getting a little about it, no, we don't want anybody else. we want you. apparently reports say he will speak directly to congress which i think is probably the right thing to do. if he doesn't he opens himself up. stuart: when he testifies we will cover him wall-to-wall. you will get no argument from me on that one. neil, it is yours. neil: he is kind of a monotone guy. be careful making that leap. i'm saying. thank you very much, stuart and ash. we're couple of other developments, soaring stock market, facebook, other technology stocks are doing just fine. we're getting indications that the chinese are set to to roll concessions to the united states. 1% of their overall semiconductors are bought from the united states. we have argued you can certainly afford to buy more than that we are the world's leader in the technology. that is apparently much of the attention is being focused. whether they buy twice as much

as they had before, three times as much, you get the drill, would be two to 3% from the 1% they're buying. it would be a move in that direction and follow indications from other sources they are moving to satisfy u.s. demands they sort of share the trade wealth. we're running about a a $375 billion trade deficit. in you look in other goods and services, he wants that cut by $100 billion. i don't know if semiconductors alone can do it. the chinese are trying to look at a way of satisfying a the president's demands, the president long argued, i will raise with the pan kneltists -- panel its. he is getting his way right now? "wall street journal" editorial board member, mario grade is

here and deneen borelli and last but not least by buddy charlie gasparino. that is his premise, charlie, they need us and they need us badly and they are blinking here. are they? >> yeah, maybe. i don't know how much of a blink it is. how much does it move the needle? is it enough? the markets will take this postively. anything that stops a real trade war, us putting tariffs on them, them putting tariffs on us is a big positive for the markets. what you have is tax cuts coming and deregulation without the drag of a trade war. neil: right. >> but you know just in terms of reality if they pie a few more semiconductor is, move the needle trump wants to move? neil: is that 100 billion in the scheme of things? having said that doing research for all of this, knowing all you smart people are going to be here i had to do my part, almost every major western power has

some protections built in that disproportionally really gouge the united states. in china's case, 25% tariffs on, for example, automobiles. so right from the get go we talk about his response being draconian, start as trade war but you can see his premise that they long started this trade war. we imposed 2 1/2% on cars that come from abroad. china's included. so he does have some right to say what he said but are you worried about where this is going? >> i'm not worried about it. first of all no one want as trade war but when you think about president trump says and how he says it, he usually goes broad and big and there is the overreaction especially from the liberal media and he narrows his focus. china is the focus. neil: you mentioned liberal media, i talk to a lot of liberals who were surprised to hear when i just mentioned what do you think of 25% tariffs on goods coming into your country?

i'm absolutely aghast at that. i'm opposed to that china does that, germany does that france does variation, italy my people, i was shocked. i almost wanted to disown. it is common, very common. >> think about it, he is educating, you mentioned the media, he is educating hard-working americans as well. who knew it was that bad with china and tariffs how they have unfair -- neil: but is this the proper response? >> to talk about tariffs? neil: yeah. >> talked about them. he talked about exemptions with mexico and canada. other countries want to come to the table like japan. just talking about it, whoa, whoa, what is going on here? china, they're watching. this is not business as ususual and politics as usual with president trump. they get that now. now they want to come to the table to hammer this out. i think that was the plan all along, to get these countries to come to the table. it has been unfair on the u.s.,

for way too long. neil: like people who look at a lone deal that they have, realize that the bank is gouging them. all of sudden, this guy in the world is labeled a nut, he might still very well be a nut but they're saying wait a minute, he does have a point. argue against that actually i don't i don't agree he has a point. first of all, the benefits of trade liberalization go to the liberalizer. if there are 25% tariffs on things going to china, the people harmed are chinese. neil: but the chinese are enjoying a huge surplus with the world. >> the chinese people. and -- neil: you think the chinese care? >> the chinese people can't -- neil: chinese government, if you're sitting on all the money and -- >> look, neil, the fact of the matter trade deficits don't matter. we sell things to them. they take, they get dollars from that. what can they do with those dollars? they can wallpaper their rooms or send those dollars back here.

>> which is what they're doing. >> what they do. now if the u.s. government ends up taking the money and becoming the hog at the trough, that is our fault. we have to deal with that but that economy could come back here as investments, as more capital and more capital maersks americans richer. >> i worry, we're fighting yesterday's war. i disagree with all due respect, deneen. i love you. i love your husband. >> i love you. >> people know what china has been doing for years. we try to get to their market. we cut deals with them so we get access to their market which we do sell a lot of stuff to. the other thing i worry about -- neil: you don't worry about it being an upside down relationship? >> we're trying to change that. >> going nowhere fast. >> i don't know about that the agricultural industry and a lot of other industries would disagree with you. but the other thing i'm worried about we're fighting yesterday's war. again our economy has adjusted. there has been displacements,

obviously. nafta created displacements, net-net it created more jobs. displacements in the industrial middle west, in pennsylvania for example, steel doesn't produce a lot of jobs anymore. okay, yes, we are up against cheap steel being dumped by china but here is one thing thaw forget. even if we created more steel jobs, that will come at the, that will hurt other jobs right? because they're going to be paying more, people, the car manufacturers, are going to be paying more for steel. >> it will hurt the manufacturers. >> the other thing, neil, steel is an incredibly automated industry. neil: it is beyond steel. i understand what you're saying there but i more agree with deneen. i'm just saying that i think there is something where it says, i don't know if responding tit-for-tat is the answer. i think you raise a valid point there, but i will say this, if you look at our trade relations, we can't fight fairly. like a one-armed paper hanger

with all these guys have built-in advantage in their market. >> if they're sending cheap inputs and using those to become the most competitive manufacturers in the world. neil: but we're not. >> we are not competitive. neil: not to infiniti. >> metal fabricatetores reporting that steel made in this country, contract pricing has been up 35%. we had a report of that last week. that is from a u.s. steel manufacturer. so the protectionism -- neil: what do you say about that? whining unnecessarily? >> they're going to gouge their customers. they're already doing it. neil: okay. >> neil, here is the other thing with china? what about the intellectual property. >> that is whole other story. neil: let her finish that point. we'll hear your point. >> in regards to that, who really knew it was to that magnitude in order to do business in china they need to know what your technology is, your other trade secrets. you know that is -- neil: american companies including apple have been happy to share them. >> that is wrong.

>> there are ways to deal with that. you don't have to go into the china shop and break everything on the shelf what he did by going after mexico and canada and the eu. neil: but he lightened up on canada. he lightened up on canada. >> and mexico. >> he announced exemptions for all of them but with no concessions which makes him look weak. neil: this otherwise crazy behavior, seriously, a lot of impulsively he does really nut at this things. when i looked at this, i'm not sure to your point, mary, the way to go about it, it is an uneven playing field. i certainly see your point as manufacturing country we can't be what we once were. >> we can be better and difficult. neil: we can be better. what i like to play out here the sense foreigners are now reassessing things and reassessing the type of trade pacts. >> we did nafta, you're pretty much up on this, we did nafta because we wanted to blunt asia's emergence, dominance of

china. what does he do? he goes after our trading partners in nafta. talks about getting rid of nafta. nafta was the trump opening up these markets so we wouldn't worry about these instruments. >> the trans-pacific partnership was to blunt power of china. what does he do? blows it up. there is no strategy. i'm sympathetic to the intellectual property issue. i think there are targeted way those go after that, but he has gone out there made all these announcements having to backtrack without any concessions and he looks weak. neil: you could flip that around say, all right, his cozy relationship with xi xinping, the chinese premier, leader for life, when it started out he wouldn't challenge him on anything, he challenged him on this, ditto with vladmir putin. he had a very cozy relationship. a lot of people said he wouldn't say boo to putin about anything because there was wink and nod, well, maybe he owes it to putin.

lo and behold he kicks 60 ambassadors and diplomats out of the country. were you surprised by that and the fact that the president is willing to test consensus that he would talk tough but not be tough? >> the chinese and the russians have not been our allies. what i'm saying -- neil: he is responding. i thought you would welcome that? >> yes, but what i'm saying why did he go out and pick fights with mexico, canada, our allies in europe, with countries that are playing by the rules and helping us -- neil: first on the russian thing, were you surprised by that, what he did to kick these diplomats out? >> i wasn't particularly surprised but i was pleased. i thought it was -- neil: deneen, just were you surprised by that. >> i'm not surprised. for trump, he is thinking about america first, forgotten men and will, in regards to putin, putin with the poisoning that happened

and also the russians, basically infiltrating our infrastructure on energy and our water, which was just reported this week, that would have been absolute chaos if they had been able to trigger something with that. neil: or it would have been chaos if the president had ignored it. >> that's true. >> i think that is the least you can do. getting back to the trade argument, listen my old man was a construction worker. builds little bars come out of the ground, rebar. wire lather. he told me not to go to that profession because it was commoditized by other things like sheetrock and things of that nature. yearning for the days where pennsylvania was filled with steel mills is a nice thing. i get the forgotten american part but you know, at some point you got to get with the program. those jobs are gone. bo to school. neil: but we can't be a nation just as consumer. >> can we be a nation of people that trades, that -- neil: i agree with that. can we be a nation that just relieses on services?

>> neil, the steel tariffs would not help steel manufacturing. they would damage u.s. manufacturing. who would put manufacturing plants here, put investments in manufacturing when it is expensive to get the materials? neil: then i will flip it around. no you're not agreeing with my argument, but it is fine, you're very smart. let's say the chinese do cough up some concessions do buy more chips, try to cut the gap $100 billion whatever the president wants, what would you say to that? >> trade deficits don't matter. neil: you come from that premise, if they did make those concessions what would you say? >> what i would say is that the intellectual property argument deneen brought up is the single most important argument here. this is a big problem and the president is right to try to find a strategy to force the chinese to -- neil: the strategy would be a step in that direction, right? >> he is not right to go like a bull in a china shop with these steel tariffs, alienate all of our respectful trading

partners -- neil: they're not respectful trading partners. they're duplicitous. >> european union, mexico, canada? neil: come on, the european union? they take three hour lunches. >> those are the italians. neil: oh, here we go again. >> you doesn't have to worry about them. remember why gary cohn quit or got fired. neil: he is a globalist. >> trump went around the room, you know, are you, will you publicly support tariffs on steel and aluminum. he said why don't we start with intellectual property, focus on that, i'm paraphrasing and been reported out there. trump says, no, i want to know where you stand on steel tariffs. that put gary cohn in a completely untenable position. he had to quit. everybody knows that the ai, intellectual property, artificial intelligence china tries to steal from us -- neil: but this is means to get

to that. >> i don't know. >> neal you said i was in agreement with your argument but i wasn't. i'm trying to agree the united states needs good jobs, high-paying jobs, but those will not be found in steel manufacturing, charlie points out, and you go into a blast furnace plant, there is one guy with computer. neil: you're getting concessions and worries whether the steel industry is getting or not getting is a moot point. >> why are u.s. producers already upping their prices so sharply from domestic manufacturers? for example, brazil is still, brazil is our second largest supplier of steel. they're still on the list with the tariffs. >> give trump credit for this, if this start deal and playing -- neil: it might not be. it might be musings of impulsive man but could have desired benefit. >> i'm getting him the benefit of the doubt. the market likes it looks like we backed off the stuff.

>>wer back where we're started. >> it brought china to the table. neil: you're a great panel. mary, thank you for your final appearance here t was really nice. [laughter] i'm kidding. i'm kidding. >> we didn't even mention stormy daniels. i just did. neil: one of the few broadcasters not got into the whole stormy daniels thing. look at the time. we don't have time now. mark zuckerberg is planning to testify. the stock eked into positive territory yesterday is back selling today. this guy might be brilliant and you will of that, founded this whole thing but i don't know if you have seen him speak or been events to where he is speaking, he is kind of monotone. i don't know if this will work out for him. we're an top of that. the dow up 212 points. i'm kicking my panelists out of here because i've had it with them. more after this. ♪

neil: that graphic pretty much says it all, facebook is still under fire right now. indications its billionaire founder is ready to testify at least in washington. there are a number of congressional committees that want to hear from him but right now the focus seems to be how he is going to ward off all the others that will want to hear from him as well, a number of

states, towns, municipalities looking at suing him. then foreign entities, including those in the european union who want to hear from him as well via videotape. whatever the case it is getting worse and worse for this company that can not seem to get out of its own way. real clear markets editor john tamny, forbes rich karlgaard. john where is this going? how bad is this for facebook? >> i think it has the potential to be bad because i think mark zuckerberg was misadvised. he should have have told the lawmakers in washington, d.c., mind their own business. why on earth would he open up this pandora's box? what did they think would happen? why would facebook keep improving what is an amazing product enjoyed by two billion around the world unless it was using some of the gleaned from its users. unless you're paying for a service you have no right to demand service do certain things or not do certain things.

zuckerberg should have told washington he will not testify. it will get worse and worse if it continues. neil: that would have gone over well. rich, we're in this position, but i certainly understand what john is saying. but what a lot of customers didn't know that information coeasily get out and compromised to find out after the fact. i guess now he is between a rock and a hard place here, what do you think he should do? >> this is a mistake to testify. this guy sweats in public literally under the lights. he has that asperger monotone type of voice as many bright software people here in silicon valley do. it is not going to go well for him. john is giving him good advice. people who go on facebook, this delete facebook movement, kind of proves it all, not turning out to be that popular other than some virtue signaling

grandstanders like elon musk, not that many people are doing it. neil: you do wonder, i don't know what the real score is here, john, other rivals, sort of social sites, you know, snapchat came to mind, some of these others who are sort of trying to woo facebook customers to quit or delete their accounts and go over to them apparently lot easier said than done. the company lost 100 billion in market value since this all erupted and i'm wonder whether it feeds on itself in. >> i don't think so. it is apparent rich and i agree here on this. zuckerberg should walk away from this. this will die. there is no major come -- compromises of information. the fact that it has two billion users around the world tells you all you need to know. why give in, why testify, why ask for regulation?

where do we go from here? if we're going to allow politicians to regulate speech on a website, where does that stop? and so i think this is a chance for zuckerberg to make a stand, people voluntarily come on facebook. neil: he is not going to do that. he already agreed to testify. he already agreed to talk and he already held out the possibility yeah, maybe we do need regulation? >> yeah. my strong sense is that he did that, he threw that out in a time of needless desperation, but i don't think he wants that. thankfully wise people, old hands from the media donald graham said how much a dangerous scenario that might be. hopefully wiser minds around zuckerberg and facebook in general get this back on track. neil: rich, do you worry, whatever you feel about facebook, it's a slippery slope, if he agrees to regulation, scrutiny or privacy advocates will want to rein in how facebook does, how it accounts

for data and database of customers they will feel the pinch as well, that it will affect everybody? already there is talk, hey, we want to talk to twitter and all these other social sites what they're up to, what they're doing, how they handle information? >> well, i've got a theory on this, neil, i think the happiest guy this week in all techland is jeff bezos. i think the one area that maybe invites regulation is antitrust, for example, amazon's retail doesn't make any money. it is subsidized by combination of what amazon web services does and then the various tax breaks it gets and subsidies from the post office. that is a big issue i think merits real discussion. this is a sideshow and i think that mark zuckerberg is providing cover for people who don't have technologies interest at heart and will bring down, will really do mischief to silicon valley. neil: you know what this feels like, guys, real quickly, i will

bounce it off you, john, going avnetscape in the old days. there was pile-on. going after microsoft before that. the giant of the moment, and certainly facebook is a giant. it is beaten up so badly, another one emerges, that risky for facebook? >> it is risky but you bring up an essential point. if you go back to 2006, you realize at the time myspace had as many visitors as did google? where is myspace today? we're presuming that facebook is the power but the beauty of silicon valley, indeed, the source of its great wealth there is constant replacement of those at the top. when the 21st century began facebook didn't even exist. apple was just emerging from near bankruptcy. why not let markets work? why not let that, work that way, rather than allow people in washington who can never get a job at facebook presume to regulate it?

neil: i assume you agree with that basic premise, rich? >> yeah, i do. actually the alternative to facebook is already there in the world. there are two of them. alibaba and tencent, china's two big internet players. neil: can you imagine, can you imagine -- well it's a very good point. >> would they really rather trust their private date to alibaba and tencent than facebook? neil: good point. thank you gentlemen, very, very much. debt, we have a lot of it. $21 trillion worth of it. interest rates are moving up. what if i told you they're moving up not just because the economy is picking up steam. because we have to sell more treasury notes and bonds to keep up with, well the cost of all of that, after this. [ phone rings ] hi, tom.

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neil: said he would sign it but wasn't happy with it. remember what the president said of that $1.3 trillion spending

measure that keeps the government to end of fiscal year, another six months or so? he wouldn't do it again. don't even try to give him something like that again. the bottom line he did sign it, and ultimately we're looking at more spending than we are saving. former debt commission co-chair alan simpson joins me on the phone right now. senator, you've been blaming both parties for this runaway spending that knows no pause. we're lookly looking at a trillion dollar deficit this year when all is said and done. your thoughts. >> neil, you've been a great paul revere but you have no horse. you've been sending out the warning but it is too slow. nobody is listening. it is, i'll tell you, the thing that capsuled it for me, watch these young people march on washington. let me tell you in 16 years, 16 years you're going to see the greatest march on washington you

ever seen because these young people and they're going to waddle up to the window of social security and get a check for 23% less. the trustees of the system are saying that. and everybody is, the tea party is doomed because their whole issue was cut spending. all their buddies just said, well, we can't do that because we want the gravy and we're sorry about not wanting to do revenue. so, you know, we'll just hand it to our poor old grandchildren. what a disgusting thing to watch. neil: what is interesting is that know one seems to even want to make minor adjustments. when you were put in charge along with erskine bowles with coming up ideas to rein in the growth of the debt, a lot of these were simple measures. they were repudiated by both parties. you were abandoned by president obama, abandoned by republicans. that was just doing something which at the time was very

doable, making slight adjustments. i think we're already beyond the slight adjustment phase, so what do we do? >> we have to do something with the aarp. you got to just repudiate them. you know what you have to do. in fact one aarp member here deceptively, frail person, i guess you could raise the retirement age in 50 years? i said, pal, the money is in social security and health care and you don't touch it, not one living politician is saying touch it you're doomed. but that would mean taking it to 68 by the year 2050. some frail old coot, how could you do that. look at cost price index, cpi, change cpi. change the bend point. that is inside baseball. they know what to do. pick up aarp magazine, it is

good stuff, has wonderful ads and they mention just tweak, just take a little tweak of the social security, and they never tell you what it is. they're a bunch of bums. neil: what is so weird about it though, we're past the point of return and i'm wondering if the appetite really isn't there to make minor adjustments. because we fail? you were trying with erskine, trying to spell out we're not talking about present day social security recipients or any one of the so-called entitlements. we're talking about grandfathering some in, working over the years, explaining to young people, you're not going to lose your social security but if we don't do something right now to curtail this, you're not getting any social security but it was never explained or at least in the the reshun that you got they were drowning you out. there were a lot of logical

ideas you were putting forward. what i'm asking now we're submitting a spending plan that doesn't even take into account some fiscal austerity. there is none there. so, where are we going with this? >> well, you're going to a situation where you will have class warfare. i won't be around and somebody ought to tap on my box and tell me how it goes in 2034. that is 16 years away i say. you can't get anywhere when the opposition rises to use the word cut, they're cutting your social security. some old coot wanders up to you, i put it in, by god from the beginning. i'm '86, i put it from the beginning, five bucks, first year, then in the army and practicing law, never put in over 874 bucks a year. when i left the senate in '96, the average old coot picking up

social security getting everything back in four 1/2 years. give me a break. neil: real quickly, do you see any chance at all right now, let's say after the midterms, either or both parties are open to addressing this spending or this will go on? there is nothing encourages you in the spending measure where they will rein it in, tax cuts or otherwise? into i've been portrayed as the doomsday kid, master of lost causes but let me tell you, they ain't going to do nothing. the next guys up for president will say, i want to be your president. doesn't matter what party, independent, green, democrat, republican. i can only promise you one thing out there, buddy, not going to touch your social security or anything with health care. forget it. neil: you might be right. the aarp is calling me. they have taken away your card and early bird specialties counts are gone for you.

>> i will drive to perkins in mylex sus and get a meal at a discount. neil: you're doomed. senator, thank you very much. it is always good reminding us. we all need that, republicans or democrats, way, way too much money going out compared to the money coming in. all we have to do slow it down a little bit. you don't have to reverse it. slow it. bill clinton started that process. it is possible and that was when he was working on it with newt gingrich in concert. it is possible. the historic precedent is there. it is just a distant memory. the dow up 124 points. we'll have more after this. it was my very first car accident. we were hit from behind. i called usaa and the first thing they asked was 'are you ok?' they always thank you for your service, which is nice because as a spouse you serve too.

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why markets are up, after day or so they are blinking because they realize this president means it. a lot of people say he is fighting fire with fire. he will ignite a trade war. as people already said, this idea of an unfair trading stance is something that in this case the chinese started. for example, they slap a 25% tariff on american cars sold there. our tax for foreign cars sold here about 2 1/2%. that is not fair. that is not right and the president is saying what is ignored in much of the media. we have john to his the president is on to something here but he could risk making the situation potentially worse. you were looking at this, john, we were briefly talking during the break, you understand what the president is trying to do but you're afraid it could blow up? >> yes i think there are real issues here. let's start with the notion that we have a very mature car market in the united states. our future for growth in the car industry here in the united

states is through exports. we export two million cars and trucks every year from the united states. we need to export more to grow our factories here and employ more americans. neil: how many of those make their way to china? >> that's a good question. it is very early in the process. what you see international car companies, u.s. car companies, car companies from japan, europe, korea investing in china to build in china because of requirements they have joint ventures so those types of things. tariff barriers and joint venture requirements, do need to be addressed. that is not the question. the question is what is the right approach to get the job done. neil: all right. the administration says there is no war going on here but if there were deemed to be a war they started it. china has these high tariffs. china has these impediments and roadblocks. that predates anything we're considering now. we played nice, talk nice, through democratic and republican administrations. that has gotten us nowhere. you say what? >> from the american consumer's perspective, the american car producers perspective it,

doesn't matter who started the war. if the result of that trade war is retaliation. in other words, we have fewer opportunities to export cars and trucks around the world, or our global supply chains are reduced and cost of producing in the united states goes up, that doesn't help anyone. i think the right approach is engagement. i'm encouraged to see secretary mnuchin and ambassador lighthizer are engaged. neil: isn't the argument as well we made no inroads there. the trade gap with the chinese gets worse and worse. depending from the numbers you use, 375 to $500 billion a year. that dwarfs any rational gap? >> so i'm not sure you're going to find me supporting the notion of trade deficitses as measure for whether we have the right trading relationships. the fact of the matter is, we need to have export opportunities to china and to countries all around the world. the way to make sure we have

those opportunities is through dealing with a focused approach that says, here's the problem, let's resolve that problem. so if there is a tariff issue, by the way they have a 25% tariff in china, we have 2 1/2% on cars, we 25% on trucks by the way in the united states. we have issues on both sides. neil: doesn't they do that in other administrations. they know the 2 1/2 to 25% and it never gets changed? >> maybe we're at the point to change it and maybe we have the right folks to do it. neil: you think throwing a grenade in the middle of this might be the way to do that? >> if it is manageable, if it is mappingable. what i'm encouraged, that tariff could be equivalent of a grenade. we talked about this with key administration officials and i think that is a good sign. neil: is this going to work out okay? >> i don't know, i don't know. that's why we're concerned, concerned about the approach to tariffs. look on the steel tariffs and

the aluminum tariffs we were very concerned but what wave seen is a recognition that our allies had some arguments to be made and there is a clearly a negotiation through a series of exemptions of those other countries that has recognized, hay look, if we don't do this right, we'll invite retaliation, raise prices on consumers and manufacturers in the united states. not the right approach. neil: john, thank you very, very much. meantime california is suing over a census bureau question, one question on this among many, many others, are you a citizen of the united states? and it caused a holy uproar after this. ♪ whoooo.

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>> welcome back to can "cavuto: coast to coast" i'm gerri willis. all eyes on apple appearing at lane prep high school in chicago a more focused ipad with pencil support. the pad will cost $299 for schools and 329 for consumers. the second time in a year the company cut prices on ipads. apple was rewarded with higher sales when it cut prices in the

past. apple has fallen behind in the educational market. made up 17% k-12 market in the third quarter. that according to future source consulting. 60% of mobile commitment to schools ran google's chrome operating system and 22% ran windows. it could be all about the money. chrome books are sold by dell technologies for as little as $189. and back to you, neil. neil: okay. sorry wasn't ready for that. >> sorry. neil: no, no, please, gerri, thank you very much. >> you're welcome. neil: we're keeping track what is going on in california, not just because it is the home of apple computer here. but indications it is suing over a census bureau question particularly going after the trump administration because it doesn't like the specific question, are you a citizen of the united states? do they have legal grounds to sue on this matter. let's ask judge andrew napolitano. we used to ask this years ago. >> right. neil: there is separate survey

where it is routinely asked. what is the deal? >> it was first asked in 1940. it was used by the fdr administration to locate 110,000 japanese-americans in california and incarcerate them without proof of any guilt. in 1947 congress forbade asking are you a citizen, what is your nationality. so that was not asked in 1950. gradually all those questions, how many bathrooms, how many toilets, income, education level, well beyond who lives in the house has entered the census bureau. this got so oppressive when president george w. bush received a long form census as sitting president of the united states at his home in waco, texas, he ripped it up in front of a camera. i will tell you how many people who live here, nothing else. does the government prosecute for failure to answer all these questions? no. it could, but it doesn't. it only prosecutes if you falsify the answers. so someone is here illegally, will they answer that question

truthfully? neil: what if they didn't ask? it was a big issue in 1940. >> i don't know what they did in the past. neil: but isn't a census return supposed to get a count of legal americans? >> well, the constitution doesn't specify. the constitution just says persons living. so the government has the right to know how many people live in new jersey, for example, so it can figure out how many representatives in the house of representatives new jersey had. neil: also what kind of services you will provide for that population? >> correct. you also have the first amendment which not only protects free speech, it protects silence. so can the government ask this question? yes. do you have to answer this question? no. it is a conundrum. and as a result of attorney general becerra's, california attorney general's lawsuit, the courts will resolve it. it may be a good thing this lawsuit is coming. the government will know the

nature and extent of its power. in my view the government can not compel the answer but most people will answer anyway. of course the government use this is information to provide services. i don't think it is nefarious or creepy but they can't force to you answer. neil: but, the fear i guess that the california is raising right here is, this is convenient way for you to track down illegals who are here, mr. president. this is a pet cause of yours. much as fdr could have used to track down americans. >> correct, correct. there is a history to substantiate that fear. now this is not the law yet. this is a proposal. it came out last night by the department of commerce which is required by march 31st. got to be enacted by congress. we'll go through this all over again in couple of months when congress debates this. congress decides what questions are on that census form. neil: but isn't it meant to sort of get an update count on number of presumely legal americans? i know to your point it can extend to people living here?

>> yes. neil: it could give us a better idea how many are here illegally? >> yes it could. yes it could. california is notorious for right to protect undocumented persons to stay here. seems like california is ready to secede from the union. orange county wants to secede from california because they're the earth extreme. neil: that's right. >> i don't know where any of this is going to go. probably with my former colleagues in black robes. they will decide it. neil: they're all a confusing bunch. >> yes, they are. neil: i can't figure it out. tough go to princeton to figure this out. meantime we have trade war fears easing. stocks are up a little bit here. does the rally today wipe out any fears from last week? we're on that after this.

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neil: all right, we're still up not as up as we were earlier on here but we are making up a lot of ground from the big sell-off last week. we made up about half of that in one day yesterday, where it's up near 200 point gain today largely on the belief that this trade war might not ever happen, that the chinese are going to make some concessions, the latest talk is they're going to do something on semiconductor computer chips to buy more whether that would prove the $100 billion that the president wants to pair this 375 to $500 billion gap between our country is anyone's guess but i want to employee more this a little bit more detail with market catcher christine short, former republican congresswoman from new york and last but not least wall street journal

editorial board member. dan, the argument is that the chinese desperately want to avoid a trade war with us hence they're coming together to get something to satisfy the president. will they? >> they will come to the table, there will be a negotiation. i mean the chinese are skilled negotiators they have seen this coming for a long time. i'm sure they have a strategy they're going to deploy with president trump whether it will get to the goal he wants to reduce the deficit with china is a good question. he's probably not going to reduce the deficit with south korea they are announcing an agreement with them today but negotiating with china is what most of us thought from the beginning of this process when he was talking about tariffs on steel and aluminum, china was the target. now if they moved over to talk to the chinese i think that's why the markets are responding so well at the edge of a terror last week the market went off 700 points when it came off this week it went up 700 points. neil: you know christine the

argument has been that the chinese do fear more than we fear them and that the message seems to be this crazy president is going to push us to the wall and we don't want to be there. >> yeah, it's true look i wouldn't put it past the chinese to retaliate and that's what everyone was concerned about last week. i think the exemptions as well for certain countries especially the european union helped this rally today but you know no matter which way you slice it we're talking about the midterm elections and how this might impact if trade tariffs do go through you might see an immediate impact on jobs because of global competitiveness and as costs go up it makes steel input companies less competitive so that's really the big fear there yes the steel industry has been going down as far as employment for the last couple decades it would be nice to add jobs there but -- neil: do you think it'll get to that point? >> yes but it won't be enough to offset the jobs you'll lose in automotive and in aerospace and manufacturing.

and 80 times more people than steel industry does, so that's really the big concern and that's why you saw the big downturn last week. neil: one of the things i've also seen is this fear that we'll discuss that when it comes to trading partners like the chinese, and that all of a sudden they do take their system and the 25% tariff on american cars versus our 2.5% on there's that people say the president's igniting a trade war a lot of people looking at this are saying wait a minute. >> we're already in a trade war. neil: right so how do you think this plays out, what do you think the chinese do? >> we all know, i mean, any company that wants to do business with them, american or others, we month they steal intellectual property, we know they have punitive licensing terms. everybody agrees, something needs to be done, so to the president's credit he promised he would do it he is doing something.

tariffs are a very blunt instrument. they have to be highly -- neil: they work for the chinese right? >> well so long as we let them, neil and there is this dynamic tension. we are their biggest customer. they are also our biggest creditor, so we all have to come to an agreement here and i think usa today among many others have said look the smart way to do it let's make sure we're partnering with friendly nations and re visit a trans-pacific partnership just don't rule it out completely. work through the wto. neil: we bowed out of that thinking it wasn't worth the benefit. >> right but i think the president is showing that he is firm when he introduces these tariffs, we know that he's serious. neil: okay. >> about chinese trade. i think if he decided to reintroduce the idea of joining the trans-pacific partnership and concept of a tough approach to china he o have more leverage there. neil: his view then and you can

correct me on this is that well, republican democratic president for the past have all tried the nice approach the let's talk about this, and see what we can change and nothings changed so he thinks this more blunt instrument is the way to change it. do you think it is? >> i'm not so sure one of the reasons is not only the fact that there's a lot of international supply chains but to christine's point when you do this thing what you discover is there are political implications and consequences inside the united states. the wall street journal has a fascinating story today about how architecture interest across the midwest are terrified at the idea of putting tariffs on china , because they export so much into china. neil: and they believe they're a target. >> i would assume a lot of people and people working for them and steel fabricators, those are also trump voters, and if they're going to be damaged by this the president runs the

risk of driving a wedge into the republican voters out there in the midterms they have to be nervous about what's going on and i think that's why presidents have always been a little bit careful about these trade negotiations. neil: well that's what the chinese count on too that we'll blink. >> in 2002 we have the bush steel tariffs as historical precedent and those were most costly. about 200,000 people out of work in 2002 and that continued for the next couple of years and so if you look back at that it wasn't really worth, you know, what we gained. neil: but this one follows, wasn't the argument that at the time it wasn't worth it, this president now is changing around it's not worth continuing that he has long argued the chinese need a heck of a lot more than we need them. do you agree with that? >> i mean, sure and we'll find out when this happens. neil: sounds like you have your doubts. >> well i do have my doubts just

based on 2002. the one thing we had going for us was that companies are very good at restructuring their supply chains to deal with and make, you know, make sure there's a negative impact when we elementary tariffs and we're in a very strong corporate environment right now tax reform is going to help this year so we have a strong underlying economy i think more than any other time companies are in a position where maybe they wouldn't have to reduce workforce as much, however that doesn't mean they won't. i mean they'll cut costs if there are rising costs they'll pass it on to the consumers or have -- neil: i don't know how much they can pass along. one of the -- >> key thing is to cut workforce neil: you're right but one of the things we've counted on is that in this case the administration wants the chinese to recognize that they're the ones up against the wall here, but the chinese might figure to your point that well wait a minute, we could punish you, punish your agricultural

interests or stop or slow down your debt how likely are either of those in a realistic scenario because we'd escalated it to the next level. ii think the chinese are willing to take risks past some point but i don't think any of us -- neil: what makes you say that though when their initial response was $3 billion worth of targeted goods very carefully if not tentatively. >> well you know there's a point beyond which even the chinese would have to react to start targeting specific industries in the united states that are tied to trump and his bait but i don't think anyone disagrees that the administration is on the right track, the chinese have to be taken on in areas line intellectual property theft and forcing american companies and chinese partners that then take their business away. there is no disagreement on that but they're going to need allies to be able to pull that off because a lot of other companies trade with china, depend on chinese trade. neil: a lot of those countries

too right so they must be salivating at the prospects of our alienating china. they will swoop in right? >> and that's why trade policy requires sophisticated approach, and one of -- neil: i don't think nuance has ever really worked. really has it? >> but president trump is he's not ideological, he is pragmatic and we know that merely in the past three weeks he first announced a very blunt as we know across-the-board tariff on steel and aluminum, very quickly the market responds and other outcry potential threats he clearly could perceive led him to moderate that. he's a negotiator. neil: but if thins got worse for him and if he knew where this was heading and to your point to a trade war, governments to your point do not pay these tariffs, individuals do. he would have to tell individuals you're going to pay a lot more for this and rally a nation to support him on something that might be very unpopular. how is that going to go?

>> especially if they're losing jobs and you're telling them that costs will increase that could be a very dangerous situation and something that when voters hit the polls in november they would really take into consideration, i mean you're reducing that then would filter into so many other industries both consumer facing, automotive, airlines, and that would really fuel everyone if you've got people losing their jobs and then therefore -- neil: would you even get that bad? >> i mean if you look back to 2002 sure. we weren't in the worst economic situation but it slowly deteriorated from there and i think people still remember the financial crisis and it's still very much in the front of their minds. neil: they did have a little bit of a recession that would come after the slow down after the internet boom so it could happen again. >> you're playing with fire there. you don't want to go to a recession after doing the positive things that came out of the tax cut and deregulation the market is growing up, the market is obviously very nervous about

what's going on in these trade negotiations. neil: well the market right now seems to think we won't have a problem with this. >> that's in the last 48 hours but not if the president sort of starts talking again about imposing tariffs on china the market could turn in the other direction. >> i think politically the president has to concern himself with the house because as you said dan the chinese can definitely target certain areas and districts they're keeping track of american politics, they know where they have pain points and manipulated opportunities so the president is going to be very sensitive to those districts that are at risk particularly in ag all communities and others where jobs definitely could be very badly affected. neil: this is all about the north koreans and all about finding a way to deal with north korea to have china help us and to force this. do you guys agree with that? >> i kind of doubt it. i mean, i -- neil: i should explain the chinese helping to find a

neutral venue for the two leader s to meet. it did sound a little goofy to me. >> well kim jong-un reportedly was just in beijing, very surprising mysterous something is going on out there obviously in the background. neil: these tariffs part of it? >> i doubt they're part of it. >> they won't exactly charm the chinese. >> that's why the markets get nervous about this sort of thing north korea is the biggest problem out there immediately. it's bigger than the problem trade with china but the chinese are clearly a solution to the north korean problem so we've got a new secretary of state a new national security advisor, we've got kind of a new ballgame neil: write all those names in pencil though. >> [laughter] neil: and larry kudlow and the administration to help us strengthen the economy any more. neil: he's against us. >> and fair enough larry has got very well informed opinions and the president i'm sure will listen to him closely because our number one defense and offense in a sense is a strong

economy and the president has made great strides toward that. neil: kudlow was with gary cohn on trade so i don't know but we'll see. guys thank you all very very much as they were speaking the dow didn't budge that much we were up about 180 points we're still up about 180 points there you go. more after this.

retail. under pressure like never before.

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neil: seems like everyone wants to talk to mark zuckerberg facebook fame right now cook county, illinois among others saying do you know what we'd like to have a little chat in washington theyed like to have a chat in london and istanbul, just made that up. >> [laughter] neil: if you were paying attention i hope you are let's go to deirdre bolton on this and i'm looking saying he has a lot of obligations a lot of people want to chat the ftc wants to go through this where is this going >> listen i think this is a good move on his part. he had no choice, trust is severely down with facebook. neil: he said he did have a choice and by saying yes to one he risks being regulated. >> actually he said the other night he's open to speaking about regulations but this is a good pr move for him, he wouldn't say yes to something like this but he has no choice he has to do this.

neil: he would be his own worst enemy deirdre. he's a brilliant guy i take nothing away from him but e electrifying, no. >> no but he absolutely has to and remember that interview he gave last week saying well if i'm the right person to do it if the controlling shareholder, founder and ceo is not the right person to do it i'm not quite sure who is the right person. neil: yeah, technology officer to london for that one right? >> in fact he is and they've named facebook has actually named chris cox is one of them or somebody else, but yeah, he's not going to get on a plane, mark zuckerberg is not getting on a plane going to london but one of my friends tweeted this out i had to write it down. i'll pay my taxes, raise my kids and obey the law if i'm the right person. neil: [laughter] >> the point is of course he's the right person, okay maybe he gets himself in trouble but honestly the company is already in trouble. i mean this is the second -- neil: do we know whether they're losing users though or people are deleting their accounts? i understand it's very tough to

do but is it substantial? >> it's not substantial enough no. they're losing users but not at the critical level they would need to see. neil: but what users do they have? like i have teenage sons who they don't know facebook from they like snapchat. >> right. neil: oh, you're hip like me. okay fine so who is being hurt here? >> well their fastest growing demographic on facebook is actually baby boomers they lost a lot of the millennials, so -- neil: so my age? >> they're not going anywhere by the way. they don't want to learn a new network. neil: are you saying that my generation is kind of stuck in their ways? yes, you are. that's fine. >> perhaps. neil: absolutely right. >> but there's something about this whole story. neil: there are 2 billion of them worldwide by the way. >> yes, there are. neil: okay. >> but the point here is this is not new. this has been going on for years we're hearing about this now because people are having a social media awakening, but this is not news worthy. neil: what the fact that you can

have your data come promised? >> [laughter] well no the fact that facebook is really a data mining company and they've been doing this the whole time. people don't read terms of service. that's really -- neil: but it made the difference here that this trump-linked firm did it because of the link to trump was it different in the obama days? >> of course it was different and when obama used dana mining he was called a genius right? neil: but didn't they have new laws after that? >> there's a little bit more of a nuance where cambridge did actually put in a personality quiz on facebook so if you want to sort of split hairs over this the obama campaign went in and was going towards the voter registration which again is an abuse of privacy but the fact this required an interactive quiz and then also mind your list of contacts for like-minded people was seen by some as just one step further into a space where facebook should not be. i think at the end of the day they're legitimated no matter

what. neil: if i'm the rest of the industry looking at this on twitter and all these other guys , i'm fearing if you regulate them, you'll regulate me. no, it's coming it's coming. neil: it is really? >> yeah and i think twitter has been invited the ceo of twitter has been invited to go you have to underline that word pretty hard. neil: but this is like when they gather the royal executives nothing good with come of that right? >> no it's more expense for these companies they have to hire more compliance people and more legal people. neil: they can afford it. >> it's a distraction. they want to do it through automation but the problem is they don't hire enough people to do what has to be donald you see that with their whole ad team. neil: well i know you're not a stock person buffets book has lost what, a little bit north of 100 billion in value and zuckerberg is down about 15 billion in value? too much? is that overdone? >> no, i mean i think that can bounce back. i think it's going to happen

right now while this is in the news cycle. neil: so is this the worst we're seeing right now? >> yes, i believe so. i think like once we learn just kind of the shackles for lack of a better term they're put on facebook and listen google and twitter also had the same missteps in the run-up to our presidential election but it was on facebook at 125 million americans so more than half of the u.s. voting population saw an ad manipulated or created by some form of a connection to russia. no i think these companies as you said this is a moment as we can remember back in the day big oil. this is the big oil moment. neil: but like sun microsystems you want your privacy get over that, like he was being blunt but in this day and age, those days are gone. >> exactly you can't expect any privacy at all if you're on social media. neil: really? >> absolutely. i fully expect that my calls are going to be monitored they'll see my full message. neil: your generation is very

jaded. >> is that jaded or realistic? it's realistic and i think that's the facebook legal standpoint right if you aren't paying -- neil: do you think that's a given? >> i didn't take it as a given when we learned about the android recording your text messages, who you called, you know, basically how many times that i thought actually -- neil: that's a little creepy don't you think? >> but as far as somebody targeting me to sell me because i have a dog, i post a lot about a dog the fact that i see, you know, dog biscuits ads doesn't shock me no. neil: really? >> and traditional advertising by the way has been doing this for ages. neil: you're right about that. we don't have to be reminded when it pops up on our computer screens right? >> right. neil: but you can deal with it. all right your whole generation is lost. all right when we come back here we're up 162 points by the way, facebook is still selling off right now and mark zuckerberg has lost about a billion dollars market value here, fear not though he's still worth about $64 billion, we'll have more

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neil: all right, russia says just a matter of time before retaliates and responds to the u.s. kicking out 60 russian diplomats here adam shapiro at the white house with more hi, adam. adam: neil it's a coordinated effort not just the united states but 22 countries in alex peopling russian diplomats. here is what lavrov, the russian foreign minister told the press agency in russia said rest assured we will respond, no one would want to tolerate such obnoxiousness and we won't either. now you should also know that defense secretary jim mattis has come out and said it's pretty obvious that russia was behind the chemical weapon attack in the united kingdom which almost killed a former russian spy and citizen whose now a british citizen and did kill that man's daughter, and we obviously stand united with allies that believe

in the rule of law of a rules- based order whether it being north korea using a weapon of mass destruction or any other country we are against the use of weapons of mass destruction and russia has already kind of retaliated on twitter. take a look at this full screen. they are actually asking people to vote on which consolate u.s. consolate they should shutdown and about an hour ago, the votes were in favor of closing the u.s. consolate in st. petersburg and expelling the diplomats and the staff there. back to you. neil: i hope not that's such a beautiful city but we'll see what happens. mr. shapiroiro, thank you very very much. so to dissuade people that the president would be in the hip pocket of the russians and very afraid to take them on put that issue to rest the fox news national security analyst, what do you think? >> i think that that should clarify to many people who were and are skeptical about the

white house and the president's position with regard to current tension with russia that should clarify it. it will escalate and that is going to be ahead of us, the russians will respond, and i am sure that nato and the united states will continue to respond but it has a point whereby they need to agree both sides that number one, chemical weapons cannot be used, at all, first off. second, going after the west including in the states or in europe is something that the russians should commit not to do and of course the russians will ask for something in return but at one point in time this crisis will have to be resolved. neil: maybe it was listening not so long ago talking about when someone has also met and when rivaled power and vladimir putin re-elected to another six year term can also get paranoid and we're at the paranoid stage of vladimir putin enraged at this action, i'm sure he remembers that he had held off on firing or getting a lot of american

personnel out of his country after barack obama did that right before leaving office, and now the guy he preferred for president, i'm not saying he rigged the election for him, but that guy he preferred for president is doing this now. he's got to be. >> he is, but his intelligence services i imagine and many of their analysts understand that the united states even if it has a president that wanted to have an opening as the previous president tried to the previous administration and two previous administrations as well since the cold war, they understand that there are red lines. i mean, we cannot be away from great britain when it is witnessing such an incident. i mean, they know what the red lines are. what could change is not in europe. it's going to be in the middle east as it was known we need to talk to the russians for issues in syria or in new york where you are at the security counsel. we are sitting in front of the russian ambassador who has a very powerful tool which is a veto so at one point basically

we need to figure out what to do but apply what we need to apply because a red line has been crossed. neil: do you know what i notice no matter whether democratic or republican presidents those who think they have seen a potential for change in the relationship between the two super powers that nothing really does change, that the sinicism and the careful scrutiny of each side and even the notion that they can't make much progress, that doesn't really change in the end it still is a tough relation shape. >> i agree with you. actually if you look at it from a historical perspective not much has changed in terms of how the leaderships deal with each other since the cold war. i mean, we had much more severe crisis, the berlin crisis, the cuba crisis and at the end of the day they know. i mean we know they have nukes we have nukes we cannot get to beyond a certain point. everything below is possible but that point we cannot reach. neil: yeah it is amazing all right thank you my friend,

follow us very very closely if you're expecting to these this factor out into a global panic and the fact that we and the russians are fighting with each other this will escalate into some diplomatic crisis, the markets worldwide have a funny way of showing it oil has a funny way of showing it gold has a funny way of showing it interest rates, bonds funny way of showing it no panicked response if anything in the equity markets and across the globe more buyers than sellers, any fear index? zero. we just got married. we're all under one roof now. congratulations. thank you. how many kids? my two. his three. along with two dogs and jake, our new parrot. that is quite the family. quite a lot of colleges to pay for though. a lot of colleges. you get any financial advice? yeah, but i'm pretty sure it's the same plan they sold me before. well your situation's totally changed now. right, right. how 'bout a plan that works for 5 kids, 2 dogs and jake over here? that would be great. that would be great. that okay with you, jake? get a portfolio that works for you now and as your needs change from td ameritrade

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neil: all right, we talked about the interest rates backing up a little bit and they're still historically very very low but for those interested in refinancing a lot apparently feel their window has come and gone and up and shut and campus company founder and realtor joins us. there's been a freeze in this activity or what appears to be

one katrina and i'm not sure if it's justified but it is what it is. we've had these starts before but this seems to be purely rate driven and we've hit a point at which a lot of potential borrowers said that's it. what do you think? >> well i think the refinance market is definitely extremely aligned with these rate changes, so what you're seeing is you're seeing a large decrease in homeowners wanting to refinance because rates continue to go up. why? well because many of them already have lower rates and are being offered in the current market so it just doesn't make sense to refinance. ironically, we haven't really seen the housing market suffer too much as a result of the rate increases and i believe that the reason for that is because buyer s are trying to take advantage of it because they know and they sense that rates are going to continue to go up so historically as you mentioned neil we're still relatively low by those standards historical standards and we have been spoil ed for some time now with extremely low interest

rates but there's still time to take advantage of these rates that are currently around 4.45%, 4.5%. i've also seen a lot of sellers that have asked me to decrease the asking price of their home in hopes that they can get their house sold before rates continue to go up. these sellers are also going to have to purchase new homes so i'm getting those phone calls a lot where a seller would say katrina i want to reduce my price i don't even ask them to do it. they're calling me telling me to reduce the price because we want to sell and lock in a rate an interest rate change here with their purchase, so i'm really seeing a lot of incentive to be able to purchase. now i think long term the housing market will probably slow down as a result of these rate changes as wages are just not increasing at the same rate as home prices, and with these increases we're also seeing that the buying power will probably decrease moving forward. neil: you've always reminded me that job beats rates i think the

just of that argument was if you got a good economy and jobs are plentiful and secure an up-tick in rates is an afterthought as long as it doesn't get crazy i guess what do you see happening? >> well we have extremely low unemployment historically speaking so the economy is doing extremely well which is the reason i think it's important to note that the reason that the fed is actually increasing rates is because the economy is doing well, so when the federal reserve increases rates, it's going to obviously affect the mortgage rates, but overall, you're still seeing people that are extremely optimistic and i think it's also very regional in states where prices have increased tremendously like texas or california or florida. i think that you're going to begin to see the home prices stabilize a little bit more but overall people are very optimistic about the economy and about housing and it's time to really take advantage of these rates now before they continue to go up because a lot of

economists are saying we're probably going to see three different rate hikes this year alone so time to buy before they continue to go up. neil: this is one of my other crazy things. i've noticed this anecdotally but more and more builders, big, small, inbetween, with spec houses, in other words there are no buyers for them but they're building them and i think for the better part of a decade it was tabu that you just didn't risk that because you never necessarily find a buyer for that, but i'm not just seeing a couple i mean quite a few popping up and i'm wondering for the builders doing that that that's a great sign of confidence. is it justified? >> uh-huh, i think there is extreme confidence with home builders now days. i think these home builders also realize the rental market is doing extremely well so if they don't end up selling these properties a lot decide to rent them. you're also seeing that the rental market is really

incentivizing people to build multifamily, there's such a huge demand for multifamily and there's not enough supply to the point where a lot of the cap rates in the market just don't make sense you have these large institutional buyers that are wanting to buy multifamily and it's extremely competitive so i think home builders are following suit with the confidence and noticing the rental market is going to continue to be very solid so they always have a backup plan and people want now days everybody wants new and they want instant gratification, so they are very happy with these home builders and products they're offering and there's definitely buyers out there and more buyers want to take advantage before these rates continue to go up. neil: well they're putting a lot of goodies into them. this might interest you i don't know if you're into bocci ball courts but a lot will do a bocci ball court for you i'll tell you how to talk to the builder but it's kind of interesting, katrina thank you seriously very very much.

>> thank you so much. neil: all right, so the next trillion dollar company i think they've said its got to be google or apple. what if some of the smartest finds on wall street today say it's going to be microsoft and it's about $250 billion away, after this.

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neil: all right the government wants to stop an argument out in court the at&t time-warner merger and where this stands connell mcshane following it in the u.s. district court in washington with the very very latest what's going on today? connell: well, we've actually had some very interesting testimony in the morning session and on lunch break right now, from a guy whose the executive at sling tv owned by dish network and he was up there yesterday but cross-examined by the company's lawyer and it got contentious at times the two went back and forth on a number of different issues. what the government is trying to establish here is that the merger would lead to higher prices essentially for consumers and at&t which owns directv would be able to leverage some of the turner networks and that would lead to higher prices so with that as a back drop what he did is he's challenged an assertion this guy made yesterday that the turner networks, hbo, cnn, tbs, all of

them are must-haves for the various distributors, so he said to them we all know we watch the ncaa tournament for example, but what percentage of overall sports program do you think comes from turner? he didn't know the answer but he accepted that they don't broadcast the nfl, don't broadcast nascar, college football, nhl, on and on so he established that pattern and then start talking about news which got interesting because cnn came up and he brought up a number of quotes that the dish network founder is said to have said over the years mostly to investors where he said like 20 years ago, cnn was must have programming but not any more and he said he thought his boss was just negotiating through the press when he made comments but you can see the patterns all trying to establish neil it's really kind of interesting to listen to because you have on the one hand the government trying to say these companies programming turner, cnn, all of

them is just so great that you have to have it and then you have the lawyers representing the company saying it's not that great after all so that's kind of the back and fourth we're having here because of what the lawsuit is about from the department of justice. we hope at some point after testimony wraps up possibly this afternoon to hear from the turn er chairman john martin which a lot of people are looking forward to so things are starting to heat up a little bit it's a long trial should go on for another month and a half or so maybe more. neil: now the government has to make its case this would be a combination to hurt all competitors in the business even though it appears to be a vertical one so it's a tough one to prove right? >> yes, especially after nbc, comcast went through and what have you and you don't see these types of cases get this far into the court system very much, it's usually the other types of mergers direct competitors horizontal mergers so that's why there is a tough burden on them this time and why you have that

kind of weird part where the lawyers for the government are out there saying these networks are just too great. you have to have them, they are must haves and the companies lawyers coming back essentially saying these people are representing not so hot after all that's the back and forth. neil: weird defense connell thank you very very much connell mcshane in the meantime you always hear this what will be the next trillion dollar company for a while everyone said amazon and no no it's apple, and google no, no, morgan stanley out with a report that says the one that could get there first, microsoft yes, microsoft used to be the lag and in this all of a sudden the dinosaur not looking back here would have to appreciate about 25% to get there, a couple of others are closer but how do able is that to market watcher s craig smith, keith fitzgerald, keith what do you think? >> i think it's going to get there. it's the dark horse and the fact that nobody sees this coming neil is what makes it all the more attractive with a large

user base legacy contracts and thanks to the new ceo they are really well aligned with everything in the cloud computing space and the growth there is absolutely phenomenal you're talking about a trillion dollars in corporate it spending within the next couple years. neil: i just look at the numbers they are now, craig. apple at around 870 billion, it's certainly a lot closer than the roughly $715 billion market cap let's say of microsoft so thereabouts we have 720 billion, but what do you think? >> well i agree with keith, neil he nailed it. look, cloud computing is the future and i think ceo nadella really saw this way ahead of everybody else and he made the capital expenditures and put the energy into that space. there are a lot of people competing for that with oracle, google, amazon, gosh i could give you a whole list of them

but the three main front runners and i'm curious to know if keith agrees would be microsoft, amazon and google and i happen to believe microsoft is going to win the day because we've got to keep in mind, when microsoft started in 1975 with that little geeky looking guy bill gates when he wrote the basic interpreter for the alt air l 88 he has morphed that company several times and then when nade lla took over they focus completely on the cloud and i think they're winning that space and will win it big and it could make this company a trillion dollar company. neil: let's talk about something that could rain on this parade then keith and what's going on with facebook if there's regulation of facebook by extension is regulation of other players in the industry and it could hurt all players. what do you think? >> you know, i think it's a very interesting point neil, however i don't think it applies in

microsoft's instance to the extent people might think number one because you talk about a growth across the gaming community with xbox, linkedin, with different kinds of profiles and finally lots of cloud data come muting related to corporations as well as individuals. so it's not just the social media phenomenon that's going to get it here but the growth that will continue in those particular sectors. neil: now, i'm wondering though when i look at this, craig and of course the market is well off its highs now barely changed whether people are beginning to fear that what happens to facebook, mark zuckerberg has to testify, that it certainly is going to whip up the entire industry. we saw that a couple of days back, a couple of trading days back certainly last week in the free throw of that. do you think that's justified here? >> yeah, i do neil and let me tell you a rising stock market lifts all stocks but also the gravity of a stock market when it starts falling drags all stocks back so while i think

microsoft has a clear shot at being a trillion dollar company, if this market was to start pulling back and pulling back hard i think microsoft would be pulled back with it. unfortunately due to momentum, but once that's over, make no mistake about it, microsoft is positioned right now in my opinion to be the number one player in the cloud space and i think the cloud space whether it be a year or two or five years from now is going to be a space where trillions of dollars of revenues come from and if you look at microsoft in the way they are structured, they are clearly in first place in my opinion in this race to capture that business and like keith said with 365 office suite and a ssure alone those are totally disconnected to the social media space, they're clearly designed to provide services and i think cloud computing services are going to be a huge huge cash cow neil: i agree on all of the above and the macro that would favor say microsoft or for that matter looking at the robust

technology world apart from excuse everly social media but the one thing i'd like to follow-up on is i can remember the netscape and microsoft battle with governments whether it's those abroad in the case of the eu or microsoft battling justice here, it ends up not being good for that sector in the market. are you worried about that? i'm wondering if that's coming into play in the markets like as we speak. >> you know, here is the thing, neil. if you're going to talk about that issue, trust is absolutely germaine to the discussion and here what you have is clear violation of trust by a specific company with consumer-related data. now microsoft is fortunate to have a huge number of institutional portfolio owners with a lot of institutions in their database user base those are bound by long term contracts very predictable revenue and not a trust issue for them. it's a stability issue for people because it speaks to revenues and bottom line.

i think facebook is in a world of hurt because consumer trust and outrage is building and those are very different factors neil: gentlemen thank you both very very much we are looking at what's going on right now. we're 200 plus point rally has given way to barely at all a lot has to do with facebook and has to do with the very factors that we're keeping stocks climbing the government intervening we'll have more after this. . .

neil: up about 48 and 2/3 points right now we have to reverse a lot of buying what so far is looking to be a down month. here is trish regan. >> great to be, back, neil trish: i am trish regan welcome to the intelligence report. great to be back from hawaii. i will have more on that at the end. show. let's talk about the