking at that right now. i don't like that at all. >> i like the head and shoulders out of procter, to 120 i think bank of america was a

good quarter goldman sachs number one jpmorgan number with citi number three. bank of america, number four wells -- >> 10, 11. >> how many banks are there in the country? >> once they get a ceo, do they move up the ranks? >> you think they're going to get a ceo. i don't think -- that could be the headless horseman. four horse men and the apocalypse. >> they have an acting ceo. >> lawyer. >> but, hey, lawyers have run banks before moynihan runs bac. prince ran citi. >> the dancing has stopped at wells. >> the dancing stops reference to chuck prince, got to dance. >> overall, have bank earnings inspired you at all? >> yes, because the consumer is so strong. my deep wish is that jerome powell stays in europe, remains worried about brexit, or does nothing but read the csx quarter over and over and over again which was -- terrible report

there is no more tightness in trucking, david. >> powell is giving us no reason to doubt that we'll get those 25 basis points >> in, woeno, he's worried about everything now in europe, he's china. >> banker turned stack entrepreneur michael con behind these. they went and bought -- that was the first churchill one. once a unit of reuters, has done extremely well this is the latest, they raised another 700 million bucks, they did it basically in a day. he's got a lot of ceos associated with this as well at this churchill too. the list goes on of ceos who are investors who are also inpower to go out and find deals because they can actually get a significant part of the promote

if they find the deal that the spac actually does the deal with perhaps as much as 50 million bucks worth of stock interesting model. and we continue to see these special purpose acquisition corporations often ringing the bell, listing and going out and doing the deal bob pisani reported on them. churchill one did very well. so far >> blank check company. >> blank check companies. interesting model. >> people know how to make mound in many different ways, keep that from jerome powell. i don't want him to know any of this good stuff. we have to keep the ball rolling. >> only the bad. have you seen the cover of business week this week? the headline is fed chair's guide to managing trump and it is a picture of powell with headphones, just blocking out all the sound. >> that's so brilliant i got to love that not really twitter more of a visual medium. >> hasn't said anything about

powell today. >> no, worried about china, chinese tweet that could interrupt things here. who is at the nasdaq >> nasdaq is dou international, game centric live streaming platform >> here we go. still this list in the chinese companies as if there is nothing wrong. bring them on, china we let them raise money all we want here. will they buy our soybeans where is the soybean order >> i think that's a bad idea. >> i do. mark cuban, that's where i am. >> speaking of streaming and downloads in china, apple today highlights weakness in app store revenue. they take their price target up to 187. >> the price target is so far below the market this is a very bad note, goldman on apple, and i think the people have to recognize that it is not good you need to hear something good in tech. maybe something good from faang. >> rod hall has been skeptic on

apple relative to the street. >> i know. but, look, the -- we have to have katie yuber ty co uberti c say there is no downside risk. >> the nikkei says apple is testing, moving air pod production to vietnam. good luck getting apple to comment on this one. >> they better move it somewhere, they cannot make enough they cannot make enough. there is -- it is just very strange that there is -- the limited capacity they're backed up for a long time i think it has been a problem. lam research is going down asm is going up. >> one last supply chain story today, texan, dallas morning news says they're delaying construction of a $3 billion plant by two years citing market conditions >> that's why lam's down. >> in texas. >> that's why lam's down that's a lam piece of business, semiconductor capital equipment, that's a disagreement with the

note that came out from asm, the giant one in europe, saying things are pretty good. >> speaking of -- >> ericsson also, taking market shares or a result of the u.s. deal with huawei, doing so at less profitable business margin. >> why not they were the highest charge -- >> potentially going to open something new here at some point. >> better do something soon. huawei, yeah >> getting hit pretty badly. >> they're losing a lot of money on what they sell, and making it up in volume >> always a good model. >> thank you >> let's see, we haven't really touched ual, beating the raise oscar munoz a few moments ago. >> a great tape, great interview. i don't know if we have any of it, i can tell you this company is printing money, when you hear that, you know, we're an extremely full flight, think of this, don't regard the down 20 cents. this is kind of front loaded, the rally. but it is pretty amazing >> phil got munoz to talk about whether or not they should

rename the 737 max and phil has a lot more on boeing today good morning >> we have some breaking news regarding boeing remember, a few weeks ago they established $100 million fund for the families of victims of the two 737 max crashes, one in indonesia, one in ethiopia well, now they said of that $100 million that we're setting aside, we're going to take $50 million of that and that money is going to be distributed to the families of the victims through ken feinberg and camille barrows. we're all familiar with ken feinberg's work, whether with the 9/11 fund, i had to work with him and interview him several times when it came to the gm ignition switch fund for victims there, they handed out $595 million so now boeing is saying, you know what, ken feinberg and camille barrows, they're experts in terms of distributing funds to the victims' families, figuring out the appropriate level of compensation, and they will be in charge of that. and, it is not a coincidence

this news comes out a half hour before a house hearing will be taking place on the state of transportation as well as aviation safety and expected to testify at that hearing will be relatives of victims from some of these 737 max accidents some of the relatives of some of the victims. so that's going to get a lot of attention today and no doubt boeing is saying, you know what, we realize what is going on here, we want to make sure that we are being sensitive or at least appear to be sensitive to the needs of the families, so ken feinberg and camille barrows will be in charge of distributing that $50 million. >> phil, thank you very much trying to remember, jim, if you suggested retaining feinberg when this happened earlier on. >> i did it for facebook not for boeing this is -- ken feinberg has the kind of standing that nobody challenges that's what's necessary right here, right now. >> yeah. a very specific set of skills.

>> but not a nightmare for anyone he's really good >> really good ebay will report earnings after the bell today this is prime week we'll see how -- and what that number looks like from ebay. but i did want to share a little something involving the company. they were called back on march 1st, ebay said it was undertaking a strategic review of a number of its businesses. actually entire business in some ways, but specifically stub hub, and its -- as well as its classified business also and -- sorry wanted to make sure it was classified >> they're doing the stuff i wanted >> what happened since then there is a lot of incoming interest on stub hub once they announced it back in march so sources familiar with the situation tell me they have moved aggressively towards what conceivably and likely would be a sale of stub hub given the interest that they have seen it is a formal process

it is relatively early, it is under way. worth mentioning in light of ebay's numbers coming later. and to be differentiated from the strategic review, it is now taking that step forward to become a full sale process of stub hub, of stub hub. and conceivably, it will garner them a decent number if it ends with the sale, which does appear as i said at least based on -- i haven't confirmed the various names i heard of interest, but if they are all interested, certainly could argue that it is go to be a fairly robust option. >> i mentioned to devin winnic, the ceo, that it should be worth a $10 billion which is $14 billion for live nation. people think i'm wildly high, i will not be. i'll be right. >> of stub hub >> 10 billion. >> they're talking 4, 5. >> pinkie bet. >> no way you're going to be right. no chance. >> i was wrong on symantec. >> amazon giving us metrics on prime day.

two days surpasses the previous black friday and cybermonday combined. prime members purchased 75 million items and of course they give you a self-selected set of examples right? >> that's bigger than i thought. but does it matter, the stock is up big, the answer is yes, because that's really pretty amazing. >> it is >> did you buy the fire stick? >> i did not buy anything on amazon prime days unfortunately. and i rue the fact i bought a vitamix about four weeks ago and paid full price. >> you idiot. >> i know. >> i did want to add to the stub hub reporting, i did call ebay, they declined all comment. and i don't expect necessarily we'll hear from them during earnings as well about the process. >> the faang etfs are going nuts here microsoft, like josh said, people thought microsoft would be cut out, i said it won't be bank of america is -- brian

moynihan and company lamented where the stock is people are taking problems on amazon can you believe it can you believe this i'm talking to you >> can i believe what? that amazon is down 6 cents? >> a lot of hot money in amazon, okay too much hot money too much like hot money in csx because of precision railroading, doing less business. >> jim foot had a great quote. the present economic backdrop is one of the most puzzling i've experienced in my career as they cut their full year guide on revenue, they were looking up 1 to 2, down as much as 2. >> i thought that most exciting thing about this unfortunately was that they do head count productions with 6% to 8%, not 6 to 7 because things are so weak. intermodal, trucking shortage, trucking shortage no more. and there really wasn't anything that was so good that, look, let's also be honest natural gas prices are so low.

they're giving it away that's bad for coal. >> gets -- is getting transported. what happened to the trucking -- >> trucking shortage is over i continue to believe that uber freight is behind that the philadelphia refinery, hurt them, i'll give them that. intermodal decline 11% on 10% lower volumes. that's about -- we no longer have a trucking shortage i continue to believe that as i said uber freight is the silent force on lowering -- >> lowering trucking what? efficiencies that are reducing -- >> uber trucking has brought in a whole new cohort of drivers who apparently had been discriminated against is what uber said. hispanic drivers and sikh drivers, something they told me on the record. i'm giving it to you >> thank you. >> feel they have not -- now that uber is color blind, it is an opportunity for people who may have been discriminated against.

>> powell's talked about this very dynamic >> yes, thank you. i wish powell would connect with ron who runs this division, it is about how to empower minorities who have been left out of the workforce >> another muted open. s&p barely up a tenth of a point. to bob pisani. >> mixed open. semiconductors leading, transports a real problem for the industrial group look at some of the sectors there. there is the semis, positive news on the earnings front here. new new hi another new high. transports, here is the problem. that's csx, all the railroads week, they gave disappointing guidance semiconductors, asml, a big dutch semiconductor capital equipment company, everybody is worried they're going to lower guidance, everybody will lower guidance in semiconductors, been a year for them. not only did they beat their over in the netherlands, not only did they beat, but they affirmed their full year revenue

guidance a huge relief. everybody is worried about the semiconductor space. it is trading up 6% over in europe look at what's been going on here we have the global economic slowdown, it started back in september of last year the chin ka trade war, the huaw band, the restrictions on the south koreans, that's hurting them over there, it is just been very difficult and the result, the profit margins have been collapsing for these semiconductor companies. the numbers aren't out yet these are estimates for the second quarter we have now we're talking about 26% profit margin likely here last year 33%. that's a big contraction overall for that group here. if you look at the semiconductor etf, the one i use all the time, it is only 5% from its historic high look, we're back over here, we're not that far away. why if the business so crummy is things doing well because there is an endless belief this industry will keep expanding, it is not about cell phones anymore, it is about cloud computing, big expansion,

artificial intelligence, autos, big expansion, 5g,ering erinve needs more semiconductors. there is a belief this space will keep expanding. we'll see. the profit margin contraction is a big problem. regional banks reporting i love regional banks. they don't have trading operations they talk about commercial loan growth and personal loan growth and that's what you want to look at these numbers are good look at the average long growth for these big regional banks i have been complaining for years, it has been crummy. about 2%, 2.5%, all of a sudden, look at this, numbers in the 3 this is average loan growth. that's a terrific number comerica, 3. pnc bank you break it down more granularly look at u.s. bancorp, the residential mortgage is strong, credit card growth is good, commercial was good overall. excellent. this is what you want to look at when you look at the strength of the u.s. economy, numbers are better than they were several

years ago. look at the numbers there today, with the stocks here, you see comerica down, there was a bottom line miss there that's why that stock is trading down other than that, if you look at most of these stocks, it is not that unusual for the kbe, the main bank etf to trade down in the week immediately following earnings reports and you see we're flattish here. i would expect this to be flattish to down we have been complaining about the bank stocks for many, many years. overall, a mixed open today. carl, back to you. >> thank you very much, bob. to the bond pits housing starts this morning, rick is at the cme hey, rick. >> hi, carl. let's revisit that for a minute. we see a couple of dynamics. domestically and globally, like many issues, they're global. long rates melt from recent high levels and granted it isn't only from today's data, but today's data is part of the reason and i'm talking permits.

let's throw up the chart, the chart starts in march of 2017. the permits that we receive today were at the lowest pace, seasonally adjusted, annualized pace, since may of 2017. so one month more than two years as you see on that chart now, let's look at one week of 10s. we can clearly see we're knocking at the door at the upper end of the recent range around 214 and we failed we could say the same thing about a lot of long end rates globally, they're coming back down granted we bottomed out around 195, at least on a closing basis. so we do have a bit of a cushion and if we go to the month to date of bunds, you can see that big turn that they had which correspond to our low close at 195. but you can also see how it is running out of steam and the catalyst was central banks. you know, many believe that when central banks, especially ours, talk about what they're going to do with regard to rates, that they are going to potentially be

able to actually season some pricie ining pressures. if there is anybody out there that thinks the the res of our central bank at this point in time with one or two quarter points or even a 50 which i totally think is out of the realm of possibility will make a difference in that category? it is starting to run out of gas. we switch to foreign exchange, we obviously know the dollar index is giving a bit back, it is still at lofty levels look at the pound versus the dollar i started this chart in may of 16, so you can see the drop on the left side from the brexit vote and see how the market is relative to that we're currently at the lowest levels against the dollar since may of 2016. finally, a lot of talk about china, markets seem to avoid some of the most recent negative tweets regarding a deal. but at the end of the day, something interesting going on, year to date of the dollar versus the chinese currency, it has gone sideways here we know manipulation is a huge issue. somebody in china is paying attention to that. carl, jim, david, back to you.

>> thank you very much, rich. a big night tonight between netflix, ibm, ebay, united rendal rendals. >> netflix, growth of 5 million for the three months ending in june they have been very erratic. i think everyone wants to hear about near term loss of "friends" and "the office," my prediction is they won't give you a prediction they don't like to do that kind of thing ibm, i think it is too early to tell, but you can't have the red hat accounting red hat accounting because of the absorption of deferred revenue, technical thing, very positive for the next quarter. not necessarily this quarter i don't think that -- i have to tell you, i hate the way netflix does things. >> in terms of - >> they're so bad at forecasting. that's because they're -- >> subscriber guidance. >> guidance. one thing they do, they do not do that upod, they make a serious attempt to figure it

out. because they're really -- they don't play the game. >> no. though if you are a producer for them, or create content for them, you feel a bit dfrndiffery in terms of transparency, there is none. i hear from a handful of people in that business that it is frustrating over time, that relationship. >> the times did a great piece about the netflix lobby, people go in to pitch and it is celebrities, constant stream, all day. >> look, artists. >> i'll keep an eye on that relationship how long they can sustain those relationships given that there is -- there is some tension there. >> disney, a lot of people talking about content. there is a lot here. we'll stay on it. >> we will >> we'll go to break here, get a look at the market as the s&p is down about 2 but still above 3k we're back in a moment

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there is a shot of house financial services today facebook goes become to the hill

for another hearing on its cryptocurrency plans david marcus, head of libra, will be there. meantime, dow's down eight we will get stock trading with jim in a minute. don't miss your golden opportunity

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let's get to jim. >> goldman's hit hershey it looks like mars is raising the price for single-serve chocolate. that's a signal. hershey will follow. i have to teit to tell new look at that stock is that unbelievable isn't that amazing, david? >> i totally missed that move in hershey's. >> look, chocolate prices -- >> you said over and over the procters and hersheys. >> i don't know what to do i stand on my head jason english, nice person at goldman sachs, he has to start watching the show. i give these guys free stuff i give it to them for free every single day i ought to charge them $10 to

watch. >> what about tonight? who is being hurt in washington and who is not. >> interesting we will see you tonight at 6:00. when we come back, day two of facebook on the llhi dow's almost exactly flat. don't go away.

♪ good wednesday morning "squawk on the street. i'm carl quintanilla with courtney reagan, david faber of post nine. new york stock exchange. it's another morning of a tight range. dow's down about a point we look at facebook on the hill again. retailers hit by this goldman sachs downgrade and csx transports worst day since may 18. >> under fire. the eu launching an investigation into amazon. >> facebook heads back to capitol hill for another round of grilling. >> plus, the cannabis consolidation making an $800 million purchase making the world's largist cannabis company. the head of khalib ra, david

marcus, going back to capitol hill for a second day of testimony. elon is in washington watching developments i wonder how will be different >> the hearing is just about ready to get underway. i expect it to be con fran da confrontational. maxine waters has called for a moratorium and she is calling for the keep tech out of finance act. it would facebook and other large platform with $25 billion in global revenue from ever establishing a digital currency. the goal is to create a firewall between banking and commerce and the penalty for any violation is $1 million a day now, on the republican side tech is an issue splitting the party. there are some who feel the platform simply wields too much power. patrick mchenry, the ranking republican on the committee, was

on our air this morning saying he is tired of grandstanding and government should not be trying to kill innovation guys, it is worth pointing out he was the first member of congress to call on facebook to testify on libra he said he haseley jit questions. we will see if he gets them answered of course, bringing any other ubs as they happen back to you. >> $1 million a day fine thank you. lawmakers in the u.s. and globally uniting in their fight against big tech the eu will investigate amazon for possible anti-competitive practices. in yesterday's hearing how the associate counsel responded to a question about competing with the very retailers that sell on amazon >> our incentive is to help the seller succeed because we rely on them. if we did that, we know they'd go elsewhere we apply the same criteria we do not use their individual data when making a decision to

launch private brands. >> joining us kathy leonhard and former target vice-chair and u.s. ceo jerry storage thank you for joining us jerry, you run several large retailers. when you look at amazon does it worry you? it seems they get treated differently by the public markets than other retailers. >> rightly or wrongly, they are far ahead. no one is even close they are ten times walmart.com's size, for example, to put it in perspective. over half of all sales on the internet are on amazon over half of all searches for products, when we are looking to buy something, are on amazon and they also have a growing advertising business their marketplace is the most rapidly growing part of amazon two-thirds of sales are from third-party sellers who have no other choice if you don't do business on amazon, you are almost not on the internet they have a lot of market power.

there is no doubt about it they are growing their delivery business they are growing all over the place. entertainment. they are launching satellites for e-commerce they have the largest cloud business so, you know, eni hathey are g just in the eu, but also in the u.s. just to close off, i think, you know, some of the more recent actions have brought them down a few notches. they are not seen just as a holy saint. the occur flufl here in new york the headquarters, they look like a bully to some people, how that played out even jeff's personal life, what he wants to do, oh, fine but it brought it down to a human level for people it was no longer this sort of unassailable, you know, wonderful good -- of course, they have been after him for a long time. you see that playing out, making him more of a target. >> kathy, you spent years advising companies when they are looking at the competitive marketplace and looking to do deals in one way or another,

spinoffs, acquisitions what do they make of the amazon threat and how are they dealing with it? >> it's interesting if you think what happened in the equity capital markets. amazon has been an impediment to a lot of retailers going public. they were such a threat. they were reviewed as being so formidable we have seen a change in this. not only are the equity capital markets hovering near highs, but within that we are seeing a lot of successful market retail tech centric ipos chewies, revolve, the realreal even the market is supporting losses, which an interesting phenomenon. yes, amazon is formidable. you know, nobody disputes that but i think what you are seeing is bright spots in other retailers which have high table stakes and are making inroads. >> an example would be target. somebody else? >> you know we are speaking ever the new ones to the market if you think about companies

like revolve, you are seeing where high customer economics, high lifetime value where repeat purchases and gross margin give you a long-term value that customer exceeds the cost of customer acquisition and they have a long runway. >> influencers could replace marketing budgets? >> it is working your go-to-market strategy could be very different and very digital. >> you used to run hudson's bay company, of course that's a retailer. it is a department store we got an interesting call today out of goldman sachs and they are downgrading ralph lauren they are worried about the department store space and sort of that wholesale model with some of these brands do you think that's warranted? >> i think that the trends have been there for a very long time and they are continuing unabated in addition to some of the new names you heard about, i think there are old names that will do

just great doesn't matter walmart. target costco t.j. maxx. dollar general a value every day, and they are going to do great and they have been doing great for a long time the department stores, their performance is just dreadful that latest retail report that came out yesterday, it was terrible for department stores those are some of the worst numbers we have seen in a very long time. it's getting worse a lot of the names that goldman downgraded are department store dependent or mall-based retailers, mall-based brands the traffic is crashing so dramatically in these venues that there is no way -- you could be the best in the world you could be the best as what you are, whether you are macy's or nordstrom, but you are the best in a losing battle. >> we have been having this conversation for ten years amazon being the elephant in the room, and the decline of malls and department stores. i mean, this is just a long-term trend. >> it is but there are a lot of winners and vertical companies are really smart like a nike or lululemon

they make their own products, control their district distribution they can choose to sell on amazon if you want that product, you have to get it from them anyone who operates a marketplace. ebay, etsy, they make money. and amazon themselves. >> kathy, you worked with pvh a lot. what is your thought >> those are global brands selling around the world they have diversified. they focused on their own end use customer and their own reinventions and self-disruption. so they are not going away anytime soon these are gloebal brands look at ralph lauren or levi's or pvh's business in china and other places around the world. >> three names that got cut to sell today at goldman. >> they are doing great. they are class acts. apparel is crashing globally the prices are depressed they set a low threshold unit sales are down but dollar sales are the most troubled

class of any consumer good for long time new and nothing will change that. >> kathy, what about the la landscape for m&a in retail? we talked about the ipos, even a chewy. what about deals any of that going on >> it's interesting. we are in a period in 2018 where the deals are significantly less maybe there have been 100 deals of any size year to date this year that was 150 last year we are not seeing any mega deals, the ilks of walmart, staples, these big deals so it's very soft. >> a different kind of year in 2019 so far in a number of ways. thank you for being here with us today. when we return csx worst day in over a decade since 2008 we will hear from the ceo. plus, monitoring the house financial services hearing over facebook's proposed crypto libra and the dow is down 7. "squawk on the street" is back in a moment.

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a camera might figure it out. that was easy! glad i could help. at xfinity, we're here to make life simple. easy. awesome. so come ask, shop, discover at your xfinity store today. s&p a milestone. a few percentage points from doubling since the '07 peak. with markets trading at all-time highs, are stocks getting tired or getting a second wind in mike santana is here to answer that question definitively. >> i think it might be a third or fourth wind by the time we calibrate it all you know, we are talking about the round numbers, s&p 3,000,

27,000 on the dow. but the fact that we are at 3,000 on the s&p gets us just about to twice where we peaked in 2007. also 2000. i went back to look at prior bull markets when they got to this stage, if they did. it only happened in the 1950s, 1980s and '90s in the last two bull markets, in the '80s and '90s, when you ducked from the prior bull market peak it was not over. the market went up another 40 to 100% actually, in the '90s it ducked again in 1996. that was the moment alan green is span wondered about irrational exuberance. of course, crashing, not causing a recession, but having a big setback. we are at a point where it's starting to ask the question how overheated are we? we look at valuation, trailing ten-year returns the market doesn't owe us anything at that point we got up 15% annualized return

for the last ten years big bull markets peak at above that typically, but not much above that here is the thing. if we are going to be above 15% trailing ten-year annual returns when this thing peaks, it has to keep accelerating higher because we will be going up against the recovery from 2019, 10 if you want to talk about the historic multiple of the s&p, it's always on tra trailing reported earnings. you are at 20 right now. you are stretching it a bit. low bond yields. obviously, the fed is looking to engineer a soft landing that would prevent something bad from happening, you could go back 20 years, and the rate doesn't look so strong? >> absolutely. from the 2000 peak, the rate of return of price return is about 3.5% you add 2% dividends, you got 5.5% that's obviously unimpressive. on the other hand, if you bought

at exactly the worst moment in recorded market history, then time-bailed you out. over 20 years you stayed ahead of inflation for sure. >> and what you can get with the return - >> bonds would have done better from that point. >> of course, right. a huge rally in bonds. >> let's bring in chief investment strategist brian bellski and christian. guys, you were -- you have been bulls and have been proven right. been stubborn and right. brian, anything that the market have told us recently to have -- to see your enthusiasm eroded at the march even >> well, let me add to what michael said 15 bull markets since the 1940s. bull markets don't die of old age. they die of fundamental reason we think the fundamental construct of the stock market is stable especially relative to the rest of the world. the number one problem with the

market, carl, if you go around the world and visit our clients to talk with them clients have chased up the market because the fed is cutting interest rates or the perception, sorry, that the fed is going to cut interest rates. we have reared an entire generation of investors that only buy stocks because of bad news, the fed cuts trying to stimulate growth we think that's the wrong strategy our target for year end is 3,000. the upside target is 3,400 we think the market closes higher from right now, but at current levels given the perception and the worry about earnings, we think if and when the fed cuts by 25 basis points some of the momentum money is going to think that's not enough and the market will sell off we don't like making short-term calls on the market. however, we remain in our 20-year bull market camp when we made that call in 2009 we think the longer-term bull market has a long ways to go. >> interesting data trek did nice work looking

at aggregate consensus s&p targets and the way analysts were not spooked by december they stayed with their year-end 19 targets but they are really not moving them up now. why is that? >> i think the reason they are not moving enough is because the expectation with respect to the economy is still remaining quite low. i agree with the previous speaker. i think we have five more years at least, his 20-year call is a really bold call. >> ten years. >> i would say, you know, five more years and the growth outlook is going to improve in the second half. i think on the back of that growth outlook the consensus expectations are going to improve meaningfully you have a perfect environment you have moderating economic growth for sure, but far from catastrophic at the same time you have really good policy support from a monetary policy standpoint for sure, but the trade front despite the things you hear we

will probably get closer to trade outcome that is positive as well my outlook is 3,100. it probably goes higher rather than lower, that target. >> i think it's definitely fair to observe that generally sentiment is subdued and people are not acting as if this has been some kind of celebration moment, the s&p getting to 3,000. that's probably a net benefit. but i also think that the reason for that is this has been going on so long we have been so in the habit of saying is it almost over is it going to end why are bond yields so low we are worrying about if it's going to end i don't think you kind of escape that cycle this could go five years, if brian is right it doesn't necessarily mean that that five years will be a carefree burst of everything is wufrl and we will celebrate all the time. >> like a bunch of eeyores, is it going to rain today >> well, it is. >> so equities is really about

taking risk. we will have zigs an zags. at the end of the day everything is shaping up the right way and things will look much better year end. >> mike, kow look at the sentiment indicators you want. you need to talk to clients and investors. this is the most hated bull market in history. we have a low degree of participation. i was in san francisco yesterday, saw three big accounts all three are sitting on their hands, they are nervous to invest they missed the big move so far this year. net out flows in 2019, '18, '17. again, fundamentals in the u.s. in terms of looking everywhere else in the world, we believe that dollar denominated assets will be the home for all assets the next several years. >> tech was a major leader for s&p 500 2000 amazon up 500%

knicks up 455% with this growing techlash, is tech really going to be the leader for us, that next leg higher for the s&p 500 >> well, i think for a while tech is going to be the leader i think expecting the markets to do well with tech underperforming in a big way, at least on a sustained basis, i don't think that is how things are going to work out. at the end of the day, the tech companies are deliver growth in an environment where growth is really short so people are d being going to y valuations for those companies because the growth outlook is good and they are executing fabulously just look at amazon. >> guys, thanks. nice setup good discussion. when we come back, earnings season is in full swing with currency headwinds hitting corporate america. we will tell you how bad that damage is. plus, an $800 million marijuana

deal creating the world's largest cannabis company the executive manager of cure leaf joins us straight ahead

house financial services chair maxine waters kicking off this hearing with facebook talking libra. she tweets, too much power, too much data, too many excuses. facebook wants to lead a big tech takeover, nope, not on my watch. we will take you there as q&a begins meantime, earnings season underway netflix, ibm, ebay today our next guest warns that tariffs and trade tensions are costing north american corporations $23 billion in losses over the last quarter what can we except for this earnings season? joining us senior strategy officer, wolf gang is this the largest number we have seen, and if so, why now? >> yeah. certainly the last time we saw such a high number was roughly mid-2015 quite a while ago. we are seeing it because the daily volatility of currencies

has increased because you are sa seeing a lot of geopolitical tensions what surprises me about this, there is a lot to of companies who know how to manage this thing properly and there are others who are not as good at it and it's impacting them in a big way. >> does the volatility particularly given even within very short time periods make it more difficult to manage even if you know what you are doing? >> no. if you know what you are doing in today's world, you can act quite quickly and accurately companies like coca-cola doing a really good job. unfortunately, pepsi is not doing as good of a job coca-cola is not impacted. pepsi had a $400 million or 2% impact due to foreign exchange on their revenue lines. >> now, you sell those services to those corporations, isn't that right >> yes, we do service some of those conversations. coca-cola is one of those customers that are doing it well and what you have to remember, cloud-based technologies today can do that accurately and

timely you can act to these market quick enough and manage it properly it is surprising that you have big losses unfortunately, we will see the headwinds. i saw your prior segment i am bullish in general. what they are talking about, if there are fundamental shifts in the spaces and in the economy, you may end up having significant continuous headwinds and reversing a bull market. this is what president trump is also talking about when he is talking about, listen, i am worried about a stronger dollar. he is encouraging to actually get the interest rate slowdown because the economy is doing well and a strong dollar is going to hurt these corporations. >> i was going to ask you what you think about the president and his comments about the dollar something not often seen by presidents, at least in recent history. some suggestion he may try to intervene to weaken the dollar do you think that's warranted? do you think that's what these

companies want if they are struggling with managing the currency >> yes, i think this is a conflict for any president who all of a sudden has a strong economy. they lose competitive advantage if they have a strong currency so they try to talk. we have seen that historically, talk their currency down while the economy is going down. i think we will see that, which will add to the increase in volatility of the currency markets. you will get not only the president, but others starting to talk the dollar down. you can expect that. but the fundamentals are looking for continuous strength in doll t the dollar. >> you expect we will have nor more volatilely. it's good for your business? >> unfortunately we will try to make sure these companies don't have these impacts, and we can do that. >> what are you doing to help these companies manage this? why, for instance, is coca-cola do it well and pep is i isn't? >> yeah, so what happens is the issue is that it's really difficult for corporations to

get at their exposure data so really understanding what they are exposed to and how. what we do as a cloud-based technology do is help them get at that data in a very timely fashion, literally 90 seconds or so they can know globally what their exposures are and make sure it's accurately reflected so they have confidence in their data we have seen companies increase hedge ratios by 50 plus percent. >> for for your time today big day for transports in the rails. shares of csx take a hit after reporting results lowering their revenue guidance worst day for the stock in more than ten years we will hear from the ceo next we are an hour into the trading session. we are check where the major averages stand s&p has lost 3k. around 2,998 don't go away.

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the house financial services hearing is beginning their q&a let's get to chair waters. >> the project was facebook's idea facebook is spearheading it and recruiting partners. facebook's subsidiary calibra will provide consumers with a digital wallet to store libra tokens as i understand it, no member of the association has paid anything towards the project so my question is, why should we trust facebook to do these activities >> thank you, chairwoman i think trust is really essential and it's clear we've made mistakes. i believe we're owning these mistakes and working hard and remedying them and working hard at improving on all fronts as far as the libra association is concerned and the way that

this project has been developed, we have invested everything that has been invested so far in libra. you're absolutely right. and we have built all of the code base, the technology up to this point but we have also given, donated if you will, the technology because it's now open source for the whole world to be able to use and leverage as a result, we are not controlling the code base. and by the time we launch we will be one of 100 members with no special privilege as far as the wallet is concerned, i believe that the idea here often is that one day we will launch and suddenly two billion people will arrive on the calibra wallet this is not the approach we are taking people will have to open specific calibra accounts, so they are not going to be able to use their facebook account they have to open new accounts in order for them to do that,

they will have to upload a government-issued i.d. to identify so we can meet our kyc requirements. >> thank you i appreciate you understand that there is a trust problem here given its disregard for u.s. law and its massive scale. i think foreign countries could find it difficult to effectively regulate facebook, libra, orca libra, it isn't clear the federal reserve, other u.s. regulators have the authority to regulate you yesterday, the swiss regulator that you're saying would regulate you actually said that it has never been contacted by facebook about this project. so, mr. marcus, you responded to a request by members of this committee for a moratorium on your activities by stating you would continue to work with regulators before going forward. if the regulators like the authority to adequately oversee you, how can you work with them to resolve concerns?

will you stop kind of dancing around this question and commit here in this committee before the duly elected representatives of the american people to a moratorium until congress enacts an appropriate legal framework to ensure that libra and calibra do what you claim it is intended to do, which is to serve the public's good? let me just say that we are all in support of innovation it's not one side of the aisle versus another side of the aisle. but if you talk to any member on this committee, they will know nothing about libra or calibra, how it is organized. they will know nothing about the role that facebook is going to play in this big association that now has 28 companies and looking to get 100 companies and so despite the fact that we all support innovation and we all understand what it important for our economy to grow and for our development and for the future of this country, we need

to be on top of and understand something as massive as this project, and that does not say we don't support innovation. with that i will turn to -- well, yes. if he has time to answer, please, go right ahead. >> chairwoman, i agree with you that this needs to be analyzed, understood, and the proper oversight needs to be set up before libra can launch. this is in the spirit that we released the white paper very early before any launch so that we could have the time to engage with all of the proper regulators and central banks and lawmakers to ensure that we will get this right and this is my commitment to you, chairwoman. we will take the time to get this right >> thank you very much the gentleman from north

carolina, ranking member mr. mchenry, is recognized for five hins. >> i want to keep this simple. mr. marcus, i read your white paper. i understand the nature of digital currency and digital technology what is a libra? >> congressman, libra is a digital currency, a reserve-backed digital currency. >> is that a security? >> we don't believe it is, congressman. >> is it a commodity >> congressman, based on current u.s. law, i believe it might be a commodity, but we see it as a payment tool. >> is it an exchange traded fund >> it is not. >> okay. so when you say that -- so it's none of the above in any pure form like other digital currencies, correct? >> congressman, it is designed to be a payment tool. >> a payment tool. okay so if it's none of the above ind

our current regulatory structure, what i'm getting at is how do you comply with regulations? >> congressman, the way that we comply with regulations is in a number of ways first, as far as the ka lgcalibt is concerned it is registered. it is applying and has received a number of state lances and will operate the same way that other wallets operate. >> that's calibra. i'm asking about libra. >> for libra, these are active conversations we are having, the working group with the g7 as well as finma, which is the swiss financial regulator. >> okay. so there is tension between the notion of a decentralized currency or something decentralased and ultimately privatesy and anti-money laundering and know your

customer these things stand in conflict with one another very difficult things to resolve. in your white paper you say after five years there willen b transition point and you will go from a permissioned-based to a permissionless system. post-transition, how do you recognize the need for controls which allow you to comply with any money laundering and kyc, know your customer, regulations with that decentralized notion of a fully decentralized digital currency >> that's a very good question, congressman. the way that this will work is that the association will still have the ability to set the rules whether it comes to any money laundering programs, the require its for the network. and what we expect even when the network transitions to permissionless without getting lost in the weeds is that the vast majority of validators will

likely be the ones providing services, likely larger companies. >> you are saying in the nature of the wallet, that's how you get to any money laundering, know your customer, not in the nature of the digital currency going from permissioned system with these nodes, ultimately 100, to a permissionless system, it's not in the nature of that technology of libra, it will be in the nature of the wallets on either side of this? >> that's correct. the libra system will still be under the supervision of finsen. >> okay. anymu money laundering provisios is your view you will be like western union? is it going to be your view you are like your former employer paypal >> congressman, i believe that it depends about the entities you are talking about as far as the wallets are concerned.

it will definitely be more like the paypal types of businesses that op retails in the payment space. as far as the libra association is concerned, that is the conversation we're having because -- >> so is it your view, the development internally of facebook, for you to be a competitor to alley pay and we pay? >> congressman, yes -- >> and to be a competitor to venmo and paypal >> congressman, so, yes, we have a number of wallets that are working with us on the network side but will compete on the wallet side. >> will that consumer data be kept separate or a part of the calibra data collected from consumers? will that be a part of facebook's overall knowledge of consumers or separate and distinct >> no, congressman we will make a strong commitment to keep that data separate -- >> separate and distinct >> yes. >> final question here so if you are seeking to be a competitor to ali pay and we

chat, why are you doing this in switzerland? why are you using a basket of currencies why not the good old american dollar and to bring down the transaction costs, which is seemingly the ultimate goal here >> congressman, first i want to say that the choice of switzerland has nothing to do about evading responsibilities or oversight the goal of switzerland is to home this libra association in an international place that is the home - >> okay. skip beyond that. >> and so that's really why. the second thing is, for the same reason, we would like for libra to be a digital global currency, and as a result to be one unit of digital currency for the whole world and this is why we believe it was the right approach. >> thank you the gentlewoman from new york, mrs. maloney, who is also the chair for the subcommittee on

investor permission, "apprentic entrepreneurship. >> as you can see, there are a lot of questions about this project. it's big and very bold some would say it's too bold the chairman federal reserve, jay powell, was in here last week saying he sthis it could be a systemic risk the former chairman. c ftc, gary gentzler, is going to testify that he believes it should be covered by the investment company act so we have a lot of concerns and a lot of questions and i take it that it's a node to the chairwoman's question about requesting a moratorium on libra until policymakers can figure out how to handle it. was that a yes or no to her question when she called for a moratorium. >> congresswoman, the commitment is that we will not launch until we have addressed all concerns

fully and have -- >> i take that as a no okay so what i want to ask you, whethwill you commit right here in this hearing room to walk before you run? will you commit to doing a small plight program for libra first, limited to no more than one million users and overseen by the federal reserve and the s.e.c. will you commit to that? >> congresswoman, the steps we have taken, and this is the reason why we announced the white paper and the plans instead of launching and then figuring it out after, which is what happens sometimes with technology products. most often, actually in this very case we are deliberate about taking the time to get this right -- >> but that's seriously, all due respect, that's not what i asked you. and given the lack of trust of people having facebook, you have

breached the trust of users over and over again just last week you were reportedly fined 5 billion for selling your users' private data without their knowledge or permission so i would like to ask you again, will you commit to walking before you run because if you go ahead and launch libra without doing a pilot program first, there are too many risks the libra reserve could be managing too much money, which could make it systemic too much money could be pulled out of banks in order to buy libra, which former fdic chair sheila bear has written about and warned about so the risks are very great. now, personally, and this is my own personal belief, i don't think you should launch libra at all because the creation of a new currency is a core

government function and should be left to democratically accountable institutions that are accountable to the american people but at the very least you should agree do this small pilot program first fully overseen by you and the federal reserve and the s.e.c. i think that's a modest request. so will you commit right now to doing a small pilot program first, yes or no >> congresswoman, we will continue to engage with regulators and the working group at the g7 that is notably looking after the issues you raised to ensure that however we launch this, it is responsibly and it is with the appropriate oversight and in a very responsible way. you have my commitment on that. >> if you will not commit to testing this -- >> house financial services, the questioning arguably maybe a tad less focused than the senate

side marcus again having to explain exactly who is going to be accountable to regulators. the libra or calibra side. the dow lost some steam. down almost 70 points. down 10 or 11 on the s&p when we come back we'll talk son csx, on pace for the worst day in 11 years. we will talk to the ceo. as we said, major averages have gone into the red. gone into the red. we are back in a minute. [ sniffing ] come on. this summer, add a new member to the family. hurry into the mercedes-benz summer event today for exceptional offers. lease the glc 300 suv for just $419 a month at the mercedes-benz summer event. going on now. i felt completely helpless. trashed online.

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welcome back to "squawk on the street." csx turning into a big tore i have after cutting it's outlook, a revenue decline of 1% in q2. hi, morgan. >> i spoke to csx ceo jim foote a short while ago. here is the take away. cautious so on the earnings call, foote saying that the present economic backdrop is one of the most puzzling in his career foote has been in the

railroading business for four decades now. i asked him why, and he said normally you can see what's changed in your outlook and see why. in this current environment, in the merchandise segment in particular, it's a slow drip where everything continues to shift further down he says there is a lot of confusion, a lot of noise whether it's tariffs, whether it was that government shutdown at the beginning of the year. and that customers are being cautious so you combine that with a transportation industry decline in intermodal, weaker coal demand thanks to the cheap price of nat gas and softer steel, output steel production in the u.s. on the flip side, you have reasonably good housing starts, auto sales, good consumer confidence, low interest rates, low gas prices, and he says, quote, it's a difficult time to get arms around the tone and tenure right now also, csx is contending with philadelphia energy solutions, closing down the largest east

coast refinery they moved a lot of crude by rail to that refinery. it accounted for 1% of overall revenue at csx you put it all together, and this is why the freight railroad has become so much more cautious it's gone from a to now down 1% to 2% you have a record operating ratio that was below 60%, foote saying they'll keep working to bring that as low as it can go the bottom line here, the read through on the economy since the rails do touch so many different goods that are moving around the u.s. and north america really saying, quote, overall clearly the economy is not as robust, but it's also not the end of days either. nonetheless, shares of csx are down almost 12% right now. all the other freight railroads that are publicly traded kansas city southern, norfolk southern, union pacific, also the canadian names are trading lower in sympathy as well. >> at one point every component

was down today >> yes. >> this takes you back to february on csx. incredible story thanks, morgan we'll see you in a little bit. a purchase of grassroots for $875 million the deal makes it the largest cannabis company in the world. joining to us discuss this is the executive chairman welcome back congratulations. >> good to be here >> why this one? >> this fulfills out our national footprint we had a dominant position on the east coast with the transaction two months ago we built out our footprint on the west coast this gives us the midwest -- illinois, michigan, oklahoma, arkansas, maryland and other states this basically fills out the footprint for us to sell our products across all major markets. >> is it a comment on where you think statewide legalization is headed now, the center of the

country? >> illinois obviously -- >> michigan, too, right? >> michigan, too, making that decision we think pennsylvania is one of the states we've acquired the transaction, may have it on their ballot the governor has a team going around the state right now talking to various interest groups so we're starting to see the most major states in the country at least starting to review going recreational or adult use. >> through land grab, you were early, are you done now? >> given those states that have legalized at the moment, i think we're almost there the only hole is colorado. and that's because the colorado authorities didn't allow out-of-state companies to own. we may have a colorado transaction that works but outside of that i think we're going to develop our brands and the next sort of

frontier is europe given the united states maxed out our footprint. we have to obviously built that effort to get our products to our customers. i think europe is probably the next point of destination for us >> when it comes to integration, give our viewers some sense as to why they should believe you're going to be successful at that given how many acquisitions you've made. >> this is just another industry to be honest it's very similar to what we saw in europe where you had every single country in europe has different rules and regulations and we're requiring data centers we started in the uk and across europe and created telecity, the largest data center complex in all of europe. it's a similar platform to that. what's great at the moment is that topnotch executives want to

come to work and senior hires. two, three years ago they wouldn't pick up your phone. now they're calling us and saying we would love to come to work for you >> why is virtually integrated >> you have to manufacture the products once that legislation changes, i don't expect that to happen for a couple years we'll change and centralize and distribute our products from there. >> our team has done some reporting on the black market and how hard it is to kill what's it going to take and what impact is it having? >> reduced taxes no states where they have lowered the tax rate, the those

states like california where they come out with a 50% tax rate helped the black market further develop. they can move it up. they start moving the tax rates up >> cannabis has been made legal basically. 30 some odd states have at this time in time the doj doesn't spend the time to do it the only way is through market forces and bring down the tax rate that will kill the black mark market >> you are a entrepreneur with a good amount of experience in different areas, you rolled up data centers in europe, you are obviously expanding in this product area are you eventually going to sell

this company >> we'd like curaleaf to be one of those two to three. we'll come in and start acquiring in the sector as legalization happens let's be honest, where does it go goes into food products, nestle, drinks, anheuser-busch there will be a tremendous amount in the area we also think there will be specialty companies focusing on cannabis products. we'd like curaleaf to be one of those companies. >> wow a new frontier thanks for keeping us updated. congratulations again. we'll see you, boris when we come back, tech under fire, the eu launching an investigation into amazon. facebook meantime is on capitol hill in this country facing another round of grilling. another round of grilling. we're gog mit tt.intoonorha fr. just one way pnc is modernizing banking to help make things easier.

pnc bank. make today the day.

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♪ ♪ ♪ good wednesday morning welcome to "squawk alley." at post 9 of the new york stock exchange, jon is on assignment we'll start with amazon. the e.u. opening an investigation into their possible anti-competitive business practices this, of course, follows the company's two-day prime event which has set a bunch of records. we a joined along with adviser founder ted smith, formerly the head of credit suisse's global investment banking division. good to see you both thanks for the time. how much risk does amazon have