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tv   Squawk on the Street  CNBC  March 20, 2019 9:00am-11:00am EDT

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>> do you take the band-aid off like -- is that how you do it? rip it off rip it off do best out of three vote again if they say stay and best out of three, what do you want? >> i want a proper deal. >> you want to stay. >> yeah. >> thank you we'll see you back here tomorrow right now it is time for "squawk on the street." >> rip it off. ♪ good wednesday morning welcome to "squawk on the street." i'm carl quintanilla with jim cramer at the new york stock exchange, david faber has the morning off. tight range for futures after yesterday's failed rally it is fed day. decision at 2:00 eastern news conference to follow. we'll watch that along with fedex, boeing, lyft, apple and more europe lower may you heard will ask for a short brexit extension ten year 259, some parts of the yield kursk curve at a new cyclw
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fedex warning on a global slowdown with ceo fred smith telling jim exclusively last night. eu regulators hit google with that $1.7 billion fine and disney officially closing its blockbuster deal for those fox assets fedex down sharply in the premarket after missing with the quarterly results and cutting guidance for the current fiscal year citing a slowing global economy. this is what fred smith told jim last night on "mad money." >> tale two of stories, jim. the domestic business is pretty good, although we put some new expenses in place to meet the demands of the e-commerce market and then our international revenues were not quite what we had hoped, so we had anticipated about 6 billion in increased revenues for the fiscal year that ends may 31st we're going to end up with about 4.5 billion, but we are seeing some green sprouts now in the
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international side and we're optimistic as we go into fy '20. >> we talked about their conservative in general outlook on most prints did you see the warning two quarters in a row? >> yeah, kind of, because what -- look, fred smith is doing something that i think people don't understand. fred smith decided, we're going to own the world we're going to own the world whether the world is doing well or not we'll spend all the money we can on tnt, europe, that's turning out to be much harder than people thought, they have to fix that still optimistic done in a year. asia, he's got a government that is at war with our government, trade war. you don't -- it is very hard to own this stock when the world is slowing. it is very interesting because if you go back to the fed's comments last time, they're talking about the growth of the world slowing. i would literally bring fred in. fred would tell you what is really going on. fred makes the point, we know more than anyone but i want to make it very clear the u.s. is strong that amazon is nothing amazon is less than 2%
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but what really does matter here is they have spent a fortune and they got to keep spending. they have negative cash flow, still -- a moment where -- i don't know if people recognize the name md-10 that's mcdonnell douglas i remember that stock, md, how great that was in the takeover bid. you have 40-year-old planes. fred has to keep spending and spending and spending. he is truly spending to win in a market that doesn't even want to hear the word investment >> cowan today, reiterating outperform i think target is 270. but they say this is a lost year so if you own it, do you need a year's worth of patience at least? >> got a trade deal, you get 15%. there is a new insight i have on the trade deal somewhat negative, which is that there are -- there is a big camp in the white house which says let's do a trade deal, but let's keep the tariffs on tariffs haven't hurt anybody in the united states and really
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hurt china better than keeping the -- taking the tariffs off and putting them back on if china doesn't comply there is talk about the chinese being unhappy. that talk is wrong we're unhappy. >> we're unhappy in. >> the negative -- it is a bizarre series of conversations about this president's being very hard. okay president think he's got the winning hand when you listen to the mainstream media, here we go, you get the sense that the chinese -- the narrative is that the chinese are upset here, upset there, they won't buy the boeing max, give me a break. dennis muilenburg is saying, safety, safety, safety, if the chinese think they can get out of this by buying, buying isn't even in the agenda the agenda is intellectual property the dismantling of the basically the china domination 2025 plan, it is about military it is about the idea that they
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got to close the state run enterprises that dump and then about buying and -- >> basically you just told me don't bet on a deal anytime soon. >> they will get a deal, not big. what i'm thinking. and you got to stop taking -- we got to stop hearing about the chinese being upset. the chinese, the chinese, they got, you know, they got two, three, four, six, eight, okay, they got real bad hand right now. that's the way the president views it the president is doing negotiating that is extraordinary behind the scenes, some guys are very compliant he sends them over, go tell them what they want he's got another side, here's the deal, keeping the tariffs on until they start doing real joint ventures that don't steal. stop the state government sponsorship of the enterprises. >> fred smith talked about china in the context of global trade in these talks take a listen to that. >> china is an enormous place with an incredible infrastructure for manufacturing. so it is going to be a very,
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very big part of the world economy in terms of manufactured goods for years to come. any change is going to be on the margin that's why china and the united states need to come to a deal, because it is a good thing for both parties >> okay, so this is another issue that is at war with the government the government, our government says the longer we stretch things out -- >> your thesis. >> the more likely thailand, more likely that cambodia and vietnam, that they can possibly take this. there is -- fred, who has boots on the ground, says the infrastructure, this has to do with ports has to do with the fact that china has this hooked. we are -- this is the way the president feels too. completely hooked. we have to get unhoob ked. china is dominant. >> that's what i'm asking you. you're telling me the president feels he has a good hand at the same time you tell me there is no alternative to china. >> the president likes to -- the president -- he's bluffed before, one, but i think that
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he's basically saying, i don't trust them at all. everybody says trust to verify he's saying no trust, verify and fred is saying there is a deal we'll hear good things when mnuchin goes over, it is always, like, fantastic, okay. >> next week. >> yes fantastic. everybody will get their hopes up around 2:30, there will be some reporter comes out and says there is glitches. can't people see that's the game they're being played >> it does feel very calculated, the walking back headline yesterday, 737, the chipmakers keep us out of it, we're unnerved by how we walked away from kim all that is coming last week. >> all kabuki dance somebody will say things are close. micron tonight, positive stop it. there is the force of the president is to say i'm winning. the president never rarely talks about i'm losing, but i'm winning. and i don't care what fred says. i don't care what anybody says
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in terms of -- we got to get a deal we can't go back on and we need to see something that is akin to them saying we, we are no longer going to do our plan of world domination good luck. it is going to be harder the trade deal may not be -- the chinese still think if they come over, and they buy our sugar cane, which we don't even make that much, honestly, can we just start stipulatinging the ining a is being played. being played every day. >> if it is not friction from the far east, it is europe big tech under scrutiny across the atlantic the eu slapping alphabet's google with a $1.7 billion fine. the eu competition commissioner delivering details at a news conference in brussels, just a few hours ago. >> today the commission has decided to fine google 1.49 billion euros for breaking eu
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antitrust rules. google has engaged in illegal practices when it comes to their search advertising brokering in order to cement its dominant market position. this is the third antitrust fine that we have imposed on google >> goggle has come out and said they will accrue -- they expect to accrue the fine in q1. >> i'm convinced this is the only way europe can make money we're having a bad quarter, let's fine google. google is tough. we all know google ad service, most impressive thing in the world. you ever notice they follow you everywhere that's google. that's what that -- that's their next case. i do believe, sure, the cost of doing business for google. $100 billion, write a check. what's far more important is not that, good film. friend of sara's sarah li
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sara likes that european stuff. >> you think this is the more relevant story today this effort to -- >> write two more checks probably this year you know what it is? it is like a parking ticket. >> u.p.s. pays a lot of parking tickets every quarter. just do it. >> it is like what happens at the end of north by northwest. when cary grant has seven parking tickets. >> you think -- >> we have a downgrade of sony this is the end of equipment and the beginning -- i know it is herky-jerky, don't worry, lisa sue will solve that. people keep underestimating her, the ceo of amd. >> the journal says they need more games >> yeah, they probably don't even know call of duty from grand theft auto over there. i think leveraging youtube is important. everybody wants a subscription stream this, you got the noise of the parking ticket to europe but then you got this thing. and if they have a subscription
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stream, i'm trying to get them on the one thing that google does not have is this subscription screen that everybody wants is badly. this could make it so you can make some money from youtube they underpriced everything that they do. and this is the beginning. people just love gaming. do you know the nfl has a problem with gaming? >> we were talking about this before the show. big overlay in football and gaming and -- >> my -- my daughter is involved in this. this mental health field, like number one the addiction. you got to take the machines away but the addiction plays into google's hands download playing games i got friends setting up gaming parlors. i know there is a -- we had a big issue with getting into college the wrong way. but they're going to be doing title 9 gaming and you got to be good i think the staidia plays into that hand. and the read through, some people are saying it is okay for ea, atv, take 2. no, amd, she won lisa sue won
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nvidia and amd are back. >> yeah. >> there is going to be many more chip wins you hear from amd. don't sell amd there is more ahead. don't sell nvidia. >> despite some of the industry semiconductor data we got yesterday regarding the sequential decline. >> go up and just goes up a little bit every day and will report tonight and i think they're going to try to tell an upbeat story about it. >> before the break, apple is announcing the launch of some next generation air pods the company says the latest version of the wireless headphones feature 50% more talk time, hand frees free hey siri recharging case. tim cook with the ipad mini drawing, a picture. >> maybe we are can get them one of the great holes in the conference calls is they never had enough of the air pod.
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maybe they're making these. >> the ipads, this, i mean, if monday was going to be about hardware, they already -- they're going to get that out of the way early. which leaves more room for something else. >> monday better be about a stream we pay more for apple, you get the e-mail i want the stock to go to 200. they need something that makes it so we pay more. not the watch, i don't think that's what i hoped. but if they have something video that is the holy grail, it would be incredible. i don't know what that will be what, what do we have there? >> we tried to find out. >> game of chairs. they got to come up with something. i don't know what they have. i do think that it is long awaited. they leaked out a lot of stuff the air pod has been disappointing if only just because i can't recall a product that has been -- that had too much demand for as long as it had and haven't been able to meet it. untold story what is going on with that
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>> it is interesting >> what's going on with that will they have this one? they left a lot of money on the table in retail. retail, i think, was disappointing. this was the product everybody wanted to get. i went and bought four of them i was going to put them on ebay. >> like a concert ticket >> 50,000 nike >> when we come back, disney mean team ti meantime closed its megadeal why is disney at a five week low. also ahead, one of the power players in private equity, exclusive with david rubenstein coming up later on this morning. one more look at the futures coming off the dow's first decline in five. more "squawk on the street" from post nine in a minute. hey mercedes, how about letting your hair down a little? how about a car for people who don't play golf? hey mercedes! mix it up a little. how about something for a guy
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weird to see the art including dead pool and bart simpson next to -- >> we have been waiting for that those of us who watch marvel on netflix, noticed that's the end of marvel. i think it is funny the most important research that came out today about this was a bank of america merrill lynch piece, better den most. i think people are all waiting for this analyst meeting by bob iger everybody is trying to figure out over the top i continue to think that people are underestimating ufc. and that deal. >> that's two days you said that in a row. >> i think that -- that plus -- those of us addicted to say, ncaa, march madness, any behind the payroll involving the draft
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of nfl, good stuff behind the payroll, nba helping everybody everybody connects it. that includes nike tomorrow. >> why can't it bust out of this 110 range? >> that's a great question there are people who just literally think bob is not going to be able to pull it off, disney plus, too expensive, and i think that, you know, we talked about fedex's investment, year 2019, investment year code for don't touch me i think that's what people fear with disney. i think you have to look, i think it is in the stock that's why it is 110 like the stock want to buy more >> interesting >> i guess the next chapter in this might be speculation, of course, but how are the synergies going to work. how many people are they going to let go? >> yeah, i know. look, i think this is iger's -- this is iger's crowning moment he makes this thing work, the stock goes much higher
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>> applause on the floor for building homes for heroes. >> one i've been involved in i've been involved with the home depot side, just for -- they passed it. about time i wish we had more where we celebrate the net positives of giving because that's real. some of these companies have built so many homes for people who need them. really fantastic. >> yeah. >> it is a great story one thing i've been doing on "mad money", sustainability, purpose led. >> anytime we get young people in here, it is a nice moment even if they're too short to see above the lectern. >> it is not controversial don't you love that? no fake news >> that's right. we'll get the opening bell here. cramer with the mad dash as well on this fed day with the decision at 2:00 don't go anywhere. ♪
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jim's watching general mills. >> very hard in this consumer packaged goods, kraft heinz the most recent disappointment campbell's struggling. and only pepsico has the growth. general mills put up good numbers here and it really is gross margin. it is not necessarily -- a little better on the sales side. blue buffalo pet, people iq, anything pet is strong barclays is saying stay long it. neutral. a lot of neutrals on this. upgrades if they do good job on the call the analysts are dreesperate to
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find anything good they finally got the cost structure down i like it. it did get some -- some positive attention right there. which is very good i think that this stock is go higher people want a winner in this group. they do. look, my hat is off to them. the organic sales were flat. people thought they were down. if you look at smucker, i thought it was making a big comeback, they're trying too this is one they get behind, the kraft heinz -- >> they raise their guide, margins went up you think it is a craft share story, taking share from -- >> wouldn't surprise me. some overlap snap doing very well north american pet not kraft what i like about the guys is they have tried very, very hard to be more natural organic hope on the call we hear more about that this stock shouldn't have been where it got down. they have a big equity to play for blue buff. i think initially they did it hurt their capital structure. they bought back a ton of stock up here and issue stock down
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here and that's exactly the opposite of what you want buy high, sell low a disaster for them they're making a comeback, though. >> you're right about yields pepsi yield near a ten-year high, something like that. >> pepsico is so good. i really think that you're going to get a revision of growth rate higher if you want to own the stock for growth, own pepsico. they are having a great quarter. >> we'll watchthose names with others. opening bell moments away.
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(dog barking) whatever your financial goals are, a u.s. bank wealth management advisor can help make them a reality. talk to one today. u.s. bank - the power of possible. you're watching cnbc's "squawk on the street. the opening bell in under two minutes on this fed decision day. continue to look for clarity on the china trade. we talked about fedex. you know, reminded, the negative tone out of the fedex call coincides with ubs, not saying good things about this quarter bmw saying profits go lower this year. >> we have bmw -- >> samsung, what is up with the global conglomerates here? >> a lot of -- china's market
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slowed these are companies that sell very much in china's market. i'm in lamborghini, chinese market is so important, and i think the people are all just accepting the fact that this is the president's hand, this is why the president -- president trump, because the world trade is not good. look, europe's very weak one thing that fred was talking about, just how hard it is to do business right now and then i think other than will, make we're underestimating brexit when i asked fred smith what is going to happen with brexit, it is a you tell me situation when you do business, in europe, and you use fedex, a lot of times they have to figure out the customs. i don't know what it will be like that day when things switch that will be one of the biggest snafu days ever. fedex is as ready as you're going to be. how many different scenarios are you supposed to be honestly fedex is caught in -- they're in the cross hairs of every single part of the global economy including the fact that the tnt
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deal, doing business in europe is just so difficult. >> that's probably what he meant last quarter when he said a lot of this weakness is from political decisions. >> it is >> it has been a thousand days since the uk voted for brexit. a thousand days. slated to happen in nine more days we'll see if may's extension works and if the eu is going to accept any of that. >> you keep hearing this undercurrent of people saying, it is going to be real chaos because we don't know about food food issue it is not going to be the famine in ireland there is just really people saying we don't know what will happen with food imports how can it be like this? >> at the big board, building homes for heroes, nonprofit, awarding its 200th home to veterans this year over at the nasdaq, up fin tech focusing on chinese investors celebrating the ipo today.
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ipos, jim, we'll get levi's tomorrow, and looks like reuters says lyft oversubscribed on friday. >> i think lyft is the beginning of the fascination there is a fascination with a lot of these ipos. i think levi's will go well. denim is strong. got to be careful, because we have to -- they'll keep that one tight. at the beginning, they're all tight. it is only when we get, like, i think we'll be in a situation where the first couple of deals will be remarkable and get all pumped and excited if levi's is big, it is a good story. chip burg has been on, a terrific guy, and i think they'll tell a very positive story at a time when people are trying to find something new in apparel. i think apparel is all nike, nike, nike
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don't need to think about anything else other than nike. nike will have a blowout. >> but -- >> i could add lulu. good story >> we know it is competitive your general take has been ipos will suck oxygen >> all the money. >> so where does that leave you on the overall market? >> biggest worry i always say that -- i don't hear enough from people about supply supply overwhelms demand these days because there is not enough money managers, it is index money. that money does not get to the ipos got to wait until the ipos are further along. i think lyft dazzles will dazzle. when it dazzles, people say, i got to get in the -- i got to be in uber. uber will be good. airbnb could be good uber will be a question of how many people who have ridden in uber want to stop in an uber i don't want it to be facebook in terms of the opening. remember that fiasco.
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>> i do remember that. >> one of my kids was graduating, i was throwing a party, that was a rager. >> and viewers may not remember, you were not hot on facebook as an ipo. >> sell, sell, sell. i knew they were going to botch it i knew the machines could not handle it. taking the day off, i was throwing the preprom party for all of summit high and was frantically trying to build a patio overnight, just overnight with lamps and everything. and meanwhile, like, hey this facebook will open way too high. a lot of controversy about facebook are they going to regulate, self-regulate to the point where they hurt their numbers? that's the big theory. every day i read about that. i continue to think that's not a good narrative the two narratives i think are wrong are boeing, higher, i think -- yes, i think boeing can get -- >> you say boeing has bottomed short term. >> telling a story all over the street about this is not the safety issue that you think, that they did not compromise on safety and that that narrative should be taken off the table
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i believe that i believe that is the b-17, b-29 this is boeing for heaven's sake and i think that facebook can go higher my friend stephanie link, fabulous yesterday on the judge's show really just telling it as it is. these are two stories i think are getting overly beaten up that are not expensive facebook has a real price earnings multiple. it is not expensive. by the way, alphabet is not expensive. >> even still. >> no. >> fine them a little more got to do -- every quarter, they have to fine, like have the eu, how did they do? 1.7. >> goldman on boeing, goldman cuts their target on love to 49 from 54. they say, we don't know how long this thing will be grounded. but we currently estimate it will result in a 6% reduction in capacity for love. >> yeah. maybe they could raise prices down there i happen to think that united is
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doing very well. i continue to like united. i don't really care for the other stocks now i think oscar munoz will do a good job they didn't have the -- they had some not good service stuff, they're putting behind it, huge meeting recently to try to get really rally the troops. >> you got to admit the transports had everything thrown at them. >> and fire and flood. flood. union pacific, hurt them fracking was a great business. now they found out they got fracking sand and permian. have to be very careful about coal the president favors coal. no one else does except for the coal miners. >> yeah. a look at the transports up 10% for the year gas prices interestingly now the highest since november and in the midwest, michigan up 75 cents from the lows of the year so far. >> it is rather amazing. you know, there will be an enterprise in politician should
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say we're exporting too much gasoline and it should be -- >> save some for us. >> just do a little -- you know, little -- populous stand get me a politician, something to talk about. hey, listen, exporting so much gasoline, our gasoline is too high why doesn't someone do that? just knuckle head thing that politicians do. >> your points on amd and nvidia 177 now. amd is the second biggest s&p gainer. >> wong had a keynote that was dazzling the crypto inventory, it is no longer an issue. this stock was 100 points higher it is -- there is multiple legs now. they have the great gaining -- they have life-like gaming that looks better than -- a lot of people feel the gaming they have is more life-like than humans, something to try to get your head around. amd, lisa sue won that huge piece of business from alphabet. that's going to be a domino. she's going to win -- this is
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amd's -- 2019 is their year. they did have the hiccup at crypto data center was not a hiccup i think that -- i think that the stock can go back to 30. >> two more questions. one about what does micron need to say tonight it fits this category of names, bespoke talked about this yesterday, of stocks that are caught between their 50 and 200 day. caterpillar, facebook, micron, you can go -- just squeezed in this triangle. >> yeah. i think micron has to say is we said that the -- we were going to be in the trough and the next quarter is good. i'll tell you what we had to say, we have been buying the stock back heavily they have the capital to do so if they tell a positive story, which, remember, i wanted fedex to tell a positive story, didn't give us that, if micron gives us a positive story, you'll see the semis back up. it is no-man's-land.
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i'm very concerned the stock is up too much ahead. if they call buy, call bottom, you'll see more. and i think it is a very exciting story but there is a lot of people on wall street saying -- the commodity continues to plummet, flash keeps go down. the koreans turned on the spigot i don't know this is -- pure battle not fedex. you knew they would guide down this is i don't know what they're going to say entirely possible if they say, listen, this is the bottom, people will believe that remember -- >> we have been -- people have been taking stands >> hoch tan got it right we got micron so important micron and nike. there is such a dearth of stories now. micron and nookike, china talks china, i love, something to talk about, and then we got disney, which has been disappointing >> you know what's going to heat up is home building. and home repair.
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we got the average 30 now, 30-year fixed, 4.55 is the lowest in over a year. home buying traffic near a two-year low so what is is the spring saling season going to be like for homes? >> i think it is going to be good we have some unnatural weather in the midwest, but i think that we're still -- we're still in a world driven by lower rates. watch lows watch lowe's watch lennar, toll earlier i think that toll is in a different spot from horton which is doing i think a very good number i like the home builders for a brief move here. a lot of my belief in the home builders comes from the idea that, look, as long as rates are low, you'll do okay. and also the best housing analyst, has her own firm, she's going bullish. she was bearish. she is going to be right >> as we wait for the fed this
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afternoon, is there any reason why they should sound more hawkish given that financial conditions are much different now than they were in december >> geez, if they're hawkish after the last -- after that last employment number, i don't know if they listen to fred, they should. they want to know, what do they listen to? it is not -- they got the dots, whatever that covers it but if they look at what has been going on about the gradual slowdown in the u.s., the idea of raising rates would be foolhardy. what is really doing much better than it was three months ago i don't know, strong housing selling season, maybe. that's because rates are lower i don't have a lot of companies doing dramatically better. i just don't i would like to. costco >> that would be an interesting, yeah, interesting screen >> dollar tree we're kind of -- i don't -- look there are tech stories doing well but tend to be the cloud.
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i think that andy jassy is doing a remarkable job bezos i continue to think is doing the right thing. they're having a big -- they're up 47% that's the best story. >> yeah. >> i know earlier we had mr. sadler on -- he was talking on "squawk" about i don't know how you get to the valuations. he facebook is cheap alphabet is cheap. apple is is cheap. and amazon has the greatest momentum of any company in america. >> evercore initiates 1925 target >> i can get there i can absolutely get there because amazon web services is so powerful. >> for now, though, dow down 116. boeing once again the largest point contributor along with disney let's get to bob pisani on the floor. >> they're about the only ones positive contributors. look at caterpillar, it is down, goldman, the banks are weak, united health is dragging on the dow right now. let's look at the sectors.
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the one group that still has the momentum, semiconductors, this had a great month -- fractionally positive, real market leaders not surprising industrials weak. banks had a tough day. yesterday they had a tough day flattish today energy also a little bit to the down side. what is moving stocks? good thing to remind ourselves what the primary movers of the markets are. my opinion is the big driver of the rally is traders believe that the central banks around the world have their backs whether it is in china, whether it is in the uk, whether it is in japan, whether it is in the ecb, the draghi pivot was a huge event a couple of weeks ago or whether it is the federal reserve here in the united states central banks are accommodative, and that's the biggest supporter, secondary is the belief that a trade talk deal will be happening. obviously want to watch guidance now, i put up the earnings companies that came out today. companies that gave guidance here we already talked about fedex with the weaker macro.
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bmw talked about a soft 2019 it got hurt and the cards are all down over in europe. ubs talked about slower capital markets. specific stories there about the slower capital and business overall. samsung was talking about a sluggish smartphone business not terribly negative. we knew that it is flattish that was out there and, of course, ubs we saw what is going on there as well. general mills, i think the important thing is they had terrific commentary overall. let's look at where we are of the companies, there are six companies that have february ending quarters that we would consider roughly what we call the first quarter overall. fedex was a miss by 2% or 3% look who beat. autozone beat. costco beat. adobe beat oracle beat. general mills beat and the average beat was by 9% this -- they're beating by much larger this includes fedex's miss my point is we got these numbers for the first quarter, cut to pieces at the end of the fourth
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quarter. the analysts came out panicked and cut all the numbers. i think they cut so much that we may be getting bigger beats than anticipated out of the first quarter. i know fedex was a miss. i'm aware of that. i'm trying to look at everybody else besides federal express and see what's going on. the cope here is that you beat and your guidance is not as bad as what you gave in the last quarter overall. so we have been talking about micron this morning. here is a good example a lot of similarities with fedex here even though they're different businesses, china and europe is a big part of the overall package from fedex and micron. just like fedex, micron gave generally lower commentary in november and then in december they gave q2 guidance below forecast now, q4, the stock was down 30%. that's what fedex was down in the fourth quarter so what do we expect here if the pad earn ho pattern holds up weaker may guidance than
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anticipated. green chutes, green chutes equivalent, i'm trying to paraphrase what fedex told fedex ceo told jim last night. that's the pattern we expect overall and see what's going on. we'll keep an eye on that. micron, drop of 30% in the modest return we have gotten back fedex, by the way, same thing. where was fedex, 225 in the beginning of the third -- the fourth quarter last year it went down to 150 or so. and now it is 170 or so. the return from fedex off its lows has been fairly modest compared to the big drop in the fourth quarter the hope for the bulls here is is that you see this 5% drop here today, next quarter the guidance is about in line with expectations right now down 120 points. carl, back to you. >> bob, thank you very much. to the bond pits as well, rick santelli in the cme in chicago good morning, rick >> good morning, carl. of course many are observing how
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treasury yields and even to some extent the dollar index are somewhat sliding into the day's fed meeting. big news, yields are down. but, maybe the bigger news is the yields have been hovering in zones really technically significant. and even though they're bumping along the bottom, they haven't really violated. if you look at a may 1st start to two-year note yields, you'll see what i'm talking about 238 the low from january 3rd,. so we're a bit aways hovering at 245. but you can see what i'm referring to ten years maybe more significant. 255 the low closing yield on the 3rd of january you see the year to date chart there, and obviously should we take that out, we go all the way back to january of last year dollar index, this is a mid-january chart. it is starting to exhibit a pattern that makes some more optimistic just like treasury yields, it doesn't seem to be able to gain higher ground.
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but it certainly doesn't lose the lower support levels around 96 if we consider higher highs and lower lows that jump out at you on this chart, that builds confidence that we are still in a slow-going process to get up as high as 100, long-term charts seem to point to that likelihood finally, let's stick with the dollar year to date of the dollar versus the chinese yuan. and we talked about how sideways it has gone as these negotiations look like they're cleaning themselves up it did turn a bit lower today. i did find a story in a china securities journal that translated that chinese may be looking to cut reserve ratios in q2 all these things, of course, are contributing to a conversation as to how close are these part of the actions that a country might take as they get close to a trade deal no matter how you slice it, it is depressing the dollar just a bit. carl, jim, happy fed day, back to you >> all right, rick, thank you
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very much. when we come back, david rubenstein on the economy and the investment climate and interview you do not want to miss we can cover so much ground with david later on today dow down 110 the only component green are boeing, disney and home depot don't go away. plants capture co2. what if other kinds of plants captured it too? if these industrial plants had technology that captured carbon like trees we could help lower emissions. carbon capture is important technology - and experts agree. that's why we're working on ways to improve it. so plants... can be a little more... like plants. ♪ ♪ cal: we saved our money and now, we get to spend it - our way.
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later today on the exchange, an exclusive with morgan's ceo jamie dimon on everything from the economy to amazon's hq2. meantime the spdr bank etf coming off the worst day of the year, and dimon has made some comments in the past few days, largely macro, about how the economy remains split leaving the -- the less advantaged behind. >> yeah. look, i think that we've really got to focused on this disparity between companies with financial technology, which everybody loves and companies like jpmorgan, bank of america, which have a huge amount of technology, morgan stanley, a
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great opposition, where if you're going to become public and do the 401(k) and allocate stock. i think the disparity is too great, but i recognize until you see worldwide growth and commerce bank buying deutsche bank commerce bank buying deutsche bank is very important bank stocks are weirdly trading with oil as if oil is the barometer of commerce. i think that's wrong it's also the barometer of supply permion jpmorgan will be held by the 3% yield. won't go that much below it. but you need deutsche bank to be bought that's what people are keying. >> it will take a big worry off of investors' mind gold back down below 200 dow trading down 102 premium entertainment on the infinity screen! people have seven different premium entertainment options to choose from. 'cause people are different. like how you cut the crust off of your sandwiches, and i eat them. and i'm pretty laid back and casual, and you... iron your jeans. i'm actually very happy you noticed that.
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recognizing that this is going to be one of the bigger fights going to be a very big boat. i remain convinced that they mean it because they have -- they have problems with optivo i like celgene's pipeline away starboard doesn't. these guys do at bmo. >> seems like there's always one fight in the pipeline. >> this is a huge fight. calling david faber. this is a huge fight, and i don't know who is going to win i do think bristol is very articulate about why they need celgene and the payback is big. >> tonight on "mad." >> pet iq is a stock we've liked forever, they have veterinary and food and a lot of good things there and then green dot and stash, about owning stocks, financial literacy go to chipotle and buy a burrito and get some stock in chipotle so i really like that story.
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i want people to own stocks. i know people just -- you know, we've all been brainwashed to the etfs, right? >> isn't that the law? that's a national law. >> like camelot. etfs was savior. i like both. i'm not -- i've -- i love index funds, but why not own a few stocks. >> yeah. jim, we'll see you tonight. >> >> sounds like a great show "mad money" at 6:00 p.m. >> thank you very much. >> coming up, a lot to talk about with a pride of equity titan. dow down 184, about the worst daacsshey ro t board in two weeks or so, march 7th don't go away.
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good wednesday morning welcome back toes on the street. i'm carl quintanilla with sara eisen at post nine of the new york stock exchange. david faber has the morning off. the market looking a little bit weak at the open dow down 116 watching china trade fedex a disappointment and brexit headlines as well. >> our road map starts with done for now. investors are betting the fed's raising rate days are on hold. we'll speak exclusively with carlisle group's co-founder
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david rubenstein hear what he has to say about rates and where he's seeing value. >> the ceo of fedex flagging serious concerns about the global economy as his stock falls on weaker than expected results. >> and the eu slapping google this morning with a massive $1.7 billion fine we'll tell you why we begin this morning though with fedex the company continuing to see a slowdown in the global economy reporting weaker than expected earnings and revenues in the third quarter. fedex also cutting its full-year outlook for the second time in three months here's fedex ceo fred smith speaking with our jim cramer last night on "mad money" about global growth. >> this tale of two stories, jim. the domestic business is pretty good although we put some new expenses in place to meet the demands of the e-commerce market and then our international revenues were not quite what we had hoped so we had anticipated about 6 billion in increased revenues for the fiscal year
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that ends may 31st we're going to end up with 4.5 billion, but we are seeing some green sprouts now on the international side, and we're optimistic as we go into fy '20. >> despite fact they took down their numbers again and painted a pretty gloomy picture of global growth, and one of the questions that relates to the federal reserve today is how much is the global outlook clouding its own view, and toss that tell us anything about whether they are fully on pause this year, and whether the next move is going to be a cut or a hike, because global growth is one of the factors that jay powell has cited in the past as why he wants to be patient right now. >> yeah. tons of other information from fred smith to jim last night about china and whether or not there's really going to be an exodus of manufacturing. doesn't seem to think so transports, by the way, below the 50 day for the first time since january 24, and the ratio of the transports to the broader
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market, a six-year low today. >> that's an economic belle weather. that's a tell on the economy i think that the mixed picture and the mixed outlook also has to do with the u.s. because fedex wasn't that gloomy when it came to the u.s. outlook and the data we're getting incoming it's clouded by the shutdown and the first quarter seasonal weakness but overall it has been worse than expected, and the question is are we slowing to 2% growth versus three last year or is it something worse than that? what's the fed going to say about that today that will be another big question. >> yeah. obviously for that we'll turn to steve liesman as the fed wraps up two days of policy meetings steve has more on what we might expect this afternoon. steve, good morning. >> reporter: yeah, nice pivot from fedex to the fed and not unrelate, of course. now that we know that the fed is on hold, the question markets are asking is what will will it take to move them either way will the fed tolerate higher inflation and higher growth on the upside is the fed's newfound patience thick, or is it its patience
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thin here's what we expect to happen both in the statement and in the being if he's going to signal some form of an extended hold on rates maybe six months maybe longer announce an end of the balance sheet runoff could be q3 and q4 and maybe some information about what will be in the mix of the balance sheet, in other words, maybe moving towards shorter dated treasuries a slight dun grade to the gdp forecast it could go down maybe even further in 2019 and the big question, the median rate forecast, does it decline to one or no hikes? if the data continue to come in as we expect, we see the fed raising rates once in 2019, possibly as soon as the june fomc meeting goldman says our own forecasts could be for a hike in december of this year, and i like what ian shepardson adds, he said using one dot in a rate hike is a good bet and two would box the fed in unnecessarily meanwhile, our own cnbc fed survey along with market pricing
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sees anywhere from a 35% to 50% chance of the fed's next move being a rate cut key to the outlook, sara was just talking about, how the main risks the fed is looking at progress the global growth slowdown, an expected easing of stimulus from the tax cuts and global trade tengsz, and you've got to fold brexit into that list. what happens today, guys it's easy. the fed is on hold, gaming out where the fed goes from here most important why it goes there. that's what we're listening for. >> steve, i'm wondering what you make of critics who argue that the fed is no longer data dependant but more market dependant obviously given the timing of powell's comments and the lows that we saw after christmas. >> yeah, carl. i mean, people will always say that the fed is overly market dependant when it does, that burks look, i think when the market falls as much as it did and what happens is the federal reserve begins to fear two things one is that the market is sending a signal that it's going too far, and the second and maybe more important one is that
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there's this feedback mechanism of a decline in the market into the macro economy, so, i mean, i think the fed is humble about this itdoesn't know what's going to happen so the market sends a signal of being really concerned. look, the fed didn't ease yes. the fed went to hold, so it's going to wait to see if the market is right. you know, we have that famous statistic that the market has predict predicted five of the last nine recessions. >> last fall fed was being criticized for not paying attention to the market so they can't win either way. >> reporter: well, look, i have a running joke with our producer that the fed is in a box the fed gets paid to be in a box. it should always be betwixt and between the right policy that's what they do. they should be on the hot seat that's what they are there for >> steve, thanks a lot more to come from steve obviously on this fed day. we'll see you soon
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oppenheimer funds ceo joining us us and good morning to both. are we in this giddy phase when we're post-pivot and haven't yet seen the pikes of higher prices? >> giddy phase depends on your perspective, but i think a soft landing is very much in the cards, and by that i mean the data is softening. it has been softening for quite some time, and i don't think it's softening to a catastrophic level. at the same time we get a great deal of policy support on a global basis i think that leads markets higher i think economic growth probably doesn't materialize until the second half -- second half of the year, but we are -- we'll continue to do reasonably well and the real weakness is internationally and that's what the sped going to talk about today. >> you think the economy will accelerate towards the back half of the year. does that mean that we're set up for another rate hike possibly this year. >> so accelerate from its slow patch in the first quarter i think the trend growth rate and where we end up for the year
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is probably close to two in our judgment the fed is pretty much done tightening for the cycle, whether they cut this year or next year is an open question, but i don't think that they tighten today they will probably show a dot plot with one hike that's brave talk. they are not tightening anymore. >> lindsey, where does the fed have the potential to surprise the market today in its message? >> well, i think right now the market is anticipating the fed to reduce their outlook for rate increases in 2019 as the previous guest just said we're looking that to come down from 2 to 1, but we can see a downside surprise if we see the dot plot show the vast amount of committee members don't expect any additional change in policy. also, i think the market is looking for aed most reduction in the fed's outlook for growth and inflation relative to what we saw in the december summary of economic projections, but, again, the risk is to the downside if we do see a significant reduction in that outlook for 2019, 2020 growth and inflation,
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that could really compound the expectation that the conversation at the fed is shifting from one of neutral policy to one of defensive policy meaning it's not about whether or not we see an additional rate hike in 2019 but when does that first rate cut come into the picture? >> well, if that happens, giddy times. >> right i think the fact of the matter is we're going through a soft panchings and in the second half of the year things stabilize, and as a result the urgency to cut rates probably doesn't materialize. there's a possibility but the probability is relatively modest in our judgment. >> given, that you want to own domestic stocks? >> we want to own international stocks because we -- because valuations are better. you know, overall global equities, they do much better than bonds and have a decent allocation in the u.s., but valuations internationally are better, so they offer better value. >> so on the global picture, lindsey, fred smith told jim last night what, did he say, sees green chutes, green bulbs.
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>> green sprouts. >> thank you, krishna, in the global economy have things stabilized >> i don't know if we can get say things have stabilized in fact, for the fed the global economy and for pronounced weakness we've already seen and the expectation of further downward momentum is really one of the key factors sidelining the fed, and so if in fact we do see that continued deterioration of the data as well as the fed's acknowledgement of the slowdown on the global stage, i think that's going to compound the fed's willingness to sit on the shrine indefinitely. again, begin that conversation about a rate cut remember, global growth, if we do see a continued slowdown, that means a reduction in demand for goods ander is visds, and, of course, translates them into deflationary conditions, imported into our domestic economy. so that's going to again compound that downward expectation for domestic growth and prices which will keep the fed on the sideline in this patience stance.
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>> doesn't sound like you need lighten up on defensives or utilities or reits. >> no, no, not at all. we think in the current environment we've seen this, you know tech continues to do well. so it's still a growing economy, especially in the u.s., and it's the -- it's a tech type of stuff, you know, economic -- economic drivers that probably do much better than defenses. >> are valuations rich anywhere that you should see? >> valuations are not cheap in the u.s., but they are not extraordinarily rich i think the profitability levels kind of make it -- make it a little bit more -- a little bit more expensive than they were before, but they are not expensive. >> finally, lindsey, the ten-year yield right now is sitting below 2.60 lows of the year continue to fall how does the fed, what is that telling you? >> i think the market right now is buying into the notion that the fed is done raising rates. as you look at the probability being priced in, it's about 70% to 80% that the fed is done in this cycle in terms of raising rates. it also represents the fact that
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even if we hear from a more volk a.m. hawkish faction among fed markets, you get the differential between 2s and 10s between 16 and 17 basis points at this time, if the fed did in fact decide to raise on the short end by 25, you're talking about a potential inversion 2s to 10s and that historically been a very good predictor of recession lurking around the corner, so i think the market is telling the fed that they are done even if they don't want to be >> we don't foresee a recession any time soon. our call is five more years. that is the likelihood of any impending recession is very, very small, primarily because the underlying growth trend is modest, and policy support is going to be massive and global. >> but you're not saying the curve might not invert. >> the curve could invert, but i think for the curve to invert the fed has to kind of tighten once more. we don't think that happens either >> steve, krishna, lindsey,
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thanks to all of you guys. >> thank you. >> another day, another fine the european union slapping google with a $1.7 billion fine. here's the eu competition commissioner speaking with cnbc europe in brussels just a few moments ago. >> if you have a travel website or a news website and you want to sell the advertising space next to the search that you can do on your site, you need a broker and -- and google is one of the absolute biggest brokers in this market and they misused their dominant position to make sure that no rivals were able to compete in this market for a search advertising on your news travel sites. >> viewpoints about this newest find this is the smallest of the last three that she has handed down to google over the last i would say decade or so much. the last were 4.3 billion euros and 2.4 billion euros. smaller and importantly unlike some of the others
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this doesn't require google to change its business practices because what it's alleging in terms of the anti-competitive ad behavior from google wrapped up in 2016, so it's just another fine, and another indication that europe is on top of this issue way more than say the u.s. she should meet with senator elizabeth warren i think they would have a lot to talk about, you know messier has not been one of those let's break up the big tech companies it's not really in her power anyway and that hasn't been her thing. her thing is finding the anti-competitive behavior and finding them and making them change their ways. >> what did you make of cramer's point it's like a parking ticket now, like the cost of doing business these days. a billion here and a billion there. >> that's how it's not that big of a deal for google, but i think it's always the extrapolation as to whether u.s. regulators will follow suit. >> when we come back, a general motors plant in lordstown, ohio has been the focus of president trump's twitter. gm says it's shutting it down for good trump says he wants it open or
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sold fast. we will take you there live. plus, a big interview you will not want to miss the carlisle group co-founder david rubenstein is with us exclusively. "squawk on the street" will be right back r for people who don't play golf? hey mercedes! mix it up a little. how about something for a guy who doesn't want a corner office? hey mercedes, i don't even own a tie. do you think i need a mahogany dashboard? hey mercedes, can you make it a little cooler in here? [ a-class ] i am setting the temperature [ a-class ] to 68 degrees. we hear you. we made a car that does, too. the all-new a-class. all-new thinking starting at $32,500.
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good morning, frank. >> reporter: the chevy cruz plant behind me was the heart of lordstown, ohio before march 6th and now the final vehicles sitting other waiting to be taken away and sadly like the 10,000 jobs here at the heart of the production it's possible that this plant could reopen sometime after september when gm and the union reopen negotiations, but president trump who will be in ohio today says that he wants action right now he tweeted over the weekend i want jobs to stay in the usa and want lordstown and one of the best economies in history open or sold to a company who will open it up fast. right now thousands of workers who made these chevy cruzes are in limbo as they apply to other jobs at gm plants. we spoke with one of them. ryan mccabe, a husband and father of six who worked here making cruzes and other vehicles saying these jobs paid an average of $60,000 per year, some of the best salaries in the area, and he believes they are almost impossible to replace
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>> it might be another car company, but they won't be as high-paying jobs as we have right now. the middle class jabs that we have that pay nicely lake ours does, not many of these jobs left so it's hard to replace jobs like that. >> i feel bad for those who do have to transfer or have already transferred because they didn't have much time to pick their places and get their homes sold and decide what to do with their school-aged children and we won't see those effects until december. >> it's a big disappoint marx, a big loss to the area because it's going to be millions lost in tax and revenue it's a trickle-down effect. >> reporter: a lot talking about the social and economic impact of this closure. a study says that this closure will have a negative $3 billion impact on this entory region this year and while these jobs may or may not come back,
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manufacturing jobs in ohio have grown more than 2% since january of 2017. sara, back over to you >> frank holland, thanks very much energy etf xle down slightly this morning considering opec cuts are supporting energy cuts despite the sector pulling back from four month highs on concerns over the economic growth and trade turmoil we're joined by bank of america's head of global commodities research we've had this tremendous comeback since in the price of oil back in bull market off the lows where do we go >> i wouldn't say we're full-blown bull market and thanks again for having me once again, with you i would say we'll go $5 or $10 a barrel higher for both wti and brent, but i do think it's important to understand that this is a spoke price price, not so much forward
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prices for oil and opec cutting back pretty dramatically coupled with venezuelan cut production and others likely to be used on tighter sanctions starting in may so we've gone from a rate of growth to 2.5% last year to simply half 5% and another factor that's important and shale producers are finally exercising more capital discipline so you have that being curtailed across all fronts iran, venezuela, and the rate of supply growth is being curtailed back here because of the prices two months ago. >> it's already up 39% that's wti crude oil from the lows. >> right. >> what about the concerns from demand and where they will take us next. global economy, trade, you know, fedex warnings like we got last
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night. >> look. those commands are fair, and we are worried about those but consumer confidence around the world is pretty strong and even in countries like mexico where industrial confidence or corporate confidence is very low so i think that consumers will keep burning the fuel, and we are seeing very strong impact demand for passengers and freight is weaker. i think one of the crucial events from the next month or so from the man standpoint will be the u.s./china trade deal. if that situation resolves itself and the u.s. are china are back to trade terms we'll see a sizable rebound in demand for freight, road freight, sea transport. i'm actually positive on oil heading into the summer particularly if we get that
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trade deal behind us obviously if that doesn't happen then the risk of recession arises if there's a breakout between the u.s. and china on trade. >> a little closer to the consumer gas prices up 9% over the last month. how much upside risk is there on the retail front >> i think you're going to see higher prices. like i said before, i think probably gas line rises in tandem a tandem in sync with crude oil. my sense is we can get another 10% to 20% higher from here on a -- at crude oil levels there's the spread there as well so maybe we get a little bit of a lift, 10% to 15% in gasoline, but we should exsecretary a seasonal uplift in gasoline anyway gasoline in the summer is harder to make than in the winter because of the environmental rules that govern our gasoline consumption here in the states
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so i think you'll see higher prices i do think consumer confidence is very strong in the u.s. and the employment rate is very low so i'm not particularly worried about the demand side at the moment so that -- that's the main story, and i don't think opec is prepared to do anything else but keep production tight and allow prices to rise the saudis need the money. that's the bottom line, and we'll have to pay a little bit more for now in the u.s. for gasoline going into july 4th >> thanks, francesco. >> thank you when we come back, our interview with david rubenstein of the carlisle group we'll get his take on the economy and interest rates ahead of today's fed meeting and jamie dimon will join us at 1:30 p.m. eastern time dow wndo 40 with boeing adding 40 pints keeping it from slipping even further.
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florida's tax revenues are
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running well ahead of projections, while new york is facing a sudden shortfall. our robert frank joins us with more on the migration of high earners and whether florida can keep things booming. good morning, robert. >> reporter: good morning, carl, it's the tale of two tax regimes, high-taxed new york facing a revenue shortfall and population declines while low-tax florida is considering a tax cut after bigger than expected windfalls florida expected to finish the year with about $200 million in extra funds. governor ron desantis even floating the idea of cutting property and sales taxes then you have new york which is facing a $2.3 billion shortfall. governor andrew cuomo responding with talk about a new tax on those who own second homes in florida. florida is hoping those homes taxes. >> raise your taxes on the expensive homes. i hope new york hurries up and does that so we get another 5,000 people who move to florida. >> reporter: now the divergence
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may be fleeting from new york suffered after last year's stock market declines back in december, but the new federal tax law that limits state and local deductions could accelerate a shift in growth from high tax to low-tax states. new york gdp growing about 2.8% in the latest period florida growing a full point faster at 3.8% new york's population was basically flat in the latest full-year period in 2017 signs that it actually may have declined in 2018 florida's population meanwhile grew 1.6%. new york collects an average of $9,000 per person in combined state and local taxes in 2017. that is more than twice as much as florida now the tax foundation yesterday announced tax freedom days for each state that's how long you have to work to pay all your federal, state and local taxes for the year florida's state tax freedom day is april 13th. new york's freedom day ranked last in the country at may 14th.
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guys,back to you. >> lucky us. robert frank, thank you. >> thanks. fedex shares falling after the shipping giant posted weaker results and lowered the outlook pointing to slower global economic growth. i just had a chance to speak with honeywell's chairman and ceo darrius adamchik, another global industrial giant. he had a very different take than fedex on the global picture. listen >> overall what we're seeing in the first quarter is actually a pretty strong business environment. not just in the u.s. where it's been strong for a while, but we're seeing that a lot of our high-growth regions where we've been seeing pretty good rate of growth in europe so overall the business environment that we're seeing in q1 has been relatively strong, and it's been across all of our business platforms as well as more or less across all the geographies that we're participating in which is more or less everywhere >> strong in europe, strong in china.
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here is the full interview at 4:00 p.m. eastern, carl. they are a parts supplier to the boeing max jets so we talk about the impact there as well. >> heavy avionics and controls. >> exactly. >> interesting how sometimes your exposure, even though it might be a little bit different, alters your experience by so much. >> the business you are in. >> yeah. >> i think matters a great deal here. >> yeah. >> and we talked about why such a divergent forecast from him and from fedex. >> and speaking of boeing, its commercial airplane, the 747 max. it's brought in a new vice president of engineering while dedicating a new top executive to accident investigations meantime here in the united states, the president planning to nominate a former delta executive and pilot, steven dirkson, to he dickson, to head the faa might get someone in there full-time but with a lot of experience in commercial flying.
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>> phil lebeau said this had been in the works for a while and didn't want to read too much into the timing but maybe it was expedited by the crisis maybe too strong but the challenges right now that the faa is facing with these investigations into the boeing relationship. >> yes. >> dow is down 80. let's get a news update with sue herera back at hq. hi, sue. >> good morning, carl. good morning, everyone, here's what's happening at this hour. british prime minister theresa may asking the european union to delay britain's departure from the eu until june 30th in a letter to eu president donald tusk seeking that extension, she said she intends to try a third time to get the deal approved. >> the government intends to bring forward proposals for a third meaningful vote. if that vote is passed, the extension will give the house time to consider the withdrawal agreement bill if not, the house will have to decide how to proceed. i am not prepared to delay brexit any further than the 30th of june. >> the fire at a texas chemical storage facility is finally out. it had been burning since
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sunday there have been no serious injuries reported, but air will continue to be monitored readings are still well below hazardous levels and pope francis expressing sorrow for the victims of a cyclone that hit mozambique, zimbabwe and mulawi. hundreds have been killed with many more missing in southeast africa, and it could rank as one of the worst weather-related disasters ever in the southern hemisphere you are up to date that's the news update this hour sara, i'll send it back downtown to you. >> sue, thank you. when we come back, don't miss our exclusive interview wi ctharlisle co-founder david rubenstein "squawk on the street" will be right back obvious.
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time for the santelli exchange let's get to the cme group and rick good morning, rick. >> reporter: good morning, carl. i would like to welcome my fed day guest mark sunderland. thanks for joining me. let jump right into it if you take art class-ins
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college you talk about composition and technique. the new fed busword in my opinion after today will be composition followed by duration the why is composition of the fed's portfolio, by, way the way,that sensitivity or duration pre-crisis of the fed portfolio is four years, it's currently right now at nine years. >> right. >> and all the debt of the treasury out there has a sensitive or duration of six years. let's talk composition >> okay. absolutely chairman powell said as soon as they decide on what the ultimate size of the balance sheet is going to be, they are going to move to the debate about what the composition is going to be like, and almost in any scenario they want to shore up the balance sheet and they view that as storing up ammunition for the next recession that comes along. so that if they are at the lower bound, they have a way to stimulate growth, and so before the 2008 financial crisis, the duration on the balance sheet was pretty short
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right now they hold no t-bills and lom in any scenario they will go back to holding more bills, and then they have the debate about whether or not the holdings on the rest, on the notes, will mirror the treasury outstanding stock or be actually shorter than that. therefore, when they get into a recession they can take duration out of market hoping to stimulate housing and markets again. >> we learned two things how but they concentrate on composition and viewers it's a sensitivity if your portfolio has a drafgs nine years, it's sensitive to movements on a basis point where the move cement a nine-year security so what you're saying, mark, we've also learned or are thinking about using qe again because by extending duration and dealing with the purchase of long securities, they get more stimulative bang for the buck, is that correct? >> that is correct they are thinking a lot about what their tools are going to be in the next recession. qe is one but they started to talk about interest rate caps
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similar a to what japan did which is a pretty important development as well. >> now, let's take a look at this from an investor strategic standpoint in the little time we have left. if this is now the conversation after what is largely regarded as a neutral pause, is it safe to say that the fed really is now thinking much farther down the road about how much insurance they have and how they can use it best if they need it again? that certainly sounds like a fed that's very content to stay as is for a while your final thought. >> that is absolutely true i think they are very content where they are, and they are thinking about their next big job which is the next downturn and how they will be ready for that. >> excellent, mark always interesting speaking with you. i thank you. let's go back to "squawk on the street" gang. >> all right rick santelli, thank you very much when we return, private equity powerhouse david rubenstein with us here with the co-founder of the carlisle group the economy, the fed, global
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the economy, the fed, global there's one under-the-radar indicator that means stocks sob heading for higherig hhs sooner than you think find out on tradingnation.cnbc.com more "squawk on the street" is coming right up. hey mercedes, how about letting your hair down a little? how about a car for people who don't play golf? hey mercedes! mix it up a little. how about something for a guy who doesn't want a corner office? hey mercedes, i don't even own a tie. do you think i need a mahogany dashboard?
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hey mercedes, can you make it a little cooler in here? [ a-class ] i am setting the temperature [ a-class ] to 68 degrees. we hear you. we made a car that does, too. the all-new a-class. all-new thinking starting at $32,500. stocks are a bit lower ahead of today's federal reserve decision on interest rates and the policy statement the major indices though are up double digits since chairman powell said pack in january that the fed will take a patient approach to monetary policy. joining us now for a cnbc exclusive is carlisle group co-founder and co-executive chairman david rubenstein live today from the yale ceo caucus down in d.c. david, welcome nice to see you again. >> my pleasure to be here. >> so you know jay powell, the chairman better than most. you hired him at carlisle. you spoke to him recently at the economic club. what do you expect to hear from
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him today? >> well, he's obviously a person that's got a lot of people focusing on him. he worked at carlisle for about eight years. was an outstanding buyout professional. i thought that was the highest calling of mankind he would stay there forever, but decided that public service was more important, so he's now doing a great job i think as chairing the fed now that's a difficult position because nobody ever likes anybody who is increasing interest rates, so when he had to increase interest rates that's been a problem for some people, but i think it's been the right decision >> do you expect that he's done increasing interest rates this year >> well, nobody knows for certain. he said that he depends on and the fed depends on the economic situation and the statistics so depending on what the facts show, but right now based on what he seize it appear, though i can't really speak for him, it appears that he feels that there's a justification for a pause for a while, and i would expect that probably you wouldn't see increased in interest rates any time in the near future.
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>> what about -- >> again, i cannot speak for him. >> what about what you see you've got a pretty good window into all sorts of businesses at carlisle. >> we own about 200 companies, partial stakes or full stakes around the world, so it gives us a good insight essentially i would say that the economy around the united states is in reasonably good shape. we don't see any signs of a recession. we've gone ten years without a recession. that's very unusual, but we don't see any signs of it in all the data we have in our. europe is obviously slowing down i think brexit sat big problem for europe and france and italy have some other challenges as well so i'm not as bullish on europe at the moment though i think prices are relatively low and probably a good place to invest asia has slow downed a little bit, but i don't think it's actually going further south from where it is i think china will probably pick up once the trade agreement is announced and i do think there will be a trade agreement with china in the not too distance future. >> david what, makes you say that last part what specifically do you see that will lead you to be bullish
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on resolution of u.s./china trade? >> well, of course, things can always go wrong, but the signs that have come out of both sides are that there's some indication that there will probably be a meeting with the president and xi jinping at some point in the not too distance future at which point they will probably reach an agreement that's pubically announced. obviously they are difficult issues to be resolved. enforcement is one of the most difficult issues to be resolved. i do think there's a sense on both sides to get an agreement, and i think there is an agreement in the not too distant future that will pick up the chinese economy and it will be bullish for the u.s. economy as well. >> so if we get -- if we get resolution there, we've already talked a bit about stimulus and areas like china, does the slowdown x u.s., does it show you that we have that nearing our shores >> the eyes has recession every seven years or so, historically
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since ward war two we've been ten years since then. i don't know if we've repealed the business cycle but elongated it so we may go a few more years before there's a real slowdown or recession china don't seem to be having a recession, haven't had one for a quarter century or more though there's slower growth. the news of a u.s./china agreement will be bullish for the u.s. and chinese economy and it will probably help had the european economy as well. >> do you think though that, david, it will be bullish for the markets? 2019 has been off to the races on hopes of a trade resolution. >> right. >> on hopes of this fed pivot. does it feel like it has staying pope do you, this rally? >> well, the markets tend to be forward indicators, and they tend to anticipate things. i think the market anticipated there will be an agreement in the not too distance future and it may be belt into the market there. may be a push upward but i don't think the news will of it will push the market up as the people in the economy will feel that things are better than they were
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before. >> you briefly touched on valuations and you saw some opportunity in europe. can you talk a little bit more about where you're seeing deal-making activity and potential? >> sure. well, to begin with, the stites is still the best place toss do private equity deals in the world. it's the biggest market and it has the best financing and best executives best exit opportunities. europe is very atrafrkt as well because prices are about 20% lower for comparable assets in europe than they are in the united states, and there's some uncertainty in europe and that tends to produce a lower price and financing is pretty much readily available. asia is also attractive as well. while it's slower growth now, i think prices have come down a bit from the peak and, therefore, there are good buying opportunities in asia i think latin america is really coming back. brazil is much more attractive than it was a year or two ago, and i think even in africa we see some very attractive opportunities as well. >> speaking of opportunities, david, it's going to be a big week, maybe a big few months for initial public offerings as we get some exits of investments
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that have been in the works for a long time. i just wonder of the buckets that are coming to market that have to do with structural growth, autonomy, mobility, cloud, which areas are of particular interest to you in carlisle >> well, we've made investments in a number of say growth companies, ones that are part of the newer economy. we are not an investor in say uber or lyft which are going to go public presumably in the not too distant future or airbnb those are good investments i think for the people that went in early i wish i had been an early investor but i chose not to do so and i made a mistake perhaps. >> what led you to be skeptical just out of curiosity? >> well, i -- you know, i've generally not been an investor in those type of companies carlisle has typically been more of a buyout investor we haven't been a venture investor typically so we really didn't pursue those opportunities when they were available to people in the early stages of the company, but as
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i've said before, i missed facebook at the beginning. i kind of missed amazon at the beginning so i'm pretty good at missing really good technology companies at the beginning i just don't anticipate them as well as i should so i just don't know you can't make it or win them all. >> that was sort of a warren buffett kind of admission. he said that before with amazon. david, when you look out on the horizon at some. risk factors, how much do you factor in political risk right now in the u.s. ahead of the 2020 election? >> well, we have political risk all the time in the united states because you never know where the government is going to go, majority republican, majority democratic. right now i think generally people are prepared for a one-year long march towards an election, and i suspect that there will be ups and downs. i don't think anybody really knows who is going to be the next president of the united states i think many people believe that president trump might geth re-elections because the economy is in reasonably good shape and the democrats have not yet emerged with a leader but it's too early to predict
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if you go back a year and a half before each of the last ten presidential eleakses and predict who is likely to be president a year and a half in advance you'd be wrong every time it's a fool's errand it's fun but not realistic as to who will be president. the going to be president. the business community believes the economy's in pretty good shape, so the business community is not as worried about these issues as maybe oethers are. >> but you've got to be listening to the dialogue right now. what's your sense of the populist left turn that we're getting out of some of the democratic hopefuls? >> well, of course, it's too early to know whether they're going to capture much of the vote they might capture a lot of the attention. we don't know whether they'll capture a lot of the vote. but clearly it is making some people in the democratic party worried that the nominee could be too far to the left or the party could get driven to have the left and that might make it difficult to win the general election generally, people far to the left or far to the right don't usually win general elections, but we'll see what happens now clearly, if vice president biden gets in the race, as it looks
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like he will, we'll bring a moderate voice to the democratic party and that might make the party move back a bit more to the middle >> another question, david you know, we know you're a student, a lifelong student of american political history, going back to the beginnings of the republican when you start hearing things like, do we do away with the electoral college, do we add seats to the supreme court, is that -- is that just part of the political silly season, the early primary season, or do you think the fundamental rules of our democracy are seriously being questioned >> well, remember, the electoral college was put in at the constitution's convention -- the constitutional convention and it's not likely to be changed, because it takes two-thirds of both houses of congress and three quarters of each of the states to make a constitutional amendment. it would be unlikely you'll get that kind of support three quarters of the states would have to vote to abolish the electoral college. it's fun to talk about when i worked on capitol hill
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for senator bayh, who recently passed away, he was a big advocate of direct elections, and that would have given us different results in several recent presidential elections. but we have to talk about what's realistic. the electoral college is not going to be changed because a lot of states that are smaller really like the electoral college. >> the other thing we talk about and gets a lot of buzz on wall street is this idea of the war on wealthy the fact that you have this freshman firebrand representative, aoc, and others proposing extreme taxes on the wealth do you think that's a positive debate we should be having or are you worried about it >> i'm never against a debate. i think everybody should be debated, to be realistic about it people on the ways and means committee in the house of representatives are not talking about some of these things it's the ways and means committee that really develops tax legislation, ultimately has to go to the full house and the senate finance committee in the senate i don't see members of those committees talking about these things in a serious way. so, there's always easy to talk about these kind of changes and
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they should be looked at, but i don't think it's likely to happen in the near future. >> finally, david, just a few seconds left,down asked ken griffin about amazon hq. he said it really put cold water on their own plans to put some operations in new york were you surprised >> yes, i interviewed him recently, and he made it very clear that he had thought he might be moving to new york, but now it looks like he's not, because he was upset about the amazon situation in new york so i think that probably did have reverberations that were not anticipated at the time. and i wonder whether some of the people who were against amazon would now -- if they had a chance to re-look at what they said, but i don't know for sure. but i do think it's an unfortunate situation for new yorkers. i think it would have been good for new york >> david reubenstein, good to catch up with you. thank you. >> my pleasure >> let you get back to that yale ceo caucus now let's send it over to jon fortt with a look at what's up next on "squawk alley. good morning, john >> good morning, sarah this tensions between government
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and tech and questions about really what kind of involvement tech should have in the military, vice versa we're going to talk to trey stevens, partner at founders fund he's not afraid of dealing with the government and he has some thoughts about it. that's coming up on "squawk alley. 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. learn what a cfa charterholdr can do for you at therightquestion.org
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finally got a day where inventories moved crude. had an intra-day jump a few moments ago, as inventories fell almost 10 million barrels for the week, we were looking for an increase of about 300,000 barrels. and with that, oil did go into the green after being in the red for most of the morning. but we know what the general trajectory, sarah, has been over recent weeks >> higher crude oil. >> yeah. >> as we mentioned earlier with francesco blanche, up almost 40% from the lows. he says he's still bullish from these opec cuts. >> when we come back, the eu is slapping google with that $1.7 million fine bill nygren of oak mark will join us. it's his largest position. does he really care? find out next on "squawk alley." the future of technology investing
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