tv Squawk Box CNBC May 21, 2018 6:00am-8:56am EDT
live from new york where business never sleeps, this is "squawk box. >> good morning, everybody welcome back to "squawk box" here on cnbc i'm barack obaecky quick along kernen and andrew ross sorkin. we've heard the trade war is on hold at least for now. secretary mnuchin speaking over the weekend about some of these issues and we will be speaking to us this morning on "squawk box. but that is probably a big part of the reason that you're seeing these big numbers today. stocks are up in asia, as well s&p 500 indicated up by about 15 points the nas das dak up quarterba quarterback -- the nasdaq up, as
well the shanghai composite up by a little bit more than that. and the nikkei in japan closing up by about a third of a percentage point this morning in early trading in europe, you will see at this hour it looks like things are, for the most part, in the green. the cac is up by .6% ftse up by 9 percentage points, stocks are higher. a little weaker in italy take a look at treasury yields this morning last week, you did see the ten-year treasury yield push soundly above 3% 3.067% >> i liked the headline in the journal, u.s. sends mixed messages on china. that wasn't what i was thinking. i was thinking the trade war is over there is a growing frustration with secretary mnuchin getting ahead of both the president and the trade team on the direction of negotiations. said a person familiar with the negotiations
>> do you think it would happen to be lightheiser? >> i don't know. his eageren to do a deal undercuts the u.s. negotiating position >> it seemed to me that the president was in step, at least with mnuchin for this moment >> great day to have him on. >> yes it is. >> who do you think a person familiar with -- that can have been light -- or someone that works for lightheiser. >> there is a whole world of other people willing to talk >> mnuchin undercutting the position of the president. >> but by the way, there are people who are hard liners who think this is a huge mistake huge >> i guess it could have been navarro. >> we stick out this position, they're here then we enup -- >> we don't know where we've ended up >> 1% is not bad
i don't know if it's soaring as they wanted me to say at the open but it's up. if we had some great deal with china, it may be up more than that >> and as they're saying, look, there's still details that need to come on this. >> it will be good to talk to him. >> but later, it says in that piece that someone else that is, like, came and said oh, they're definitely together on this. if they don't play ball on the intellectual property, they'll do it, anyway. >> in the meantime, deal or no deal coming to cnbc this fall. >> right >> but in the meantime, a big deal this morning. this is the beginning of the unraveling ge reportedly in negotiations with wabtec.
neither ge nor wabtec responded to requests for comment. >> it's been unwinding since they took over in 2001 >> he merged a lot of things together >> and let me ask you this there was a cohen and company analyst report that was out this morning that said this deal appears imminent and it could be very good news for wabtec, that they continue to think it would be favored for wab and believe the stock could overperform peers on monday. what does that tell you about -- >> is it silly wab at the c? every time you say it, i think you're -- >> what is it called >> wabtec. >> what does it stand for? >> i actually have no idea
but my question is, if this is so great for wabtec, is it a good deal for ge, with as well >> i'm sorry every time you say it, i think you've got something silly wabtec do we really want this >> rabbits >> rabbits with an "r. >> you know we need -- but he's gone ♪ i'm in my car ♪ turn on the radio >> elmer fudd. >> i just want you to be happy ♪ i'm driving in my car >> oh, my gosh john, well done. >> we were going to do mnuchin now, as it happens >> you mean talk about him >> yeah, right now >> oh! okay we had quite a conversation
already. we're getting off of wabtec, though u.s. secretary steve mnuchin says the trade war with china is on hold. that means the two countries agreeing to drop tariff threats while working on a trade agreement. ayman jabbers joins us now with more i like the -- i think trump likes to see two sides go at it, doesn't he why else would you pick kudlow and, you know, mnuchin versus navarro and lightheiser and he's in the middle. does it work >> there weren't many other options. >> sometimes it seems like it works, doesn't it? >> what you've got, you laid it out perfectly, joe you have two sides to this debate the china talks and the china doves. that's why you're seeing those senior administration officials and sources familiar with being quoted in those stories that you've just been reading and, you know, my experience is that often the people who are quoted using those terms are
exactly who you can are quoted using those terms. but ultimately, you've got a split here and the president has to decide and he does like being in a position of watching his aide he battle it out intellectually and making the decision of which way to go. it look like the president is siding with the moderate he on his team which is frustrating to those like navarro who wanted a harder line on china you see steve mnuchin out over the weekend saying the united states is going to hold off on those tariffs over china >> we have agreed to put the tariffs on hold while we trying to execute the framework the president has been very clear that we are going to reduce the trade deficit
>> aide he have talked about a $200 billion reduction in the trade deficit with china, but they've walked that bag significantly. now they're not committing to any specific number. i talked to a senior administration last week who told me that one of the things under consideration as part of this broader deal is to allow greater ownership of china ee firms by american firms and particularly in the financial services industry which would be allowed to own up to 535% of of chinese financial service he firms once this deal is complete if it ever is complete that's one of the things that they're talking about behind the scenes the other thing that happens is what happens to zte? that's the chinese company sanctioned by the united states for allowing business to happen in north korea zte on the verge of going out of business as a result of that action taken by the united states president xi jinping intervening with the united states asking the president to reconsider. here is how larry cut low described what's going to happen to zte next. >> the question is whether there
are perhaps some small changes around the edges i think president trump is doing this because there's some very good feeling between him and china. do not, please do not expect zte to get off scott fro ain't going to happen. >> as of monday morning, the united states and china walking back from the brink of a trade war, ree torically easing tensions but it's not clear exactly what the deal is and what happens to zte in all of this you guys are going to be talking about the secretary treasury at 8:00 i'll be fascinated to hear what he says about where we are right now. >> yes, that's true. that's true. >> any given day, ayman, we could have -- i could have like ten other things to talk to you about. but i think as a business network, this is what we should be focussing on today. you know, even during the election, trade war with china what is this guy going to do
he's not a free trader everybody that says what keeps you up at night? every stock market guy, every economist, trade wars, trade wars theoretically, this would be good if actually china did agree to some concessions and if we don't really give up too much. we would be in a better position than we were, i guess, before. >> the question is what is it that's been weighing on the dow all year this year? >> from tax reform to trade stuff, tax reform which everybody liked and then we went to something that could back fire theoretically >> the white house is really focused on the dow they haven't talked about it a lot this year because it hasn't been as big of a story for them.
>> hanging in there, though. >> it's frustrate to go some people, the china hawks inside this administration are frustrated because they feel that some of the doves are making this deal because they're concerned about the dow. they want the market to get back and they're focused on that and the hawks feel like they're going to give away the store in order to do that >> so jim tisch of the famous tisch family, jonathan tisch and the giants and everything, westinghouse air break, silly rabbit, so westinghouse air brake is what it's called. but jim tisch is watching squawk he has insomnia or something he's not watching somebody else in the morning we like that >> hey, ayman. >> yeah. >> i just want to understand -- >> a shot coming here. >> what's that >> what? >> what? >> gist a shot at the trump administration >> no. i just wanteded -- >> i just know it's coming >> i wanted to understand the
permane p permetations of sort of how the dominos fall it's not clear, right? what negotiators told me last week on friday afternoon is they were prepared and larry kudlow said this publicly they were prepared to continue negotiating and it's not clear what the deadline would be. steven mnuchin saying we're putting the trade war on hold. that doesn't mean it's off so the question is if they continue to negotiation that threat of tariffs is pauld back, but presumably if negotiations break down, the administration could bring those tariffs back into the picture so, you know, that's a question for steven mnuchin you guys will be able to ask him >> let's get an update of what you know on nafta right now, too. that's the other big trade question that has been hanging over the markets >> yeah. >> that deadline has come and gone that paul ryan spoke about. what are the odds and what do we
think is happening right now >> well, it looks like it's going to be tougher to get a nafta deal every day you go along, they have to get congress to take an action even if they come together with the deal so they've been hoping to get a deal first early in the year right around now and then be able to move something through congress before we get into the thick of the election season and that looks like that's going to be harder and harder to do. they say they're not giving up on the negotiations. but we've seen some statements from robert leitheiser saying they're very far apart you see other voices inside the administration saying, no, it's not bad as all that. lightheiser, they're down playing the success for political reasons. it's unclear whether there will be able to be a deal in the first place and then it's unclear whether they can get something through congress in the second place >> and you've got the freedom caucus lining up with the progressive wing of the democrats to defeat the farm
bill >> fascinating, right? >> you have the speaker of the house who is stepping down >> maybe so lame it ushers in a speaker from the other side. >> so i don't know >> look, paul ryan has said he's not going to step down before this election. he wants to be in charge until november at least. the question is whether he has any real leadership at this point. you saw the conservative republicans sort of go aw on ol on him over this issue of hard lime immigration bill they like to see they say they're not going to vote for the farm bill which is usually not controversial until they got their deal and they didn't get their deal so they walked >> you could -- >> that's so funny that you get far enough out on both sides that you end up like a time space continuum. >> it's like a full circle, man. >> it's like steven hawking stuff. >> anyway, thank you >> you bet >> watch the wedding, ayman? >> i did not >> you saw none of it?
>> we fought a revolution so we don't have to care about those people >> i didn't watch a minute of it, either i read up on it, but i didn't watch a minute of it >> tough words >> that was tough. >> i wish them all the best. they seem like a lovely couple >> it was beautiful. she was resplendit >> strong allies we get together. we have a u.s. bishop and -- >> the castle. an american princess "stand by me." >> ayman, it was on nbc. that's all you need to know. and wilber frost was on. he did a nice job. >> subtitles i knew what he was intimating, sort of. >> i didn't watch a second of it, you know >> he had some serious -- over there with -- it was like they were deferring to wilf because he's almost royalty. >> his father served >> yeah. >> we'll see you soon. stock futures rising sharply
as we mentioned, up about 240 points or so cathy jones is chief fixed income strategist at the schwabb center for research and michael thompson is president and chairman of the s&p 500 investment advisory services michael, let's talk about this the dow is indicated up by about 240 points this morning largely because of this news that we've heard that the trade war is on hold what does that mean from a markets perspective? >> i think the market is kind of interesting right now. you can take 23% growth, quarter one. fantastic growth, best several years. this china deal, it's big. we talk about trade deficits we always focus on manufacturing and industrial we have a huge trade surplus and services in our economy services we're very strong in international banking. so just as a side note, we have 30% earnings growth. generally what i think is markets have gone up again to about 16 times multiple, just
below 17 seems to be a pattern here you know, the economic narrative is strong as a testament to that you see the dollar increase. a price of oil increase. and a 3% plus tenure has not stopped this market. >> a 3% plus tenure did put a pause of things last week. we had so many up days in a row and the markets overall were down for the week. we lost about 116 points for the dow and the nasdaq was up, too >> we're up 2% for the month and up 16.5 to 16.9. and i think what you see in the market is now this rain setting in you're going to see this market going from 16.5 to 17.5. technology is outperforming value. they're going to be most vulnerable >> but you go back to earnings and you're right first quarter earnings was great. we keep hearing peak earnings and we've gotten to the best we're going to see is that true that could be a big factor in
how the market goes from here. >> 18%, 21%, 18% how is that? and broad based strength >> and i'm sorry, you're talking about earnings gains for year over year basis for each of those quarters >> i'm talking about the -- yeah, earnings growth year over year for the next q1s and joe asked the question last time, well, you know, is this market's narrative becoming untethers. i'll tell you what, there's a question about what corporates are saying about softening, protecting themselves. why are they buying back more stock than ever? we have record buyback so if they're saying that, then how does that jive with them going and saying i'm going to go buy back records >> stock buy backs have not always been the best indicator of a future performance for some of these companies >> yes they've made morning mistakes. >> and you're talking about corporate -- i think you're talking about ceo buying, insider buying is always the opposite but corporate buybacks aren't necessarily -- kodak and ge
shows us how they can be >> we had a hat. i love 20,000 on the way through. i thought it was amazing but now it's like -- i don't know >> let's talk about that, the ten-year pushing behalf above 3%. that did give people pause, i think. i don't understand why you should know if you're a rationale being, we're headed back 3%. how much does this concern you >> not too much. we were looking for the peak this year in ten-year yields somewhere around 3.25, maybe as high as 3.5. that's probably a stretch at this stage of the game but the market is perceiving stronger, real growth and more fed tightening down the road and i think that that's what's being reflected in the ten-year, not so much inflation expectations >> so even if the yield curve tightens,ite not so much to be worried about. >> the part you want to worry about is the short end, three
months versus a two year or five year that's the bank profitability. if that inverts onereally tighten financial conditions but at the long end, it's telling you the market is not perceiving a lot of inflation down the road. and i think that that is not particularly a concern, then >> would you tell people to buy bonds right now? >> we like the short to incidenter immediate part of the curve and we're saying credit quality because you're not getting a lot of risk premium in the lower tranche s and high yield. and we're under weight emerging markets. >> cathy, michael, i want to thank you both for coming in today. good to see you. coming up, it's graduation season and we heard from some high profile business leaders over the weekend, including hedge fund manager david kepper, who spoke about his bid to buy the carolina panthers. we'll talk about that at a graduation ceremony. >> cramer gave a commencement speech, too. we'll talk about it when we come back
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4e7b8g fund manager david tepper receiving an an roar doctorate from carnegie mellon yesterday. he is awaiting approval for his bid to buy the cloivarolina panthers >> a kid is on the verge of getting the nfl's approval to buy the carolina panthers. >> that is great >> i've had an incredible life from humble jennings i' i've had a successful business career, and incredible philanthropic philanthropic indevors >> hillary clinton spoke at ill university's commencement. you may remember that hillary clinton graduated from yale's law school back in 1973.
>> we also also witnessing an era of new civic engagement and a sense of devotion to our democracy and country. so here is the good news if any group were ever prepared to rise to the occasion, it is you, the class of 2018 you've already demonstrated the chaktder and courage to heavy you navigate this tumultuous period and most of all, you've demonstrated resilience. >> this is the commencement speech at bucknell >> if things don't pan out the way you would want because life after graduation is rarely a straight path, there are twists and there are turns and roadblocks and defeat is and you must know how to negotiate them and negotiate them gracefully, earnestly as possible.
college, as you will certainly learn is not an on-ramp to the hov success lane yay, jim cramer. >> the online to the hov success lane >> it's a good one >> his daughter was graduating from there, too. i saw some pictures on his twitter feed >> big bucknell guy. where is bucknell? >> outside philadelphia. >> pennsylvania, right >> sloppy, foggy day for the preakness. >> i'm so excited. >> justify was a favorite. he didn't disappoint he beat seven other horses to capture the second jewel in the triple crown the belmont is on june 9th >> i did watch >> i can't believe the guy was able to call it.
it's hard enough to call it on a normal day >> justify didn't have a lot of rest but still, that horse right there, if it had been a little bit longer, that horse -- >> but it wasn't >> yep >> and this was -- the belmont is half a kilometer longer, i think. i think this was 1.9 kilometers and the belmont is 2.4 >> justify loves when it rains so i hope it rains they asked mike smith, how did he run he was tired, but i'm worried about getting excited. >> i'm excited at the opportunity. you might actually get to see the triple crown >> yeah. we just saw one. >> i know. but you might actually get to see it again
>> i'm just telling you, it's lodger at the belmont. we'll see. >> nervous nelly >> it's a longer race. >> i know, i know, but he pull it out >> and if it had been the belmont, he wouldn't have run. >> but i hope he rains because he loves the mud >> i'm going to start wearing when i ski, six pairs of goggles, keep throwing one off so much powder is coming as i'm cutting those -- carving those turns. how much goggles do you wear, just one pair? >> one nice pair of smiths, yeah they're nice coming up when we return, board room battle for control of cbs. we're going to bring the latest on the saga, the season oprah to can control the red stone's media empire plus, election results from venezuela that could have a major impact on oil prices we're going to tell you about those as we head to a break.
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they are on the rise in large part because at least it seems for a moment there is going to be no trade war with china the dow looks like it would open up about 232 points higher nasdaq, 44 points higher and the s&p 500 up about 15 points >> and today is an important day for the intersection of u.s. foreign policy and oil mutual caruso cabrera is here with more on why it matters. explain to us why this guy can still get elected down there it would help me out >> i don't know if there were free and fair elections. >> does that happen there, too, as well as here? russian collusion down there, too? >> i think it was just pure scam, pure voter fraud so when it comes to the oil markets, first event happens 2 1/2 hours from now secretary of state mike pompeo makes his first major foreign policy speech. it is on iran. the administration just pulled
out of the nuclear agreement with iran and now we're going to learn more about how aggressive u.s. wants to be in counting iran's influence in the middle east the location of the speech is a clue the heritage foundation, a very conservative think tank. second thing to watch for is how the administration responds to venezuela's so-called election yesterday. no one was shocked to here that nicholas maduro was re-elected as president the government says maduro won by a margin of victory independent polls leading up to the election suggest he was behind by 8% treasury has been explicit stating that venezuela should not hold this election which has been labeled a sham by many institutions and on friday, treasury fired a warning shot sanctioning more venezuelans there's a lot of expectation until the market that has some point there's going to be sanctions on the oil sector itself strokest sanctions would be an embargo. they supply roughly 600,000 barrels a day to the u.s
could be lower because their production is collapsing >> a 47% margin ofvictory. >> open sigposition called for boycott. it wasn't 90 plus percent. like cuba is 99% >> russia. >> with some of these elections. but i guess is there a full oil embargo that could potentially come from venezuela oil? >> i think eventually, yes nobody expect it today danny of andean capital was on cnbc on friday and he thinks the way it goes is this. more individual sanctions today against members of the regime. eventually at some point they're
going to start doing things like prohibit sale of dillutants from the u.s. eventually you probably get to a full embargo of oil if something doesn't change down there. >> thank you, michelle we want to talk about the soap oprah we talk about. sherry redstone wants to merge cbs with viacom. cbs's board is trying to dilute redstone's voting power. they called a time-out in the last week. joining us right now, steven batelli, a reporter for the "l.a. times. and ed lee is also here. steven, the question that we've all been grappling with is is there any way for either side to ultimately win at this point because we've talked about about it the idea that sherry redstone wins probably means that she sdut get less, which mieps that the stock goes down and people have questions
and if les were to somehow win, it becomes very xwlikted ite possible the whole thing unravels. >> that's the win, right >> will he has done a very good job of tieing the success cbs to hi personality, to hi for of will he's done it when everyone said you can't do it. broadcasting is dieing he what -- he revitalized the company. he found a way to adapt it to the digital future while also respecting it traditions and the value of the ma appeal audience.
>> is this really about the deal of viacom or is this more about who is going to be looking over les' shoulder if that deal went through? >> will he want control. that's what ee wanted from the beginning. when they talked about this two years ago, he say, sherry, i'll do it, but this is what i want i've got to pick my people i have to have my board. and i've got to do it my way and i have the track record to show that my way works >> right >> by the way, my understanding is they're okay or willing to accept the viacom deal, so to speak. >> there was a moment in which they were. >> economics -- look, this is the share structure we can work out. >> so long as you had the autonomy to make it work, right? we think that's not really right? >> even with the autonomy, he knew it wasn't real. will he' real end game, what he really want, independence. but to the point of being able to sell cbs. >> but is this really about hi own inspect to operate the by
the way he want or is it really about selling this company to a verizon or somebody else >> you can imagine other tech company would come forward if they knew he didn't have this obstacle of the dual ownership in front of him. >> sherry said in public, i don't want to merge they two, cbs and viacom if both have to -- in other words, they both have to ascent, right? >> but she said repeatedly, she doesn't want to sell any part of the company. >> the other piece of it, anything that dilute he hhe her control in any way >> there are a lot of companies that have this dual ownership shape.
i understand it from the ceo of other board ownership responsibility but there are a lot of company looking at this saying what happened here is going to determine -- >> google and others >> it's not control of the story. am i wrong >> there's voting control that the a has more than the b. >> most of these dual classes are -- >> are the founders. >> are a founder control stream. my question on the control piece, though, is could sherry ultimate say, les, you can stick around is that okay i mean, is that even a plausible scenario because let's say she wins
which i think, by the way, it's likely it's hard to imagine 2450er truly going to let they with the shares >> but if cbs can prove that her actions are intended, and this is where it gets hard. she said i don't want to merge the two. you're acting not in the best interests of public shareholders, then we can sort of dilute your control over it >> and how much turf is there up to this point that they could heal this and move forward together >> sort of an l.a./hollywood question les got a big standing ovation at the up fronts last week >> yes, he did >> has this had any impact on the operations of viacom or cbs over the past year in terms of eyeing new product content, distribution, something? >> cbs is putting their schedule together and i was told by
people there that they proceeded with business as usual this cloud is hanging over it. les has expressed some -- a little bit of gallo's humor about it and also has shown some emotion, too. is this the last time that we're going through this, this tradition of unveiling the schedule and going out there to the audience i've been to a lot of up fronts over the years i've never seen standing ovation for an executive usually they're fired before anybody can pay tribute to them that way it doesn't -- they have shows. they're getting pitched to for projects they're proceeding as normal this is one of the outlets out there that you can go to to distribute your program and generate a lot of money. >> thank you when we come back, the eu cracking down on data privacy. we will tell you about the new rules that take effect this week that's next. coming up, john barrasso
welcome back, everybody. here is a quick teaser for you, it is called the gdpr, or general data protection regulation it applies to companies within the eu as well as companies that offer there. companies will not be able to use vague or consuming statements to get customers to give them data the rules say it must be easy for customer toes revoke their consent. companies have to notify regulators within 72 hours of becoming aware of it there are penalties that start at around $25 million but it could be as much as 4% of a company's global revenue that's why companies have been
paying such close attention and i would say are really for this to be rolled in. i think the big issue is will other nations follow these rules. >> we will see whether they will follow these rules coming up when we return, the country's best young economists gathering in new york two of the competitors, they're here with steve liesman. eye e eyre th'rgoing to join us right after the break. at&t provides edge-to-edge intelligence, covering virtually every part of your manufacturing business. & so this won't happen. because you've made sure this sensor and this machine are integrated. & she can talk to him, & yes... atta, boy. some people assign genders to machines. and you can be sure you won't have any problems. except for the daily theft of your danish. not cool! at&t provides edge to edge intelligence. it can do so much for your business, the list goes on and on. that's the power of &.
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♪ welcome back to "squawk box. elon musk out with some details on the model 3 two new versions of the model 3 announced with dual motors it will cost around $78,000. it will be faster than a bm bmw m-3. this all comes as a recent report suggests it could take a production leap despite its well publicized production issues the next generation of economists is competing today in new york in the national economics challenge. steve leisman joins us he's brought some special guests with him this morning.
>> every year i've been moderating the annual contest where we find the smartest people in economics. and i guess the best way to describe this is ridiculous in that how smart and amazing these kids are and they're only, you know, 17, 18 years old and they're well on their way to genius status is what i would say. joining me now is jennifer young from mt. hebron high school. is that what it is >> hebron, yeah. >> and jing-ling whan. second year we've had competition from the chinese students jennifer, why don't you tell us what you're planning to do with this economic education of yours? >> well, i think e con is applicable in day-to-day life in terms of making financial decisions. even if i don't major in
economics, there's so many real world applications >> you're going on to the naval academy? >> yes >> what are you going to do that >> i would like economics but i think i'll do cyber operations instead. >> are you a stiglitz type or a friedman type? are you a supply cider or entitlement stay what are they teaching you in economics? do you get a fair look >> we tend to look more at the classical and neoclassical models but we get exposure to everything >> i said so many times you could win a nobel prize on either side of an issue and -- biology or medicine or physics, it is or it isn't. that's why it's a dismal science. >> it's like economics is not rocket science it's harder, right we can put this thing up in
orbit but we can't figure out what the -- >> it may not be possible to ever have real objective truth >> how did you get into economics? >> actually, we were studying economics in school and actually i discovered that economics is a lot of fun and i started -- >> wait, stop. fun? >> you guys don't believe it >> no, tell us >> we try to have fun here every morning talking about economics. >> so economics is like, it's very logical and it can be applied to our lives like, for example, like, opportunity cost when you choose to do something, after studying economics you can be aware that everything comes at a price so that should be -- you will be acting in a more rational way. >> i think if 70% of americans learn that, we'd be better off let's look at some of the
questions. these are from last year you guys can play at home and you can try to answer these. let's call up the first question here do we have it here okay ceteris paribus. do you know what that means? all things equal what effect will an increase in discouraged workers have on both labor force participation rate and the unemployment rate? >> it will decrease the labor force participation rate and the unemployment rate. >> did you know that joe >> yeah. we talk about it all the time. >> okay, good. >> i didn't know it when i was 17 or 18 >> that's why you think it's lower but it's not you know, that's the -- what's his face princeton guy versus -- >> krueger >> yeah. >> expected inflation or expected deflation which would be the cause of an inverted yield curve >> can i see the question? >> we flashed it
>> guys, put the screen back up. >> we have to have game show rules around here. >> and i don't think you're answering in the form of a question which you need to >> no, no. this is "squawk box. >> expected unflags or expected deflation, which would be the cause of an inverted yield curve? >> deflation. >> that's right. a property tax that is based on a fixed percentage of the value of one's home is the -- most likely be a progressive proportional, or regressive tax? >> it's normally proportional, wouldn't it? >> not if it's fixed >> it's fixed. >> but it's based on a percentage >> it would be regressive of your home? >> that's not regressive if it's fixed, it's still a percentage >> we may have to consult the judges on this one
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u.s./china relations in focus after secretary steven mnuchin says the trade war's on hold futures looking strong this morning after those comments complete rundown of what it means for business straight ahead. oil on the move. will prices remain higher? and what does it mean for your wallet as we head into the summer driving season in. plus off the rails general electric in talks to sell its transportation unit that story and other corporate headlines as the second hour of "squawk box" begins right now. ♪ live from the beating heart of business, new york, this is
"squawk box. >> good morning. welcome to "squawk box" right here on cnbc we're live at the nasdaq market site in times square i'm andrew ross sorkin with becky quick and joe kernen we have green arrows across the board in large part. we'll talk about it in a moment. it looks at least for now a trade war with china may be put on hold. that's leading the dow at least up in the futures right now to about 240 points nasdaq and the s&p 500 also looking up let's get you through some other headlines. the price of gasoline continuing to rise. the latest lundberg survey showing prices up by ten cents that puts the national average up $3 per gallon i paid $3.29 yesterday ihs market is buying smaller rival ipreo for nearly $2 billion. it's currently owned by private
equities run by blackstone expected to close in the second half of the year a deal worth $4.7 billion. shareholders will receive 1.45 shares and $5.54 for each share of cash they now hold. that comes to $50.20 per share it's a premium of 24% over friday's close treasury secretary steven mnuchin saying the prospect of a trade war is on hold >> we're putting the trade war on hold. so right now we are -- we have agreed to put the tariffs on hold while we try to execute the framework. the president has been very clear since the first meeting with president xi in mar-a-lago that we are going to reduce the trade deficit. we have an agreement with china that they will substantially agree to it. i would just comment that
ultimately these are not government to government transactions it's not a giant purchase order with us. >> eunice yun joins us >> secretary mnuchin's counterpart was presenting this outcome as a win/win that term is usually described as standard language when the chinese are describing diplomatic relations generally but it was all over the press today. the vice premier before he left washington had said that this was all good for everybody because china would be able to buy more american goods and that the u.s. would be able to narrow its trade deficit. and then both sides would avoid a trade war because they both pledged not to slap tariffs on each other now, there was another interesting message coming out of the state media today nap is that beijing stood its ground
despite the pressure from the trump administration saying that beijing appeared strong because it resisted pressure from the trump administration on three bottom lines. they didn't budge on any change to china's industrial policies and that is using government money to support new high-tech industries, that the negotiators refused to commit to any target that was specific for the trade deficit. as you guys know the trump administration was trying to get the chinese to stick to a $200 billion trade deficit reduction. that was what all the talk was about. also the trade deficit would be reduced by china increasing u.s. imports rather than cutting chinese exports. and that chinese have also been selling the idea that by increasing u.s. imports into china, that is a decision that the chinese wanted because it would be good for chinese consumers. guys
>> okay, eunice. thank you. this is not over and we'll need you we'll talk to you again. thanks meanwhile, general electric has reached a deal to merge its transportation division with rail equipment maker wabtec. the transaction's valued at $10 billion after adjustment it's the latest series of moves by ge to prune its portfolio shareholders will get a 51% stake in the combined company. let's get to bring in our guest host for the hour. senator john barrasso, republican of wyoming. he's also an m.d and senator, just in case, what was your -- did you have a -- >> orthopedic surgery. >> so if one of us trips going over to the chair, you can help.
if i get a back spasm. >> in wyoming i was a rodeo doctor taking care of the bull riders and the bucking broncos and the steer wrestlers. >> they need you >> yes they do. >> stay close. so before -- i think we knew you were coming on last week we did a pre-interview talked all about nafta and north korea. that was before what happened with the trade war being put on hold so i don't know how you feel about this how do you feel about it who's in charge? sit the kudlow/mnuchin wing or the lighthizer wing? >> the president joined us last week at the republican policy committee. the week before larry kudlow was there. we continue to talk trade and economy. the economy overall, we have a strong, healthy, and growing economy. it's important for kids coming out of college or high school. the job market has never been stronger in the last ten years we're happy with where things
are and where they're going. i think trade is very important. i'm happy with the word out of china when they talk about wanting to have more things coming in from the united states they're talking energy they're talking in terms of agriculture and wyoming. that's natural gas, coal, number one cash crop beef >> so which side are you with? >> i'm much more for free trade. we have products we want to sell overseas i think it's important you just had those young students on here that are participating in an economic contest today. if you ask if trade is a good thing or a bad thing, they'd say a good thing >> when we look at the pushback from china and the red states that were won by the president, would wyoming be one of those? >> less so than the bread basket, the soybeans, all of those. i was in china last year we brought beef from the rocky mountain west to the premier when we met there. i think it's important to have those markets open >> if china followed through and
bought more from us like they're promising to do and the tariffs didn't get any worse from where they are here, would a free trader say that is the right strategy to pursue after years of being, perhaps getting the short end of the stick with china? and if you don't get a full blown trade war but you do get concessions, would a free trader say that was the right thing to do >> that's the right thing to do. >> so it's not diametrically opposed to trump >> no. we know what china does in terms of cheating, cyber, markets, trade is secrets >> this doesn't chaung anything with the cyber >> no. >> how do we fix that? >> with china 2025, they're looking to have world markets and various other things artificial intelligence, robotics >> talking about technology, what did you think of trump's initial tweets related to zte? >> well, i thought that zte had been violating issues that we
should have withheld american products to em tthem now that's been reversed by the president. there's a bigger term at play. with the flow of dollars and the nuclear weaponry so it's all part of a bigger picture. i worry about national security with zte >> should zte be used as a chess piece in this larger conversation you just described? >> well, the president -- >> he's using it as a chess piece. >> i have concerns about national security with zte i worry long-term about what their impact is going to be on america. >> so the security concerns of north korea would be larger than the concerns of zte. >> right now >> with the suggestion that the longer term security issues relate to china. is that where you're headed with that >> it is in terms of what's in cell
phones, tablets, in a time we're all connected. we're all vul verbnerable and ts my concern in terms of north korea with a nuclear weapon which they have, the world is less secure, less stable if we want safety and security at home, you need peace and stability overseas >> it's been interesting twist that that's how we get beat. with cell phones we give the concessions on the cell phones -- >> this is why that tweet, i think, terrified so many people in washington. >> near term, you don't want to mess up that north korea -- you know, if something -- >> by the way, also unclear what's happening with north korea right now. we sat around saying that we were going to have these great negotiations it's unclear whether those are going to happen. >> hope springs eternal for you. it could all collapse. >> no, no. we're sort of having a mission accomplished sign behind this -- >> it might still just -- >> i'm skeptical about north
korea. >> how do we get -- is there any reason to think china's taking it seriously in terms of intellectual property. and do they get off of it now with no tar roughs is the end result they don't have to change anything? >> if you had henry kissinger here rather than me, he'll say china always thinks much more long-term than we do that's how they're thinking down the line they have a premier who has ultimate power now no elections, nothing. they're having a much longer term they have their strong power militarily they have their strong power economically they have their sharp power in terms of how they manipulate opinion worldwide. they are sophisticated at what they do. >> yeah. what's going to happen with the farm bill?
normally pretty easy piece of legislation. nothing's easy >> nothing is easy anymore and the house failed to pass it. we're on a path to get it passed in the senate. we'll have to get something passed in the house and find a solution for this. >> all right nafta going to happen? >> well, that's the big debate that we also have at the senate policy discussions with this, nafta as it is now i believe is working well for the economy. but is it a great deal could the president get a better deal yes, he probably could i would rather it not come to congress there's ways that lighthizer has to do a nafta light, if you will >> it's a skinny nafta you see that, sorkin it's like a skinny margarita is there such a thing as a skinny nafta that can be done? >> how can nafta be changed to our advantage that doesn't have to go back to congress to get another vote to try to get this passed in congress i think is a -- it's a lot of heavy lifting and most people in congress and certainly the republican side would say let's lee it as it is.
if you can work around the edges to improve it for the united states, absolutely do that >> can carpal tunnel start hurting right here >> doctor? >> more you get the tingling in the fingers. >> my wrist -- and it does hurt when i use my iphone. >> is that the kind of medicine you -- >> well, it's something to get a shot for if that doesn't work, i'll make the incision and make the tendon. >> is it like arthritis? >> it's tendonitis >> this finger suddenly if it's bent, sometimes i can't straighten it out. >> it's a trigger finger >> you've heard of this? >> i have, yes alan greenspan had the same thing he talked to me about. >> he's 98 or something. >> you're getting there. you're getting there >> senator, stick around joe's got a lot more ailments. >> he's not 98, by the way >> he's as sharp as can be >> he is
i mean, we can all aspire to be an alan greenspan at 93, 94, whatever he is >> the senator doctor is staying with us -- >> at break i've got one more question you >> a programming note for you, let me hurry through this. we will hear from steven mnuchin at 8:00 a.m. eastern time. just 45 minutes away when we come back, though, the china trade rhetoric pushing markets higher much more on crude after the break. meantime, check out the futures at this hour been sharply higher this morning on the china potential deal news dow looks like it is up by about 237 right now. sdp would open up by 16 and the naaq by 48 we'll be right back. you're watching "squawk box" on cnbc this mercedes-benz ink a for under $34,000 looks like... ...think again...
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and they're going to charge for checked bags for some of the cheapest coach class tickets. you really need a bag when you're traveling and expect the airlines to cut some underperforming routes. >> routes, routes. maybe you don't need a bathroom when you travel. it could be cheaper. >> obviously got to pay for that oil prices have been on the move putting pressure on the gas pump joining us now with a crude check on reality is the executive director and head of oil market research at strategy at jpmorgan. thank you for being here today >> thank you for having me >> let's talk a bit about what's happening. there are two major issues pushing oil prices higher. the first is the president did decide to pull out of the iran accord and we also have the election in venezuela. we wonder what will happen on those issues which is the more important? >> i think the first one for
sure has already been priced in when it comes to the iranian sanctions. and the second one, venezuelan election, we know the results now and clearly what we have heard that it'd said if you don't have democratic -- in a very balanced market that we have. >> so the supply is the issue now. world demand looks pretty strong and that's continuing to be there. but we also know that production has picked up in a lot of places brian sullivan talked on the program before ours and talked about how north dakota is now pumping out 1.2 million barrels a day. which is phenomefophenomenal how does that sort of balance with all of this >> sure. higher oil prices are incentivizing u.s. producers we already have a strong number in our own outlook at around 1.5 million barrels a day.
and that number in itself is likely to be slightly higher because of the higher oil prices expected however, there are a lot of logistic constraints otherwise we're expecting from the actual support that are from the basin. if you were to see increases in protection from north dakota or even eagle ford where there are less logistic constraints, those constraints are not -- >> what are those constraints? >> pipeline capacity is basically not enough to handle the growth and production in permian basin. so that clearly is going to be one of the resistance that you're going to get in production growth this year. it's not that u.s. cannot produce more, it's just the
pipeline capacity is not enough at least from the main growth region >> which is why you come to your strategy of telling people you'd be long oil for delivery this july but short for next july >> no. on the contrary. i think if you were to see basically based on brent, on the brent side which is far more geopolitically driven. it's definitely a case of long before we definitely see that the higher demand especially from the trade war is clearly very supportive now of brent or the more global benchmark. but we have got thisdichotomy. of the u.s. supply demand balance. it's clearly one of the biggest issue is on the supply side is the constraints we're noticing >> all right
we want to thank you for your time >> my pleasure coming up when we return, we get more on the trade rhetoric talk at nafta with the ambassador to canada in a couple of minutes and steven mnuchin is going to be our special guest he's going to join us at 8:00 a.m. eastern time to talk all about the deal or no deal with china and tariffs. stay tuned for that interview in st menwh "ua" returns. can i get some help. watch his head. ♪ i'm so happy. ♪ whatever they went through, they went through together. welcome guys. life well planned. see what a raymond james financial advisor can do for you.
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welcome back, everybody. couple of stocks to watch this morning. united technologies is selling its ice cream and frozen drink machines business. the buyer will be middleby we'll keep an eye on that stock. right now united technology's shares are down. fuji film is still tries to buy xerox. fuji film says it will not
negotiate with shareholders carl icahn and darwin deason. coming up, the former u.s. ambassador to canada during the obama administration joins us from chicago to discuss the latest nafta talk. plus elon musk announcing a high performance model 3. details straight ahead "squawk box" returns after this break. at crowne plaza, we know business travel isn't just business. there's this.
♪ good morning, everybody. welcome back to "squawk box" here on cnbc we are live from the nasdaq market site in times square. among the stories that are front and center this morning, shares of tesla are higher in the premarket trading. e lolon musk announced two new versions of the model 3 including a performance version costing about $78,000. a report is out this morning saying a gross margin is
comfortably achievable the stock up by 1.5% shares of chicago-based bank operator mb financial are surging this morning the bank agreed to be bought by fifth third bancorp. that's a 24% premium over friday's close for mb financial. and "the avengers" were finally defeated this weekend. "deadpool 2" topping the box office that ended a three-week run for "avengers: infinity war. >> we were looking to maybe go somewhere. that was all that was around if you don't want to watch a superhero -- what if i want to see "sense and sensibility" or something? >> itunes, my friend netflix. >> what if you want to go to the theater? >> there were no good kids movies too
>> there was a dog one we also ended up -- >> "the best in show"? >> something like that though. >> i saw it. all right. the president just tweeted president trump just tweeting, i ask senator chuck schumer why didn't president obama and the democrats do something about trade with china including the theft of intellectual property, et cetera. they did nothing with that being said, chuck and i have long agreed on this issue. fair trade, plus with china that's going to happen then he tweeted that china has agreed to buy massive amounts of additional farm/agricultural products would be one of the best things to happen to our farmers in many years. >> "show dogs. that's it. all right. okay we will get back to movies and trump's twitter feed in just a moment but in the meantime, nafta talks are entering a critical stage as congress is running out of time
to vote on a deal. we want to bring in bruce h heymen thank you for being here trudeau said positive things about where things stood with the united states last week. then you heard lighthizer say we're not near a deem. he said there's gaping differences. who's telling the truth? >> well, both can be talking the truth. two people can look at a glass half full and half empty and have different perspectives. but both be accurate i will tell you, i think representative lighthizer has mismanaged this process from the beginning. and so has put us in a difficult place here today and second, i would say there are significant push and pulls going on in the republican leadership, the business community, and the west wing as to what the path ahead should be there are paths now to getting the deal done. but they're narrowing quite rapidly as a result of
mismanagement by lighthizer. >> let's go to the mismanagement. then the paths you look at this and say there's mismanagement. how? >> so there are two specific ways i'd like to highlight but there are many others. is tr you had canada and mexico even during the transition period raise their hand and say i want to update nafta. there were meetings taking place very early on to do that here we are a year and a half out of the election, at least a year and a quarter out of the inauguration and we have very little accomplished. this should have been done in 2015 we have now in 2018, tpa the trade promotion authority. we have those deadlines. the second, we have a presidential election on july 1st in mexico. and the third, we have midterms in the united states so all of this is jamming it
so that's number one number two way of mismanagement is you've laid proposals down on the table where you know your partners, your best friends, and allies can't accept. either you're doing that as a negotiating strategy which seems crazy late in the game when you're jammed on the calendar, or you're being -- you know, it's just a hostile move and you don't want this done so i think this should not -- we shouldn't be at this place right now. >> okay. ambassador, hang on for a half a second we have senator ba rrrasso here. he put a challenge to the party. >> he's right about the mexican elections. he's right about the fact you don't want congress jammed on this be very difficult to get something passed through congress i think there are things that can be done. we need the trade. i think it's important it's certainly good for my state and the country. has proven to be successful. could it be a better deal?
yes. but i worry aboutlig lighthizer approach >> you're not that far apart you talked about paths forward where do you see the fault line and where is the path? >> i'm in agreement with senator barrasso on how this is in thenitis senator grassley came out, toomey came out this weekend talk about we need to get this done and so the paths are you have the u.s. chamber, by the way you have much of the agricultural community the paths of getting this done are twofold. one, let's take what we have a lot of progress made in the automobile sector of the past few weeks. let's get rid of these things that we know are nonstarters like sunset clause and disrupting the resolution. and let's come up with a deal we can put on the table that we can get done very quickly. otherwise this is going to bleed
on now and create further uncertainty to take us further into the year. and then in '19 we have the prime minister's election coming up in canada i think we have to make a decision do wasn't to sevaccept what we v right now -- >> we were calling it skinny nafta. what is skinny nafta looking like >> well, skinny nafta looks like -- get this there are 30 chapters of work to be done here on nafta. nine have been done. you have more than 2/3 of the work yet to be done. we have to then agree to agree where we are today and hope we get all of the details worked out between now and implementation but i think skinny means we didn't get the comprehensive deal we could have had a year ago had we taken this as seriously as we should have.
>> and skinny means it doesn't have to be ratified by the congress it does things you want to get done but doesn't have to go to congress for a full reratification. >> that's correct. >> it's tough. >> if you change the law, then it has to go to congress if it's just a modification, the president can push that through. but you still have to get various levels of approval in our trading partners don't underestimate this mexican election there was a debate last night where this was a topic >> there was a time we thought the president was saying get this done by may because i want to focus on china. you know, that nafta is less important than trade with china. now china looks like it's almost, you know, maybe it's not completely resolved, but that's going to be put on the back burner perhaps now we're back to nafta. >> i would say nafta is more important. it's our best chance for allies and jobs here.
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♪ welcome back to "squawk box" this morning take a look at the futures right now. we do have some green arrows after it appears that a trade war with china at least for the moment has been put on hold. we'll be talking to steve mnuchin about that at 8:00 a.m right now dow about 235 poibtnt higher s&p up about 15 points take a look at a couple of stocks to watch this morning general electric will merge with rail equipment wabtec. that deal announced earlier this
hour ge and shareholders will own about 50.1% of the combined company. end vision health care is a takeover target. interested in the provider of physician services and pinnacle foods is said to have hired ever corps partners to explore alternatives pinnacle has been facing pressure when we come back, we will wrap up our hour with senator john barrasso. we're going to talk to him about things that have been happening. also look at the futures this hour you'll see the dow up by 236 points if you're watching the 10-year, still firmly above 3%. it's slightly higher than where we closed on friday. stick around "squawk box" will be right back. t pipes and water damage... soon, insurance companies won't pay for damages.
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it is with the ue and foreign companies that operate there they can't bundle consent for different things also be easy for customers to revoke their concept customers must notify regulators of a data breach within 72 hours of becoming aware of it. penalties could be as much as 4% of company's global revenue. you might, guys, i don't know if you got e-mails in the past couple of weeks. if you've ever gone to europe or spent time there in hotels, they're starting to send e-mails about sending and receiving things it was a fantastic article, by the way, over the weekend about a team of people inside facebook that are based in germany now who are doing all of the effectively keeping -- they're deleting information constantly looking at everybody's information in terms of privacy. it's fascinating how this is going to play out.
most importantly it's important because of how regulations may play out here based on the success or fail yaur of what goes on there. margaret taking aim at google on "60 minutes" last night. >> just as well as i admire some of the innovation by google over the last decade, well, i want their illegal behavior to stop >> that's what you feel has gone on >> not only do we feel it. we mean that we can prove it >> vestager says her company found google was using algorithms to offer its products before others. they argued it was not a monopoly in search and search advertising and said it does not make changes to the algorithm to disadvantage comcompetitors. >> pretty good piece i felt it was from a very certain viewpoint though they have better algorithms than
everybody else but i thought the most salient point wuss how many pages you had to scroll through. page four. it finally shows they do have a great, great, great business and i don't know whether we want the european model for antitrust or not >> i might >> i thought it was weird, andrew i'll tell you why. "60 minutes," you know you're going to get a certain viewpoint. and google and silicon valley -- you know how close google was to the obama administration the left kind of likes silicon valley and google. and watching the left eat one of its own last night, just totally -- you know, letting google being followed by theranos first you got google and they're bad. theranos was even worse. "60 minutes" hates capitalism. >> not necessarily >> oh, yeah.
>> everybody hates fraud >> you saw google. you saw how they portrayed the people that they quoted were -- we knew exactly where they were coming from, the antitrust gentleman, for example. the stuff he said as fact was not fact >> every time we put the on the right or the left, they were not close to obama, not close to the administration >> i don't know. i love google. i found smoois thinking how great google is. it's just amazing that they're great because it's a monopoly because they're so good as what they do. the other people had a chance and now they don't they did a few things maybe with getting on the phone as the search default of choice i understand that. if i see binge, it's like get me out of here. or yahoo i don't want that. where's this google? you're not going to stand up i thought you love google?
>> i think that google does a great job. i think you have to try to respect the law and -- >> senator, as somebody who could play a regulator cracking down on this, what do you think? >> we said for everyone new regulation we're going to get rid of two old regulations i don't see regulations coming in on this at this point >> there you go. you also don't see any follow on what the eu has done with privacy standards. >> well, we're concerned about price, the big discussion is privacy versus security. always >> when's the last time europe had a start-up like google or apple. i would be unhappy, too, if i was over there with no innovation just watching us just facebook watching the united states kick tucchus. >> in your face. i think there were a handful of things that took place at google that were not appropriate, right? you're game for it >> i don't want yahoo.
i know that. give me my google. it's worked really well. does it not? >> it's a fabulous product it's the best product out there. the question is, what -- >> they do know a lot about us though anything -- they can send me something right now for what i looked at five minutes ago. >> they probably are all right. let's turn back to our guest host for the hour, senator john barrasso from -- that has to have attention not as much in the senate. where do things stand? who has the advantage right now? >> a lot has to do with the senate because we are the group that confirms judges and president trump right now one out of eight members of the circuit courts in the united states are trump appointed judges we have confirmed more judges in the last 14, 16 months of this president in addition to a supreme court justice than in the hit of the circuit courts.
it does hold a majority. right now we're at 51-49 senator mccain has been out receiving cancer treatment so most part for the votes everybody has to be there. mr. trump needs reinforcements we have great opportunities. five states where democrat incumbents are up. >> you're thinking indiana >> north dakota, montana, you see it in missouri as well west virginia with joe manchin and the president is campaigning heavily in those states. he needs reenforcements. >> action oxio put out a statem saying there are uprisings from the freedom caucus wanting things to go their way you could be facing another situation like you saw with the last house
speaker. >> you had the farm bill that went down. you had people making decisions about what somebody can make to for for them the the impact of that individual can make it much tougher which is what they had happen in the house on friday. >> is that an argument for him not staying to the end of the year as he planned to do >> we don't need advice from the house. i don't need to give advice. they need to make their own decisions. we need to hold the house. that's where our focus is as well i think having nancy pelosi, i think it would be harmful and would slow down the things we have going now in america with this great job unemployment rate best consumer confidence we've had in 18 years. you know, she said she wants to reverse the tax cuts that's what going to do to an
economy? cut taxes, get rid of regular lauss. and you unleash energy which is why we're doing so well right now in america >> i have a political question there was another school shooting on friday the this country. and there is a divergent view on what to do about guns in this country. what do you think should happen literally over the year which has been unprecedent >> you need safe, secure schools. children and parents should not have to worry when they go to school in the morning. that that child's not coming home that night. >> what does that mean what are you willing to do about it they had officers in the building so that we're continuing to look for the best ideas. working with others to see what we can do. >> when you were reasoning with me about this, you said bump stocks
i think ar-15s and you want to go to 21 and you want -- >> universal background checks which is something 90% of americans agree with >> in this case it wouldn't have one of the i thinks we haven't talked about -- >> because it was a shotgun and a handgun. >> right >> other than hardening up the school, what would have worked >> one of the other conversations about this is in instances where children effectively steal or take guns from their parents, right? >> right >> whether you want to hold the parents responsible. it's an interesting question meaning if you don't lock up your guns and make them truly locked, should the parents be responsible for this murder? i'm asking the question. if you're going to have a gun in your home and your kid could take the gun and kill people, should you have a responsibility in it at all >> we did it with government offices. we did it with airports. we have hardened up places
the schools are much more -- >> that's one option i'm asking the other question. >> do you confiscate the guns or assume they're going to stay >> or do you hold the people who own the guns responsible i'm asking the senator the question >> you have a 17-year-old adult. you have young people that can go into the military and use firearms to keep -- >> not at 17, but yes. >> but at 18 you mentioned 21 as the age. i don't think those -- any of those lawsing are going to pass. you're going to have local decisions about arming teachers. that's a local control issue those discussions are going to continue we have to make the federal resources vaavailable pep. >> we want to thank you for your time and for being with us today. >> and we didn't get to infrastructure we're going to pass a bipartisan bill on infrastructure tomorrow. >> does it pass and become law >> i believe it will this is the american water
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on hold. that's what steven mnuchin said about a trade war between the u.s. and china he will join us live with the latest on negotiations between the two nations. stocks rally dow futures point to a triple digit gain at the open plus, ringing the alarm. why the founder of boost mobile says the company's merger with t-moblie is a bad deal he's going to explain first on cnbc as the final hour of "squawk box" begins right now. ♪ live from the most powerful city in the world, new york, this is "squawk box. >> good morning and welcome back to "squawk box" on cnbc live from the nasdaq market site in times square i'm joe kernen along with becky quick and andrew ross sorkin
let's get a check on the markets. the futures are up i was checking them last night after the word came out and they were immediately a little stronger based on the news of the day. and that has to do with china. the premarket gains have a lot to do with comments from our next guest who's coming up right now who said in his words that a trade war with china is on hold. president trump tweeting this morning, i asked chuck schumer why didn't president obama and the democrats do something about trade with china including theft of intellectual property, et cetera they did nothing with that being said, chuck and i have long agreed on this issue. fair trade plus with china will happen he also said china has agreed to buy massive amounts of agricultural products. would be one of the best things to happen to our farmers in many years. joining us now from washington, treasury secretary steven mnuchin. and mr. secretary, thanks for
joining us it's great to see you. can you fill in -- give us some color on just the statement that the trade war has been put on hold >> thank you it's great to be here with you i think we made meaningful progress over the past few days. this was our third session of intense discussions. and we came away with a very comprehensive framework agreement that needs to be implemented but has lots of different aspects. one aspect of it which has been the president's focus on cutting the trade deficit and that's by increasing exports significantly. but there's many other aspects we talked about technology transfers. we talked about market reforms we talked about them lowering tariffs, opening up markets to u.s. companies so i think we've made very meaningful progress. and now it's up to both of us to make sure that we can implement it >> that's really clear but when i came in, i expected to see trade war put on hold as
the lead story in "the wall street journal." instead, it was u.s. sends mixed messages on china. different statements from the treasury chief and the trade representative cloud next steps. did they get the story wrong or is it, you know, easy to see there's some disagreement between different parties in the white house? >> i think they got the story completely wrong ambassador lighthizer, myself, secretary ross led all of the meetings i probably spoke to lighthizer at least ten times a day outside of it. i looked at ambassador lighthizer's statement before he put it out it's completely consistent with the team's approach. so bob and i and wilbur are on the same page. we were in the oval office on friday for two hours briefing the president on the extensive discussions. so the team is unified on this >> there's even a quote here i want to know who this is
and maybe you know there is -- i'm quoting. there's a growing frustration with secretary mnuchin getting ahead of both the president and the trade team on the direction of the negotiations. who do you think -- you think that's either navarro or lighthizer or someone that works for them who do you think gave the journal that quote >> i'm not going to speculate. but you know i've been working with the president since the campaign this is an enormously important part of our economic program from day one we had tax reform and regulatory relief. people didn't think we'd get tax reform done. there were people thinking regulatory relief, i spoke to the president at least five times over the weekend and on thursday and friday. he's personally been part of all these discussions. and providing specifics including on the communique. >> go ahead.
>> secretary mnuchin, i wanted to ask you where this leaves zte and also whether you think zte is a national security threat. >> so, let me be very specific on zte i also think the story has been misreported. not a surprise, president xi asked president trump to look into zte that's no different than president trump calling on companies all of the time. we were asked to look into it. he didn't dictate terms. the commerce position was an enforcement issue. the intent was not to put the company out of business. it was an enforcement issue. i think, you know, i chair cifios we're looking at changes to the commerce department. and i assure you they will support our national security position i think there are plenty of people who are trying to make this out to be something it is
not. there were discussions but this was a completely separate issue that the president asked us to look into. >> secretary mnuchin, let me just try to put a finer point on this for the markets we are looking at the markets indicated up by about 240 points the dow today. based on this idea of what you said yesterday the trade war is on hold now, before everybody takes off and heads for the hills with this and really run things up, that is not the trade war is over you are saying that we've made progress, but we don't know what comes next how would you tell people to look at this >> glass half full or glass half empty if you're somebody watching the markets today >> it's half full. what i would have really said is this has been a trade dispute all along. it never was a trade war it's a trade dispute on significant issues both parties have agreed to sus pent the tariffs
they dropped the case on friday as a sign of good faith. for our farmers, this is going to be fabulous right away. secretary ross is going over there. they committed to increases in farm products immediately. in energy, i think this is a massive opportunity for the u.s. to become a major supplier of energy to china. incredible amounts of demand at these prices for our shale and our liquid natural gas this is a great opportunity. alaska has signed on mou, it's being turned into a binding commitment right away. for about $10 billion a year for a very, very long-term i think we can easily get $40 billion or $50 billion of energy and if we can produce and send more, they can take more there are a lot of opportunities. this is very good for our economy, for our farmers and we'll see. we got to execute.
as i've commented, this is not a giant purchase order government to government. we now have to execute on this and china has to execute >> obviously it's going to take some -- what's it? trust but verification because countries don't -- they go -- if it was in their best interest to have been buying energy from us, they would have been doing it all along, i would think. right? it's market forces that cause people to do things. is there -- are there guarantees that it's going to work out? it doesn't seem like any of this is binding and we're just taking it at their word that they'll start buying more from us. >> as i commented on, we have to turn these into binding agreements and those binding agreements are between companies. so secretary ross is going over to negotiate the framework so companies can enter into long-term energy sales of course, at the end of the day, this has to be in our interest and their interest. they do have a growing economy
with a lot of demand they want to diversify a way it's very good for us. we need to build the infrastructure i think as you know, one of the concerns they had was are we going to be able to deliver all these additional goods and we've said we believe the u.s. economy and u.s. companies can. some of these things can be executed immediately some of these things will require long-term contracts to deliver into but this should be very, very good for u.s. economic growth. you combine this with tax cuts and i think we're looking at very strong gdp growth for the rest of the year >> when the free traders would growl about tariffs and why are we doing this, a lot of defenders of the action would say, look. we have the intellectual property and the theft of intellectual property and unfair technology give and take between china and the united states needed to be addressed tariffs are now on hold and none
of that was actually fixed or was it? is there reason for hope in all those other areas? >> those issues are part of our framework. these things can't be fixed overnight. we've had three meetings we're going to continue to have meetings if these things aren't fixed, the president can always put tariffs back on. >> so it's on hold so it's like a damocles. on hold doesn't mean gone. it just means we'll see the behavior. >> exactly, i would use the wrd suspe suspended. this is the strange strategy we use. the president is the first one who's been determined to be tough on trade and change these deals. and the president is a free trader but he's also a fair trader he wants to make sure their markets are open to us the way our markets are open to them >> mr. secretary, i have two other topics i wanted to touch
on one is a report that brookfield properties is going to be investing in 666 5th avenue owned by kushner companies will that go through sifios and is that something you would be involved with or would you have to recuse yourself >> i can't make any spisk comments i will tell you so far i have read about that in the paper but not aware of anything else >> okay. then the other question i want to ask you, in the wake of this school shooting this friday and throughout this year given some of the issues that have taken place, a number of big banks have distanced themselves from gun manufacturers on their own but there's been a bit of concern that there's going to be retaliation from different parts of government. specifically there was a report
that the s.e.c. and commissioners have made some comments to some of the banks n in -- how do you oversee that issue? >> first of all, i want to express my condolences for the family who is were involved. it is a difficult issue. i know something the president is focused on. as it relates to any specific regulatory issues, we haven't reviewed that yet. if those become important, we will review them >> mr. secretary, back to trade. what can you tell us about nafta and where things stand there because obviously the market is breathing a sigh of relief >> there's still some significant open issues. i had a good information with both the mexican finance minister and the canadian finance minister last week i think there is a desire on all three parties to try to get this deal done. the ambassador has done an
enormous amount of work. we'll see where we get over the next few weeks the president is involved in these discussions. i know he's had conversations with trudeau we'll see where we get we're still trying to get a new deal done. that is a priority for the president. >> we had senator ra ras sew on this morning he said he would like to see a deal that congress doesn't have to sign off on something around the edges and nafta light, as it might be. because he's worried ab the complications of getting it through congress what are your thoughts on that >> i heard that idea as a skinny deal i think for right now we're still focused on a new nafta that would go through congress we easily can look at the skinny deal as an alternative that's something the president can consider again, for the most part, thes is focused
then we'll figure out how to get it through kbrs. >> can you give us any to lor on the navarro/mnuchin smackdown of you? i don't know if you're on record km commenting on that where does it stand now? >> peter's been an important part of the team i'm not going to comment on any of these specifics obviously rumors and gossip and everything else is good for your cable tv, but i'm not going to make any comments on it. >> is he -- he's president at many of the working groups any of the things still going n on i think the president likes two sides of things. at least both sides will be highlighted, right >> peter participated in the oval office meeting with the vice premier and myself and the vice president actually, it was -- i think we probably had about ten people in the office the president wanted to have a
lot of people there. the chief was there. ambassador boldin, larry so we had a lot of participation. this time we thought in terms of the intense negotiations, it would be limited to the three of us on the side 37 the china team brought 70 people with them. they are working around the clock. we had people from every agency as we were doing these negotiati negotiation. >> as is our habit with all treasury secretaries we've got to talk about the dollar a little bit. i saw it this morning on one of the financial websites that the dollar being so strong threatens a lot of our initiatives and it actually threatens the strong economy right now would you prefer a weaker dollar at this point? >> let me be very specific on my dollar comments.
so these are not misinterpreted. let me be clear. >> guy ahead. >> it is the most -- in the long-term, a strong dollar is good for the united states and reflects the success of the united states both in the economy, the investments, and everything else. i am not going to make any comments on where the dollar is right now or short-term trading of the dollar. >> all right but as long as you're here, i just got more questions for you. we're going to be ready to let you go in a second do you think the 3% gdp number for the year will get cracked in 2018 are you confident that that will be the case? >> if i were betting i'd absolutely take the over instead of the under i think we are well on our way to 3% or higher sustained growth and that's really been the focus. and that's what everybody should be focused on.
that's our score card. and the markets reflect that the jobs report reflects that. the difference between 2% and 3%, driver's license of dollars to the economy economic growth, national security those are the president's two most important priorities. i think, you know, we're being very aggressive on national security using sanctions all over the world and the economic program is really paying off. >> okay. we hear no one talks about about the stock market anymore that's what we've been hearing since it's been kind of flat since we foched it >> i can assure you i still follow it pretty carefully i'm not going to comment i'm very bullish on stocks i think that reflects a strong economy. will reflect a stronger stock market there's obviously been, you know, various different world events and things that have created so m volatility.
but the stock market is up an enormous amount since the election and with all of our economic plans in place, i wouldn't be spriesed by the enof the year. >> did you see -- >> joe's just taking a poll. >> if you saw it with google, that's a hell of a company obviously. and when you get that good and have that great a moat, you wonder if it's a monopoly. i wonder if you think it's -- but i think these are issues that the department needs to look at seriously. not for any one company but as these technology companies have a greater and greater impact on the economy. i think that you have to look at the power they have and it's something that the justice department i hope taxs a serious look at without me making any
comments as to whether or not they should be or shouldn't be these should be reviewed carefully. >> yeah. they've got a lot on their plate. i don't know what i mean there mr. secretary, thanks again for all the time you so graciously gave us this morning thank you. >> always good to see you. thank you. >> okay. when we come back, why the founder of boost mobile says the t-moblie merger is a bad deal. you may remember the prepaid brand is bought. we have that next on cnbc. stay tuned alerts -- wouldn't you like one from the market
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to broaden speeds will go up. the 5g capability will go over what the united states has seen before jobs will go up from day one >> okay. our next guest says unless the sprint and t-moblie deal is changed, he's worried about pricing for a key segment of the wireless user base joining us now is the founder of prepaid brand boost mobile which is now part of sprint. you're against this deal >> yeah. i think if you look at the market we see today, too much competitive brands in prepaid in boost mobile i think if you eliminate those two brands, you eliminate the competitive nature you don't seize at&t coming into this very kbrezively i think come lining a lot of that grand -- >> let me make you regulator for a day. would you have this go through
for so long t-moblie and sprint have been called mavericks in the antitrust worl bringing the price down and incentives to keep prices lower. >> you can't have this transaction take place unless those two brands are spun out. >> you're saying you would allow it if the prepaid business was spun out >> yeah. these guys hold 40% of the market then you look at the trickle down effect of the wireless dealers out there today. you've got five brands sitting at a trip mall you've got in metro, t-moblie. i think in order to make sure this protects the consumer the consumer i'm worried about is the prepaid consumer. >> the traction itself though, if you were to skin those pieces bb would the economics still
hold up? >> look, i think it duds if you look at the stay of print and where it's at and if you look at what -- hasn't worked out. so they decided it's probably better to merge that and move on with other things inside the vision fund. so i think that probably a strong sprint after this if it doesn't happen is not going to be there so i do believe if they can extract these brands which i know they can. they extract these out, move it where they control the pricing across the process >> would you want to buy it back >> in a heart beat absolutely >> i just want to put the motivation on the table. is that part of this >> yes i have a vision for the brand. the vision was to ensure that the people who with for credit channels had a market place. that's what boost was designed to do. i'm concerned that's been lost
really is a happy meal for the plans. they've been skimming the customers and moving them to postpaid most of the -- >> stick to your subscribers >> most came to a postpaid plan. which if you think about it, people bought the prepaid plan for a reason >> it's becoming an onramp >> happy meal, if you like >> why don't you start a business to do that? >> if you look at what comcast is doing i think they're at $1300 a subscriber the market's come down in price. >> have you had this wi-- >> you got to remember that sprint had no interest in prepaid two years allege they were focused on postpaid. say i don't believe that this transaction is going to happen unless you guys can explain to us how you're going to keep the
competitive nature between metro and boost. >> we've got to run. what'd they tell you >> what's that >> how did they respond? >> i don't know. after today they'll probably call me or not we'll see. >> thank you for coming on this morning. appreciate it. when we come back, we just heard from treasury secretary steven mnuchin we will tell you which sectors might see a boost, so to speak, if the u.s. and china reach a trade deal check out the futures. dow still indicated up the 230 points and "squawbo wl rht ckk x"ilbeig
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♪ good morning and welcome back to "squawk box" here on cnbc live from the nasdaq market site in times square i'm joe kernen along with becky quick and andrew ross sorkin it's not raining >> yea >> it wasn't yesterday either. >> that's the lead here's some more things that we're watching la salle hotel properties being acquired by blackstone all-cash transaction it was unanimously approved by la salle's board united technologies is selling its ice cream unit
>> i want to buy it. i may have a hostile bid for this everyone wants an ice cream company. >> it's a billion dollars. >> homemade ice cream is good. >> i know. sorkin boys might be putting together a consortium. >> sold it to middleby for $1 billion in cash >> oh, it's in cash. i don't know if we can muster cash for our bid >> it's called taylor company. no that'd be tough. it was part of the climate control and security unit. although elizabeth holmes raised $900 million >> she did by lying >> the sale comes as united technologies focus on the core businesses starbucks detailing an official policy that will allow all visitors to use their restrooms regardless of whether or not they make a purchase. what could go wrong?
announcement comes after two african-american men were arrested at a starbucks in philadelphia i don't know how that works. i don't know -- i mean, they -- i understand the motivation. i just don't know how you actually -- >> the truth is most starbucks you could go in and sit or use the restrooms beforehand anyway. this is a clarification of a policy because of what happened in philadelphia. >> or say it's really cold and some people want to get -- a lot of people want to get in out of the cold >> it's going to get challenging. >> i don't know how -- there's got to be some guidelines somewhere. then it's going to look like you're going back on your initial very well intentioned -- >> hanging out for three days. we'll see. >> use it to wash up and shave every day. >> i don't know how it's going to work. i imagine it can't be just anybody doing whatever they want >> we can watch from here on out. >> that's what i said. they definitely can expand around here. i don't think -- it's only on
three corners here so there is a corner open for the starbucks. all right. we spoke to treasury secretary steven mnuchin in the last half hour he clarified some comments he need over the weekend about a trade war being on hold. >> what i would have really said is, this has been a trade dispute all along. it never was a trade war it's a trade dispute on significant issues both parties have agreed to suspend the tariffs. our 150, their 50. they dropped the case on friday as a sign of good faith. for our farmers this is going to be fabulous right away >> now, again, he said this was a suspension of the tariffs, that they could come back based on behavior. but he also said people should look at this as a class half full and said he is bullish on stocks right now let's get back to dom chu at cnbc headquarters with a look at the companies with the most revenue exposure to china. good morning >> good morning, becky
the reason we wanted to look at this is we are seeing a market reaction on what's happening with the comments coming out of mnuchin during the weekend and that interview now on "squawk box. some of these companies are the ones we've seen react in the past headlines about trade disputes we put some dow components up here to give you a sampling. intel has 24% of its overall revenue exposure 3m around 13%. and walmart as 10% of its revenues in china. that's going to be a big deal. we also want to focus on the consumer names out there we talked about agriculture, energy, but these names are the ones that have a good amount of that consumer demand exposure to them especially from consumers in china apple, 20% of revenue there. mcdonald's and starbucks you just mentioned that company. 15% revenue exposure there tapestry formerly known as coach
at 14% and tiffany 13% as well. becky, we looked at the companies in the detail, the geographic exposure to certain places about 63 companies according to msci have at least 10% of their revenue exposure to china. names you want watch the the coming days as these trade talks progress in a positive fashion back over to you >> dom, just watching these things these american brands have done very well in china in the last decade or longer but there has been this sense of renewed nationalism on the ground and anything that the chinese media puts out, getting picked up very quickly by the crowd that's a much longer, more difficult trend to try and track and follow but is there some way that you could see if a rise in national equates to kind of a downturn for american brands.
i guess you'd have to watch that over a year or longer. >> you'd have to watch it on a long-term basis. we could get high frequency data from the companies given what their revenue exposure numbers are. but this is very much a play the reason all of these companies made this bet or expansion into china is because we know that the chinese economy, they've been trying to manage to be more of a consumption based economy and not as much perhaps of an export based economy. if we do start to see that happen, some of these consumer brands are the ones that want to capitalize, the ones to benefit the most from a situation like that if that nationalism hypothetically does arise in china, it puts a lot of these companies at risk. remember big brand names like kfc. >> thinking yum in particular. >> right all of those companies have a lot o lose let's be frank it's nowhere near that level right now. there's a hope policy makers -- >> apple >> even apple. that's why tim cook has been vocal about this process >> dom, thank you. good to see you.
joining us now is jim iuorio he is tjm institutional services managing director and a cnbc contributor. watching this from the pits trying to figure out what e the market's take on all of this is going to be, we saw an instant knee jerk reaction with the words that the trade war was on hold a positive reaction here what do you think this means how will it shake out through the course of the someday? >> the russell likes it the most the s&p gets about half its revenues from trade overseas from the strong dollar that's come along with putting the trade war on hold is not great it's good for the s&p. and the s&p rallied 16, 17 handles. i'd like to see it build on that today and tomorrow to think the recent problems are over we took away one of the boogiemen in the trade right now. but that leaves the big
boogeyman which is interest rates. if there's no inflation component of that, that's just mildly bad for the stock market. but if we see rates going higher and the fed scared because they see inflation particularly wage inflation, well, that might put a damper on this >> why is it that the market has been looking at 3% as some magic number that is going to put pressure on stocks to me if you're a thinking rb rational person, you must have assumed we were going to hit 3% on the 10-year this year >> i certainly did i'm not trying to pat myself on the back a little bit i did. i think it's psychological in the set of low rates. now when they ellipse 3%, even on the 2-year where it's coming close to that, it takes people to step back and say okay is this going to become a serious issue?
they do become this leader in the low comotive area. freight and transit as well. it's not clear to me how you can say one is getting a bad deal and the other a good because they had a value of wabtec and ge at the same time they did get that higher multiple at least. those guys wanted it to be the unaffected stock price so we'll see but this is the first of what conceivably will be a lot more moves from ge to come that we've been talking about which will be a lot more significant, perhaps in the future dealing with some of their major businesses. not transport. >> david, thank you for that and for keeping a straight face. i'm going to bweak right now coming up, it is graduation. we're not talking about students spotify and blue apron just two of the companies
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morgan stanley welcome back to "squawk box. i'm julia boorstin in los angeles. tomorrow cnbc unveils its disrupter 50 list for 2018 the disrupter 50 is private companies and gives a good sense of what could be the next big ipo. there are now a total of 25 public companies that were on our disrupter 50 list over the past five years.
here are e the five that have gone public after last year's list blue apron is the only one that's had a rough go. its stock plummeting 75% since its june ipo the meal kit delivery company hopes teaming up with costco, airbnb, and chrissy teigen will drive growth mongodb. its stock soaring nearly 90% since its october ipo. the company beating earnings expectations and adding more than 800 new customers in the first quarter alone. >> this market is literally one of the biggest markets in enterprise software. >> dropbox raising over $750 million in march the biggest tech ipo in over a year >> our investors are excited about our model. we also have scale from the consumer roots >> the file sharing and storage company giving up some gains after the first earnings report. since spotify's unconventional direct listing in april, its
stock is up more than 20%. though way down after earnings report on questions on its ability to get paying subscribers. docusign has gained more than 50% as the e-signature giant grows subscriptions and investors see the potential to grow adobe. a sixth company is expected to go public this week greensky we'll unveil this year's list tomorrow morning on "squawkbox." joe? >> julia, thank you. >> quickly, a question for you how do we sort it out? how do we put who at the top of the list i'm looking what we've seen on some of these things trying to figure out how we value it >>well, becky, we got about 891 nominations, and the companies
that are nominated are asked to submit a range of different kinds of data. a lot of data they give to us off the record we can't publish the numbers because these are revenue numbers, gross numbers, what we're looking at is a mix of the hard numbers, how big the companies are. how fast they're growing, and how sustainable their business models are also, how much of a chance this technology has of being sustainable and not being copied by a giant so you have to look at a range of factors, but we have a dozen people working on this months. we're lucky to have so much data from the companies. >> how many of these companies, dare i ask, have gone what they call bk as bankrupt or disappeared? >> about 150 companies are on the list in total in the first five years and i believe only four of them have gone under. to give you an example of one
that has gone under it was aero. the disruptive technology trying to change the way people paid for television media giants thought it was illegal. they sued the company and put it out of business. having a handful of companies go bankrupt out of the ones on the list is a pretty good number and the truth is, andrew, any time you have a technology that is revolutionary and disruptive to the status quo, there's a chance. >> a lot of technology lives inside so many of these other systems. like youtube the youtube pay service works like aero does today. >> they sell off some of the ip. >> bk? >> bankrupt? >> why do you abbreviate it? >> i don't know. people do it
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not in particular, i mean, i saw ken a couple of weeks ago and i know he felt it was a good thing i'm speaking my wife is on the board. that's what he cares far more about, to be honest. more about lisa and what lisa thinks than i do she's in a position to do more it was a lot of fun. >> you look good and you look, you know, we had a lot, you know, we played a temper -- >> we played hillary clinton. >> yeah. hillary clinton and then -- >> honored to be in that group. >> all right i guess we got to go we'll have to check back with you on the deal in a few minutes. coming up on "squawk on the street." don't miss an interview with reory kudlow dict of the national economic council at 10:00 a.m. eastern.
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a check on the markets this morning. we've been watching the futures which have been higher through the morning. right now the dow futures indicated up by about 228 points s&p futures up by about 16 the nasdaq up by 55. it comes after secretary mnuchin said over the weekend that the trade war with china is on hold. we will continue to watch this through the morning as we get
close to the opening bell. we did see markets in china close up on the remarks, as well you can see the ten year note is yielding above 10 percent. the yield is slightly higher than friday at the close all of this are things we'll be picking up with squawk on the street in a moment be sure to join us tomorrow. we have a lot to talk about tomorrow for now over to "squawk on the street." ♪ welcome to "squawk on the street." i'm carl quintanilla with jim cramer and david faber the trade war is on hold with chinese. europe has gains german markets are closed today. ten year below 308 highs on italian bonds road map begins with a china