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tv   Squawk on the Street  CNBC  March 12, 2019 9:00am-11:00am EDT

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made in response to that >> jim brought up an interesting point, just that it is morgan stanley and others pointing out it is the idea you can get your car made in two weeks, which shows that maybe there is not a lot of demand there. we'll see how that shakes out. >> big question mark make sure you join us tomorrow, everyone "squawk on the street" begins right now. ♪ >> good morning, and welcome to "squawk on the street. i'm david faber with jim cramer. we are live from the new york stock exchange carl is on assignment this morning. let's give you a look at futures as we get ready to open the trading session a half hour from now. you see we're lookin mixed open at this point the dow sees influence from the decline in boeing. road map this morning, well, yeah, you guessed it, that's where it starts. boeing under pressure, shares sinking in the premarket the faa saying the 737 max-8
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plane is still airworthy facebook's flip-flop the social network deleting and restoring ads from senator elizabeth warren calling for the social network's breakup and elon musk fights back. lawyers for thetesla ceo slamming the s.e.c. for unprecedented overreach. >> yeah. >> start with boeing shares, though, you weren't here yesterday to talk about this, they are extending their losses after a 5% decline yesterday now, by the way, 9:31 yesterday, it was a lot more than 5%. as the day went on yesterday, more airlines were added, australia, singapore, joining the list of countries suspending operations of boeing 737 max-8 jet following that crash of the ethiopia airlines flight 302 over the weekend the u.s., the fa saying boeing 737 max-8 is
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airworthy. not just countries, but other airlines added to what was yesterday morning just indonesia, i believe, or, well, china and indonesia's kun frico and a couple of airlines >> boeing will do what is responsible. when you have airline after airline after airline, the airline you get on, you ask, you say, look, i don't -- you call ahead, you say, is that that plane and because i've seen all the responsible airlines that have been -- we all know have great pilots and they don't want it, so why should i ride that's going to determine and not necessarily the boeing isn't safe or that the faa, it is the idea that the customer just doesn't want to -- >> that brings you right to southwest for example, which has more of these in its fleet now than any u.s. airline. no idea, no reporting on this as
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to whether they're starting it see cancellations. >> that's what we need gary to call in. i think that gary, again -- >> gary kelly, the ceo of southwest. >> if they say the 737 max-8 remains airworthy but other countries don't think so, i think we are going to have to -- the customers will react to what other countries say. we're in the going to take the assurance because we want to know well, why did -- if it is so great why did malaysia, singapore, noted airline, ethiopia, the safest in africa, everybody knows that, why did these -- what were they thinking >> is it a more charged climate just generally in terms of the relations between countries? it seems look a strange thing to say. in every story you read, how the faa almost always is the arbiter and/or other countries look to the faa, not this time. >> there is -- is there nationalist extreme? these are countries that have
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been our allies and i don't think they're saying it is an authoritarian faa versus us. i think they -- people don't want to go on them >> they just don't want to it is a safety issue or the appearance of one. that said, they have gotten the black boxes, but still have -- it could be quite a while, we'll look -- we'll be speaking more about this during the course of the show, before they know ig. >> tfaa says it is great and you call southwest and you cancel, it doesn't matter, does it they can say it is great all you want. >> you think that starts to a, the consolations and the they have to take these things out of the fleet for a while? >> you have the switch and we know how to -- all the airlines know how to do it and the pilots know how to do it and the ethiopian pilot was a -- they have great record. so because they have a great record, people have to say, listen, we have to put these -- we have to ground the planes and find out what a great pilot
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would have seen and how he reacts i know boeing will do what is responsible. boeing has a history it is the most responsible look at their -- look what they have to do plane within a plane everybody knows they have unbelievable safety record and to question their safety record has been wrong, but i think the responsible thing is that the airlines say we're losing customer because they're not certain because they hear about the countries they know to trust or have flown, singapore air is another one known, these are not -- >> not fly by night -- >> i like that >> -- airlines these are serious airlines. >> boeing is unbelievable stock. the stock for a second -- >> yesterday was interesting because very early on the stock was down as much as 12% and then came back during the course of the session, still ending down and you can see going potentially open down fairly sharply this morning
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>> i don't know how many hours have been flown in this plane with no problem. it is ironic if you look at the number of car accidents, that's like a 747 falling out of the sky like once a month. but whati do feel like is i would like to hear from boeing and from the faa saying, listen, we want to do the most responsible thing. as more and more countries take them out, the responsible thing might be to ground them until we figure out what happened and then come back look, that's what i'm saying that will happen if the customers cancel i don't know if phil might have good numbers of what the customer is doing. >> phil is all over it as we expect and, yeah, kind of our go-to guy on this. let's move on to one of your favorites, elizabeth warren. >> this is so charged. it is unbelievable. >> let's tell people. >> you want to break up, facebook -- >> it is that fight you just said, yeah against big tech the breakup.
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we were talking about it yesterday. what was interesting is facebook deleted and then restored several ads placed by the senator which called for a breakup of that particular company. the company says it removed the ads because it violated its policy of corporate logo apple also announcing it is going to hold that event on march 25th, expected to introduce a new streaming tv service, that's more in my area of the world >> i want to know, facebook back tracking is embarrassing the fact is they made a wrong move, then a right move. that's what i want i want them to realize, hey, that's not good, we have a logo issue, but the debate is right i think the debate is right about how powerful this is i wish there was a debate about how powerful walmart was at one point when they mowed over all the individual little companies. what they're trying to stop in india. >> however, when you look at walmart and what happened in the market place and the rise of
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amazon you can argue there would have been no point in curbing walmart. it was curbed by the fact that there was innovation they did not take part in necessarily and -- >> i think it was worth debating at&t was too big >> how you use your market power. at&t was a monopoly and the question is what -- are you preventing others from innovating, pursuing any competitive practices that in any number of different ways create inefficiencies. >> but do you think she's doing this -- people have learned that not to trust facebook and google >> i think so. listen, probably helps, we had a long discussion with jim stewart about this yesterday ppe as we like to call him and unclear whether the law in any way is would actually enable you to do it got to find something to latch on to under the antitrust laws that would actually allow you to -- i had discussions with the
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current chief of antitrust at the doj about this they're aware of it. they're looking at it. you need to define what it is they're doing that is unlawful before you can move against them. >> said, listen, if they're doing something unlawful, we'll go after them. standard oil, and then this monopoly of oil, that's pretty cler these are not -- >> mois abuicrosoft abusing its position >> i don't -- look, i think elizabeth warren is right to bring it out i think she's wrong. >> okay. yeah there you go >> there is a lot of fear. >> we're done with it. >> there is fear. >> we moved on. >> denial, remember the new york times about how facebook strategy, deny they're not popular. >> denial is is a long river in egypt. >> yeah. >> good one. isn't it >> yeah. >> apple's streaming service, however, is more in the current
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let's call it focus. >> what are they going to charge >> not just because of apple, but so many companies we talk so often about, this year will see the introduction from apple, the direct to consumer from disney, warner as a -- well, time warner as a part of at&t. our own parent company going with the ad supported, free ad supported service. and it is going to be so interesting to see what happens not just for these companies, that are going to be spending more than they have previously but what happens to netflix? what happens to some of the incumbents out there, do they start to see their growth rates slow because of the proliferation of choices and the fact that your budget is -- is what it is may not have an opportunity. do you need disney and say do i need netflix or so forth and so on >> but we now have 100 channels
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you skip over every day. and you can't believe they're there. >> no. >> doctor so and so's back pain, like in the top five -- >> i don't even really -- i just go immediately now to netflix, hulu, amazon, hbo and the thing. don't even look. >> they want to take everything. espn plus, i'm on it last night, i'm looking at free agency espn plus is unbelievable. it is unbelievable why not pay for it i want to know what apple has. >> what is apple going to be able to do in some way that differentiates it? they're going to spend i decent amount of money of >> you know amazon has exciting stuff. >> well, amazon is spending multiples of what apple is at this point netflix spending as much as $12 billion. >> i continue to think -- >> the equivalent of what at&t is spending for everything
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including news gathering at cnn. >> and the studio and hbo. >> i want apple to expand into health care. that's what tim took cook is ta about. that's proprietary to them i feel like their idea is you need a stream that is paid for and comes -- take the medical records and go to your watch the doctor said, listen, you can discover what might cause a stroke, they have a little too much of -- they determine too many strokes, but that's all right. we want to know that but i think that there is a -- is it crowded this space strauss will say you can only take so much would you drop netflix because apple has a service? >> i don't think so. would you drop it if disney has a service and then -- >> no. >> time warner has a service. >> time warner, i don't know >> you're not going to have them
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all. >> this goes back to the question of apple and recurring revenue stream, what we talk about. and then there are those who say, jim, you know, google's traffic acquisition costs and apple service revenues track each other to a certain extent and got to keep an eye on that google has been paying them a lot for tack. >> yes >> and as that potentially goes down, those service revenues may not grow. >> i like spotify. have you seen -- some of this -- did you see costco's move? >> no. entirely subscription. it is sticky the question is will apple be sticky netflix is really sticky i know you watch hulu. >> i do. i do. >> i don't know whether time warner -- i don't know. >> we don't know >> cbs. >> cbs all access. that one i don't pay for >> who is running cbs these days >> when we return, the man
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running tesla, elon musk, he's firing back against the s.e.c. and the race to boost oil production mike wirth live if a big energy is summit they have in houston take another look at futures as we get you ready for the opening bell little more than 15 minutes from now. right here from the new york stock exchange wn ce ckost nine where we will beheweomba i don't know what's going on. i've done all sorts of research, read earnings reports, looked at chart patterns. i've even built my own historic trading model. and you're still not sure if you want to make the trade? exactly. sounds like a case of analysis paralysis. is there a cure? td ameritrade's trade desk. they can help gut check your strategies and answer all your toughest questions. sounds perfect. see, your stress level was here and i got you down to here, i've done my job. call for a strategy gut check with td ameritrade. ♪
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tesla and ceo elon musk pushing back against the s.e.c. in a court filing musk's lawyers say his tweet about production values was not a violation and they rejected the contention that musk should be held in contempt of court. musk's attorneys accusing the s.e.c. of trying to, quote, trample on his first amendment rights >> they must know that's fatuous, the commerce trumps first amendment when it comes to the s.e.c. that's not even an issue i can't believe they went with
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that i think that's an ill advised strategy and you have to recognize that you cannot plead the first amendment in those cases. it hasn't held up. >> right >> just hasn't. >> under close scrutiny doesn't wo work. >> once again, the spotlight at least will shine to a certain extent on the fact that musk does whatever it is that musk wants. we all know about the turnover they had there whether it be in the general counsel's office or the accounting area, that's the way it goes there. >> he's a cowboy. >> countless stories about the way musk runs things and treats people. >> not like you hear the chairman of the s.e.c. come out and say, look, the agency doesn't like this. they don't do that the agency should do that. the agency should come on air and say we don't like what he's doing. and if he does it again, he's out. that's okay. >> lawyers are saying, listen, he didn't do anything he did not in any way share anything that
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was material that had not been shared previously, publicly, in the way that you're supposed to share material information he was cheerleading and he's allowed to do that. >> what i would say is he's been on notice from the s.e.c., that if he does continue his antics, so to speak, he'll be in trouble. i think when you and are saying is why does he -- why doesn't he send out a straw man like, the 76ers had the wife pretending to not be the general manager saying things. why not just say -- >> twitter. >> that was unbelievable why can't you just say, okay, to his staff, guys, i love you, i love you to death, and that's what you need to know. as opposed to being -- look, he hates the s.e.c. i'm saying he's trying to stick a finger in the s.e.c.'s eye just say, okay, listen, guys, get the agency to issue a statement, call the agency >> doesn't like to be told what to do. >> i don't like to be told what
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to do. >> neither do i. >> sometimes the way life is. >> this isn't right. >> yeah. >> i like him. did call me a simulation >> yeah, you don't like him. you don't. you're lying it is okay i know you don't like him. >> you're right. >> we'll talk about the -- we'll talk about the adam jonas -- the jonas note out of morgan stanley on tesla see how the stock is doing mad dash as we count down to the opening bell another look at futures. see a mixed message from wall street, boeing having that impact on the dow. more "squawk on the street" straight ahead
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♪ all right, time for our mad dash on this tuesday with seven minutes to go before we get started with trading here at the new york stock exchange. dick's sporting goods. >> if you like sporting goods, reports a number that is just not perfect, okay. and this market had some perfect ones, and when they're not perfect, they get hammered costco being perfect macy's not i think this is better than what the stock is saying, but gross margins didn't come in what we wanted they did not -- the earnings per share weren't perfect. most importantly, they're using a word that kroger used. investment they have to invest. and you had suboptimal same store sales, 17, i remember when target dropped the bomb of investment and brian cornell, he
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invested, and the smoke was clear, everything was great. i think people who are selling this stock have to recognize that if they do the investment and they get better sales, you say why did i sell it down 3 in wh what was the point don't know why people sell it before the conference call conference call may have something good to hang your hat on. >> they talk about investment, what specifically are they referring to where are they schochoosing to - >> omni channel. what happens, the pay back is not clear. maybe you have to bring in a big consultant, and the big consultant goes top -- sales force, home depot didn't like how things are going, they brought in sales force next thing you know, spent a lost money, they invested. they had good enough sales you didn't have to do it right now, right now, lowe's is spending a fortune just a fortune marvin ellison is balancing the spend with the sales so it comes out okay you know, when you go in and you don't have everything point of
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sale, david, you just fall behind because you get beaten by who? amazon >> amazon. hey, we haven't talked about amazon we'll look at that stock. >> break up amazon, david. standard oil amazon, u.s. steel, at&t, which one doesn't belong in that list? >> break out aws. >> i think you should break out massachusetts. onited for -- whatever. >>peng bell coming up next
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♪ ♪ ♪ each day, brings new possibilities.
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that's why you need a partner dedicated to helping your company reach its goals. u.s. bank -- the power of possible. you're watching cnbc's "squawk on the street. we're live from the financial capital of the world, the opening bell going to ring less than two minutes from now. want to update our boeing continued coverage of boeing, the uk civil aviation authority and people may have seen it at the bottom of the screen, has suspended the boeing 737 max 8 operations in the uk you can't even use their air space, don't know how manyare in the fleet of the likes, for example, british airways but you're getting there now where it is going to be everybody in the world except the u.s.
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>> yeah. and, again, i'm going to reiterate, boeing will do whatever is the most responsible thing. that has been the record nothing has changed. from the world war ii, they do what's responsible so i'm not -- they'll react to this. >> you've got the airplane being suspended all over the world other than in the home country, what -- does that change the -- the responsible thing to do might be to say, okay, we're investigating, we're investigating, but -- >> when is -- only two have gone down let's understand, only two, that's a problem i just said -- i just said the wrong thing. i said only two. and it doesn't matter. two is too many. but they have flown, i mean, they have flown a lot. >> yes >> i think that's worth mentioning boeing you're saying, okay, look, two have gone down but you also have to say two is too many. >> within a few months of each
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other -- >> and the second one, not a bad safety record, the best. >> one of the best not like lion air, which was a bit of a different story. >> that's unfortunate, but -- >> opening bell at the new york stock exchange you can see what may be a bit more green as the real time exchange gets itself together. here at the big board, brentwood trust. and we shared the boeing news with you. >> the max 8, two crashed, that's one out of 175 planes in six months, a one in 90 chance if you had an operation and said one in a 90 chance, the doctors may not want you to take it. i want to put it in perspective. it is easy to be trashing
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boeing i don't want to trash boeing i think i understand why people don't want to -- some issue. >> i think tim sloan, ceo of wells fargo, we know well -- >> testimony is good. >> appearing before the house financial services committee today. i believe, you know, we had some chat with him, ylan mui talked to him. >> can customers still trust wells fargo? >> sure. >> and how long do you expect to remain chief executive >> i'm sorry. >> how long do you expect to remain chief executive >> as long as i have the job i think i'm doing a good job, the board thinks that. >> and you think you can effectively serve the customers? should we expect other executives to depart are you working with the occ at all? >> yeah.
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you know, we have -- asking mr. sloan a couple of questions there. he answered a few and walked on. we asked him the same kind of questions. he took over difficult role, how do you think he's done >> i think that what i would say is how the bank has done the bank has replaced the board. they have elizabeth -- they have duke at the helm of the board, a lot of soul searching on what to do issue is, does it matter he was part of the bank, so does it matter anything that he's done i think everything he's done is right. everything and i worked -- i rarely have gone over, had him on the show the issue is what elizabeth warren pointed out to me, it doesn't mat, jim he was there he was in a position to stop it. that's kind of like unless you brought in an outsider, she is not appeased i think he's done everything possible, but that may not be enough given he came from there.
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and the report basically says that, you could argue that everybody is tainted he did not know -- i believe it, i believe this, he did not know what was happening at the -- in the scale, so to speak i think elizabeth warren would say, it doesn't matter when he knew, what did he do did he act immediately no he investigated. i thought that was right why should he act immediately? he thought about it, looked into it and took action but, again if you're her, why didn't they bring in an outsider and that's what she wanted >> yeah. his testimony of course will include the new organizational structure, cultural transformation, making things right for customers, these are all sort of the bullet points, enhancing risk management and compliance and going over in his testimony -- >> i went over every one of those. it is what you want. >> they made some very bad mistakes >> yes jim, to phil lebeau joining us now to update us on all things
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boeing the latest news is the uk now, phil, also saying no action for the 737 max 8. >> they don't even want it in the air space, david that means there are now 147, by my count, 147 737 max 8 planes around the world that are shut down they're not going anywhere that's 42% of the global fleet now, you can argue on the other side that the faa has been analyzing not only the lion air crash data, but what little they might have already from ethiopian airlines and say we don't see enough here and also american and southwest, two of the largest operators of this plane in the world, who are no doubt in consultation with the faa saying, look, this is what the data comes back in terms of when we -- these planes are flown, this is what we're seeing, and to that end, the head of the southwest airlines pilots association, he sent me
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an e-mail this morning, listen to this, they get 17,000 reportable parameters from these planes during the flights that have been flown by southwest since they have taken delivery of them. 34 more than 41,000 flights and he says it supports their continued confidence this plane is airworthy and safe. if you're the faa, you have two things pushing you here. you have a global tsunami of countries and airlines saying, we don't want this plane flying. and then you also have the airlines in your country as well as boeing based in your country who are saying, here's the data. you do not have enough here to ground these planes. but no doubt the pressure is mounting on the faa. you know who i would like to hear from, secretary of transportation elaine chao she's down at south by southwest today. what does she think about this she's no doubt going to start hearing from more people and including regular joes who she comes across who will say, you know what, i'm supposed to be on this plane, is it safe
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>> phil, everybody, many people are asking that, i'm sure. jim made the point earlier, if you're going to be flying, your mother, your wife, whoever, questioning, what are you flying emotional though it may be, that's kind of, i guess, you know, where we are right now is there any corollary you can think of in terms of a similar situation where the faa has been put in this position >> the only thing i can think of is when you go back to the 787 battery fires. but in that case, david, you had a couple of incidents in the span of a couple of weeks where they could sit there and say, look, we do not want a plane catching on fire in the air. not that they want a plane falling out of the air if there is some problem with the 737 max 8. that's the only situation that i can draw as a parallel and they move very quickly to shut down the 787 and said we're going to ground it, it stayed grounded for three weeks until they could figure out exactly what was going on with those batteries an then boeing had to come up with a fix
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and it was a mechanical fix. it was in terms of how the batteries were situated within the dreamliner that's the only parallel i can come across right now. and boeing has said, look, we believe not only in the safety of the 737 max 8, but we have implemented a number of things to further communicate with pilots how to deal with this situation if it arises, and we will be updating the flight control software and has to be updated by the end of next month, that's the expectation of the faa. >> so could you put into context the company that is boeing their track record, what they have done, they're always proactive, they have the best safety record, and put that -- overlay that, i think that mr. mullenberg, mr. mcnerney, these are gentlemen, if there was something wrong, they would pull out in a second. >> that's problem for the faa now, boeing is taking the approach of, look, the data doesn't show us there is an issue with this plane.
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i suspect that what they're sharing with the faa is giving the faa enough confidence to say, it is not there if there was some indication that a number of takeoffs, the pilots were encountering a situation that they overcame and the plane went on and successfully flew from point a to point b, but they had some anomalies or had situations that developed during the takeoff, i would suspect that they would ground these planes or take a stronger stance than what they're taking now if you listen to southwest, i talked to people at american who are saying, we don't see a problem at all it sets up a very unusual situation. not only for boeing, but also for the faa, where they believe in data. and their data does not show them there is enough to ground these planes. >> phil, yeah, thank you we'll be checking in with you of course throughout as we watch boeing shares sink a bit this morning as news continues to mount. phil lebeau in chicago. >> boeing is the pinnacle of
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american manufacturing, great exporter there is a lot on the line here. if we don't -- these are not idle countries, they don't want to do this nobody wants to stop it. it is about safety and anytime you have safety, people are going to have to overcompensate even in a case of, look, i don't think there is anything wrong with them, but i don't know right? what do i know maybe what does anybody know >> well, elaine chao would be interesting to speak to as well. broader market now, we're up again, up about one third of a percent on the s&p after a strong rally yesterday, jim. and in technology in particular. nasdaq comp quite strong apple following through from yesterday's gains with less than a percent, but still -- >> that upgrade did not really have anything, but it didn't matter the upgrade says there is not an inventory glut, in chips that go into phones. i want to point out that today,
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one year ago, larry kudlow, we got the news he's chief economic adviser, my friend, from when we were partners. i think he's doing a great job i think he correctly in an a-political way -- people may hate me for saying that, i don't care i think larry is doing a great job. i said it. okay it is different from what i said about musk because i like larry. >> on this one we believe you. last one, not so much. >> he's doing a great job. >> you and i talked agood deal about bristol-myers and celgene. something we're following relatively closely april 12th vote, an important one. >> what are you hearing? >> a post story sort of interesting today, talking about how starboard is looking at a couple of funds it believes perhaps have engaged in almost what you call vote stripping where you go long, short sell, but you're doing it solely -- hedging yourself but doing it solely to own shares to be able to vote those shares the record date has already
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passed it is not king mylan and not vote stripping what i was reporting on, i think last week, right before or right before the record date was the t plus one stock that goldman sachs had, it sold to potentially one buyer. but two hedge funds are mentioned in this post story, third point, of course, dan loeb, and de shaw, my reporting indicates neither one of them had anything do with this. that in fact it was the buyer of the t plus one stock for goldman, i have not confirmed this with the firm, large asset manager in texas called hbk, and, by the way, there is all a side show to the main show which is bristol-myers, is going to be able to get the deal done whether shareholders back them up i assess it will become very important here the meeting, iss will come out, prior to the vote.
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and their opinion conceivably will weigh heavily here given you got wellington, we believe dodge and cox, starboard, small position, but leading the charge and the critics of them, everybody is throwing charges around here, say, hey, maybe they were operating as a group and never said anything. >> that's a proxy. you're not allowed to do that. >> they would say they're not. there is a lot of heat in this one right now. back and forth what it comes down to is the fur fundamentals and the belief, you believe yes. >> i think dr. caforio came on, bristol needs it people do underestimate what celgene had going. i think that celgene -- you think bristol-myers didn't have the ability to analyze the portfolio? come on. >> many of their presentations that they have done, in terms of the due diligence and others other deals. and how long that they took and the opportunity they had and the
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patent, they go through all of it, jim. >> what is bristol's alternative? one other really big drug. one. >> yeah. >> elequis they're losing to keytruda, to merck. there are five drugs that aren't talked about that could be excellent. celgene, to go over the nonpipeline pipeline, the stakes they have in the public companies. magnificent. so certain point we have to say maybe bristol-myers knows what it is doing if they haven't been contacted. dr. caforio told me they were not contacted. they're doing it of their own free will. i'm not buying the bear case. >> we're counting down to that, a month away from the big vote you know what else we're getting closer to, the close of disney fox. they said we're going to close our acquisition of the fox assets 5:00 march 19th one week from today. >> one week? >> one week. that deal will close april 11th is the key day in many ways for investors and
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disney, when they have their investor meeting. >> did you see a lot of the stocks -- >> going to discuss rollouts, details around their direct to consumer offering including potentially showing us how the app works. three-hour investor meeting that day. >> what are you hearing about the group being rerated? yesterday disney was up, comcast up strong, i checked a number of trading desks. there was nothing other than enthusiasm for a group kept out. >> i don't know, jim i don't have any real -- on the other side of that, had viacom and i think cbs, discovery all down yesterday there was a report out from ubs, covered at&t forever, talking about press reports abou directv now going from sort of five tiers to two in terms of pricing. increasing pricing and potentially eliminating or getting rid of from one of their bundles viacom, amc, discovery we talked to at&t, they just
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told us to stand by. they're not telling us anything except there has been no announcement, and we'll give you an announcement as soon as one happens in terms of directv now. that's the over the top service, what we call the virtual mvpd that is losing a lot of subscribers now because they brought a lot of people in, promotional price, priced under the market now trying to rationalize the pricing, bringing it up, people are leaving, but trying to get it to the right place. part of that is potentially dropping programmers, you feel like you're not getting the value from, and that goes to the core of the concerns about cord cutting, which has been made up to a certain extent by the likes of our network, for example, our parent, with these virtual mvpds. there is people cutting the cord, but now i got sling and now i got the hulu thing and youtube and we're getting all those. >> this is, to me, almost a nonissue if you want it now, you can go
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to -- look, that -- if you go read the brief, time warner's brief, at&t brief, there is so much choice, give me a break you don't want this, go get that there is too many. i have the verizon skinny bundle on one of my tvs, comcast -- >> you got them all. >> it is like, okay, what did i miss i got cnbc, i don't have -- there are 70 espn channels i don't have another 42 i do have espn has a lot of real estate, david. they have a lot of real estate i watch it on this >> that's it >> yes. >> that's not a great way to view sports. >> i like it so much -- norwegian, europeans taking -- >> who else? >> the european union is going to -- >> norwegian airlines? they added to the growing list it is going to be just be u.s. carriers flying. >> here is something i noticed when you have good news, your
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stock is like a perpetual motion machine, like it moves until it hits a wall. costco is now up 20 straight points apple has just taken out -- now over 180 on what? >> i know. >> on what on programming no it is just -- too negative. >> it outpaced the s&p's return this year. this is the year in which apple warned before reporting the quarter -- >> stock is back to where it was in november. >> how about facebook up 31% we hate them more than ever. who cares? people post because they want people to see it yes, it is true that i guess i saw something that made me want to -- go for the communist party. >> alibaba up 32%, speaking of the communist party. >> i like alibaba very much. i thought the masa son interview, a couple of visionaries in the world, he's
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thinking. >> he's thinking about the future he's a believer, he says, true believer in the power of technology. >> we have to use it to save the environment, which is my new theme. >> softbank one of the largest holders of alibaba, why jim made that -- >> i'm in favor of the environment. >> i'm in favor of the environment. let's -- go to high ground >> we both tried to not -- >> it is over. >> burlington, keeps go -- >> get to high ground. let's head to the bond pits now, maybe that's high ground rick santelli at the cme group in chicago rick >> good morning, david and jim two days of 10s, looked like we're going to zoom a bit higher, cpi hit, it wasn't hot it wasn't cool, but it was cool enough so you can see we drifted back into a well worn range bunds, same pattern. trading 6 basis points guilds, same pattern not being able to quite jump back over 120 and there is some
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potential brexit news, maybe a thaw in brussels i don't think brussels is doing them any favor making this any tougher on the uk. time will tell munis, we don't talk about them much, we like looking at some of the etfs the mub is muni etf. something interesting happening there. it is now trading at the best levels in over a year. so we want to continue to monitor. i like to keep an eye on munis before we go to tax season finally, the dollar index. guns hot on the dollar index look at your intradate chart the 25th one, and we finally got above the bar, spent some days there, matter of fact, last thursday, it was up almost a full chrebent. we have given all of that, the high intraday levels of the year, back, but this is still a key area, let's see how many of
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those longs bail, see if it supports david, jim, back to you. >> thank you, rick rick santelli. the bond report. the u.s. army reportedly asking for $190 billion in that would be $8 billion more than last year's budget. coming up, morgan brennan is live inside the pentagon with the secretary of the army who is going to decide just how much of that money is spent. "squawk on the street" will be right back measure up? a cfa charterholder does. you've worked hard to grow your wealth. make sure you're working with a wealth manager who can grow with you. cfa charterholders have the investment expertise to unlock opportunities other advisors might not see.
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and around the world, you have a partner in that pursuit. pgim: the global investment management businesses of prudential. and there's a look at our favorite faang netflix the only stock amongst that group that is -- >> you killed netflix, david >> oh, yeah, right 'rba aerhis. what do you see? we see breakthrough medicines getting to patients in record time. we see harnessing natural gas unleashing the promise of clean energy. we see engineers simulating the future to improve today.
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what's on "mad money" tonight? >> vm ware and coupa coupa didn't give the right guidance and sanjay is going to give vm ware guidance. >> if people want to understand the cloud, one way to do that is to watch the show. >> i said last night, are we doing too much cloud are we trying to make too much
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money? >> no, it's the key thing. >> amazon web services >> you have so many of these guys on and ladies on. >> health care that's the new frontier for the cloud. coming up -- more, of course, on boeing. the uk announcing its grounding the 730 max 8. keep it here
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two hearings we're following closely on capitol hill. wells fargo ceo tim sloan is appearing before the house financial services committee and u.s. trade rep robert light hig lighthizer is testifying on trade. we'll monitor both of these hear,s and bring you any updates in realtime. good morning welcome back to "squawk on the street." i'm david faber with melissa lee and mike santoli sere i sara eisen has the morning off we're a half hour into trading a mixed bag really because of the performance of boeing which is a key component of the dow. pressuring that overall. but let's say the market is up and our road map does start with boeing
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piling on moments ago the uk announces it will be the latest country to ground boeing 737 max 8 jets we'll bring you more on what is a rapidly developing story >> plus, president trump unveils his record $4.75 trillion budget we'll break down the increases and decreases in spending. >> and senator warren goes after big tech now they seem to be going after her. facebook deletes and then restores warren's ads. we've got the details. but we begin with boeing the uk, australia, singapore and malaysia are the latest countries to ground the company's 737 max 8 jets, despite an faa statement saying the planes are safe to fly phil lebeau is in chicago with the very latest. >> this is a ground swell that we're seeing around the world, not only airlines but also countries who are saying shut down this plane until we know more about exactly what's happened over the last six months, especially with the two crashes involving 737 max 8 planes so the total number, and here's the updated figure of just a few
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minutes ago. the total number of airlines that have grounded the max planes, 26 they make up 47% of the global fleet of 737 max planes that are around the world the overwhelming majority of those are max 8s, which are the same types of planes that are involved in the two crashes over the last six months. uk, malaysia, singapore, australia are the latest countries to say we do not want this plane flying. and there's growing pressure and speculation we could see the european union, the counterpart to the faa that covers all of europe, it may be doing something very within the next couple of hours. that is speculation out there on the wires. it's not documented. it's not confirmed at this point. quickly want to show you shares of norwegian air these trade over in europe they're down 9% after norwegian is the latest airline to say that it will be grounding its fleet of 7 37 maxs they have 18 in the fleet. these are popular models that a
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lot of them are flying between northern europe and the united states as well as within europe. so you've got norwegian joining the number of airlines who are no longer flying this plane or temporarily suspending flights and quickly shares of boeing remember, we get the orders and delivery numbers coming in the next hour. i can also tell you, i've reached out to boeing to see if they have any change in their stance with regards to keeping the 737 max 8 flying or whether or not they're going to say there's so many people around the world, so many organizations and airlines who have said let's shut it down until we know more that we'll voluntarily, you say to all of our operators, we don't believe you should be flying this plane. so far we've not heard back from boeing back to you. >> you know the numbers so i want to go through them. of the planes out there that are not in the u.s., how large a percentage of the overall fleet is outside the u.s., assuming then that more or less it stops
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flying everywhere but here >> i think of the 350 that are out there, and this is a ballpark figure, david, i think about 100, maybe 105 are here in the u.s. add in canada, maybe up to about 135, 140 and that's just -- that's just me going off memory here >> understood. >> southwest is the larmgegest operat operator they have 34 american is two or three in terms of the number of max planes and united has several, although those are the max 9 if there is a ground, let's say the faa reverses itself today or that boeing voluntarily says shut these down, that would likely also cover the max 9 planes as well that united flies. so that's what we're watching right now. whether or not north america remains an island compared to a lot of the rest of the world, guys, it's not all of the world, but it's increasingly a lot of countries who are saying we don't want to see this plane flying right now >> phil, just what we're
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speaking with you, the president just tweeted the first of two tweets. still waiting for the second but airplanes are becoming far too complex to fly pilots are no longer need bud computer scientists from mit i see it all the time in many products always seeking to go one unnecessary step further when often old and simpler is far better split-second decisions are and -- we're awaiting that second tweet to finish his thoughts and we're watching shares of boeing as well and reaction to this tweet but it is curious. it seems like regulators and airlines around the world are much more willing to ground this plane as opposed to the u.s. side we had senator dianne feinstein yesterday also sending a letter to the faa the acting faa head requesting a ground stop of these planes. is there a reason why the u.s. would be so careful in deciding to ground these planes >> first of all, grounding any aircraft, doesn't matter if it's a smaller commuter jet or a large jumbo jet, that is a very
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serious decision and i know that sounds trite to say that but it's not one the faa makes lightly. it's a decision that the faa wants to make sure they have t do that in order to ensure safety and in this case, when you talk with the faa, when you talk with american or southwest, the largest operators of this plane, all of them say the same thing the data that they have, and these planes are constantly feeding back data whenever they take off and land and are in flight the data they've received does not show any anomalies it does not show a plane where there are question marks that are popping up, where pilots or crews are saying, i'm not entirely sure about flying this plane right now. so, you've got that. if you are the faa, you have the largest operator of these, southwest airlines, and its pilots who are saying it's working exactly as it should and they've got data to back that up versus the emotion and the feeling of a number of
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airlines, as well as countries overseas who are saying, yeah, but we have two deadly accidents. and these two accidents with a brand-new airplane within six months, doesn't it sound like it would make you say let's shut it down until we know more? that's the tug of war that's going on for the faa so there are people who are saying they should just shut them down. that's not a decision that the faa takes lightly. >> all right phil, thank you. phil lebeau in chicago for us. we're going to continue, of course, to have a lot more about boeing but let's talk stocks for a moment snapping a five-day losing streak with the s&p and nasdaq having their best two-day gains since january. with us now, goldman sachs' chief u.s. equities. i want to start with something you and i have talked about which has been a key issue ever since tax reform which is what are corporations doing in terms of buybacks and/or investments and you weigh in on this in terms of misperceptions
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regarding corporate cash spending priorities. so what are the misperceptions, and what did you find? >> the misperceptions are many let's take them one at a time. first that companies are suddenly increasing or shifting their decisions in terms of repurchasing stock for 140 years, companies have been returning cash to shareholders the first 100 years -- >> dividends >> was dividends in terms of buybacks, that's increased offer the last decade as a share and one reason for that is the economy has been growing relatively slowly, and companies have been increasing the amount of leverage they have. and that increases the volatility of their earnings as a result, buybacks give them more flexibility in terms of making those decisions of how to return cash to shareholders, dividends versus buybacks. then you look at, what's been happening in terms of the share of cash spent by corporations? every single year, for 30 years, companies have directed more
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cash to investing for growth, capital spending, research and development dollars, spending on m&a, more investing for growth than returning cash to shareholders then you look at what is the growth as a result of the tax reform that took place last year and what we find is the increase and certainly there's been an increase in cash money has been brought back onshore. >> right >> 70% of the growth in buybacks came from just a few stocks. the top ten stocks and so you see apple and oracle and qualcomm and they had a lot of cash. they brought it back and they've distributed more of that to shareholders than reinvesting. and the last and one of the most interesting misperceptions is the idea that companies, managements, executives, are repurchasing stock as a way of enhancing their own compensat n compensation when you actually look at the management teams that have earnings per share as one of the mess ri
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metrics, we find those companies buy back less -- less -- spend less dollars on repurchasing stock than companies where actually making that acretive share repurchase would have -- >> we've made the point through the years there are management teams that benefit from, are judged on eps. jngets >> judged, yes >> the eps number goes up. >> we'll assume if they were really looking to enhance their own best interests, froma financial point view of, which is to buy back more stock. >> all says what about the bigger issue, which is capital spending and whether or not it's increased appreciably, otherwise from -- what it otherwise would have been without tax reform >> we do find certainly, as profits have been repatriated, some of that has gone to investing for growth some of that has gone to return cash to shareholders, dividends and buybacks and the interesting thing, it was so chunky, so concentrated and relatively few
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number of stocks in terms of the amount of increase came in the buybacks but more companies -- they are investing a lot for cash you think about -- we just had the tenth anniversary of the bull market. so if you go back over ten years, 75% of the rise in the market comes from earnings growth the level of profits are higher. about 20% comes from a p/e multiple expansion we think about where is the compass directing us towards forecasting growth in earnings and there is modest growth in earnings because the economy is decelerating and one of the things from a tactical point of view is that the earnings recession, we're likely to have a negative earnings growth year over year in the first quarter we'll get those results somewhere between the middle of april, middle of may that's the time of the reporting. that, in my view, puts some headwinds in terms of the market moving higher. we're at 2,800 right now as we look further out in the year, the economy continuing to
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grow would suggest to us, you get earnings improving and that would lead to a higher market and target at the end of the year around 3,000 for the s&p 500. it's basically a flat overall market near term and rising later in the year. that's how we think about it >> there seems to be a conundrum. morgan stanley had this interesting note out over the weekend. they are saying in this environment there's upward wage pressures but very little overall inflation. when you have this rising cost here, in addition to any other rises in costs, commodities, et cetera, but very little ability to raise price you have this conundrum for corporations where their profit margins get eroded it has to come from somewhere. how do you view that >> a couple ways from a societal point of view, it's a good thing you have wage inflation. from an investing point of view, that represents potential headwind on margins for some companies. and so as a strategy for a long time, we've been focussing on companies where labor, wage costs are relatively small share
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of their revenues. and so put that in some context. a typical company in the united states, around 13% of its sales it consumed by its labor budget. that's a distribution. some companies are 5%. some companies are 25% and so as a portfolio manager, we want to focus on and recommend portfolio managers, focus on companies where labor is a relatively small share because they will have less headwinds from their margins look at google as an example of that paypal companies where they are strong revenue growth but less of a risk in terms of margin headwind that's how i would combat that and recommend clients address that as a headwind it's absolutely an issue and you see wage inflation as unemployment rates remain below 4% >> david, we're going to keep it a little shorter today, but thank you for joining us, particularly for weighing in on what's an important issue as we continue to try to understand the benefits and/or lack thereof
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tax reform are we getting to phil now i think we are >> yes boeing is out with a statement phil, what is it >> they feel the pressure. they know that it's growing around the world to ground the 737 max fleets and the statement from boeing, some of this is similar to what we heard from the company yesterday as well as sunday. safety is boeing's number one priority we have full confidence in the safety of the max. we understand that regulatory agencies and customers have made decisions that they believe are most appropriate for their home markets. we'll continue to engage with all of them to ensure they have all the information they need to have the confidence they need to safely continue to operate the fleets and to return them to service. the most important part of the statement is coming up right here it's also important to note that the federal aviation administration is not mandating any further action at this time, and based on the information currently available, we do not have any basis to issue new guidance to operators. that new guidance would be to
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ground it or just to continue flying so there you have it, guys it's going to be a day where perhaps we'll hear from more airlines, perhaps more countries. maybe we'll hear from the eu where they may ground more of these planes for now, boeing is saying it's safe the faa says it's safe, and it's still going to fly >> all right, phil we've actually just got the second part of president trump's tweet. remember we brought you the first part so this continues. split-second decisions are needed and the complexity creates danger all of this for great cost yet very little gain i don't know about you, but i don't want albert einstein to be my pilot i want great flying professionals that are allowed to easily and quickly take control of a plane with an exclamation point. phil, does the president have a point in so much that we're still awaiting, for instance, the software fix after that first lion air crash which hasn't gone into effect. it's been five months now.
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>> that's a good point but they'll make sure the software fix is correct and ready when it's ready. they'll not just say we have one and stick it in there. i think the significance of the president's tweets, whether or not you think he's right or wrong is that this represents perhaps a tipping point because now you also have heard from mitt romney. you've heard from dianne feinstein. you are starting to hear from leaders on capitol hill. what you are going to see potentially is they're not only going to put that pressure publicly on boeing but they'll start putting pressure on the secretary of transportation. and you don't think that it would have a lot of influence if the president was to call elaine chao and say, you know, i'm not so sure that this plane should be flying right now. now i don't know that that will happen i'm not saying that's going to happen but let's connect the dots here. we know that washington is a political area and this is how these things sometimes happen where you will see pressure mount on the department of transportation look, we saw it when we saw the vehicle recalls, when toyota was
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going through its recall, when general motors was going through it we've seen this. the political pressure mounts on the regulatory agencies. i wouldn't be surprised if we see that pressure mount on the department of transportation >> but, phil, to the larger point here, and not to put you on the spot, but i will. technology has increased, of course, in complexity to some extent aviation has never been safer. >> correct you're 100% right. okay separate from these two accidents, david if you look at the rate of air crashes worldwide -- worldwide -- the rate keeps going lower and so that's why these two accidents just stand out immediately because you just don't see new aircraft going down the way that we've seen this with the max in the last six months and so overall, though, technology has made flying far safer. there's no doubt about that. >> all right, phil we'll let you go thank you, phil lebeau let's bring in a former transportation secretary, ray lahood thanks for phoning in.
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we appreciate it phil had mentioned the pressure that could mount on the current transportation secretary elaine chao in terms of what we've heard from mitt romney, what we've heard from senator dianne feinstein, what we've heard on twitter from the president this morning. if you were in her shoes, would you ground these planes? >> well, when i was in her shoes, and we had some very serious safety issues with the dreamliner, we grounded -- we ordered all of those planes grounded until they could be inspected by boeing. and what we also did is we just didn't allow the boeing inspectors to inspect them we sent our own faa safety inspectors to work with them as a team in collaboration to put eyes on, to make sure all of the dreamliners were safe. you cannot compromise safety this is the most important part
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of the job of being secretary of transportation safety cannot be compromised and as long as there is a doubt that these planes may not be safe, they need to be inspected by faa safety inspectors and boeing safety inspectors until there is full confidence that these planes are safe. that's what we did the secretary has the authority to do it and i think the secretary could be doing that. >> wait, doing what? in other words saying to take the plane out of service because, obviously, the investigation, mr. lahood, is going on into the crash. nobody knows exactly why the second plane crashed at this point. boeing is involved the faa is involved. so you're saying take the plane out of service until we have the answers? >> absolutely right. take the plane out of service, just as we did with the dreamliner until the flying
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public has 100% assurance that these planes are safe. and they don't have that assurance today. and the inspectons have to be done, not only by boeing inspectors but in collaboration and in cooperation with faa safety inspectors also >> mr. lahood, what's the, i guess, threshold for deciding if there have been enough incidents to say that we have to actually stop this plane has been in the air almost two years we have had this sort of -- within several months, two of these accidents that vaguely look similar how much do you have to get an accumulation of evidence before you say it's just time to sit these planes >> one incident is one too many. i can tell you this. when i was secretary, the worst day of my day on the job was when the air crash happened in buffalo and 49 people perished and the point is one incident is
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too many if safety is your number one priority, and it can't be compromised, then this airplane needs to be grounded until the public can be assured that these planes are safe. that is the obligation of the department of transportation nobody else in the federal government has that obligation that's the federal government's, the d.o.t.'s obligation to make sure these planes are safe >> are you shocked at the faa taking this long then to actually -- i mean, it was, over the weekend, the accident happened they issued the continued air worthiness directive last night. do you feel like they are slow in the going here in terms of the whole process? >> what i think is when you make safety your number one priority, there can be no compromise that's what i think. >> and, ray, just to wrap it up
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here, would you fly on one of these planes >> these planes need to be grounded until they're inspected by not only boeing but faa inspectors >> so no >> and then people will have confidence that when they get on these planes, they'll be safe. >> ray, thanks for phoning in. ray lahood, the former transportation secretary joiningous the cnbc newsline, jeffreys equities analyst sheila sheila, thank you for calling in i know you've been trying to sort of quantify the potential financial impact on boeing knowing what we knew going into today. the market seems to be perhaps rethinking its calm response yesterday. the stock down another 5%. how would you essentially put this in context, what it means for boeing, and do you now assume these planes will be grounded more broadly? >> sure. so we think the stock will be under near-term pressure as you
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see the headlines, whether there's a grounding from one association or another what we put stth a quantitative scenario analysis looking at a potential grounding and maybe a pause in deliveries for two months to three months, so essentially a quarter. and it would be about a $5 billion impact to revenues so the 737 program is about 30% of boeing sales. it's $29 billion in revenues and it would be a 12% hit. >> so that assumes a pause in deliveries and perhaps pushing back production, but no change in things like, you know, order volumes down the road. you don't think there will be a market share impact or potential liability coming out of this at this point >> no, we don't. when you look at the 737 max, it's about 4,661 orders to date that are in the backlog. it's about 80% of boeing's
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backlog on a unit basis stretching across 80 customers so very big backlog. and so we're not worried about order momentum, but it is a concern about making sure customers are comfortable with it one interesting tidbit for you, when we look at the 787 with the grounding in 2013 and the battery fix there, the aircraft still had 182 orders in that year or about 20% of the program's orders program to date it didn't impact orders as well, although for the max it's a different situation given the backlog is so lengthy. >> you've been correctly bullish on boeing up to this point for a while now. i wonder what your take is in terms of clients who really love this stock in large part and rebuilt its valuation to really near historic highs in part because it seemed so visible how many years of free cash flow they were going to be getting because of this order. is there now a rethinking process happening?
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>> i don't think investors are skittish i think the 737 max is a derivative, an improvement of a proven airkra dlcraft with an ae fleet. so, you know, i don't think investors are worried the program is going to go anywhere. it may just cause some disruption or delay. and boeing issued a press release with a bulletin that they're working with the faa either on pilot training or, you know, making sure everybody is aware of the system upgrades on the max with the system. >> sheila, why is it taken for granted there would just be a delay in terms of deliveries and that could be a worst case scenario in that customers wouldn't switch to an airbus single aisle plane there was a report that lion air, the biggest customer of boeing when it comes to the max 8, was suspending delivery of four max jets. have you heard anything to that degree and what makes you so
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confident that airlines won't consider another alternative >> airbus and boeing both have fairly large backlogs on their narrow body aircraft both five years in length. it's fairly hard to switch let's not forget airbus had some -- although not to this extent every customer has its own, you know, issues it's working through where their active fleet -- although all the customers are important but their active fleet might be, you know, or their order books might be quadruple the size of their current fleet. so i think that's something to consider as well >> all right, sheila, thank you of jeffreys. >> thank you very much we are monitoring two important hearings on the hill moments ago, taking a look at the ceo of wells fargo, tim sloan, being sworn in for his testimony in front of the house
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financial services committee and there's maxine waters, chair of that committee. we'll continue to monitor this hearing and bring you any and all news as it happens
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all right. time for etf spotlight dom chu looking at the financials as wells fargo ceo tim sloan begins his testimony on capitol hill. >> good morning, david the third worst performing sector in the s&p 500, just eight trading days into march is the financials the sector overall a drop in longer term interest rates and general aversion to risk over the past few days has driven trading action. wells fargo has been a modestly positive performer up around 0.25%. bank-related exchange traded funds like the spdr financials select fund, slf and bank and regional bank funds, kbe and kre, get a lot of attention from traders. certainly ones to watch over there. the bank related stocks have been slightly underperforming the markets with volatility at relatively low levels. some traders look at whether those banks can play a bit of a
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catch-up game. that will be a big trade to watch. melissa, back to you when we come back, president trump unveils a record $4.75 trillion budget. the former director of the national economic counsel, gene sperling, will join us next. measure up? a cfa charterholder does. you've worked hard to grow your wealth. make sure you're working with a wealth manager
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good morning i'm sue herera here's your cnbc news update at this hour. in the latest blow to prime minister theresa may's brexit deal, the country's attorney general says the legal risks over the irish border remain unchanged despite the changes to the deal that may secured from the eu late monday night rupert murdoch's australian company is calling for the break-up google saying the u.s. tech company has too much power over news outlets and online advertisers. newscorp australia wants google's search separated from the rest of google's business.
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north korea's latest parliamentary elections went as expected with a landslide victory for the ruling party turnout was over 99% and each ballot had only one state-approved candidate here at home, secretary of state mike pompeo said the u.s. will withdrawal all remaining staff from its embassy in venezuela due to the deteriorating situation there. this after several days of power outages roiled that country aggravating the chaos there. it's a busy news day that's the news update for this hour guys, back downtown to you melissa? >> sure is, sue. thank you, sue herary. president trump proposing the largest budget in history. the budget already looking to be a fight with congress with some calling it dead on arrival with us to talk budget and his latest piece on democracy is david sperling, director of the national economic policy for presidents obama and clinton
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gene, good to have you with us >> i don't know if you thumbed through the thousands of pages of the budget report, but i was wondering what you made of it in terms of where the cuts are coming from in order to bolster other programs such as defense >> i think there are three things that should worry people about this budget. number one, it is completely directed towards a kind of hard base of donald trump and the reason that should worry even people who are not budget wonks like myself is that if we have another big fight at the end of the year, it won't just be about the government shutdown, it will probably be about the debt limit. when you have the president bracing up with huge cuts to medicaid, another huge $8.6 billion for the wall, you have to worry whether he is already aiming for a degree of volatility and dysfunction that could even affect the -- whether we default on the debt number two, it's an enormously
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gimmicky budget. i don't think i've seen such inflated economic numbers and the effort to try to hide $165 billion in the defense budget. why not just say you're for the increase and, third, it goes to the area you mentioned in the cuts. i mean, this is so inconsistent with what i think most american people are for and even what donald trump has said. he liked to brag he wasn't going to go after medicare and medicaid it cuts medicaid by $1.5 trillion, even if you look at what they plow back into their kind of block grant which i don't think much of. it's an $800 billion cut in subsidies and medicaid it will cost millions of people health care. and then on medicare even, $800 billion in cuts. and on their discretionary budget, yes, he's got some increase for homeland security, but if you care about science, if you care about affordable housing, if you care about the environment, there are deep,
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harsh cuts across the board. so i think this is a very, very partisan and harsh budget, and i think it worries me on both policy grounds and what it says for how the president plans to govern in the next two years >> gene, i want to talk about your article about economic dignity. it was -- philosophically very interesting argument to put forth, particularly in the context of these discussions about the budget whenever you bolster one program, the money has to come from some place else in thinking about economic dignity and you're talking about the cuts in medicare and medicaid, is medicare for all economic dignity is free college tuition for all economic dignity, and how do you pay for that dignity >> so what i say in the article in democracy journal is that economic dignity is really about three things your ability to not just care for your family but to be able to enjoy the -- have the time to enjoy the beautiful great
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universal joys of family to be able to pursue your potential and purpose and, three, to be able to work with respect as opposed to domination and humiliation. and what my focus is, is that we as a country should be looking at the end goal. i do think that having a basic degree of health security is absolutely essential for economic dignity what is worse as a parent than feeling that if you had a sick child you either couldn't care for them or had to bankrupt your family that goes to your core of any kind of economic dignity my focus is, it's not about saying you're just for a one solution it's about insisting that health care, i think, should be a right. that there should be universal health security. but as a country, we should insist on that principle of economic dignity, but we can be open to different solutions to getting there as long as you actually make the test, the one of economic dignity, and in this case, true health security
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>> gene, if there were a consensus to be built that, in fact, health care should be something that the government guarantees across the board, what's the mechanism you see most likely? would it be just a public option just sort of a general subsidy how do you think that might shake out? >> well, you know, it's a good question because if you are asking what the end goal is, people for medicare for all make the point, and they have a lot of good arguments that if we were starting from scratch, this may be a more efficient way to do it. but i think if you look at the experience with the affordable care act, with people -- what disturbed people was the holes that weren't being filled. so, yes, some kind of large public option that was available to everybody for some people, that might be the end goal for some that may be a stepping stone. for some a way of having a mixed solution of markets and government, but, again, my focus should be on, is it working?
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is it actually providing that economic security for all? we just should not be a country where somebody has a child that has a very serious or rare disease and because of that, it bankrupts their family with lifetime limits or people can't get the coverage that they need. that is very basic, and i think what we need to do is insist that everybody have a plan and a promise that they are going to achieve that and then we as a country can be open to judging and looking at those different options. i think certainly some kind of major medicare or medicaid buy-in with really strong coverage might be the best way or the most realistic way to get there i'm not shutting the door to other options, and i think the people of medicare for all make a lot of good points about efficiency but politically, realistically what i'm suggesting here is probably a more realistic way to achieve that goal of health care as a right >> gene, a provocative piece,
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thanks for sharing it with us. gene sperling. when we come back -- to hearings under way on the hill wells fargo's ceo tim sloan and trade rep lighthizer both testifying before congress "squawk on the street" is back right after this. what do you see? we see a billion more people breathing free. we see access to fresh food being the global norm, not the exception. we see homes staying cooler, without the planet getting warmer. at emerson, when issues become inspiration, focusing core strengths to create a better world isn't just a result, it's a responsibility. emerson. consider it solved.
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one top technician says a group of under the radar tech stocks trading near all-time highs still have more room to run. find out more on more "squawk on the street" is coming up.
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let's get out to the cme group in chicago rick santelli is there with the santelli exchange. rick >> -- >> we're, obviously, having some difficulty with rick santelli's microphone in the meantime, a quick check on the markets
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the dow treading water here. it's down just slightly, 41 points here so far in this session. we are, of course, watching the impact of boeing on this index as more and more airlines are grounding the max 8 plane. the s&p 500 is up 0.4% >> rick? >> i don't really need a mike, i'm pretty loud. i see 263, 264 we've seen it before that doesn't make it unimportant. in pacman when you take a lot of bites you're getting ready to make some progress let's go to the charts we picked a macro chart in june of 2012. the reason i picked it is easy these are the historic double bottoms, right around the mid130s in july of 2012, july of 2016, and while i'm on the topic, does anything jump out at
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you? july of '12, july of '16 yes, there's a cycle, the ten years. july, every four years, believe me, these things always have a way of coming around bottom to bottom so i think it's safe to say somewhere in july of '20, maybe we'll be looking to make a bottom but a bottom doesn't have to be here doesn't have to be here. the bottom could be up here. so the point is you need to be cognizant of these time cycles the second thing that's key and we've done this quite a few times. you know how much i love double tops double tops always seem to be wonderful reversal patterns. harken back. this double top was october, november of last year. and when this was undeveloped and moving up, i remember we had one of these white board fun sessions and i said if we come back and trade around 3.25, start to come back down, it's going to be a top but we never know if it's going to be the top. and i think that we have to
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continue to think that way but now let's add in a wave. wave one, two, three and four. the point is we should be doing a wave five. everything on this double top now keys on this one point 255 on the 3rd of january. if you are looking for rates to stay higher, keepior position. if it trades under that level, you have three different scenarios that say rates are going down melissa lee, back to you >> 255 got it, rick rick santelli at the cme let's get to wilfred frost >> the hearing which is titled holding megabanks accountable, an examination of wells fargo's pattern of consumer abuses relates to a scandal that first emerged 2 1/2 years ago and the new democratic chair of the committee, maxine waters, outlining her view and the reason for the hearing >> wells fargo is a recidivist
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financial institution that creates widespread harm with a broad range of offenses. in 2018, the federal reserve board imposed a cap on the bank's growth which remains in place today. but this punishment and the fines imposed have not changed the bank's behavior. also concerning is that wells fargo's regulators seem unwilling to take forceful actions against the bank but instead are weakeni ining dodd/k safeguards >> wells fargo ceo tim sloan responding >> i believe that wells fargo serves our 70 million customers, 1 out of 3 u.s. households in an effective way. it's reflective of the changes that i've made since i've become ceo. >> the share prices pretty much match the bank index over the last 12 months that's because the worst of the repercussions of the scandal, including the news of the fed's
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asset cap punishment came before that timeline, february 2018 for the fed asset cap. and it's hard to see how punishment itself gets much worse from here but broaden out to two years or when tim sloan took over and his share price performance has significantly lagged other big banks tim sloan has also fails to have the fed's asset cap lifted as much as he initially suggested he'll be hoping for a strong performance today to ease pressure >> wilfried frost watching those hearings they are considering another tax on the wealthy we'll tell you what it is. first, morgan brennan has a look at what's coming up from the pentagon >> i'm at the pentagon, one of the most secure buildings in the world and i'm about to go inside for a rare interview the department of defense is getting ready to unveil the details around the $718 billion budget proposal. going to be sitting down with the secretary of the u.s. army to talk about his portion of 'dose proposed funds and how
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he like to spend it. more "squawk on the street" after this break if you have a garden you know, weeds are lowdown little scoundrels. draw the line with roundup. the sure shot wand extends with a protective shield to target weeds precisely and kill them right down to the root. roundup brand. trusted for over 40 years. whooo! want to take your next vacation to new heights? tripadvisor now lets you book over a hundred thousand tours, attractions, and experiences in destinations around the world! like new york! from bus tours, to breathtaking adventures, tripadvisor makes it easy to find and book amazing things to do. and you can cancel most bookings up to 24 hours in advance for a full refund. so you can make your next trip... monumental! read reviews check hotel prices book things to do tripadvisor
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welcome back to "squawk on the street." i'm dominic chu. stocks are hitting highs of the session so far industrial stocks are among the
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worst performing groups following the second sharp day of losses. but energy stocks are one of the biggest leaders to the up side in early trading, whipped along by saudi arabia's plan to voluntarily cut supply later in april. among individual names, hess, apache, devon energy, all up by 2% or so and look at one of the most closely watched etfs, up nearly 14% this year. one to watch especially with the energy trade david, i will send it back downtown to you guys at the stock exchange >> thank you, dom. i will take it. new york considering yet another tax on the wealthy, this time for those that own apartments that are not their primary residence. many of these people are not even u.s. citizens i would think. robert frank joins us with more. robert >> good morning. new york governor andrew cuomo announcing his support for the
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so-called tax. the tax on secondary homes in new york city would raise about $9 billion over time for the mta. it already has support from the assembly, senate, and city council and mayor, looks like a done deal at this point. you could call it the ken griffin tax. bought that condo in january they told us this morning that the rich that own multi million dollar second homes in the city can easily afford it >> we're leaving a lot of money on the table in new york city. these are individuals who don't make new york city their primary residence and therefore don't pay income taxes and that's money that's left on the table for things like the subway system and things like affordable housing, for things like the infrastructure of our city >> all right
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so here is how it would work it would apply to properties valued $5 million or more not the primary residences or primary residences of the owner's parents or children. the rate would be graduated, rising from a half percent to 4%, and another fee of $370,000 for the properties over 25 million. ken griffin would pay about 9 million a year for his place analysts say it would raise 650 million a year in total. and owner of a $10 million would pay 50,000 a year. the real estate industry gearing up for a fight, saying additional tax like the one proposed would suppress sales activity and lead to lower tax revenue for the city guys, a lot to deal with in terms of how you implement it and determine who is a primary resident of an apartment, how you value that apartment
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we are going back and forth. >> a heated discussion. >> whether or not it will help in terms of the revenue picture. that's the key you have municipalities dealing with what you and i believe may be an exodus of residents who no longer have the salt deduction, and the return with amazon, how you sustain the revenue picture in big cities like this in high tax states. >> this is an interesting tax because brad hiel man said it only impacts 5,000 people in new york that have nonprimary residences over 5 million. when you look at the structure of the tax, it is only a small group even within that 5,000, those with $30 million apartments that will pay hundreds of thousands of dollars a year in extra taxes. this is the most progressive tax i've ever seen the question is what happens to sales at the top end of the market that are already under a lot of pressure because of
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excess supply. you add this tax on, we could see big price moves and big declines in sales at the top of the market which could spill to the lower end as well. >> that's the key. robert, thank you for the continued coverage of all these tax related issues "squawk alley" is next we're going to take you live inside the pentagon. morgan gave a tease of that. she's speaking with the u.s. army secretary, mark esper this is your invitation to be our guest.
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good morning it is 11:00 a.m. at the pentagon and 11:00 a.m. on wall street. "squawk alley" is live. ♪ ♪ good tuesday morni


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