up with the tariffs on the horizon. dow futures down by about 600 points. s&p futures are down by close to 100. the nasdaq off by about 380. if you're looking at this on a percentage basis s&p 500 off by 1.6%. the dow off by one and a third percent. the nasdaq down by about 1.75%. of course we're watching treasuries too. the yields haven't budged all that much. the ten year at 451. the two years at 424. we'll see you tomorrow. right now it's time for squawk on the street. >> no, no, i'm not going to say we may have. >> short term. >> some little. >> pain and people understand that. >> but long term. >> the united. >> states has been ripped off by. >> virtually every. >> country in the world. >> we have. >> deficits with almost every. >> country, not every country. >> but almost. and we're going to change it. it's been. >> unfair. >> that is. >> the. >> president announcing. >> tariffs on imports from the. country's biggest trading

partners. good monday morning. welcome to squawk on the street i'm carl quintanilla with jim cramer david faber at post nine of the new york. stock exchange. stocks are selling off of course, as the street really guesses as to whether or not these tariffs truly take effect tonight and for how long. let's begin with the global sell off. the president has signed an executive order to impose 25% tariffs on goods from canada and mexico. canadian energy 10%. same for chinese imports. canada and mexico have threatened retaliatory measures. trump is expected to talk with his canadian and mexican counterparts later today. jim, your thoughts going into this incredibly busy week? >> well. >> first, i mean, he said this over and over again, and if you didn't take him seriously, i don't. know what you were thinking. i mean, this is what you elected, okay? you elected this. you elected the. >> idea that. >> we have too many. >> people coming from mexico. >> you elected the fentanyl. you elected that. >> we have a strong stand against china. >> did you elect the canada? i mean. >> that's a little bit more.

>> that's a. >> little harder to understand. >> but i just think, well, what what were. you worried. >> about other than. >> the fact he was. >> going to do this? >> so the market was way too high. i mean, even last night, as soon as this came out, nasdaq was. >> down 2.6%. >> now it's come back. i think it has to revisit that level, david. >> because i think it has to. >> revisit that. well, because i think people are waking up and saying, what the hell, what am i doing? i know, but i saw. >> someone this. >> morning wake. >> up every morning. >> i saw that ends in y. that's what. >> we're saying. has nothing to do with the market. well. >> i was watching someone on frank's. >> show this. >> morning, 5:00, and the person was basically. she was. she was like. >> an end. >> of the world. yeah. i'm not an end of the world. >> of course not. >> i think it's going to be a rough day. yeah. the market was at one point. >> off a percent and. >> a half of the high. you take it in. >> just sucked it up. there is still. that argument that i continue to hear that the president is a negotiator. you know, he's he's coming big. he always does early and then he's

going to ultimately back off. but i don't know. i have a view. >> there is something, something. >> curious about. >> this in the sense. >> of it. certainly as you raise it with canada, it's. not clear to me exactly why. i think many people are also wondering. why canada in the way and what they can do to truly alleviate the burden, because it has to do with fentanyl. >> but yeah. >> i don't know that. you know, listen. >> i've got to look into more. >> of the numbers. you hear what? how many pounds. >> of fentanyl were transported. >> across the border? >> 47 pounds. >> 47 pounds that were that were found, obviously. yeah. it's an enormous border. 47 pounds. >> by the. >> way. >> fentanyl is a terrible crisis. that that's that alone could kill. 9 million people, so i don't. wow. and you know, we've. had i mean, 100,000 people a year dying from opioids. so there's no doubt that that's a crisis that we have to deal with in a more effective way. but i don't know that this is it. and i'm curious as to what it's going to mean in terms of our relationship with canada and what they can possibly do to get out of it.

>> it's oil, but it's. >> only 10%. but they have no place. >> they have one terminal. >> that exports to vancouver. so the oil is going to get 10%. well arguably maybe we drill more. >> i just think he just. >> lumber and swine and any. >> number of other things sara eisen told us about last. week as well. trump doesn't. >> thinks that canada has taken advantage of us, wants that to stop. >> so i think. >> they are. >> i think. >> they have a big trade. we have a bad trade deficit with them. we have trade deficit with mexico. i think that you can play, you. >> know, the obvious ones. >> the autos are really. kind of trying to figure out how much. >> their cars cost. i don't know. >> whether he wants volkswagen to say, listen, we make 50,000 cars in puebla. we're going to build a plant here. i mean, i think the only way to alleviate it is to say you're going to build a plant that takes a long time. >> but isn't it also about carl, the. >> the number. >> of components that move back and forth across the border. >> sometimes multiple times. >> i mean. >> then the confusing part, jim, this is not new. hassett on squawk a few moments ago saying this is 100% about fentanyl,

100% about the drug war. where does that leave. >> us. >> on trade deficits and subsidizing a 51st state? >> why can't you? >> you have. >> to. >> talk to claudia sheinbaum, president sheinbaum. it does. >> seem a. >> little bit offensive to claudia, but it wasn't like they sat down and had a real, real big talk, brand new. >> i notice. >> and think. >> that canada. >> and mexico can come down. >> but china was. >> really a gift. china can go up. >> i felt china was. listen, guys, 10% is. >> real low. come to the table. but we will raise it. >> so i think. >> that the difference is that. >> mexico. >> china they have to. >> talk canada. >> they come down. >> but this. >> was a gift to china. >> why don't people. >> realize it was a. >> gift to china? may have been. but that also is. >> something that is notable. >> we're taking stronger action, so to speak, against our allies. >> in the two countries. >> on our border. >> right? >> as opposed to our true economic enemy, if i could say that. but that's what.>> i thins

about. i think china can say, holy cow, we've got. >> to come to the table. or we could get what happened to canada. >> i thought it was a gift the hardliners lost. >> i think the hardliners lost here. the hardliners wanted a much higher tariff on china. they wanted things shut down. >> by the. >> way, the hardliners. >> are who at this point, you. >> know who it is. >> navarro. >> yes. peter navarro. >> okay. >> peter navarro did not get his wish. navarro i don't think was in the room. navarro is a hardliner. >> i think navarro would have said. >> look. >> we have got to stop whatever china is doing. we have to put a we have to put a tariff on china, but we also have to stop. steel coming from canada and stop steel coming from mexico in particular, because. >> they're sneaking. >> their chinese are sneaking their. >> steel in. >> i think that he's a steel is going to be one of those areas. that's why nucor goes higher. nucor letter x by an eye on them. they're they're they're they're going to be potential beneficiaries. they are.

>> although you remember cliffs went in preannounced today. >> yes was preannounced. >> so let me get. >> in there. >> buy some cliffs i don't. >> i think nucor. >> is good. i mean i talked with nucor last week. anything that makes it so that that we don't have mexican steel, there is no mexican steel to speak of. >> it's canadian. >> steel i'm sorry. it's a chinese steel. >> through mexico. >> that's what they do. >> meantime jim. >> the administration at least initiating some conflict with panama. colombia, the danes, south africa over the weekend. how does the street supposed to absorb all that? >> i think that that the street sells. that's what happens. >> and as you said earlier this morning, we're in no hurry. i assume you. >> meant i'm not. >> in any hurry to buy anything. i mean, we. just were at a high. we had some big turmoil in tech as it was. we've got a lot of quarters this week. >> the only. >> stuff i would think about buying are the drugs, medical device. because their business, for the most part not made in

china, not made in mexico. >> so those. >> are the ones i mean, look, my travel trust owns bristol-myers. i think bristol-myers is terrific. they've got a new drug coming. >> this week. >> yeah. cabana, which is about schizophrenia. first, new drugs. >> i want to talk about being taken advantage of, though, when you come back to pharmaceuticals and the fact that the us consumer in some ways subsidizes the r&d of our great companies in that area. >> so the. >> rest of the world can pay lower prices. >> that's true. but that's. >> why that's actually that's an area where we conceivably are being taken advantage of. >> well, so are we under biden? >> yes. they brought. >> some prices down. >> the prices. yes. >> i think that that's something that president trump would continue. >> to do. >> that said, you always run the risk that if you bring them down too much, you then move, eliminate, no, you eliminate the. incentive for some of these. companies to. spend as much as they are on r&d. and, well, that's. >> true. >> but that's what. >> you make a fortune if you started, if you start a company and you have a great drug and

then pfizer buys you, you make a fortune. don't cry. >> as a biotech company. yeah, you can conceivably. >> you make a fortune. >> you need, you know, maybe you need to lengthen the window on patent. i don't know, but. >> i just think that that's remember, it's a bit of a canard. the drug companies charge a lot here and they charge a lot less. >> or less to. >> yes, but if we got the va prices, it would be better to charge va with the va is a very low price. >> i don't mean to take us off, but that's. >> no, no. >> another area that is yet to be a focus. >> i don't think you veered at all. i was waiting for you to talk about trevor noah mentioning nvidia. i thought that's where he was going. >> that did come up early, i think. do we actually have that sound built? i think we racked it. i'm not sure we'll get to it, but. well that was like the first. >> thing that sent chills through me, because that meant that there isn't an area of the world that doesn't own nvidia, and that kind of has to end before you can buy it. trevor noah, nvidia looking down again. >> obviously the broader market is going to be down, but it was down on friday right? obviously had a historic loss last week right. made some of it back from the week ago. loss on monday

when it was down that 17%. on worries about deep seek and what that's going to mean. a very interesting journal story today that gave some, i thought, decent background on the back and forth between the biden administration and nvidia at least gave some sense as to why there might have been some frustration on the part of the biden administration with nvidia and put in those last minute restrictions that you have been very. >> angry about, and they did everything they were told to do, and they have evidence that singapore did not bring it. they have actual evidence of where singapore put their chips. but i think that this company has now been called, so to speak. and i when i meet people, they own it. and i'm not trying to help people. i don't want people to lose money, but i think there is a cohort of nvidia that doesn't know what nvidia does that's worried about deep seek. i'm not as worried. i do think that the cuda platform that they have is going to come out fine, and that the more gpts there are, they are a winner, but they're in quiet period. and during quiet

periods, period, people get very nervous and they sell. i mean, i did a lot of work on nvidia this weekend, and then you watch the grammys and you say, well, geez, all my work was just nullified by a guy whom some people regard as a comedian who mentioned it. i don't want the broad notion that nvidia is a fraught stock in the sense that everybody owns it that i talked to, but it's a great company, and i think ultimately it will be a winner. but it has to be a loser first before it's winning. >> that's a 24% drawdown so far on nvidia, lowest since october. >> is that enough of a loser? no. >> no, it may not be enough because you really have to shake out people. i mean. >> that's. >> what happens when you have a really great company that everybody's in and you don't have. a lot of people know what it is. that is a recipe for even further selloff and then buy because it's going to win because nobody's close to them. nobody. >> no. although again, back to the trump administration and china, the h20's, for example, are as powerful, if not more than the 800 seconds they were

all allowed. deep seek was trained to a certain extent on a lot of h20 chips that are allowed to be shipped to china, but there's going to be some questions about those and whether we're giving an advantage to our adversary in that way. >> well, that they could end that, and it's. >> still 12% of their revenues. >> right. but but remember, they're moving. they're moving past the 200. and the new one. blackwell which is right. >> the ones that china can't get. >> well i mean, 100. >> or 200. >> but the. ones you need look deep. yeah. i mean, there's going to be a lot of different companies that have a better than duke's deep seek. i think google is better than deep sea, but yes. >> oh yeah. no, there's no doubt about that. although we did learn that the chinese computer scientists are strong. yes. have a, you know, a decent creative bent. >> they graduate more stem. people than other major economies combined. >> with that. yes. so it's not perhaps shouldn't be a surprise, carl, but i think some people were. >> i think that we have leadership. i think our university i think every one of those people would love to go one of our universities. i remember when jensen said it

will take everyone from caltech take the whole class. caltech was hard to get into. and if you try to get in there, caltech. >> that's a fascinating bit of cramer history. thank you. no problem. >> meantime, speaking of china, they like canada and mexico, are threatening to retaliate against these new u.s. tariffs if they take effect. eunice yoon is in beijing with the latest. hi, eunice. >> hey, carl. >> the chinese. >> government response was much more muted. >> but generally. >> speaking. >> the. >> reaction here is that china. got off much more easily than. >> many had feared. >> this is a 10% tariff that's on top of existing tariffs. >> so it's. >> going to affect industries differently. >> but at the. >> same time, most companies here that we spoke to believe that there wasn't really any need to change their current plans. for example, those who are thinking of moving some production outside still. >> are going. >> to do that. >> others who are saying that there's going to gut it out would continue to gut it out. but for one thing, that was

really interesting in my conversations with some of the manufacturers, is that most of them did feel emboldened to try to push this 10% tariff onto their us partners or onto us consumers with the hope that they could, at the very least, split the cost. one other trend that we heard with our conversations is that a lot of people believed that, in any case, the chinese government would allow for the yuan to weaken further, as the government here did during president trump's first term. so those. >> are some of. >> the. three trends. the government itself had. >> said that it. >> plans to hit the. >> us with. corresponding countermeasures. >> and also to bring this case. to the wto. but for the most part, those statements were relatively boilerplate. there will be an impact and a consequence to these tariffs. as you guys well know, the chinese economy isn't really doing that well. the tai shin pmi actually showed that factory activity was worse. than expected for

january. >> so it could hurt. but for. >> the most part. people are feeling that a little bit of a relief, even. if there is uncertainty. >> eunice, excellent point. i totally agree with you. i was surprised that they got the 10%. i think that they could get it higher if they don't play ball. there's one part of the economy that we're all trying to figure out, which is the diminished the end of the de minimis and what it means for sheehan and tamu, because these are two companies that have really taken the country by storm. and i think that could be the most hurt trying to figure out what happens there. >> yeah. >> well. >> we spoke to some of the sellers for tamu and shiyin and they weren't so disheartened because of the fact that. >> a. >> lot of the companies had already been trying to push ahead with one of tamu and. >> what they. >> called the second model, and that is to push the, the, the product to the us and warehouse

more. so by doing that, the cost is more on the seller as opposed to on tamu and shuyin. so the companies themselves don't really have to take on that much. >> units appreciate that. we'll talk often. i have a feeling eunice yoon in beijing take a look at the premarket. the sell off is global in scope and appears to hit us at the open. in a few moments, we'll talk about a busy week for earnings with palantir at nxp. tonight, we'll get to elon musk and his attempt to take control over some treasury operations. squawk on the street continues after a break. bitcoin is. >> the best. >> performing asset. >> but its volatility. >> has kept. >> many on the. >> sidelines until now. >> introducing the world's first suite of. >> downside protected bitcoin. >> etfs capture bitcoin's. upside potential with downside protection for 190 or 80% protection levels over the one year outcome period. asset

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on canada, mexico and china. but let's talk some stocks and one that we talk about often here reporting earnings. palantir alex. >> karp and an excellent interview last week with our own sara eisen i talked about the well kind of just what a genius he is. that's okay. you're allowed to do that now. it's brand new. notice this david little head and shoulders reverse head and shoulders developing okay. so he reports tonight. now we're hearing a lot about doge and what doge is doing. yes. and one of the things they're trying to do is figure out how to do procurement in a cheaper way. well, that is what alex does. he that's one of the many. look they also do consumer products. i do not want him even more mad at me. but they are unbelievable at procurement. now this is up 310%. this is the ultimate meme stock. they won't even let it come down at 4:00 david. they were propping it up. it wasn't samson, it was prometheus. and i do think that when you see the quarter, you're going to hear some great verbiage from alex, who i think will might still curse. that's why he doesn't

like me in 2022. he cursed and i pointed that out and it stuck with me. and you also thinks i'm an idiot. that also hurts. but i will tell you that this is the one to watch because they're going to prop it up again. this is the ultimate retail name he plays to them. he is. some people think he's a pied piper. i don't i think he's the real deal. he's kind of musk when it comes to procurement. and he's got a lot of other things. you know he did data. he's warp some warp does a lot of things with israel. won't tell me what they are warped. he did the warp speed. he's the man behind. he's the man behind that. and you know, he's the man behind the curtain. and i do think that in the end, he's going to say things that are going to make it. so you want to buy the stock okay. >> there you go. that's the conclusion. >> yeah. >> all right. >> i wish you didn't hate me. >> but you know what? he doesn't i'm not i got i saw him when he was here for the interview. what'd you do? very nice greeting. really. a little hug in, but i'm not. >> you see? that's different. i'm not. you think i'm. you

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>> paul tudor jones earlier on squawk there to promote the just capital list of america's just companies. although he did say, jim, it was ironic that we're celebrating american companies on a day when we're tariffing the hell. >> out of them. >> that's true. mr. nyren from hp. i spoke with him on friday. he's a terrific guy and does a lot of work with nvidia, does a lot of work to be able to get the best generative ai to different companies. i want to point out that once again, we have billionaires on, and the billionaires always say it's incredibly precarious. people at home therefore sell, and they miss great opportunities to buy because they hear that it's really precarious when someone who's a billionaire. so therefore it is and i'm urging people to stand pat. and you can't make money listening to a billionaire because they already have made money. >> that's true. but i listen to i listen to paul because of course he's got great insights, decent instincts. and when he says, precariously perched in a macroeconomic perspective, it's not something to just slip by. no. >> it's a cookbook. i'm not saying goodbye. i'm just saying

it's a very tough word. precarious makes it sound like that. we are in a systemic moment. i save that for 2007, 2008, when it. >> was curious. >> that one day a new institution went down. >> that was, i'm not buying. this is as bad as 2010. >> so. >> let's get the opening bell and the cnbc real-time exchange at the big board at 17 bank. celebrating black history month at the nasdaq restaurant company twin hospitality celebrating its spin off. jim, as we might have expected like this at the open. >> sure. i mean. >> look, this is not a great time. we are only down one and a half from the high. and i think at this time what trump i don't like the name 2.2.0. it's kind of trivializes i think that the president gave us last time some tax cuts ahead. so you kind of felt that there was some good things happening here. he comes up with this first, which makes it feel like that. you justify what he said on friday when he said he didn't care about the markets. ultimately, david, he

does care about the markets and i don't think he wants them down badly. i think he could give us some good news. and one of the reasons why i worry about the term precarious again is that, like, why don't people own apple here? well, they've been they've been told so many times, times are precarious that they've sold it. they've sold amazon because it's precarious. they've sold microsoft. and i'm saying that in 2007 it was precarious. these other times we worked it through. that's all i'm saying. >> the point has the price of an iphone now gone up by 10%? >> i don't know, i buy mine through verizon. i have no idea how much it costs because verizon subsidizes it. next time i'm buying it from t-mobile, because mike sievert here, i don't know how much it costs. all i know it's in my bill, and it doesn't cost the listed price. that you can buy a used one. right now. you can't. >> tell really. they do tell you what? what you're paying. >> well, yeah. >> so it's a giveaway. i mean i don't think. >> that that not everybody does that. so my. question remains. and i don't know because they have been exempted previously. will they be this time? >> i think that that's important. i think that we could find out that further on down

the road that some are exempted of. i think that the president has given you ample room to be able to say, okay, look, we've made this. now i'm getting some ball being played by claudia sheinbaum, whom i think, by the way, is doing a great job. and i felt badly that claudia chaimongkol was not in on that because she's got to if it's about the border, you have to sit down and talk to her. i'd like to see a little more respect for mexico, because there are huge trading partner and a lot of companies move from china to mexico and they that doesn't that was. >> raising the other line of thinking over the weekend. certainly. and that is that this whole operation, this whole mindset opens up a lot of lanes for china, especially in latin america. >> yes it does. i think china is a winner today, a very big winner. i think mexico is a very big loser because so many bmw moved down there and got huge plan for vw. >> chinese market finally opened after being closed for the lunar new year. i want to check. i don't even know. i have to say

let me check. but because we haven't been able to look at the chinese market given it was closed last week with the deep tech news, obviously you can watch baba shares. sorry. say again, what. >> do you got? well, you're just like, who are you talking to. >> are or they're coming in right now the chinese tech stocks. >> i'm chuck i'm getting it right now. >> look, it's the autos. you like that? i mean, i. >> can't hear anything unless they do. >> i have a place. that's right. it's right next to an allison transmission plant. there they are. okay, so there's no there's no gm factory. there's an allison factory. it's gigantic. and where do those go? i mean, they, you know, you don't make the whole close. china is still closed. >> for the lunar new year. >> i just want to let you know, the lunar new year. what are you, like, a weatherman. >> pdt down five or. yeah, premarket. jim, to your point about timu. >> and sheehan. >> timu and sheehan are losers here. and amazon's a winner because jassy has said oco has said over and over again that those he doesn't make any money off of those two other than to be able to sell them where you actually get a date. and that's what his advantage is, is that

when you order from timu, which i have ordered from, and sheehan, which i have ordered from, you don't know when they come. i mean, i ordered some some timu from my wife. it came well after her birthday. i had to slip it into valentine's day. and i would tell you that i mentioned this to you before. david, i want to make a point. like roger ailes told me to say things 18 times that my wife said that thank heavens she doesn't smoke because she would be immolated. >> yes, because they're very they're not a lot of fire retardant. >> they're not they're not. you know, when you go to sunoco, it says 94. you can get the 94, the 87. they're using the 94 i got it i got it. >> what if byd were to say you know what. we're going to build a giant plant right here in the old united states. >> that's what's. >> supposed to happen. and build evs here. >> that's what's supposed to happen. like we have enough workers to be able to do that. i mean, we're so we don't have enough workers to do anything. i mean, there is and the ones that we do have are about to be exported. well, by the way.

>> when it comes to inflation, i think, again, we listen to all the same people. we read the same things. it's still very much unclear the inflationary impact of tariffs. those who even admit that they will be inflationary say it will be one time in nature, but deportations and or even the threat of it, and the fact that people may not be going to work as a result of fear of being deported, could have a longer lasting impact on wages, particularly in certain areas and certain industries, right? >> restaurants in particular? >> yeah. restaurants. so construction. >> so take chipotle. chipotle is only down $1. and i like chipotle very, very much. i think it's a great company. but they have avocados and they have tomatoes. now most of the plurality of our tomatoes come from mexico. yes almost all of our avocado comes from mexico and they're trying to get it from every single province. so i could argue that. and they have i would argue that that stock is too high. and i remember i really like it, but it's also 51 times earnings. but when you go to mexico, you almost anyone who has places in mexico, all you see is costco, tomato fields as

far as the eye can see. david, i'll take you down to a costco tomato field. you won't believe it. it is. it's like the yellow brick road. you just kind of go through it. it's like everywhere. >> this is where? mexico. what part of mexico? >> it's guanajuato province. >> i remember when i went to brazil and saw the soybeans. it went on forever. >> is brazil part. >> of mexico? no. brazil is its own country. >> no. okay. >> apparently not right now. being tariffed. no. >> boy, what a gimme there. >> lula says if you come at. >> us brazilian soybeans. >> we're coming right back at you. by the way, the president's now on the tape saying that he spoke to trudeau today. he's going to talk to him again at 3 p.m. eastern. time goes on about how us banks, he argues, aren't allowed to open or do business in canada. what's that all about? again, jim, just adding to the list of grievances that makes it hard to know what the end game is. >> well, it is, i mean, you know, mexico, if you have a bank, it's separate from the other from your us bank. i try

to open an account and then, you know, my jp morgan chase can go down there, but they don't have it. you have to have a separate bank, go to santander, go to santander. >> yeah. >> but my city is not connected. >> i decided after quite a few years jane frazier was like, we're out of here, right? >> right. well. >> all right. >> so, look. >> i to carl's point, right? what's the end game? what is and how do you. >> measure the end game is to call. >> is it is it migrants at the border. is it fentanyl? what is it? how are you measuring this? >> the end game is to say to president trump, you know what we have, we do have a very big imbalance with you. and we're going to fix that. and if you give us some ideas of how you think, we'll fix it, and we'll give you ideas and we'll come to some sort of happy conclusion, happy 46. >> billion on $1 trillion of trade. i mean, is that really the is that the biggest crime we've got? >> it's 37 million people in canada. that's all they got. >> well i mean doesn't doesn't like the imbalance. there's an

imbalance. i thought that the oil trade was very interesting. only 10%. he could have done 25% there. remember they send 4 million, 4 million gallon. >> enforcement administration is very much in favor of additional production. we've talked about this. it's the 333 plan from treasury. >> well, this helps get the oil up to three because 3. >> million additional barrels. >> a day in. >> production is. >> the hope. there you go. there's 4 million. >> that's from the us. it has nothing to do with canada. >> it does. it does. because if you are able to have a if there's a tariff on canadian oil, might pay to produce more here. >> although the journal. today says as far as fracking goes, no. and the saudis and opec plus today maybe not. >> and we talked to we i mean darren woods and mike worth, although worth didn't really say much when we asked him about it last week. but i don't know. they were turning a lot of capital. i mean, you saw exxon and chevrons earnings on friday. they are continuing to and they talk about return on capital. not that they are an increase in

production. i don't. >> think they're going to produce much more because that's their whole 3. >> million would be a lot off a $13. >> million returns. >> a million barrels. >> they all have. they've all tried to keep their production down because they want prices up. >> that's what they do. meanwhile it. >> is i wouldn't buy it. would you buy any of these. >> in a sea of red? it is largely the domestic companies, as you might imagine, that are beneficiaries. at&t shares are up 1.4%. verizon terrific tmo right. you know you're doing a lot of domestic wireless. maybe people. >> want to just they want to buy instantly. they can't even team t-mobile. yeah t-mobile is great. but you have to like go pay up three i mean you know come on it's a bad day. just like it's a bad day. live with it. >> health insurers are all up. >> oh that's brilliant. >> yeah i've got humana anthem. unh. all. >> yeah. because they're domestic. the market is not set up to go up today. cigna up six bucks okay. go ahead. go ahead. buy it up six i wouldn't buy it up six if it was a great day i mean it's not a great day.

>> no no jim it's not. >> see what did you say. sea of red. >> yeah. there is a sea of red though. let's i mean again you're talking an s&p down 1.3%. >> so. yeah. but i'm saying that people who want to buy things just wait. see i think it's a long day. it's 939. you're going to have people come in bang the s&p futures down. and you know you're going to stand there and buy cigna because it's a market. >> tomorrow's going to bring either when it comes to who else we're going to. >> by the way, like constellation brands is up up six bucks from the open. >> well sell constellation brands. they had no clue of what was happening. sell it down. we had a clue. i had a clue. did you? my wife had a clue. >> what's going on with the mezcal company? this can't be good for you. >> okay, will you just wait a second? i got the numbers. okay, first of all, i. my wife, who's not an idiot and watches the show, said, you know what? >> she watches the show. that's the biggest news. >> i heard, actually, the hour. >> she doesn't watch. >> our general manager watches it and told her this. okay, that's fair enough. clear in

your, know, our general manager? no, you're right. she hasn't watched the show. and i just was trying to be nice. okay. she's she's driving down to florida. okay. so we sent three trucks up with 18 pallets. each pallet has 100 cases. we got 7200 bottles here without a tariff because we knew there was because we listened to the president and the president said there's going to be tariffs. so instead of saying, ha ha, he can't put it on us because they don't grow agave here. we said he means business. so we have it all stored up in texas and we're ready. >> so you're part of that big trend of retailers who imported a ton of inventory. yes. >> well because we take president trump very seriously and because we take him seriously, we shipped a huge amount of agave to texas. we don't need all this agave, but we got it in storage. can't we just. >> grow our own agave at this point? >> no we have. ours is from pueblo, which is really far away, but it's close. but my wife did a good thing. and chuck hawkins, they did a good. >> that was my favorite. i can't

we just grow our own. no, no. >> you have jersey agave. >> you have to keep your. yeah. >> how about upstate new york? >> flint michigan. yeah i mean like no no i mean, it was easy to see that he was going to do this. so you send it, you keep it in a warehouse, it keeps. and you end up making a year's worth ahead of when. now we have one more truck coming, and that's going to have a 25% tariff. we didn't get it done in time, and we all wanted it to get done in time. but you can't rush agave, you know, no agave before its time. >> david. no agave before its time. i know orson welles continues to be your spokesman, i think. is that right? >> well not really. no no no he's not. >> he's not i version. >> of him. we're not we're not a celebrity mezcal. we're a good mexican. good mezcal speak for themselves. good mezcal speaks for itself. >> saul. no fosforo before it's time. >> it's just it's just it's. we kept the $4,040 price point for the for the ensemble. so you can mix the drink. >> all right. i'm going to move us on to the automakers because i do notice tesla shares are down almost 5%. >> that's wrong.

>> is that wrong. >> yeah because that's a domestic. >> well they do manufacture a lot in the shanghai plant. now that doesn't come here. that goes to europe. made there. and obviously for the domestic market in china as well. gm shares are down about six. >> i would buy tesla before i buy some of those others. >> that's not a big surprise given. >> wouldn't you buy tesla for any of those others? gm, ford, they don't even know where they make. >> what to buy or sell. i will say that autos were not a big part of the conversation last week. it was about full self-driving and about optimus the robot. >> but maybe this is why gm sold. >> it's really the central part. >> of the conference. it sells at four times earnings. gm. >> gm sells. >> at four times earnings. it's the cheapest stock. >> now. mr. musk, obviously deeply involved in his doge. and there's been a lot of reporting over the weekend about their access now to treasury and the ability to potentially have information on all the different payees that, i mean, i think there's a trillion different ones. $5 trillion gets sent out by by the treasury every year.

there's some concern about that. well. >> he's got a social security number, but so does. so does beijing. i mean, they both have it. you want to know what to buy? not sure. sing this. fine. i mean, it's just there's a price war there. you buy royal caribbean. the dollar is stronger. they just reported great number. you don't know that the dollar is stronger. you go overseas with it. people love it as a bargain. and it keeps. they keep raising numbers. that's what i like. i don't hear cigna raising numbers. i want raising numbers recently doing great where the dollar is strong and that turns into royal caribbean. so you think. >> you think consumer discretionary survives any full point rise in the cpi. as jp morgan says. >> travel is just unbelievable. it stays strong american express after it comes down a little, the travel insanely, but it's just what we did since covid. it was a major change in our lifestyle and i think cruises

are really the most indicative of what's happened. i think that norwegian cruise i like viking vikings really terrific. these are really do well in a strong dollar. and they have the numbers are too low and buy them right. royal caribbean is an amazing stock. >> goldman's got a list of names that they argue have broad tariff exposure. they're not surprising. goose dick's nike target lowe's rh ford. of course. >> no sea rh is an example of how they work very hard to get out of china. they've done a fantastic job about it. if you sell rh, i think you're selling a company that has been moving so aggressively out of china that should be making a big mistake. but interestingly enough, they had a sell on rh the whole way from 200 to here. and now they're back to putting the hat on again. that's true. why doesn't that guy just go to his beach house, see how much is rh and realize. >> goldman only upped it to neutral last week? >> yeah, that guy's got a hamptons house and it's filled with orange. that's what you did. you filled it with rh. you didn't fill it. wayfair. no

partner is going to fill this place with wayfair. they really get hurt. gary friedman has said over and over again, i'm moving out of china. i'm moving out of china. so this this guy who's hated the whole way, now they're back putting the hate on. you know, i don't like that. >> no, i know you don't like it. i don't like that. guys, i would end with mehta up end. well end here for this period of time. we call a sort of section of the show. i will never be done. but i think that's right. i will end my. that is so great. >> you met. it was down. >> it was. three quarters percent up, 18.5% so far this year. >> jim okay. so this is a good example. meta was down 16 points this morning. someone was selling it. now i look normally i would have called that guy a chowderhead. i am just saying it was ill informed. that was really an incredible incredibly poor sale because it had no it didn't make any sense at all. they don't have exposure and yet the person sold it down. 16 i don't understand that. why sell it down? 16 well it is. what was he thinking or she thinking. >> of the mag seven but.

>> doesn't know. do i want to buy? i don't want to buy anything up today. but i think that down 16 was someone who just panicked. and you never make any money panicking. that person is now saying, wow, i hope no one knows that i did this because i feel really stupid. that's a look you have. first amendment allows you to be stupid. but that person was ill, very ill informed and i don't get that. >> we are back to 5944 isms coming up at the top of the hour. but first we do get some manufacturing pmi numbers. let's get to rick santelli this morning. hey rick. >> good morning carl. yes these are s&p. >> global and yes. >> manufacturing pmi. >> january final read. >> which means we take our mid-month read at. 50.1 and increase it. >> upsize it to 51.2. that would be the best. >> month over month rate since june of last year. >> and it does underscore. >> a couple. of things. we've officially broke. 650 readings in a row, which is what we. >> finished last. >> year. >> with, and.

>> we held up. >> and improved on our january. >> midterm to final read. >> what else. >> is very interesting. >> today is that the. >> longer the maturity. >> in yields, the. >> bigger its increase in. >> price drop. >> in yield. >> a major curve. >> flattening issue. >> going on. >> so right. >> now you're roughly at. 424 in a two year. >> that's up four basis points. >> here at 449. >> and a ten year that's down five. you're at 4.73. and a 30. >> year. >> that's down six. >> so the implications. at least. >> for the moment. >> which will change i'm sure is that what we're witnessing. >> with. tariffs is going. >> to. >> affect the fed. >> in a. way that will make. >> it less appropriate to cut. >> but in the. >> general economy. it's going to weaken it. therefore your longer dated treasury yields are going down. how long this lasts? my guess it will be a short time, but for now it's pretty exciting, at. >> least on. >> the yield curve. and the. >> dollar dollar. >> is flying up three quarters of a cent and squawk. on the street will return after a very

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stocks right to your inbox. sign up now for free at cnbc.com. slash top ten. >> take a look at the s&p heat map. obviously quite a bit of red. looking at some of the leaders in health care and some defensives like kroger at&t procter close to the top of the list. we'll get stop trading with jim as the dow is down 555. with jim as the dow is down 555. don't go (♪♪) (♪♪) what took you so long? i'm sorry, there was a long line at the thai place. you get the sauce i like? of course! you're the man! i wish. the future isn't scary. not investing in it is. nasdaq-100 innovators. one etf.

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from goldman who's talking about a 5% decline. but i do think it's right there. but i do think that there should have been more downgrades. and because transport commerce is going to slow, and the rails in particular, because that's how we get a lot of stuff. union pacific's huge down there. ksu is huge. so those made sense. and i just urge people to remember long day, not a positive day. don't go crazy. get a better price. don't need to go buy visa down to $1 mastercard. there's no need. let them come down. there's no hurry. long day. >> it's a long. it's a long year. it's a long. well, it's a long life. hopefully. he has. >> to get existential. i'm talking about stocks. he has to go get. right. yeah. okay. sure. >> long live. >> you're going to wrap that theme into tonight's show. >> yeah. well i'm going to talk about existential. >> i hope you do. >> i hope you do talk about dollars. i'm a dollar sign represented by a man. now i'm suddenly going to talk about, like, the afterlife. no. you're not the afterlife. yeah, yeah, i'm going to talk about ryan peterson. flexport. oh, yes. because i need you need to know

about supply chain. >> yes, but. >> and then i'll try to work in principles of western religion because i think, david, that would make david watch. >> i would like that actually. would you. >> that's just great. >> i have a little philosophy in mad money. >> it's going to be a busy week, jim. look forward to tonight. >> change it up. >> change it up after 20 years. change it up. >> change it up. >> why don't you change up your stuff? >> change is good. >> mad money. >> £0.06 everyday. >> eastern time. early session lows here. dow down 580. nasdaq down a full. almost 2%. we'll continue our coverage of the selloff after a break. >> for me. squawk box is breakfast with. >> the most. >> interesting people. >> in the world. >> it's a privilege. >> to get. >> to talk to them every day. >> it's more entertaining than any other morning show, but you might get some useful information. >> squawk box weekday mornings, 6 a.m. eastern. cnbc.

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>> from post nine of the new york stock exchange. take a look at. stocks sell off. mode on wall street after those tariffs are imposed on canada, mexico and china. >> the s&p is. >> down 1.75%. nasdaq taking it harder down 2%. and the dow is down 640 points right now. take a look at treasuries. interesting reaction here because there's a lot of worries about inflation. but we're actually seeing after. the short end the five year ten year 30 year yields all lower. right now ten year yield is 4.5. two year yield a little. elevated 4.25. we'll talk. >> about. >> all of it. we're 30 minutes here into the trading session. here are some movers we're watching this hour many. related to tariffs. >> a big leg lower. >> in the autos. >> for instance. gm the biggest. >> loser here, nearly 40%. >> of all vehicles. >> that the company made last year in north america came from plants in canada and mexico alone. you can see the earnings hit that's being factored in. food and alcohol names also taking a hit. piper sandler downgrading constellation this morning on tariff headwinds and. fast casual chains with big exposure to produce like

tomatoes and avocados. namely chipotle and cava. also seeing pressure. and then we're watching the transports loop capital downgrading the entire sector as they write, quote, don't buy transports into a trade war. there's no shortage of losers on this. >> let's get some isms this morning on a busy week. let's get to rick santelli once again. hey, rick. >> yes ism. these are our january reads. >> these are. >> of. >> course ism pmis. >> versus s&p global. on the manufacturing headline expecting 50. >> we end. >> up with 50.9 50.9. >> what's interesting. >> here is. >> that we reversed. 26 consecutive. >> months under 50. yes. now we are back over 50. 50.9 would be the best read going back to september of. >> 22. >> september of 22. impressive. new orders also well. above what we were expecting at 55.1. that would be the best since. may of 22. >> and if we. >> look at. >> the employment. >> side. employment 47.8

expected leaps over 50. 50.3. that would be the best read since. >> well. >> may may. >> of 24. and finally, on the prices paid. >> side. >> we'd rather have these go down. >> but it is. >> a bit higher than expected 54.9 we're looking for a number closer to 5450 4.9. how would that measure up? well, 57 was where we were in may of 24. in between then the lowest read we had was. 48 in september, so still. >> a bit elevated. >> now we also had construction spending come out. carl. that was the december number. it's multiples of what we were looking for, up half of 1% and a positive. >> revision in. >> the. >> rear view. >> mirror from unchanged to up 2/10. up half 1% equals may. >> excuse me equals october of. >> last year to find a better number. well you're going all the way back to april of 24. now let's look at something real quickly here for 24. as sara was pointing out, two year short maturity more aligned with the

fed. that's up four basis points. if you look at a ten year at 450 right now, that would be down two basis points. that actually has moved. it was down more. and if you look at a 30 year bond at 473 it's down six. a major curve flattening. now maybe. >> this will change. >> but it certainly seems as though investors are worried. about the effects of a slowing economy on a long maturity and the inflationary effects on a short maturity. david, back to you. >> yeah. not to mention the dollar, though, which you mentioned earlier. and i know sara is always focused on as well. rick up sharply this morning. correct. >> yes, it is up sharply. we are toying with anywhere from three quarters to up one full cent. you definitely want to pay close attention there. that really throws a lot of confusion in the import export market and all the trade deficit numbers, because of course it makes domestic purchasing a real pleasure with a strong dollar doesn'telp the export side at all. >> yeah. not to mention the currencies of the countries involved also declining sharply

in some cases. rick. thank you. rick santelli all right. let's get over to meghan costello now. she's at the white house, of course with more on the story of the day. it is tariffs meghan bring us up to date as we all try to keep track. >> david it's a fast moving story. and we're just about 14 hours away now from tariffs taking effect. and there is still some skepticism out there that these will ever even come to fruition. the white house telling me just in the last few minutes that negotiations are ongoing today. and trump has spoken already with both mexican president claudia sheinbaum and separately with canadian president justin trudeau. but based on a truth social post after the canada call, it is not clear that anything was resolved in that one. trump saying in the post that canada doesn't allow u.s. banks to operate there and that he is fighting a drug war. so, adding to the list of grievances, trump also says that he'll be talking again with trudeau at 3 p.m. today. now, guys, the other thing we're watching this morning is that we are likely to hear more details

from canada and mexico about how they're planning to retaliate. mexican officials are expected to detail more later today. haven't heard too much from them yet, but canada has already laid out a list of about $30 billion in goods that would be hit with tariffs tomorrow. that includes agriculture, alcohol, some clothing. and it's also talking about some company specific moves. the leader of ontario saying this morning that the province is canceling all contracts with starlink, while chrystia freeland, she's running to replace justin trudeau as party leader, is talking about 100% tariffs on teslas. so the question is whether that sort of pressure, plus any reaction that we see from the markets today will be enough to get trump to change his mind. guys, for midnight tonight. guys. >> yeah i'm megan again. so much to keep track of you know including of course what we think the ask is. you know and i think many people are trying to understand is it really about border security and fentanyl and prohibiting that from getting into the country, or is it more about the numbers? do you have any sense in terms of the conversation and where there might be common ground?

>> just a little bit of sense so far. when the white house was asked by reporters over the weekend what exactly the president would be looking for, they spoke very vaguely about this. they said there would be a wide range of metrics, and that included zero american deaths from fentanyl and only legal immigration. so not the kind of thing that can happen, of course, overnight, but maybe some sort of more money towards border security, for example. the indication so far is that mexico might be doing more to satisfy the president at this point than canada is. he seems to be less pleased with our northern neighbor than with our southern. but i also asked this question just a few minutes ago inside the white house, i was told that we're likely to hear from the president himself later this afternoon in the oval office, again speaking with reporters that he's almost certainly to be asked about this there and that no one wants to get ahead of the president who might speak on this later today. >> okay. i mean, zero fentanyl deaths. i, i don't know how you i mean, that would be that would be amazing. obviously, you know, it's not all opioid deaths are related to fentanyl, but many are. and we have a crisis in

this country. but that seems to be almost an impossible ask, doesn't it? >> an impossible ask. absolutely. and certainly not something that would happen anytime soon. it also seems to be something of a moving target. like you mentioned. sometimes they say this is entirely about fentanyl. other times we hear that this is about the trade deficit, but it's different for the three countries. it's none of these things are things that can happen right away. so i think we have to wait and see whether mexico, for example, comes out with major measures to combat drug cartels and try to contain them. whether canada puts a huge amount of money towards border security, it doesn't seem like negotiations are ongoing with china today in the same way it's focused on canada and mexico today, and we'll have to see whether we see any sorts of announcements from these countries. >> okay. thank you very much. keep us posted. of course, megan cassella, investors hanging on on every word from president trump at this point on trade. and, guys, whether it's the fact that investors are thinking this isn't going to be long lived or perhaps not a huge hit ultimately. i mean, you're not seeing a kind of panic.

>> in the market where. >> you see the biggest hits. we're looking at the foreign exchange market is on our trading partners. mexico's peso down 2%. i mean, that is a very abnormal move for a one day move the canadian dollar. off the. >> lows but still. >> losing a percent. that's who's going to feel it the most canada and mexico. and if you look at some of the weekend notes of where the economists are expecting the pain, i mean, piper sandler, for instance, stood out to me. they think that, first of all, canada and mexico are both going to go into recession the longer this holds. and we're talking about pretty severe gdp hits for their economy. in the case of canada, a 5% hit to their economy and mexican activity would contract 8% if these tariffs last a year. in contrast, piper says, for the. >> us. >> we're looking at what a 2% gdp in 2025 that could be reduced to 1%. and actually a lot of economists say even less than that. so when you look at the market reaction, yes, there are going to be earnings revisions, especially for

sectors and for companies that are exposed. but if. there was really a panic about inflation, you would not see lower treasury yields, which you're seeing on the ten and the 30 year. and you would i mean this is being treated like deep sea last week a little bit just in terms of the magnitude and the sort of scale of the moves at. >> this point. well, the long end yield story today is also colliding with what's happened with doge, where it appears their efforts are quite serious to lower the cost of federal spending. so there is a push and pull, as many desks point out today. >> yes, lower. >> they're serious. then ultimately that would be good for us bonds. >> and what's. >> so interesting is that later this afternoon at 3:00, we're going to get the first announcement ahead of the refunding announcement on wednesday about the size. >> of the auction. >> this is the first under treasury secretary scott bessent. so we'll see if there's any change. no change would be expected and also welcomed probably by the market. there's also this idea, carl, is that, you know, implications for the fed. right. are they going to

have to stay on hold later. maybe that's what the two year yield is telling you. but ultimately, i mean maybe this causes them to cut. >> if. >> there if there's more of a demand shock, if unemployment starts to creep up on some of the uncertainty on this, you know, the fed, i think it would be hard for the fed to raise rates if we see inflation on the back of tariffs. that is not demand side inflation. so you know, it's potentially a sticker shock for americans. but ultimately it could just it could yield lower demand, which could ultimately be good for the story. >> kind of gets to what we talked about with goolsbee last week is what do they filter through the screen in the way of tariffs and inflation? i mean, jp morgan's talking about tariffs potentially adding a full point to cpi. >> i mean, they could but again, what does the fed do about it. maybe it keeps them on hold a little bit longer. but if they raise rates in that environment that's that's not good because it's not being driven by demand, which is what monetary policy responds to. you know i look at currencies obviously huge impact there. and i think what rick

said was important. you know, the strong dollar does help offset some of the inflationary impact of tariffs. >> without. >> a. >> doubt because it helps americans when we do import, on the other hand, it does hurt all of those companies that sell exports abroad having that strong dollar. so that that's part of the argument that the trump team does. >> the trade war, by the way, doesn't help them either. >> doesn't help. but i think what the currency market is telling you above everything is that they get hurt worse than we get hurt. sell all the other currencies, sell china, sell india, sell europe, sell canada, sell mexico because their economies will feel it. us obviously has the leverage in this trading environment. so i look at currencies i look at bonds. you know guys i also focus on the consumer. and plenty of consumer names are exposed. i think bank of america did a good job showing some of the names in particular on china percentage of u.s. sales sourced from china, flora and decor holdings really high. i mean, this is going to be an increase, right, when they have to bring imports from china, target 30 to

35% of its sales. o'reilly automotive, dollar tree, williams-sonoma, walmart, academy sports and costco. you know, some of the companies have already been talking about it. canada goose has said in september, a significant portion of our product is made in canada. constellation brands. we've been talking about this 175% of total imports, u.s. denominated, many of them crossed from mexico and then whirlpool. this one surprised me a little bit on production volumes. more than 80% of what we sell in the us is produced in the us. the remaining 20%, though we don't split up, but directionally put it half and half between china and mexico. a lot of these producers have moved production from china to mexico, thinking that it would be better to be close by and with a friend. >> right. and then the automakers as well have parts that go back and forth across the border, in part because of the last trade agreement that was negotiated with the previous trump administration, which is being overridden by this emergency decree. we should point out that that the

president is using to impose these tariffs. >> it's exactly right. meantime, our next guest says the tariffs have sustained could hit s&p earnings per share by roughly 2 to 3%. and that's not taking into account any secondary impacts like tighter financial conditions or consumer changes. david kostin joins us here at post nine this morning, goldman sachs chief u.s. equity strategist who has a pretty nice list of some 40 odd names who you argue have broad tariff exposure. we name some earlier today. >> yeah. >> carl, this. >> is a. >> big question. >> comes as a surprise. >> i think a lot. >> of the portfolio. managers with whom we. engage were anticipating this idea. of threat of. >> tariffs would end up being. >> a cudgel. >> and for negotiations. but we. >> did an analysis. >> to try and understand what. >> the potential. >> impact might be. >> if the tariffs were to be sustained. >> and the impact basically. >> has an impact. >> on earnings and also on valuation. and so the earnings impact. >> as you indicated. >> probably would reduce. >> our. earnings estimates by. >> in the range of 2.

>> to. >> 3%. relative to our baseline. and then when we think about. >> the valuation. >> of the us equity market there's a impact. >> on higher. >> equity risk premium uncertainty. and that lowers the valuation. >> so the. >> impact in. aggregate between earnings and. >> valuation would be approximately 5%. >> again that's a scenario based. on the current information we have. and obviously. that's a fluid situation. >> could it be offset by tax cuts. >> well anything's possible on. tax cuts. it depends on how that nature. >> of that. >> takes place. that may not happen until next year later in the year. maybe that's a 2026 story. >> so there's a lot. >> of moving parts. but when we isolated the issue. on tariffs particularly, that was the impact. >> so does it alter your playbook at all. do you move your targets. what do you do? >> i think one of the. things that. >> was. >> most interesting, carl, we just came back in the last two weeks, we were in asia and we were in europe. we met with portfolio managers in hong kong and singapore and london and tokyo, you know, across the across the spectrum. and one of the things that was surprising to us. >> and all.

>> my colleagues in the macro research area is people are more optimistic today regarding the us equity market than they have been in the last decade, even though the stock market, as you know, is up 20% annually in the last couple of years, people are more optimistic. and it has to do with this view of american exceptionalism. and what is the source of that exceptionalism. >> is the reinvestment rate. >> so, carl. >> if you. >> think a couple of numbers in mind, the rest of the world, around 26%. >> of the cash flow. >> of companies is reinvested in their business. >> in the. united states. >> it's 42%. and specifically with respect to the magnificent seven, it's 56%. so the idea of a much higher reinvestment rate is the source of this exceptionalism, and why investors around the world are so optimistic. >> about us equity market. >> when you look at the hit on earnings that you just spelled out with 5% on earnings. >> 2 to 3%, sarah, with respect to earnings, maybe 2 to 3% impact on valuation. >> where is that coming from. is that higher costs for companies. is it demand destruction. >> well, when we run through

the. >> model. >> the different inputs that we have, it's a sort of a combination of both. inflation is one aspect that tends to, you know, have a sort of negative impact. and then the idea of potentially less revenues if prices go up and the consumer buys less, and it could be on the margin squeeze to the extent that companies choose not to either cannot or choose not to pass that through the to the. >> i'm just asking because last time around during inflation, they passed it on to the consumer, and the consumer absorbed it pretty well. and it actually wasn't that bad for earnings. >> well, we'll we'll see what happens in terms of the scenario when we run through the models. it would suggest that that's a, you know, a diminution, partly because you have less gdp growth in the model of thinking about, you know, economic activity, the idea of higher tariffs would be reduction in economic activity, roughly maybe half a percent on gdp. and that would suggest there's less revenue and also marginally. >> lower than maybe the fed cuts. and maybe that's good for multiples. >> there's a whole variety of

scenarios that one could one could envision in terms of the second order implications. >> have you factored in the strong dollar and what that's going to do for earnings? >> well, that is an expectation we had as a baseline anyway that the dollar would strengthen. it has been strengthening and we would expect it to strengthen during the balance of 2020. it's also hard to predict at this point. things could just, you know, get better very quickly in terms of putting off any real trade war. and or they could deteriorate markedly. i mean, are you expecting more volatility? well, it's an excellent point in terms of the idea of a lot of scenarios could happen in terms of timing, in terms of implementation. europe could be there as well. europe could be next. but the idea of volatility and the opportunity set there is that yes, we would expect volatility to go to go higher. and uncertainty that's the source of the of the higher equity risk premia. with respect to the valuation of the market. >> when you were on your travels, did you find that sentiment about europe was bottoming, as had been suggested by some in davos? >> that is definitely not the

case. you go to europe and you go to asia. even in the home regions, usually there's a bit of a home country, home region bias. only 3% of the portfolio managers in europe expected that europe would. >> be an outperforming. >> market this year. i mean, it was really a real dearth of excitement there. and it was all about the united states. and it was a function not just of the magnificent seven, but the idea that the us companies are reinvesting so much more in their businesses compared with, you know, companies around the world. >> right. those numbers you gave are pretty interesting. a lot of research out today, and we'll be leaning on it heavily. david, thanks. thanks. good to see you, david costa. >> as we. >> head to break. here's our roadmap for the rest of the hour. we are all over every angle of the tariffs. new and exclusive results of our cnbc flash fed survey on how it could impact inflation and gdp. >> plus, we're going to have a closer look at which u.s. states are going to be most impacted by the tariffs. >> and up next, demand will collapse. vehicle production will grind to a halt, millions will be out of work. that's according to the ceo of one of

the biggest auto suppliers in canada. she'll join us next with her. read from the ground as we do have session lows now. nasdaq do have session lows now. nasdaq down 2.5%. ♪♪ [inner monologue] this is going to sound crazy. but i know these attack vectors. oh, had a little upgrade have we? ♪♪ okay, so that's how you want to play. ♪♪ >> life gets chaotic. >> we're always short on time. but quality meals non-negotiable. that's where omaha steaks comes in. >> they're individually wrapped. >> quick thaw. >> meats make meal. >> prep a breeze to taste unmatched. they guarantee 100%. satisfaction with. >> omaha steaks. >> everyone eats well, even when

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our next guest is not mincing words when it comes to the impact of those tariffs, saying nobody can absorb these kinds of costs. the man will collapse and vehicle production will grind to a halt. let's bring in linda hasenfratz. she's linamar corporate executive chair. linamar is canada's second largest producer of car parts. nice to have you here. well, you said those things, so i guess the follow up would simply be. why do you believe that will be the case? >> yeah, well. >> when you look at. >> a car, a highly engineered product, like a vehicle, the products that go into. it take months and months to tool up, buy the equipment, test and validate before they can be put into a vehicle. so it's simply not something you can turn on and. off a switch and decide, i'm going to buy this clutch module in the us instead of canada or mexico. so what that means is our customers, the

automakers, are going to be forced to pay these tariffs for an extended period of time. it could be 12 or 18 months before they'd be able to resource, and billions of dollars of cost to make it happen. when you consider how integrated the automotive industry is across our three countries, given the decades of free trade that we have built this industry on. so unfortunately, it's going to mean an enormous amount of cost being added to the cost to make a vehicle, and our customers are going to be forced to decide can they absorb it, which i think the answer is no. certainly the. supply base can't absorb it. they can try and pass it on to their customers, the consumers, but i suspect there will be pushback from there and demand will cease. and hence my prediction that we're going to see automotive production grind to a halt just as soon as inventories run out, which won't

take long. a matter. >> of what is a matter of what. i'm sorry i cut you off. then you were about to tell me, how long is it till inventories would run out? >> well. >> it depends on the vehicle platform, obviously, and how much inventory they have in-house of various supplied components. but, you know, you can't build a car unless you have all the parts. so it's going to be the, the whatever where they're shortest in supply of. that's going to be the time frame. it could be it could be a week. it could be two weeks. it depends on the level of inventory. but the industry tends to run on low levels of inventories. so i imagine it will be quite soon. >> what's this going to mean for your company. and i ask that with the information being as well, that i think very recently you announced the plan to put as much as $1 billion in additional spending towards your operations in canada, adding jobs, potentially more components that wouldn't seem to be the kind of investment you'd want to make in

this environment. linda. >> yeah. i mean, when we make decisions around manufacturing footprint, we make them on long term fundamental topics. so looking at costs, obviously labor ability, skills, talent availability in a region, you know, these are the important long term fundamentals that you make a decision on. you can't make a manufacturing footprint decision on something as short term as a tariff, which as we can see can be imposed tomorrow and removed two days later. that's not that's not how you make good manufacturing footprint decisions. that's not how you run a business on something that can be changed on a whim. you have to make it on long term fundamentals, and we have great long term fundamentals here. we have our deepest talent base in the world, likely because we started here and we have the deepest talent pool. we have our most

productive facilities, probably for the same reason because we've have that deep talent pool. we've got one of the cleanest energy grids in the world. we've got great access to. suppliers. >> the point, doesn't it, linda? if you're thinking, if you're thinking long term, then i mean, i think the current administration, the president would argue, yeah, there may be some pain in the short term, but ultimately longer term we'll get past this. you seem to be indicating the same, despite your prognostications for, obviously, a significant decrease in demand in the short term. >> i think that the short term nature of tariffs is that they can't be left in place for an extended period of time because of the negative impact. i mean, we can't not make vehicles in north america for very long that that has huge impact in terms of layoffs of people across the continent, the majority of which would be in the united states. the majority of automotive

workers and parts workers are in the us. so american workers get hurt the most. and i think that's not a good thing for america. so, you know, we need to we need to work through this and get back to back to the trade situation we have. we have one of the most balanced trade portfolios in the world between the us and canada. it's like 85% efficient. there's, you know, a significant amount of product being, you know, from the us to canada, more so, in fact, than what ships from canada to the us and a very, you know, the second highest balance of trade between the us and mexico. so let's get back to that. i mean, when do you ever make something stronger by breaking the links in a chain, like, let's collaborate more and figure out how we can get more of a global pie. you know, last time i checked, only 20% of global automotive production was and sales were in

north america. 80% is outside of it. why don't we go for that market instead of trying to destroy something that we have here in north america that's working exceptionally well? >> linda. now we have this post by mexican president sheinbaum, who says she had a good conversation with the president and reached a series of agreements, one of which says that mexico will reinforce the northern border, their northern border with 10,000 members of their national guard, to prevent drug trafficking. as a result, she says, they are pausing tariffs for one month from now, assuming that translation is accurate. that might explain the bounce we've seen in stocks here intraday. i wonder what you make of that and how supply chains will manage deadlines that are at 30 days apart let's say. >> yeah. so i mean it's this is obviously a very fluid situation with things changing. i think it's fantastic that mexico is

focusing on their their border. i think canada needs to do the same for our own reasons as well. i mean, i think that kind of investment is really important for, for all countries. so clearly a fluid situation and we'll simply need to be reactive to it. i think that. are you in touch? sorry. >> sorry to cut you off, but are you. >> in touch with your own prime minister and the leadership in canada about how they're dealing with it? because it feels like they haven't been dealing well with trump since he, you know, first went down to mar a lago. yeah. i mean, i of course, i and many business leaders are trying to provide advice and counsel as best as best we can. and i think the government has a measured approach. they too, from my understanding, have plans for interactions with the trump administration today. so we'll see where things go. >> linda, we certainly appreciate you taking time with

us. and, you know, we may want to check in along the way here depending on how long this goes on for. thank you. >> my pleasure. another sector getting hit today is nuclear related names, given their need for uranium. and canada is the second largest producer of uranium in the world. some of these names down 2 or 3% or more on today's biggest movers. after a quick break as we cut our losses, the dow down 200 points off maybe the back of that headline that that carl just shared from mexico's sheinbaum saying tariffs delayed for a month. the s&p down now only 1%. a little less than that. we'll be right back. >> bitcoin is the best. performing asset. but its volatility has kept many. >> on the. >> sidelines until now. >> introducing the world's first suite of. >> downside protected bitcoin. >> etfs capture bitcoin's. >> upside potential. >> with downside protection. with 190 or 80% protection

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searching and more time connecting with candidates. visit indeed.com/hire legacy. >> weeknights. >> the story is the fed's going to have our backs if things get weak. i see inflation coming down. housing costs are coming down. supermarkets are getting slightly better. oil is pulling back. auto prices going lower. that's the data. i like the data. >> mad money, weeknights 6:00 eastern. cnbc. >> welcome back. >> to. squawk on the street. >> i'm silvana henao with your cnbc news update. the army's complex operation to remove the wreckage from. >> the commercial plane that crashed into the. >> potomac river is underway. >> this morning. local and state officials. >> promised they will recover the remains.

>> of all. >> 67 victims who died after the jet collided with a military. >> helicopter last wednesday. >> so far, 55 victims have been located. meanwhile, staffers at the u.s. agency for international development, or usaid, were told to stay out of the agency's headquarters today. a memo told employees to work remotely. and it comes hours after elon musk, the head of. >> president trump's. >> government official. efficiency initiative, said the foreign aid agency would be. >> shut down. >> and russian media reported today a senior paramilitary leader from eastern ukraine was killed in a bombing at a luxury moscow apartment building. ukraine has long accused the man of aiding russia's war effort. russian state media called the blast a carefully planned assassination. >> carl. >> silvana, thanks. watching the nasdaq this morning, where the losses have been cut roughly in half. we're going to break that down on the back of these posts from the president of mexico in from the president of mexico in a moment.

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resale shop, now. >> with. >> code tr20. >> for 20% off. >> terms apply. >> well, the bulls were definitely on watch for any headlines that would create some upside reversal. and in fact, we did get this post a moment ago from the president of mexico suggesting that tariffs against mexico would be delayed for a month after making some efforts to increase the troop count on their northern border. she's speaking right now in spanish. i don't think we're going to take that full, but looking at some sectors, you can definitely see the dramatic reversal in names like homebuilders, for example. sarah. >> and energy too, which is higher health care communication services staples have all turned up. look i think it tells you a few things. number one and something maybe the investors were hoping for and why you didn't see a bigger negative reaction this month or this morning is that there's scope for negotiation here. and it's bringing canada and mexico, certainly mexico, to the table. number two, i think it puts the onus on mr. trudeau, who has not

been as savvy as a negotiator with president trump. as president sheinbaum has, who clearly bought herself a month. the fact that there's talking, there's open communication, there seems to be willingness from the trump administration to hold off, potentially delay and maybe even cut the amount of tariffs that's being considered a good thing by the street. >> all about the all about the drug war in this case, nothing about trade deficits or investment in the us. >> it's pretty clear. >> about that. and migrants as well i guess. i mean, that's all mexico. the argument about fentanyl at the canadian border. they're making it, i guess, you know, i don't have the numbers other than what's been interdicted, which is something along 43, 40 or so pounds of fentanyl versus tens of thousands at the mexican border. >> i mean, the data that goes to say, through the end of 24, you're looking at 70 pounds from

canada and some 67,000 pounds from mexico. for more on the fallout, though, regarding these headlines, let's turn to our senior economics reporter, steve liesman, who's also got some flash fed survey. hey, steve. >> yeah, i just got the phone with the white house. karl and i can confirm the white house is confirming that the mexican tariffs will be delayed by one month. did not get much opportunity to talk with the official, but the official did confirm. cnbc can confirm that the mexican tariffs will be delayed by one month. so what the mexican president, sheinbaum said, is accurate about this one month delay. let me just turn real quick. karl, do you want to talk about that or should i move on and talk about what the survey says about the economic impact of all this, steve? >> for sure. >> so it is hard, karl, as you may know, to get economists to agree on anything, but they're united in believing that tariffs on china and mexico and canada will reduce u.s. growth and boost inflation, though they disagree on how much every one

of the 20 forecasters we surveyed in a cnbc fed survey over the weekend predicting lower gdp in 2025 with an average of -0.6%, all but two forecasting higher inflation in 2025. prices are expected to rise by an average half point above what they otherwise would have been. the range of impacts, though, does go from -0 one. in other words, a pittance to a very substantial -2% for the cpi. the range is, as i said, a couple guys came in at zero and the upper end is 1.5%. john donaldson from haverford writing in with the survey. to my knowledge, there has never been a happy outcome from a trade war. allen sinai says we have entered dangerous, uncharted territory here. key to the impact is how long these tariffs may last, or when they take effect, with the most believing they'll be short term. you can see most people think they'll be below. they'll be lower than six months or only last about six months. after that. a few say a large chunk say they don't know. cnbc asked the white house if there had been an economic

analysis of these tariff impacts, and they responded that the focus was on fentanyl deaths, which don't have a price. they sent a background sheet with no numbers. but it said in part, quote, tariffs strengthen the american economy, raise wages and create jobs. they bring back manufacturing to the us and reduce trade deficits. kevin hassett, the president's top economic advisor, saying on squawk box this morning that this is a drug war, not a trade war. he added that he is preparing economic analyzes that take into account all of the president's proposals, not just tariffs, and that he expects they will show a positive growth impact. we'll be talking about some of this stuff with susan collins, boston fed president, at the top of the hour. guys. >> i think that will be important, steve, because the question is how does the fed deal. so now i don't know what you think, but it looks like this is a sort of one off. it's not a gradual increase in tariffs or at least at the moment. and so that should lead to some sticker shock for americans. but it would be hard for the fed to respond to that

if it's coming from tariffs and not demand side inflation. i think the bigger risk is that the unemployment rate rises and all the uncertainty and potentially new business decisions, and they would have to respond to that. >> i think you just laid out a great case, sarah, and i think you agree with me that the fed needed to pause in january and maybe pause again in march. here we are on the eve of what we thought were going to be tariffs on canada and mexico and china. and now we don't have the mexican tariffs. so they're going to be delayed at least a month. you saw the range of forecasts out there from 0 to 1 and a half. when it comes -0.1 to -2 when it comes to cpi. so these are very, very difficult things for the fed to come in. they don't they cannot play politics but they also can't. they have to forecast the politics of all this which are very difficult. i think you're right. there's an unemployment aspect to this. and by the way, there's also a recessionary aspect to this. one of the reports i read over the weekend, sarah, said that a mexican with

the tariffs, a mexican recession, is now the base case. so you have to think about that as well. yeah. >> yeah. steve thank you. i want to refresh for our viewers, of course, and your reporting as well a part of this, the white house, obviously having confirmed the one month delay in mexican tariffs as a result of perhaps as many as 10,000 of their soldiers there it is from the president himself in a truth social post, 10,000 mexican soldiers will go to the border and specifically designated, writes president trump, to stop the flow of fentanyl and migrants into the country and therefore that pause of one month. so that is being that is being confirmed by the president, who goes on to say that there will be negotiations during this period headed by secretary of state, secretary of the treasury, and yet to be confirmed, but assuming that will be done soon, secretary of commerce howard lutnick and representatives of mexico. so some positive, some positive

comments, positive developments and being reflected of course, with an s&p well off the lows of the session now down some 0.6%, nasdaq down about 1%. what does this all though going to mean for the global supply chain overall. well let's turn to lori ann larocco. she's our reporter on that has more on the states that could see the biggest impact lori ann. >> yes, yes. david. so when it comes to the states that are going to be impacted, it's actually the businesses, right, that that reside in those states. and we've got fresh data here for the audience. according to research firm trade partnership worldwide, they actually compile all of this data from customs. and so the business of the states in the states of texas, california, michigan, illinois, ohio and georgia, they will be paying the most tariffs, tariffs. texas actually tops. >> that tariff. >> list at $47 billion. now, based on what companies paid in tariffs from june to november of last year, the new rates that

will be imposed will actually add on an additional $233 billion in tariffs. this translates into a whopping $700 million in extra taxes. u.s. companies will start paying, at least for canada, starting on tuesday. >> have we heard anything from the governors, or especially the ones that are i mean, texas at the top of the list, republican governor, who's very pro-trump. i mean, our governor is going the other way on the tariff issue. >> we sara, we have heard a lot of, you know, a lot. >> of. >> rhetoric from from a lot of the governors, particularly over in michigan. michigan's going to get walloped a big wallop to the wallet. their companies are going to pay $60 million a day in new tariffs on auto parts used to manufacture vehicles in the united states. this includes about $20 million a day on imports into michigan alone. and so it's, you know, and that

doesn't even add on to the fact that, as you know, cars bought back and forth between the mexican and canadian border and even up in canada, down to the united states. and so every time a vehicle passes through for the manufacturing process, it's going to get tariffed. >> i do wonder how this plays politically, you know, because if people start to get hit and they face, you know, job cuts or wage cuts because of auto production, look, trump, this was not a secret that he wanted to do tariffs and that this was a big part of his strategy. and in fact, americans liked it because they see it as fighting for national industry and domestic production. but if that doesn't come, i do wonder, carl, how that plays out. >> yeah, it is interesting. the uaw has a statement out this morning saying they support the use of tariffs to protect american jobs and prevent plant closures. lori ann, thanks. we want to check in with megan cassella at the white house as well with an update. what a busy morning. it's already not even 11 a.m. eastern. >> megan a very busy morning. carl. yes, just confirming that news that we first heard from

mexico's president, claudia sheinbaum, that those tariffs only on mexico will be delayed by one month. now, mexico giving us a little bit more than the white house was giving us both sides, saying that mexico is committing to 10,000 troops at the border that will be specifically focused on fentanyl. mexico also saying that the us is making some commitments to stop some weapons heading over the border into mexico, and both sides also talking about the commercial deficit, the trade deficit, saying that talks will be ongoing between officials on both sides to try to narrow that just a little bit. i thought the last line of president trump's truth social post on this was interesting, saying, i look forward to participating in those negotiations with the president as we attempt to achieve a quote unquote, deal between our two countries. so still leaving the door open there for something to happen within the next month to potentially waive off tariffs entirely or potentially put them back on. and guys, i would flag what a difference in tone on this readout on the mexico call versus the readout that we were talking about earlier after the canada call. after that canada call, he was out there criticizing canada for not allowing u.s. banks to operate

in the country, sort of a long standing concern of the president up there also saying there's so much going on that he's fighting this drug war with canada and having to talk with trudeau again at 3 p.m. so clearly a big difference in tone here. so relief on one end one month until those mexico tariffs are imposed but still up in the air as to what's going to happen with canada guys. >> meanwhile, megan, over the weekend, we heard from a lot of lobbying groups, the u.s. chamber nahb, the homebuilders, the distilled spirits industry all decrying the use of tariffs. you had chuck grassley today asking the president to consider exemptions for potash, looking out for his states. what kind of weight do those those statements carry? >> i don't think they carry all that much weight, especially when the president has something that he wants to get out of this. we have always heard those sorts of concerns. in the first term, we were often hearing from some republicans who are sort of more free traders at heart, as the party once was as a whole. and none of that really was something that we saw president trump react to. for grassley. i

thought his statement on potash was interesting because he knows as well as anyone that the way that farmers get hurt in this is the retaliation. it's not necessarily the initial tariffs that are really going to hurt the agricultural sector. so that kind of thing is not something that we see trump react to. if we started to see more specific retaliatory measures that were going to hurt specific states, specific districts, if we start to see a real downfall in the markets, that's the kind of thing that we might see trump react to more. but i think individual statements, he kind of lets them shrug off. maybe he hears people out, but it's not the kind of thing that often changes his mind. >> yeah, yeah, even a lot of the economic modeling doesn't take account of retaliation. megan cassella at the white house, thank you. coming up on money movers this morning, an exclusive. you don't want to miss. boston fed president collins breaking down what all these tariffs might mean for the fed's rate path. she's going to join us in less than ten minutes.

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we lead it. gina costa... looking simply stunning... what's this? she's opening her fidelity app.... to buy that stock... with no fees or commissions... because what does gina got? gina's got the look. that never gets old. talk about easier investing. gina costa... looking simply stunning... what's this? she's opening her fidelity app.... to buy that stock... with no fees or commissions... because what does gina got? gina's got the look. that never gets old. talk about easier investing. dream office a. >> reality. >> well. >> for now, tariffs appear to be a dream deferred, at least for a month regarding mexico. and that has hardened the bulls somewhat intraday. mike santoli is here watching these crazy intraday charts. >> yeah. >> and cut the losses. >> intraday in half in the s&p 500. >> and honestly also. explains why.

>> even the. >> initial response. >> was in some. >> respects pretty measured. >> the s&p. >> 500 sure we stepped down kind of repriced a percent and a half lower. but you. >> were only back. >> to levels of two weeks ago. there absolutely was in the market a sense of you don't want. >> to necessarily. >> lean too hard in the direction of risk off, because you could get a headline relieving the immediate tariff. pressure and you get a rally. it's a familiar game. but of course, it also revealed the playbook, right? which is, you know, buy long. term bonds. that's what in aggregate what happened. because maybe there's a little bit of economic risk. and obviously. >> there's some. >> parts of the market. >> insulated metal. >> was the. >> biggest upside contributor. >> in the first. >> flush of the open. that shows you the market still wants to rotate away from from danger and keep things together if possible. and i think in general too, i mean, investors overall view the whole kind of tariff momentum. as kind of a war of choice that they would prefer not to have to play, but you're going to have to navigate around

it. and, and, you know, you have to have a theory. >> of the case as to. >> whether it's an indefinite thing. >> but it's. >> going to hover. >> over this. >> market too. so i think. >> that's. >> the other interesting part. you're never going to basically. relax entirely that this is going to go away. >> i mean, i it does remind me a little bit of the conversations we were having last week around deep sea. completely different issue. but it was like, okay, well that that's going to hover. we're going to know that they can do that competitively cheaper. i wonder between that and this as overhangs for a market that is at record high. what that setup looks like. >> yeah, it's fascinating sarah, because. >> it sort of compromises. >> a couple of the main. >> premises coming. >> into this year. as to what the upside drivers could be, which is, you know, kind of corporate friendly policy combined with the i theme that just had a long way to go. it feels as if an upward biased market with a little more volatility, a little more reliant. on kind of erratic flows from from retail in the thematic trades and obviously

this, this sort of. policy risk. >> out there in an underlying economy that seems pretty good. >> is kind of the rule. >> mike. thank you. all right. mike santoli. of course as we continue to monitor as mike market as mike said is well off the lows, whether it be the s&p, nasdaq or the dow as well. a lot nasdaq or the dow as well. a lot more market coverage for you (grunting) at morgan stanley, old school hard work meets bold new thinking. ( ♪♪ ) partnering to unlock new ideas, to create new legacies, to transform a company, industry, economy, generation. because grit and vision working in lockstep puts you on the path to your full potential. old school grit. new world ideas. morgan stanley. top line? this is a quality, comprehensive exam. come again? you asked me to topline it for you. okay. bottom line? well, the bottom line is this is an amazing value.

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securely linked to your brokerage accounts. become a smarter investor with the power of cnbc pro. go to cnbc.com slash get pro now. >> good monday morning. welcome to money movers i'm carl quintanilla with sara eisen here at post nine of the new york stock exchange today. tariffs shake the markets. but we are off the session lows. as you know just within the last 30 minutes the president of mexico sheinbaum said she spoke with president trump and that tariffs are delayed for a month. what's next for canada and china then? and how is europe thinking about the president's threats? we'll talk about it. >> plus as tariffs spark inflation fears, what does it mean for the fed and the path for rates. boston fed president susan collins is with steve in just a moment to help answer that question. >> you can see the intraday turnaround here. we were down 2.5% on the nasdaq. that is clearly reversed to a 1% decline s&p and dow even less than that russell was down 2%. plus that's reversed. and then the ten year treasury was