tv Squawk on the Street CNBC June 10, 2019 9:00am-11:00am EDT
i don't mind tiaking in billion of dollars a lot of people says we picked up one point because of all the tariffs that we are taking in from china just remember they're charging us tariffs some of the folks that i really like but some of the senators come to me, not really good because it is not free market. you take india where they are charging 100%. 100% is nothing compares to what some companies charge. france charges a lot for the wine and we charge them little for french wine. sure, we are paying a lot of money to put our products into france this country is allowing this french wine which is great, we have great wine, too allowing them to come in for nothing. it is not fair we'll do something about it. >> while i have you, there is so many things going on t-mobile and sprint, do you have a feeling on telecom and 5g, are
we behind in 5g? will the actions against huawei, will that set us back? can we do it here? >> i made a priority for 5g, before i got here, we were way behind now we are actually going to be leading very shortly we are leading in everything if you look at china, china as great as they are and they are great, they are near the capability of our services in silicon valley that walk around in under shirts and they were not $2 billion they don't have nearly the genius these people have they practically admit it. they try to go out and buy the company. they were buying all of our companies, they could not do it. we have the most brilliant people we have the most brilliant huawei is very powerful and strong, don't forget zte, i did
something with them where i closed them up and they paid us as a country, $1.2 billion fee we allow them to open, $1.2 billion done in one week. that was you know a good deal and you know i don't want to put their companies out of business. i want china to do well. i don't want them to do as well as us. you know when they say china, 25 years, you don't see them anymore. what they mean is that in 25 they're going to be much bigger and dominant in 25 i tell president xi, listen, that's insulting to me can't do that. they took it off because he understood exactly what we meant. we picked up $10 trillion more than that in value they lost 15 to $20 trillion in value since the day we are
elected. we are doing great i hope the deal can happen i don't want to see one less person can compete for an order. as far as the u.s. chambers of commerce, they have to start represent ing the united states and not just the company >> that seems like a good note we appreciate it i am
glad we booked that chairman from chambers of commerce, i am glad you got to caught that part of intthe interview. >> thank you very much > >> thank you jeff and thank you becky. >> sounded like the president was summing up a lot of his calls. >> a summation
he was ready to go after spending a fair amount of time with us. what did you hear as the big take away from that? >> well, the big take away, the bait you guys here with steve bannon, one of the things i find remarkable the president continues to be consistent in his views and people keep fighting him this is not, the president is a populist whether you like it or not. in the old days, republicans represented capital and democrats represented labor. i would say both parties represented capital over the past 20 years, this president is doing it differently from a market perspective, i am a little cautious. it is going to be harder to get some new highs by the same token, i would not
fight, people keep fighting the approach and the approach is the approach >> the market keeps thinking new china tariffs may not happen and it is going to be a deal and that may not be the case >> my opinion, you have to be careful expecting the fed to ease immediately i think you have to be careful thinking the president is going to back off of these tariffs whether you agree with that or not. just listen to what he's telling you. from a market positierspective, that's helpful >> i want to thank you for joining us >> make sure you join us, "squawk on the street" is coming up right now >> good stuff, guys, i am carl quintanilla, david faber has the morning off, i am with jim cramer >> we'll talk about utx and raytheon with the biggest merger of the year. the president calling off on
mexico 10-year yield did hit 214 today. the president just finished that extended interview on "squawk box. take a listen. this is his latest view on the negotiation with china the china deal is going to work out because of tariffs right now china is getting decimated by companies that are leaving china, going to other countries including our own because they don't want to pay the tar aiffs china in my opinion and based on a lot of facts, china will have to make a deal because they have to make a deal >> he's expected to meet xi in the g 20 the president sounded great and commanding he's given the hyperbole if there is a resolution with china as he said, there is also
an interview that we did with mnuchin. then there is kind of no stopping in this market. that's a dangerous thing it was up -- it seems were choppy. the combination that the president is talking about, the big deal is whether people should be betting against the market all that fed and enthusiasm goes away >> yes, that could happen. i think that the president made it seem a little easier. the data is not backed up of what the president is saying in our country. the data is slower but then the president identifies that the fed is still on the wrong side. so yeah, i think that i will take the china deal and -- >> and a rate cut. >> the china deal over the rate cut any time a china deal, there is not a
single stock with the exception of the pepsico and the hershey's that turns out to be not impacted by china. it would be remarkable while the rate cut chatter certainly saves the day last week that's because we thought china is going to go away. >> there is been a lot of discussion about similarities and dissimilarities between the mexico standoff and the china standoff one point goldman makes today is that people -- members of congress against the mexican tariffs and not so china >> raytheon and united technology is a need to have a strong military. >> metroplyes, there are issuesh
president felt strongly that democrats are willing to do anything all i can tell you that these issues are very, very different. metroplex. >> mexico is winning i am not sure they would call it a winning. >> there are a lot of states that are going to lose there is a lot of companies, he was trying to get companies to move from china to mexico. it was inconsistent. mexico is a great friend but real friend. president xi got a great relationship with. the foreign minister of mexico, he says negotiators are looking
for zero migrants. just to give you a sense of what those talks are about, the president talks about the southern board, if you don't get mexico, that's really serious, they got to stop the president needs to cut back in terms of zpamount of negotiation. i think china is much more important. as for the fed, the president did say there is a destructive force. take a listen to this one. >> we have people on the fed
that were not my people. they certainly did not listen to me they made a big mistake. they raise interest rates too fast that's number one. they did quantitative tightening they were taking in $50 billion a month. china is doing the opposite, they're pumping money in i am winning but i am not winning on a level table >> yeah, to me, what he's saying is that mexican president -- jay powell is the worse of the country. if it were not for jay powell, we'll be much stronger we have a much stronger negotiation with china jay powell is not a friend
>> we are in a black out period now. we are not going to get a response from anybody. they should not respond. they got to get away from talking to the president he appointed powell. do you remember that >> i do remember that, then complaining to mnuchin mnuchin by the way you mentioned the interview we did at if g-20 summit he did suggest, you can expect us to continue to use tariffs to solve non economic problems. >> remember the president was saying chambers of congress hates tariffs.
peace against xi because xi is his great friend and nuclear war against jay powell it is kind of upside down. he's a different president from what we are used to. what a diplomatic i am i wonder whether gregg haze is diplomatic >> we'll talk to haze and kennedy. the president did mention utx and raytheon as well take a listen. >> when i hear united and i hear raid thi raytheon, when i hear they are merging, does that take away more competition it becomes one big fact, beautiful company. but i have to negotiate meaning the united states has to buy things does that make it less competitive because it is already not competitive. >> we have to have the people
here maybe able to answer that question we have united technologies and raytheon, it is a all stock merger one of the most exciting things -- it is just crazy i am going to go right there you heard the president, gregg, he likes the idea of competition, will it make things less competitive >> we are looking forward to talking to the president later today. once he understands the benefits of this merger and what it is going to do to reduce costs of the government what it is going to do for jobs in this country, i think he's going to be supportive as he has been for both of the companies for his administration >> kenny, you have a fabulous aerospace. if the president says you know what, we want you to compete against united technology. even though you don't, what do
you say to the idea, hey, you guys are both defense, we should not have more defense combinations, how do you feel with that kind of 90,000 foot analysis that the president gives you? >> first of all, we are complimenta complimentary, we are not competitive. i don't remember the last time we competed against united technology in this case here, we'll be able to take about $8 billion of research and development spend and our 60,000 engineers, developing the next level of technologies and creating the next generation franchises so we'll go to the international global marketplace and bring that stuff back to the u.s. to create more jobs we need to create more jobs in this country and more manufactu manufacture related jobs
i think once the president hears our story and understand the complimentary nature and the power of this merger equal and the international marketplace. he'll understand how to take this country and make it the future >> the president is his line was if you want to buy a plane, you don't get any bids you guys don't make planes >> we are a system provider across the entire commercial aerospace defense sector this is not about bidding on planes if you think about it, tom is right. we are complementary, there is no overlap we still compete with everybody else with all of these systems the technology that we have makes it so much better from what we can offer from the company. if the complaint is about solicitation and consolidation from tractors, does it get
anymore scrutiny >> will be, we are still the same company as we have always been we are still customerfocused and everything we do there is nothing anticompetitive of bringing these companies together >> yi know when i heard this, tom, let me ask you, we want many defense contractors because i helps us to have a lot of different companies for a lot of different deals. are there some deals that you may have gone for that may be great and decided to get involved of the most heated position he made the president would be right that you might came up with the division, it could be against it >> >> the president may not be as
sophisticated as you gentlemen he may say you make aerospace and you make aerospace go. he's not really a detailed guy >> jim, let me take back a step here, with this merger of equal provides a strong base company, a strong technology that can take into the marketplace. this is on the same marketplace, the global marketplace, it is going to allow us to take business back into the united states, we'll be able to create more jobs. these are noble jobs and paying more than minimum wage and buy a house if they want and send kids to school. these are powerful jobs. that's what we are trying to create we are trying to secure the sovereignty of our nation and not just on the defense side but on a civil airside on the civil airside, when we bring our technologies and cyber security helping us secure of
our civil airside of our country. on the military side, we bring our patriots and missiles secure from a defense positierspective this is a great place for the united states of america, making it a great country and a country that's built on mobile jobs. it is a win-win for all. >> greg, complicated transactions, you have not done your spin-off yet of car carrier have you created a transaction >> this simplifies our life going forward. we are on track and ready to spin we'll have all the regulatory approvals. the target is end of march to all be done. we think this transaction because of the complementary
nature, little regulatory hurdles out there. less than 1% overlap in sales. the benefits here, instead of staying at our corporate office and six months later merging our country. we'll do it all concurrently and it is going to save a lot of money and it is going to be a great combination from our perspective. utx will get a share of carrier and rtx. that's a huge benefit for everybody. >> the president says he bought many of otis' elevators. is there anything that otis can tell us about china's growth right now? >> china is recovering the market is still looking pretty good. we'll ship about 88,000 of those this year for our china business we saw pricing deteriorating and profitability deteriorate and
the fourth quarter we start to see an uptake. despite all tariffs and noise that you hear, the chinese domestic market is relatively robust >> it is at odds but great to hear i want to know, your platform diagnostic dennis muilenberg, when the hell is that going to be resolved what's your take on it >> we have been working with the boeing company to resolve some of the issues on software. we have supply to the boeing company. i can't comment as an ntsb ongoing investigation, all i will say it is a great airplane, it is going to be a safe airplane and we fully support boeing to return its flight status there is nothing more important than aviation than flight safety the capabilities of our companies will improve that. i am confident that boeing company will get it right. >> tom, i think your missile
business is second to no one what i do worry, the markets have been going down, not to your satisfaction. you also have let's just say classified information that we don't know that brought your market down. it is whathard for me to analyze raytheon will we have to worry with any of that. it will not be a big part of the vast mosaic. >> it is a kind of a good news story. one of the reasons why the margin pressure is resolving these programs we have been winning, a lot of that was in classified work. that classified work is paying the next generation franchises in that arena, those contracts tend to have lower margins once we get that as product and
new franchise then margins will rise we are in a modernization phase relative for the department of defense. the budget has increased over the years. fiscal year of '18, it increases 19% and another 3% of 19 so it is all in the modernization budget the missile company has been capturing a large part of that budget what it is doing for us in the future that it is going to provide the franchises for the next generation. >> i am sorry to be so linear. you came here and you talked about that and a notion of what was going to happen with united technology of honeywell. there is an antitrust issue
>> you guys remember it. the overlap in our aerospace, the commercial is tremendous small engines, we are looking at $8 billion to $10 billion. all the valuation from the merger evaporates. in this case you a, you are tal about 1% of our sales. let's call it 750 million insignificant. we'll find new owners for those businesses it will be competitive, they are not the antitrust risk that we have with honeywell. this is a deal that'll happen as oppose to the one that's not going to happen. >> this will be 45 international, tom >> 45% international and defense will be good >> i would say year to year that can change i would say -- 50% international
and domestics and 50% commercial but the bottom line is the under line technology supports all of that structure that's where we'll be able to drive and leverage that technology and create the next franchise in the markets >> the atmospheriatmospheric, t that you are doing, these are things that make me feel comfortable. how many of these things that are revolutionary that the american people can say raytheon and united technologies have our back this is all science-fiction. >> we are taking science-fiction to real a reality it will be good for you and carl and all of us here today in our
country. >> okay, let's go over to otis for a second you got a new ceo. i have to applaud you for that i think she's sensational. can these two divisions, i am trying to figure out what's the worst now that you have done this can you help us trying to figure out, you put a value by doing these. give us a sense of multiples and how you did that it is hard stuff >> if you think about it, we always talked about the fact that you can unlock values by spinning off carrier and spinning off owe ttis. that should trade some where of 12 or 12.5 or 13 times we look at that value and i see $41 billion, maybe 30 after debt and $30 billion of equity.
otis, elevator businesses because of the cash flows, probably trade 14.5 or 15 times. you think about that you got two businesses combined and about $60 billion. add that to the aerospace business here and some of the parts probably $160. >> raytheon has a fabulous quarter. you got unbelievable balance sheet, what is the debt profile that you establiaccomplished >> it is an air raided company we got the flexibility we'll return 18 to $20 billion to capitol to investors over the next three years that's something united technologies could not have done because we have been paying down debt i appreciate tom got a great balance sheet. one of the real benefits of this deal is that balance sheet with ours gives us a unique flexibility and not just to turn capitol but to invest in all of
these new trfranchises the president got elected of ca carri carrier. >> it feels like a long time ago and mexico involved. it is kind of you know -- head to head. if he calls you and he says you know i don't believe for a minute that you create jobs. you fire people and you put jobs in mexico. i don't know about you what dow say to him? >> i am going to tell the president we have hired 5500 people, we'll hire more 10,000 people in the u.s. this year >> 20,000. >> where are you going to find those engineers? do we produce enough engineers in this country? >> no, we don't. we need to have more of our folks producing more engineers the bottom line is the jobs are there. we got to get our kids going in activities >> he never talks about it
because he's too humble and it drives me crazy. >> how many people did you put into college >> 38,000 people >> anybody here putting more people into college? >> one last thing. >> do you this i thnk of this ds another nail conglomerate? >> when we talk about a focused amd company, which is what we are. we are big, we are not a conglomerate we'll be focused on these four markets in the amd space that's the important part to remember we are not a conglomerate, we are focused in aerospace and defense. >> carl, this combination is brilliant. i would buy united technologies today. i want to thank dr. tom kennedy and mr. greg hayes >> throw it in, jim!
>> we'll get to the opening bell here and a look at the s&p 500 at the big board is the bank of montreal celebrating their three-times lo lon long,. we have not mentions sales force. i know we got to let you guys go i appreciate you coming on >> straight shooter. >> thank you >> fantastic >> sales force deal. sales force is down huge very similar deal, seven days later, sales force of a total coverage you buy sales force today, he's
getting adam lipsky, tabloid data used to be less cloud $30 billion for benioff, buy, buy. sales force was interested. >> oh, very much >> it was not fair when i talked to mark, i was so thrilled of what adam was saying this is acombination where you can use the dashboard on top of us, 360. that was the missing piece of the puzzle a lot of people can argue they pull ahead you will see microsoft is up you can argue it is not so great. how much it is negative for adobe. i think those two have been hammered it is a great deal for marc. he needed this we have some incredible
companies out there. marc needed tableau data >> jim mentions microsoft at its highs. we'll talk to phil spencer >> that's the fastest one ever i hope he plays it up. i really want to point out that we are far too simplestic. if you stay focus on the big picture, you will miss a lot of pictures >> global is down double digits because of the 1 through $5 billion are not getting done. >> i think we also have where we can't take the nvidia deal
they have not been able to get acheea approv approval there is a chunk that comes in that really wants to merge and have not been able to. what we have is software company and defense companies. united tech companies that hav chinese issues i got to tell you, it is so exciting to have the mexican deal done. it is so exciting to see what will happen with this deal itself i don't know, the president is a little me-- it disnooes not bec. he was not happy of greg hayes' report but he likes straight shooting guys. connecticut is not a state
that's gone with the president i think connecticut is really just whacked by us >> remember they lost ge larry culp got to scale back sales force just gained three points a lot of stupid people do stupid things this is an all new sales force i directly confronted mark you are paying too much. >> sales force market cap is also up. there is that. we can afford to buy more. you mention the president, we talked about so long being the business community president he did take the u.s. chambers of commerce seriously to task take a listen to that. >> without tariffs, we would be captive to every country and we have been for many years, that's why we have an $800 billion
trading deficit for years. we lose a fortune with every country. they take advantage of us in every way possible the u.s. chambers is right there with them. i assume a member of the u.s., i have to rethink that when you look at it, the chambers is more for the comp y companies and the people that are members than they are for our country. >> what do we do with this >> he's a populist that likes businesses that hires people in the u.s. i got to admit, as inconsistent some people think he is, that's been his thing he favors companies moving here and against companies moving over there he thinks chambers being captured by companies that cared more about profits than the united states. the company is driven by the notion of -- the president as much as i think he would like to
think well business are aligned. they can't do that and they can't go to their shareholders, look, we want to please the president. they have to please their shareholders the president is -- whether he's reelected or not the company is going to be here by the way is it nutty? >> it is a little strange. >> democrats don't care. they would be captured -- look at obama the president does not want companies selling a lot. united technologies, a huge number of factory in china i don't think the president, i don't think the president will pull anything back >> elevators going into high-rises in china. >> he thinks whatever is made there in order to grow >> they don't help china
military it would be factual if they have planes there the president loves to talk about businesses coming back and business is leveriaving. the ideology says if our company has businesses in china, what are they doing there he starts saying no, maybe that's okay. kennedy is nothing kennedy is how official. 40% is international >> hope it will stay that way. >> big rotation out of pepsi into goldman. >> yeah. >> jp morgan with jamie dimon on the cover over the weekend >> those stocks go up a little bit and it starts to go back down >> the wear was just a major
part of what things are going wrong in retail. i think it can help some of the larger retailers i thought it was interesting joe asked about faang. joe and becky. the president seems to be -- i think the under line tone to him i is these are democrat companies. we don't want to protect democrat companies i think they are scrambling trying to figure out how they became democratic companies. the president is more concerned on that. senator warren who has been rising in the poll wants them to break up i didn't think the president regards them as too powerful, but regarding them as too much of his enemies it will be interesting to see whether the president and the democratic party going after these companies. that's why while their stock is going up, the president is no fan. >> we have been calling them in
a political vice that's whey that they are in co in at both sides the right and the left there is no doubt about that >> when those stocks go u up up -- up -- apple acts as if it is going to be a china guilt. >> yeah, 192 >> so many hedge funds are short. so here back to 28.93. are we beginning to hit our head on the ceiling too >> take a look united technologies was up 6 and 4 and now it is down as people figure out the ratio, there is a lot of euphoria there is a lot of euphoria, i would also say there is a lot of people who felt that the market was -- and now i call them plow
kings. the adobe and optis and people don't care about everyone thinks well if tableau could get that kind of bid, they can. >> the journal today does a piece on fed cuts and they point out examples, for example, when the nasdaq was up 14% in a day on a surprise cut and of course 57% down to go >> people still short on these stocks because they don't understand the valuations. i am going to give you a classic example. what are people asking about when you go to the club? my wife loves these clubs. >> we don't know the answer. >> beyond meat
you have a fixation on the company like beyond meat zoom, he's doing a good job. beyond meat has to kind of reverse because that's the definition of euphoria i also wish that people would ask about the 5% of that cool 500 list and nasdaq 100. to me, maybe, i will love it this thing is out of control >> we are done talking about addressable markets in ten years. >> yes, i see signs of fraud >> we thought that china -- we spoke with him $300 billion tariffs and a lot of this goes right back. one of those moments where many things can happen with tariffs mexico was a big deal.
his economic adviser did not even know and they had to justify it that was just whimsical. the president says xi is giving up in 2025 that's an important issue. that has to do with how much they can steal from us appropriate and use it against us >> i wonder if kennedy and hayes will say we have to do this because of china we need a more powerful military this combination is more powerful i think they cancel it on that >> to the president. >> the president would like that the president made a comment on the plane thing which was not on point. he does some things that are not on point we'll be able to have hyper this what raytheon has -- they are in
basics they are like the pebbles of rigging plants i see bms that are out of space. >> "star wars. >> we'll watch those two names what a big morning with hayes and kennedy. let's get to bob pisani at post 9. >> happy monday, what a roller coaster ride we have been on the last few weeks have you notice the big down move and the big move up last week here we go, down 7% there from beginning of may, the old high 29.45, all the way down to 7%? 27.45 or so. the whole roller coaster rides backup down 7 here and up 5% right now. that's the bottom line all of a complete round trip that we have been seeing elsewhere. down 7 and up 5%
these are all the trade related names that get hit semis is bouncing and retail bounced last week and all trade related industrials all leading the move up. as much of this move, it is largely trade related issues that are moving things right now. there are a lot of risks out there. the stock market gone from over sold to on the neutral side right now. that's the important thing we are starting to see here may 1st of june 30th, down 7%, june 4th today, up 5%. that's the move that we have been seeing recently the important thing we are no longer cheap on the market here. china no trade negotiations here we heard nothing on g-20 and all of it is going on. trump/xi is going to be in japan. mnuchin did enlight us whether
what deal is going on. we are dealing with global growth overall that's major issues for the mark take a look right now. the important thing that's going on right now is the merger that we have been seeing today, tableau is up nicely and modest moves with some of the others. workday is up a little bit micro strategy, smaller company is also up about 2%. raytheon and united technologies, a little bit of a movement in some of the big names here arconic is up a little bit and honeywell. nothing is particularly moving overall in the markets in terms of the merger here we'll have crowwstrike, one of the big security companies
they raised these cyber security stocks it is a big mover for nasdaq then we got chewy, that's going to be a big deal, $17 to $19 how does the calendar look we started slow january and february, nothing going on we had a great middle part here. we had 61 deals. 19 priced above the original terms. that's a good start of the year. keep an eye on those big ipos. carl, back to you. >> let's check in with rick santelli good morning, rick >> good morning, carl, there is so much with regard to what's moving rates lower we remove one of the issues of uncertainty and we see tariffs placed on mexico and rates are up a little bit. look at 2-year, there is still
intersection with previous sections we had the big move down that created some of the lowest levels we have seen for many maturity since some points of 2017 we are now off those lows and the established range. you can see 10s, we have been as high as 2.14 maybe we'll get some of the current logistics in the mark place. you can see bund, similar, much lazy e in t lazier in the process they're still minus 21 or 22 really in the grand scheme of things, we want to pay close attention to that. the dollar index is up today it is up smartly, closing in on a third of a percent if you look at the last eight sessions not including on the day in the dollar index, there's only been one up
it has some drift from the contractors, approaching 99 and now is a 96 handle one handle that the dollar is doing better and many viewers and listeners will understand why and that's verses the chinese counter chinese currency, the dollar yuan should we stay here? this is the highest level the green back has had against the yuan since the end of november carl, jim, back to you >> rick, thank you very much holding onto these gains, dow at 161 here we are back to 28.92 on the s&p. we'll be back in just a moment, don't go away.
chloe, why is there a lamp shade on your head? shhh. my owner might have given me a little bit of cat nip. uh. [ laughing ] it's great, listen. it is great, gidget. everything is grand. [ meow ] [ purring ] [ growl ] are you finished? [ cooing ] that was weird. oh sister it's gonna get way weirder. time for jim and stock trading. >> analog devices, they do internet of things, got some auto goldman goes from sell to buy today. what is most important here is
that the semis have been -- mostly because people feel like without the mergers, you can't get anything done. i have marvel tonight. if this group can get ignited, you do have what i regard as being a catch-up to the rest it is an important upgrade because people really want that group to go higher >> especially, yeah, with three months and rolling sales doing for the industry overall, concerning. >> it is all amd that has been the winner everyone else has been a loser this would indicate the other groups should be bought. there is crazy things. people think that maybe adobe has to buy them. this deal, everything is in play, according to what benioff did. this is the most exciting day of the year i'm going to just right now say and david -- >> you miss this one, jim. >> i've been there, i was there in costa rica when you called me it is tough. >> it is tough what is tonight on mad. >> marvel, amazing, just back
from the dead story, really best way to play 5g ansys, they model things, very exciting when you want to model an autonomous car, you can't just go out there and crash. and marc, second deal of the day, marc overshadowed, marc doesn't like that. >> not what we expected this morning. >> no. >> day like today. >> just go by united technologies and go by sales force, by some now, buy some at the end of the day silly people don't remember what happens. >> good hour, jim. good hour. >> lot more to come on what the president told us this morning and of course this utx rate, dow up 143 don't go anywhere.
♪ 4 ♪ go big or go big home ♪ ♪ go big or go home ♪ good monday morning. welcome back to "squawk on the street." i'm carl quintanilla with sara eisen. david faber has the morning off. look at the markets here, coming off the best week of the year, obviously. the dow trying to get six straight wins, haven't done that since may of last year >> road map for the hour begins
with, quote, they're going to have to. president trump's interview with cnbc detailing his negotiations with china and possible deal plus, what he had to say about the fed, big tech, today's defense deal and a lot more. >> speaking of that deal, raytheon and united tech teaming up in a massive reshaping of aerospace. what utx ceo greg hayes and tom kennedy had to say about their merger. >> plus, with mexican tariffs behind us, the china threat looms. the chinese government reportedly summoning tech companies warning them about restricting access to the chinese market we'll fill you in. let's start with the president, though, joining "squawk" today, covering everything as sara said from the china trade war to the deal with mexico to avoid tariffs, big tech, the fed, kayla tausche is in washington covering tariffs steve liesman all over trump versus the fed we'll begin with china trade, the president telling us he believes china will mack a deke with the u.s kayla, we don't have the sound to you first and let's talk
about whether or not the mexico resolution of sorts has any impact on china now. >> the president said he believes china will mackke a de because it needs to ma s ts to l new tariffs will take effect on the remaining $300 billion in chinese imports, but in the case of de-escalation, trump also teased one potential concession, relaxing restrictions on huawei, the telecom giant subject to regulations that cripple its ability to do business here. but he says just like huawei's smaller peer zte, he could potentially step in and remove those. listen >> zte, i did something with them where i closed them up and they paid me, they paid us as a country $1.2 billion fee and we changed their management, we allowed them to open, but zte is a much smaller -- that was $1.2 billion done in one week. that was, you know, good deal.
>> the willingness to do this is a significant departure from the position of president trump's national security council and the treasury secretary who just yesterday told cnbc's nancy hungerford this. the huawei discussions are really national security discussions, they're separate from trade both we and china have acknowledged that in our discussions. president trump when he has that meeting to the extent he gets certain comfort on huawei or other issues, obviously we can talk about national security issues, but these are separate issues, they are not being linked to trade. so certainly a dividing line that is being erected by the treasury secretary there but president trump's willingness to do that deal with mexico over the weekend and remove tariffs there, carl, it is being viewed by some as a sign of potential dovishness on behalf of the president toward china, but i'm told by two administration officials that the opposite could be true, that closing one source of volatility may embolden the president to hold out longer and exact more pain from china to get that deal and that he has a leeway from
the stock market and the business community now to do that >> kayla, what about the meeting or lack of a meeting for g-20 and end of the month for investors that are hopeful that maybe trump and xi, who continue to say they're very fond of each other, and they greatly respect each other and even good friends, is it too much to hope for some sort of trade truce like we got at the last sort of grand meeting of leaders between the two? >> it seems like both sides, sara, are trying to wait until the 11th hour to actually confirm their attendance and this one on one meeting. they're trying to see what happens over the course of the next few weeks and whether there is any sort of breakthrough in staff level talks before that time of course, you saw the reports that president xi may want to save face and not risk public humiliation if he meets with president trump and nothing happens. this morning on squawk box, president trump said he heard nothing to tell him the meeting wouldn't happen, he has a great relationship, he reiterated that, believes that will happen. i'm told by japanese officials
involved in g-20 that the white house hasn't confirmed president trump's attendance yet, but president trump seemed to signify he would go. >> kayla tausche, thank you. >> sure. >> the president also commenting on the fed and interest rates. steve liesman is with us steve? >> sarah, president trump remains unhappy with the federal reserve for not cutting interest rates and continuing to run off the balance, destructive and hobbling his negotiations with china. >> we should be entitled to have a fair playing field, but even without a fair playing field, because our fed is very, very disruptive to us, even without a fair playing field, we're winning. because the tariffs are putting us at a tremendous competitive advantage. >> president trump also expresses displeasure with the personnel on the federal committee. >> no, they haven't listened to me and we have people, more than just jay powell. we have people on the fed that
really weren't, you know, they're not my people. but they certainly didn't listen to me. they made a big mistake. they raised interest rates far too fast. >> despite the mexican and mexican immigration tariff, markets forecast multiple rate cuts from the federal reserve this year, june down 22%, was as high as 30%. july, 84%, that's up today from last week. so you can see it is more than just mexico that has people thinking that the fed is going to cut rates, 95% for september, 97% for october. embedded in all of that, put it all together, a 51% chance of three rate hikes by december and just for the record, the president in our cnbc interview continued to misstate the size of the u.s. trade deficit. he says the trade deficit shows countries stealing from the united states, most economists say customers and businesses give those countries money, those countries provide goods and services in return, they do not see it as stealing
>> steve, a lot of discussion today about tariff tensions and worries, pushing them dovish do resolutions push them hawkish or do they keep them dovish because there is always the chance they come back? >> so the people that i -- the economists who i read over the weekend, carl, were sort of sticking to their idea that they see the rate cuts because they say it is more than just this tariff deal or that tariff deal. they see the china tariff deal as potentially re damaging to the u.s. economy they say, look, you have the weak jobs numbers, problems of trade showing up perhaps in the economy and in the jobs numbers and the general weakening going on they're sticking to their idea that the fed cuts rates either way. a big discussion, a back and forth in the reports that i read, over what lesson does the president take from this mexican negotiation. if he's emboldened that the tariffs worked, then there is concern that there would be more tariffs for untrade related
items. but if in fact it was a result of pressure from republicans in the senate and u.s. companies about the negative implications or negative economic implications of trade, then maybe there will be fewer tariffs. a big question and that's why when he said we did the deal in two days, that's potentially august for more tariffs in the months to come >> whether the fed -- whether it has anything to do with the president or not, steve, clearly the view of the market, of wall street economists is the fed is closer to making a move to cut interest rates >> yeah. >> how is that going to happen >> july is the odds on bet sara, if you like, we have a calendar that we can go through and talk about what happens here one is you have the president xi, president trump meeting perhaps in japan, right? and then you have -- you have the fed meeting next week, then you the president xi/trump meeting and then a june jobs report, that's early july. then you have a second quarter gdp report and then the fed meets in july, so if all those
things point the way and kind of line up, then you probably get that rate cut in july. >> and how big will it be? >> it is a good question i would say a quarter point at this point but there are those out there who say possibility the fed does 50 as more of an insurance cut beyond just doing a quarter. >> you got to -- you got to kind of laugh because while it isly so out front of this story maybe for the wrong reasons, but seems like he's getting his wish >> right, you have to ask yourself the question whether or not the president himself created the conditions which are prompting the fed to cut, whether or not if you didn't have these tariff issues out there, would you have the conditions in place for a rate cut, which you had a sort of garden variety expected slowing of the economy that did not need the fed to reverse course or would it have happened anyway. >> and cue the theorys that that
was one motivation for the tariff threat to begin with. >> i heard that. i have a hard time believing there is -- that was the point of the tariffs. >> yes >> steve, thanks great way to set us up the other big story is that massive defense deal utx and raytheon agreeing to merge in an all stock deal, the combined company will be called raytheon technologies, the second largest aerospace and defense company behind boeing. president commented on that deal too on "squawk box." >> it is a great company but when i hear united and i bought a lot of carrier too, by the way, when i hear united and raytheon, another incredible company, when i hear they're merging, does that take away more competition it becomes one big fat beautiful company. but i have to negotiate, meaning the united states has to buy things and does that make it less competitive because it is so already very
noncompetitive >> utx, greg hayes and raytheon's tom kennedy joined us at post nine here is what hayes had to say about the competition concerns. >> we're big, right? we'll be about 75 billion combined, almost 80 next year f you think about that, we're still the same company we have always been. we're still going to be customer-focused in everything we do. there is nothing anti-competitive about bringing this company together. >> morgan brennan has been covering the deal all morning long kudos to -- >> all weekend long. >> yes >> kudos to them for coming on minutes after the president said that. >> absolutely. and this -- contrary to what some of the earlier reports suggested there was speculation on wall street that this type of tie-up could happen. this deal is stunning. i think many folks in the investment community were very surprised to hear about this combination. here's the way to think about this yes, there will be cost synergies, you could see by year four, cost savings, but by far
and away, this is a deal about technology they are doubling down on technology what they're expecting in terms of this future business and this combined portfolio, hypersonics, lasers, isr, cyberprotection for connected aircraft as we see the iot of everything happening including up in the air, advanced analytics, ai, these are the types of things that both of these ceos are talking about and what raytheon technologies really will center around greg hayes will be the ceo, tom kennedy, currently the ceo of raytheon will be the chairman. and there is very little overlap between these two companies. i think it is something like 1%, which is why it is not expected to necessarily receive that much regulatory pushback. but, of course, we did just hear the president's comments >> that wasn't right, right? the president was talking about, if he takes a closer look at this deal, won't he see there is actually not a ton of overlap in terms of making planes >> i think that's going to be a big part of how they push this,
this deal forward. and certainly they could make the argument you got economies of scale, the fact you can leverage all the technologies, the term they keep using is platform agnostic, you can leverage the different technologies across different parts of both the defense and commercial portfolio really going to be the pitch here and this idea that you have strong free cash flow generation and the company is going to be able to go out and maybe bid much more aggressively with a much more cost centered approach to some of the future programs that will be up for bid is going to be how they build this. we have seen incredible amount of consolidation in general in defense and aerospace and i think that's probably the reason for the president's comments >> government contracting in general. people are pointing to a stanford study earlier this morning and taking a look at how taxpayers end up coming out worse outcomes for tax payers when you get tons of single bids on various contracts. >> yeah. we'll see, it is interesting, in general, in aerospace and defense, you've already been seeing this consolidation. in an industry, a sector that
was already much smaller than it had been just a couple of decades ago, only five defense primes including raytheon here but l-3 and harris doing a merger of equals now general dynamics made an acquisition. the question is what is going to happen to the other primes, the other midcap defense players, also some other big manufacturers with aerospace in their portfolios like ge and honeywell and how much more consolidation could potentially be supported and could it actually drive down costs if you see it. >> this creates, what, number two under boeing >> yeah. >> who is left i'm looking at the action in the stock price, northrop is down, are those the next potential acquirers? >> potentially, you're not going to see any of those names merge. it is not -- the likelihood of that happening is extremely low. also because the pentagon has come out and said they would not be okay with that. but you could potentially see jeffries had a note out today, suggesting lockheed martin could go out and buy aerojet to double
down on hypersonic capabilities, a big part of where the pentagon and military capabilities are going, next generation defense technologies >> how does the fact that the trump administration has been huge backers of this industry in terms of increasing our military spending always making that a priority in the budget shape all of this? >> it definitely shapes it i think -- i think if you spoke to either of the ceos, greg hayes at utc or tom kennedy at raytheon, they will continue to see growth on the defense and commercial side f you see a slowdown in growth in either or both of those areas, a combined entity will be in a better position with all of the diversity within the broader aerospace and defense portfolio to weather it. >> jim mentioned with greg how complicated the utx structure is given separating carrier and onus shareholders will get a piece of all of that. >> yes all of these deals, the spin-offs of carrier and otis
and the combination of what is left of united technologies, which is aerospace, with raytheon are all expected to happen in the first half of next year we have to go through some of the approvals, there is a lot of dancing that has to happen to get to that point. a year from now i have a feeling the conversations will be very different. i also thought it was interesting in our interview that greg hayes was very adamant that, no, this new united technologies is not a conglomera conglomerate we have seen that in industrials overall, the deconglomeratization now they're doubling down on aerospace and defense. >> investors who want to diversity tell us they'll find a way to diversify you don't have to do it for us that's what led to the death of the great american conglomerate. fascinating. thank you. >> thank you >> see you next hour. when we come back, china's warning to big tech about complying with the trump ban he hear what the president told cnbc about the threat today. another check on the major averages
coming off the best week of the year for stocks and there is follow through this morning. s&p is up .8%. consumer stocks lead the way and the nasdaq is up almost 1.5% as technology shines as well "squawk on the street" will be right back if you are a first generation college student. stand up if you're a mother. if you are actively deployed, a veteran, or you're in a military family, please stand. the world in which we live equally distributes talent. but it doesn't equally distribute opportunity, and paths are not always the same. i'm so proud of you, dad! man: i will tell you this, southern new hampshire university can change the whole trajectory of your life.
companies facing increased regulatory scrutiny, the house set to hold its first antitrust hearing tomorrow and now china warning tech giants they could face consequences if they cooperate with the white house ban on sales to chinese companies president weighed in on all of this this morning on "squawk box". >> it could be very well that we do something with respect to huawei as part of our trade negotiation with china china very much wants to make a deal they want to make a deal much more than i do if you look at china, china, as great as they are, and they're great, they don't have near the capability of our geniuses in silicon valley, that walk around in undershirts and worth $2 billion, they have -- they don't have nearly the genius these people have. they practically admit it. they don't want to exactly say that, so they go out and try to buy the companies, now we have restrictions on that too which we put in under my administration >> joining us at post nine, jim
stewart is with us a lot to unpack in that one answer >> sure is i think it is worth pointing out, trump can be very funny sometimes. reminds me years ago when i was covering him, he really is funny. you never know sometimes whether it is serious or not >> what made him a watchable media personality for years. in that answer, though, the idea that huawei could be used as a chip runs afoul of what mnuchin told us a few hours ago. >> i know. to throw that into the mix, which is really a law enforcement issue, either they broke the law or didn't and they have to be treated like everyone else, throwing that into a trade negotiation, which has already, you know, taken tariffs and weaponized them, used -- we just have seen mexico for purely political reasons and even with china, not just addressing barriers to competition in china, but a host of supposedly exclusionary and policies there that we don't like is really pushing the envelope and i don't know, i'm waiting
for a victory here i'm waiting to see one i just don't know if it is working. >> i think his answer on the antitrust question going after our best and brightest which shows a little bit of a conflict going on, right? the fact that the -- his administration, his doj, his ftc is starting to investigate these companies at the same time that he says we're better than everybody else we have the technological prowess, goes after the eu for hating the u.s. every time there is another fine on an american technology company, what are investors supposed to make of the president's position there >> well, first of all, i think why is it that we excel in innovation, especially in the technology era i looked into this over the years. and one of the reasons is that we have a regulatory environment that is much more favorable towards innovation, towards creating wealth, and letting people keep a lot of it if they succeed. europe has been hobbled for
years by an overregulatory environment. china has a highly regulated state. ours has thrived but the idea of now using legislation and the antitrust laws to somehow take this away from people is going to remove the very incentives that led to the success he's stolen. this is not logically consistent. >> you don't think -- you think antitrust say blunt weapon to fight this thing >> i think it is way too blunt first of all, the antitrust laws are very explicit. big is not bad automatically the fact that we may not like the fact that facebook is as big as it is, we may not like the fact there are privacy issues they haven't dealt with adequately, it does not mean under the antitrust laws we can go in and break them up. there either has to be a combination that restrains trade or has to be an act of monopo monopolizati monopolization we're a nation of laws and they have to break a law for us to go in and take some of the drastic remedies and i'm still waiting to see
what is it exactly that they have done wrong. >> you don't think that google or facebook has too much power >> well, i don't think that's -- that's not the issue for the antitrust laws they, however much power they have, the question is how do they get it? if they got it through the proverbial skill, foresight and industry, the antitrust laws does not provide a remedy to go in there and punish them they want to encourage that, except when they use it in an unlawful way people can argue about it. if they're too big, per se, then that has to be addressed with some kind of a legislative remedy that, by the way, applies to everyone, not just -- you can't just have one law that says he we don't like facebook so we're going to break them up. it may be something congress should be looking into i don't dispute that. >> what about the argument that market forces will take care of this problem you got amazon and google, beating each other up pretty bad.
apple having to switch their model focus entirely because of the phone cycle. facebook, core app is declining rapidly in terms of their key demographic, right >> absolutely. what is going on in silicon valley in many ways isn't antitrust regulators dream, it is like what you want to see a competitive market place look like that google is really on the defensive, dealing with amazon, an incredible turn of events i never would have guessed about. all of these high market shares that they have, which you have to, you know, define the markets very narrowly to get there seem very precarious, vulnerable to the innovation that item said is what we're known for and i wouldn't -- if i was one of those companies, i would be looking over my shoulder all the time there are arguments that, you know, even the google search function, if they -- are they favoring their own things at the top of that, they better be careful because there are competitors who would not favor
that and if consumers don't like it, if they feel like they're abusing, it is easy to change, an opportunity for -- >> is your bottom line, you're not here to give stock advice, but is your bottom line for those investors that have seen these companies get beat up on this fresh batch of headlines, it is overdone >> i do think it is overdone i think the stocks have held up reasonably well given all the threats that are out there against them right now i do think it is a buying opportunity. people should recognize there are very significant legal hurdles to get over here we have a judiciary there to enforce them i think the -- if you were to listen to the chorus on at&t and time warner, you never would have thought that merger would have been approved everybody, you know, from left wing intellectuals to right wing populists were saying that's a terrible thing and the judge wrote a resounding opinion saying this does not violate the antitrust laws whether you agree with that or not, personally, i think it is great, we still have an independent judiciary to enforce the law. >> finally, jim, on mexico, president has it out for the times.
and this story that a lot of these pieces of agreement were done in april, right >> yes. >> times is defending their story. how are we supposed to know? >> good for the times for pointing this out. whether the times is right or trump is right entirely, they're arguing over little things no question that most of this was -- there may be a little bit got added and, you know, good -- let's see what happens, like, the southern border of mexico, you know, that's a lawless place if there ever was one. we'll see what they can do i think almost everybody, including leading republicans, condemn this as a misuse of tariffs for -- to achieve a purely political goal, which, by the way, had the collateral damage of infuriating many mexicans who thought they were being bludgeoned into something. as i remember, learning about negotiations in law school, the best deals are ones where each sidewalks away thinking they gained something important
it is not when someone takes a club and bashes the head of the other one and declares victory tremendous resentment in mexico. we have tremendous resentment in china. there is no point in humiliating people and getting what you want >> i guess i would -- the only thing i would say is mexico is not saying we feel bad the rhetoric has been relatively flowery. >> there has been a lot of political opposition to this and many editorials there denouncing the president saying he caved in even with these relatively modest things. so there are going to be political backlashes canada, trudeau had to stand up for himself. you throw that element into the mix, i don't see how that advances. >> everybody has a political constituency and has to sell it. >> absolutely. >> jim, good stuff, thanks for coming in. good to see you. jim stewart. >> as we head to break here, look at shares of beyond meat. soaring again today, not a typo, up another 24.25%.
got a one month high for the s&p as we're about 2% from an all time high. got m&a at work today, continued hopes for a rate cut, mexican tariffs called off by the white house. dow up 160 >> here's your cnbc news update. the leader of hong kong is vowing to move forward with changes to laws that led to a mass protest over the weekend, saying delays will cause more division in society. organizers say more than a million people rallied against a proposed extradition law that would allow suspects to be sent to china to face trial a lot of people talk about this one, former boston red sox slugger david ortiz is recovering from surgery after being shot in the bar and his native country dominican
republic officials say the alleged gunman approached ortiz from behind and shot him at close range, his father says ortiz is out of danger and stable, adding the bullet missed major organs. american airlines extending cancellations of boeing 737 max flyings through september 3rd, which equates to 115 flights per day. boeing needs to complete a certification test flight and submit a software upgrade and retraining procedures to the faa for approval also, check out this video from indonesiania, cameras cost an active volcano erupting over the weekend. it spews ash as high as 4 miles into the air fortunately no casualties were reported, but officials monitoring the volcano did warn of possible fresh eruptions. incredible video and that's is our cnbc news update for this hour sara, back to you. >> rahel, thank you. time for our etf spotlight taking a look today at banks the kbe and kre both breaking
four week losing streaks coming off the best weekly performances since back in early april. they're up now double digits for the year names like goldman sachs, city group, wells fargo, trading higher president trump joining cnbc earlier today criticizing the fed calling its policies very destructive to the u.s., but the whole idea that the fed may cut and actually help the economy has been beneficial to banks they traditionally benefit from higher rates, not lower. this time it is lower. when we come back, the u.s. and mexico striking a deal to avoid tariffs, the former u.s. ambassador to mexico is with us. and taking a quick look at the auto stocks today, some relief that those mexican tariffs did not go through as threatened today. that sector would have been hurt the hardest. general motors, ford and chrysler rising on that announcement quk t see wl "sawonhetrt"ilbe right back
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big story, mexico reaching a deal with the u.s. in an effort to avoid president trump's planned tariffs, part of an effort by the white house to move forward with talks on immigration. earlier this morning, president trump joined squawk box to discuss the decision to use the tariffs as a tool to bring mexico to the table. listen. >> it is another very powerful tool, in addition to the very powerful tools we got, we had none of these tools, virtually none or they wore just being talked about they were being talked about for 20 years with mexico, until i said that -- it wasn't a threat, i thought we would be receiving billions of dollars, frankly, and you know what happens with tariffs, countries -- companies will move out of mexico and they'll move out of china. and they'll come into the united states or go to other countries also, but in the case of mexico, i would say we get virtually 100% of the companies >> with us now, ambassador tony
garza, former u.s. ambassador to mexico, now counsel to white and case in mexico city. and stephan selig, former undersecretary of commerce for international trade. do tariffs work? >> well, i guess maybe they were incrementally helpful to get mexico to focus on this issue and come up with the successful deal that the president referenced i don't think it is going to be nearly as successful as it relates to china, because the issues are much more complex our relationship with those two countries is wildly different. mexico is an ally, a border nation, a democracy, a market economy and china is none of those things so i don't think, sara, we can extrapolate from this experience to what we might see in kindia in the foreseeable future. >> mr. ambassador, how would you characterize the upshot of all of this? is it a success or has there damage been done what do you think?
>> the president's threat to place tariffs on mexico in the context of immigration was really not the best use of tariffs. and essentially what they announced this weekend was programs that had been in some state of implementation with an exclamation point. as you know, remain in mexico is something that was put in place in november, december of last year and is still under judicial review this appears to have been a bit clear in that guatemalans would be allowed to remain in mexico while their asylum procedures were pending hondurans would be deported or remain in guatemala. secondly, there was the enforcement along the southern border, 6,000 national guard troops, i think ultimately the proof is going to be in the
implementation, which is going to be a real challenge for the last handful of months, mexico has been doing a good job in terms of enforcement and deportation. to put an exclamation point on it with a provision to review a 90 days, we'll continue to have that overhang, that uncertainty, you know, throughout this period i think most effective use of the 90 days would be congressional review of the authority granted the executive to use tariffs in these sorts of situations a review of our asylum procedures and a real hard look at the kinds of things that we can do jointly with mexico in terms of development to address some of the factors in central america that are really the cause of this exodus of peoples out of the northern triangle >> we'll see what congress does, do investors now need to watch apprehensions for the next 90 days to know if they're making perfect gres
progress or not? >> we have seen the uncertainty that the ambassador spoke to, it is not just as it relates to uncertainty on the southern border of mexico it is now the uncertainty that is created by the president of guatemala, honduras, el salvador, but this is the uncertainty in the markets overall. the president has said he's willing to use tariffs for noncommercial matters with friends and foe alike. how do you plan, how do you think about whether or not the president is going to use tariffs in your industry, in your country, when he's talking about he delayed the tariffs from asian and european car exports for six months, that may or may not come back how do businesses plan over the long-term given that now unsr. uncertainty given the president thinks he thinks it works and is prepared to use it >> how do you plan for what going on in china? is there anything to take away from this mexico agreement that you can speculate could happen between the u.s. and china
>> i don't think these things are really directly linked i think one was an easier deal to get to, clearly some of these issues had been in the works for some period of time as it relates to border security with mexico the issue with china fundamentally as we talked about in the past is what sort of reforms are they going to be able to make to their system and whether or not that's ultimately going to be acceptable to the president. >> mr. ambassador, does this make mexico safe again for u.s. companies who were looking to move their supply chains from china elsewhere? where there is cheaper labor >> well, i think the uncertainty remains. because as you know, mexico submitted the trade agreement to the approval of their senate the same day this threat was announced in washington. canada is on track to move with the usmc aa.
but the larger point here is even if you bring usmca to ground and get it approved, there does the president see these sorts of tariffs as a tool that can be used independently of whatever trade agreements we may have with mexico so, you know, it introduces a level of uncertainty around tariffs independent of whatever trade agreements we might be able to finalize that i think from a business standpoint is simply not the kind of environment that creates a great deal of confidence around decisions with respect to supply chains and -- >> is that true? do you know the legal -- it is a good point, ambassador stephan, just wondering, legally, if they do sign the usmca and pass it, can the president still hang tariff threats over mexico? >> he can. and this to me is the odd thing. you would have thought of all things we would have been in some level of equilibrium with
mexico as it relates to commercial and economic issues having just completed this contentious negotiation on usmca which his administration led and as a result of that, going back to address these issues with this country at this time, i think it gives everybody a fear if he's going to do that to them now, what else might he do in the future? >> what you're asking is why would anyone sign a deal with us again? >> well, you know, i think the deal was obviously good for all countries, which is why they did it it was responsive to the integrated north american supply chain that makes american companies globally competitive if the purpose of these tariffs is to re domicile with what the real benefit of the usmca, trying to create an integrated market between the united states, canada and mexico. >> thank you, both, for joining
us >> obviously a busy day for deals. you know sales force is buying analytics platform company tableau software all stock deal tableau shareholders get 1.103 sales force shares for each share they now hold. 42% premium based on friday. marc benioff with jim tonight 6:00 p.m. eastern time had a call this morning, conference call, got into some of the details, but i'm sure jim will unearth even more in what is their biggest transaction ever speaking of deals, another check on shares of raytheon and utx on the heels of that megamerger biggest of the year. and the major averages in a tight range, but with a nice n'gowadow up 166 dot ay. who says our bank isn't tech enough? everyone, look at your phones. the design thinking, the digital engineering, security, blockchain, and we will be first to market! yes. when we do we launch? unfortunately, in 2 or 3,
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criticism of the federal reserve in an interhaview with cnbc. >> we should be entitled to have a fair playing field even without a fair playing field, because our fed is very, very disruptive to us, even without a fair playing field, we're winning, because the tariffs are putting us at a tremendous competitive advantage. >> let's get over to the cme group. rick santelli with the santelli exchange good morning, rick >> good morning, sara. that one was teed up we'll have to deal with that listen, my guest today is torestin sloc. thank you for joining me and right off the bat, i will react and i want you to react to that what we just played, my answer would be the president has a lot of hyperbole and i think he's the most transparent executive we have ever had my saying to him would be let's lower 275 basis points and join europe you think we're better off now what is your comment
>> well, we tried to raise interest rates in europe and japan and honestly it is not really working very well that's a number of problems, particularly in europe from that perspective, lowering interest rates is not helpful. lowering into modestly positive would be helpful but the question is it that's needed or not. >> exactly that's where i really want to begin this discussion. right now all fed futures are down just a little bit but many still believe if you look at distant contracts, a lot of easing is built in, many say stocks easing built in what do you say? >> absolutely. if you look at historically over the last two decades, you've seen the market has been wrong in predicting what the fed will do that doesn't mean that the market is always wrong and everyone is wrong, it just means it is hard to predict the future the fed also had a really hard time predicting what they would do themselves with that dot chart. the bottom line is we're hit by
stocks and the question is assessing the magnitude of the sharks is critical we don't know if we need deep cuts in rates as the mark set pri pricing at the moment. >> i would urge the president to study those who followed his suggestion to the nth degree. nth degree we now have according to your research, negative yield bonds across the globe that is not far from the high of $12 trillion with a "t" of 2016. how is this trend going to end how are they going to get out from under the weight of negative rates outside the u.s.? >> this is really important. negative interest rates in japan, it basically creates significant distortions in investor behavior. if you are a pension fund or insurance company in yooueurope japan, your stock yield in the u.s. and from that. ive, u.s. 10-year rates look a
little up and then down. the yield has been enormous as a result of that negative yielding debt you're mentioning this is a significant issue. and it's hard to get out of as you're saying, rick. it's a difficult challenge >> all right in the small time we have left, we had the jobs report on friday parts were disappointing you talk about how we see an early trend that total labor income is starting to slow what does that say in your mind about consumer spending trends >> yeah. that's right if you add up together and look at that wages have been slowing modestly, employment growth has been slowing modestly. ours were unchanged. adding all that together how much income do workers get to show up in warehouses and online and that's beginning to slow modestly we're getting worried the labor market is not as tight as it used to be that might be a little bit of a slowdown in consumption on top of the worries from uncertainty
from the trade war so the broader gdp outlook is for growth slowing modestly here going forward. >> excellent torsten, thank you for your opinion. can't wait for you to join us again. carl, back to you. >> all right, rick thank you. rick santelli. quick programming note as we go to break this morning. tomorrow and wednesday beginning at 9:00 a.m. eastern time, don't miss jon fortt and myself at the code conference in scottsdale, arizona, this year as the biggest names in tech gather to discuss innovation and the risks facing the iusy.ndtr we're up 180 on the dow. we're back after a break your daily dashboard from fidelity. a visual snapshot of your investments. key portfolio events. all in one place. because when it's decision time... you need decision tech.
it's great, listen. it is great, gidget. everything is grand. [ meow ] [ purring ] [ growl ] are you finished? [ cooing ] that was weird. oh sister it's gonna get way weirder. welcome back to "squawk on the street." i'm dominic chu. the s&p now trading 2% away from its all-time high. we are at the highs of the session right now. relative strength in technology and financials while defensive sectors are some of the laggards now, the rest of the best performers are interesting so far, though, the best performing sectors is the discretionary one. at least since the selloff back in mass. retail stocks a big part of that story. you've got macy's, also best
buy, ralph lauren. that retail trade looking good right now. now, i will send it back to you guys at the exchange >> all right, dom. thank you very much. meantime, sara what's coming up on "the closing bell" this afternoon? >> we're going to see if this market continues to follow through for the s&p. president trump told cnbc today china is going to make a deal because they have to is that true we've got president richard haass to break down the relationship the latest between u.s. and china after a deal was reached in mexico. and we just booked larry summers to weigh in on tariffs and the president's comments this morning on the federal reserve and a lot more lot to digest today. >> and it's only monday. we'll see you this afternoon obviously "the closing bell. "squawk alley" starts in a few moments.
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and "squawk alley" is live ♪ good monday morning. welcome to "squawk alley." i'm carl quintanilla big morning. dow is up 167. we'll start with the president joining "squawk" on the phone talking tariffs, tech, and this morning's m&a. take a listen. >> we should be entitled to have a fair playing field even without a fair playing field because our fed is very disruptive to us even without a fai