Transcripts For CNBC Squawk Box 20240714

The cac is up and the footstsef. The yields something weve been watching closely ticking up a little more like it was yesterday and that was a big difference in yesterdays market rally compared to the risk on tone to the sector performance. Thanks for that if youre looking for a negative, we did come off the highs. A couple of offsets, but it was a more constructive. Were getting back. Ill tell you. I can tell you week ago whats a week ago when i was sitting in for melissa, everyone was bearish. Really . Monday was a big week. It was the s p 500 and nasdaq both down. But that had been after six straight five or six straight weeks, so everyone was bearish the guy from Morgan Stanley, very bearer . Oh, i remember. Swell see. Bo jo, ten more people backing him. He had powder all over his nose. Thats derailed his campaign. Really . Theyre down to ten candidates. Ten. Boris johnson will make the final two. Less than the democrats you know, watching what happens in italy and all these other conservatives bonding together with the liberals and all the crazy stuff that goes on in all of these countries, i is have offered to rent out the constitution to you people you can copyright it for a little bit you can use our method of government for a little bit if it would help. It does work perfectly here there are never any little issues. I agree are you saying that in some facetious way . I think he is being facetious. You cant tell it works very good here, will . I think that how many different parties are going to have to band together to actually form a government and what will it last, about eight months or so before you have another recount. Less than 30 months yeah. Thats a good way to run a country. And are you staying or the only thing is sterling has touched a low. Are you keeping that currency or not youre in the union but didnt day take the currency . That makes well too. We had some good jobs data this morning yesterday some terrible gdp growth for april. Im glad arent you glad youre here . Im always glad you give me something can i just say go ahead. Theyre going to celebrate it. Its a good wage growth data have to hold on to the small positives sh the dollars weakened which can be good. Thats because they think the feds going to lower rates the question is will that actually happen. They brought that up what the wall streets wrong what if a rate cut doesnt come. How does the mark react. Its ticked up. Its so low youve got the scope for both yields to rise and equities for a little bit. But the question will be when will they get a little higher and can we get above the 2900 on the s p or back past the recent highs. The yields climbing as you speak, 2. 71 . I was nervous as soon as i say middle ground on the markets. Powell is in a pickle he looks like hes sum coming to orange man thats the summary orange man bad thats what they come up with. Cnn immediately factchecks for us lucky than cnn is the arbiter of facts. Thats what i really like that. I went to check it out. Most of it they didnt even factchecked they just mocked. Im know. And another guy they both did. Theyre great. Anyway, we doan we dont want to trash any competitors. No, no, no. Importantly, cnbc dissected it and talked about it all day i would like to say accurately. Okay. I stopped looking after a while. You somehow are complicit in giving this guy a podium, which i dont know whether you considered that. I think if you listen, if you want to know what the leader of the free world is thinking a jd you listen to him for a half hour, i think thats the benefit you can possibly do. You decide whatever you want, take from that, but you should be able to hear his thoughts. I agree, i agree. It was very important. And for the markets which, of course, were up yesterday and have been for five or six sessions in a row, its a more positive tone. Yes, the tariffs will come. I kidnapped of took awnd of u think anybody can talk him out of this, these are very long held deep beliefs he has and he thinks theyre very effective and hes going the use them. I dont disagree with that but there was a possibility that a meeting with zee shing pea wouldnt happen. Again, for all of the bluster and a tweet that all of these tariffs are never going to change, hes backtracked and said hes meeting with xi at g20. Were moving toward a deal even if were not. There was definitely progress made with mexico last week and whether theres a safe third country thats going to come through, but watching pence with bret baier last night, he actually went over the exact details of how many new ports there are, howpeople can be deported. 6,000 rather than a couple hundred a day before that. Well see. It with us funny the comments on my emails and texts were totally different its just twitter. Twitter is i dont know its the people on twitter i think theyre millennials. I think its about 90 i think people on twitter is anybody. People on your email or text are people who are actually friends. I was saying earlier i would look at two comments and the next one would say you cant see it because its blocked two. More because its blocked. Two more and its blocked. And i think, i have blocked every third tweet i couldnt see. Its that way around. Its not that theyve blocked you. No, no. Hes a blocker. Im an tev blocker. What do you expect theyre unhinged theyre hysterical youve got to hear both sides. Theyre jumped up and down. They dont accept the election its 2019 and theyre still jumping up and down and kroying. Im hoping president xi is going to phone in today, right, joe . It used to be trump tuesdays and i would be willing to entertain the notion of resurrecting it. I wou would you . Oh, shufrm im not sure the president is. Zbik tech is expected to come under fire today. The House Judicial Committee will be looking at Companies Including facebook, amazon, and google theyll look at how news content is spread on information and misinformation online. Joe. All right. President trump talked about big tech when he called in to squawk box yesterday, and heres what he told us. Every week you see them going after facebook and apple and all of these companies, these that are, you know, theyre great companies, but theres something going on i will say the European Union is suinging them all the time were going to look at it differently. We have a great attorney general. Were going to look at it differently. Theyre attacking our companies. We should be doing what theyre doing. We think theres a monopoly. Im not at sure they think that. Think think this is easy money well sue apple for 7 billion i think obviously theres something going on in terms of monopoly. Staying on the topic of technology, China Telecom giant huawei is hinting that u. S. Pressure on it is hurting sales. The companys chief strategist said it would have become the world ee top phone maker if it were not for unexpected circumstances. Theyre on a black list. The u. S. Cannot by its goods without government approval. Heres what President Trump said about huawei in his interview with us yesterday. It could do vel well with respect to huawei and our trade negotiations with china. China wants to make a deal that i want to make a deal much more than i do. Thats one of the questions you walk away with is huawei going to be part of the trade deal or be part of the sanctions with regard to security weve got wilbur ross on today we can ask him. People try to make a controversy about everything trump says we said it was only a National Security threat and i think even cnbc did something on that i think dotcom did something. Then i watched again pence said obviously we think its a National Security threat, but obviously when were looking at remedies or whatever were going to ask, huawei could come into that discussion, and there would have to be obviously remedies as par of the overall trade negotiations so it could be cte. Right so it could be part of the overall negotiations going on, but it could be both it could be nuanced and neither either or. Its either a National Security threat or a chess piece in overall trade negotiations it could be both. Still confusing why you dont have other national al lies on the same page which does suggestiosugges with some of the tone that its partly true. That its partly true. A couple of the european telco companies, not the government, came around and said were not going to use huawei. British telecom has been saying that since december. Yeah. So it is unclear, but i do think its fair to picket because the secretary and Vice President have maintained a National Security tone. When the president hasnt, hes let it slip in certain comments which he may not have meant. Part of the infrastructure the way its set up, if chinas the enemy, they can use the structure of huawei to get in. Thats part of it. The big earth part of the security issue is if youre not allies and not getting along, youre part of a bigger do you want a Huawei Smartphone i dont. I fear the future in terms of what happens five years from now. I would like to im reading about the decline of the holy roman empire. A little Light Reading . No, but weve got a real threat i think weve learned that about and its not going to be solved when we list the giant tariffs this is the main issue facing the United States and youve got to give trump credit for highlighting that, that by 2025 it would be nice if were still a preeminent power. I would hate for china to dictate terms on us on anything. China no longer says 2025 i dont know that that means theyre changing any of their behavior, but theyre no longer trumpeting their plans. They black us out if we talk about it or theyve got people in Training Camps and they call it job training youre with me. Im not defending that. Of course, not. Okay. Still to come on squawk box, longest winning streak in more than a year the biggest drivers. But first as we head to break, heres a look at the biggest winners. It all started under this buttonwood tree. Twentyfour people came together to sign an agreement that created the stock exchange. Just the right elements coming together. It started when scores more people came together, just down the street and traded bonds that helped pay for the revolution, and the nation it created. It started in an office on the corner where the right people witnessed the telegraph and brought information and humanity together forever. It started with the markets, bringing together steel and buildings and silicon and medicine and rockets. We believe the possibilities of life and investing are greater when we come together. Its why for eighty years weve connected ideas with technology, data with inspiration, investors with solutions. So that every day together, it all starts again. Be go[ laughing ] gone. Woo hoo. Welcome to my house mmm, mmm, mmmmm. Ball. Ball. Ball. Awww, whos a good boy . Its me. Me, me, me. Yuck, thats gross. You got to get that under control. [ dogs howling ] seriously . Embrace the mischief. Say get pets tickets into your x1 voice remote to see it in theaters. We should be entitled to have a fair Playing Field, but even without a fair Playing Field because our fed is very, very destructive to us even without a fair Playing Field, were winning because the tariffs are putting us at a tremendous disadvantage. That was did you know this that was President Trump actually talking about it. He called in yesterday were your ears burning, hearing me talk about you . I did, yes. A week ago i thought you were very bearish a thousand points higher on the dow. That was fast money last week. Yes, it was. Are you doubling down on the bearishness . No. Im sticking to 2900 as a yearend target, which is where we are right now it never flat lines. We go up and done a lot. If i had to bet on it,whats not priced into the market is the potential economic boost from moving Companies Back to the u. S. , from actually bringing jobs back to the u. S i think part of i think those aspects of Economic Growth arent necessarily priced into the market whats priced in is margin pressure, rising input costs, lower exports. I feel like the market is targeting more of the possib negatives,s he of the positives. Its its led to more defensive savehaven areas. Its been led by utilities and all of these sort of low beta safe defensive hedges, and i think what could actually happen as we move through year end is cyclicals could take leadership. So im a big fan of cyclicals. I guess buy rather than sell, but from here the real money can be made by playing sector rotation. If tariffs do escalate, they would fall on the short term youre saying its a potential longterm benefit. Yes i think youre exactly right the positives will take a longer time to perfect late in the meantime well see a fallout from supply chain, et cetera if you take a long view, youve got a super accommodative fed, u. S. Corporations continuing to make money margins havent necessarily collapsed even though costs have increased a little bit that suggestion theyre starting to expert some Pricing Power and our economists dont see another recession for a year and a half or more. How important is the fed in that enchoir equation . I think theyre critical. Same thing in december. Every time the market pivots exactly theyre critical in the bull market and have been since 2009. I think where we are, if we start to see growth improve in the second half and say we start to see improved economic trends, see companies spend more on capex, theyre starting to plan a little bit, that could keep the feds on hold, but growth could drive the market higher. I think its important and their mek niches are probably the most critical right now. Would you buy any stocks right now . Im a being fan of u. S. Tech. China tech looks like theyre in trouble. I doable see them stopping the purchase of u. S. Semiconductors. They buy the chips an seppet for 4 i is hard to argue that theyre going to stop importing semiconductors from the u. S. I do think china relies on the u. S. More than the u. S. Relies on china, so im not necessarily ready to step in. You like u. S. Tech but you said sell f. A. N. G. I do. Software is where you want it to be software has crushed it for most of the year. Semiis interesting but f. A. N. G. Is where im most concerned about. Theyre super crowded and have led things for three or four years. So youve got monopolistic issues rearing for a couple of these companies, corporate, data privacy. Theyve had a regulatory free ride forever and now all of a sudden its in the crosshairs of the regulators so thats the key risk for f. A. N. G. Its not about china but whats happening. If you were to do a ben frachg lynn close do you know what that is in in a brokerage, you draw a line, put the positives and negatives and make a decision and do one or the other. I just think Interest Rates are so low right now you can get 4 in stock. I do end know what the average yield is on a stock. You know what might be theal alternativive . Cash theres all these positive things globe ially you might lo at and sentiment. I agree. The market is back to where it was in january of 2018. What month is it its june, isnt it . Is that a year and a half weve been in this rolling sort of consolidation of gains weve made no headway. Only since 1999, only 4 annual returns. At the same time, the tenyear is lower than it was when the fed started hiking rates. I worry about the law of diminishing returns. That does suggest i dont think they can do it anymore. Weve got one year of 3 maybe we do. But on the low of diminishing returns, yu look around at the rest of the developed world and Central Banks really have a low of diminishing returns so, again. You cant go out of the tenyear to a german bund. Thats an option. Everything in life is relative. I dont know. Maybe were too complacent. I agree were not at euphoric levels no ones at a 3300 antarctica. Target. I see you shaking your head. You know what . You can stay bearish forever and youll also be in demand, people that are bearish they always think theyre smart and ahead of everyone else and usually you lose money. Playing devils advocate. Savita, thank you when the facts change, i change. I wanted to hold you youre bearish, last week. Now youre good. I like value. You like value stocks, i know you like defensive. No, i dont like defensive. I like financials. Exactly. Financials were the big egest yesterday. Yes. Thank you for that. Skip the Straw Movement took the nation by storm. Now the Olympic Games are getting into the antiplastic games as well. Were going to tell you how when squawk box comes right back. What do advisors look for in an etf . Dont just track an index, help me meet a clients need. Is the fund built to sell or built to last . Etfs are only part of a portfolio. So make it easy to explain. Give me a quality fund that helps me get clients closer to their goals. Flexshares etfs are designed and managed around investor objectives. So you can advise with confidence. Before investing, consider the Funds Investment objectives, risks, charges and expenses. Go to flexshares. Com for a prospectus containing this information. Read it carefully. Thats what happens in golf nothiand in life. Ily. Im very fortunate i can lean on people, and that for me is what teamwork is all about. You cant do everything yourself. You need someone to guide you and help you make those tough decisions, thats Morgan Stanley. Theyre industry leaders, but the most important thing is they want to do it the right way. Im really excited to be part of the Morgan Stanley team. Im justin rose. We are Morgan Stanley. 2020 organizers say theyll stand on podiums made from recycled Plastic Waste the materials will be collected from National Households oer the ocean. Theyre trying to collect 4,500 tons of plastic. Going green. Im not sure. Metal for the olympics should be good quality gold. How much is used in mobile phones you cant make you know, maybe a plating. I think they deserve a good quality metal for how hould they what did it used to be made of high toxic waste it could have been wood. Ship it from london to wherever the next one is. Youre right. Theyre traying the make a point. I think it will be a nice metal anyway even if its recycled. From a mobile phone. Once you melt it down, its all the same. Well see they deserve it if they win the olympics that i think theyll get nice metals. Coming up, beyond meat. Ive got a lot more on this. Beyond meat. In new numbers on investers betting against the hot ipo. As we head to break, heres look at yesterdays s p 500, winners and losers through the at t network, edgetoedge intelligence gives you the power to see every corner of your growing business. From managing inventory. To detecting and preventing threats. To scaling up your production. Giving you a nice big edge over your competition. Thats the power of edgetoedge intelligence. Good morning u. S. Equity futures at this hour slightly higher. Up 131 points on the dow nasd nasdaqs strong, almost 60 points 59 almost. The s p back above 2900 if it were to open there. Beyond meat, short sellers are getting crushed. They lost 400 million since the plantbased burger maker went public the stock is up 600 this morning jpmorgan downgraded last friday they raised the stock to 120 a shafrmt at the time the analysts said at some point it will be priced in jpmorgan says that day has arrive and the stock this morning is down about 6. 3 all of that came after the company came out with its first ever profit numbers. It blue past all of the price targets in those buy notes within a matter of days as well. Those are bullish at the time. Coming up here on squawk box, ahead of its direct listing. Well dig into the numbers and then at 7 00 eastern dont miss our squad news maker of the morning, wilbur ross wl ilbe joining us stay tuned youre watching squawk box. This position will naturally shallow out the club during the downswing. Ill approach the ball from the inside this position naturally closes the club at impact and reyates the draw soon hitting the draw will become a decision instead of a challenge. This is my headquarters. This is where i trade and manage my portfolio. Since i added futures, i have access to the oil markets. And gold markets. Ok. Im plugged into equities. Trade confirmed. And i have Global Access 24 7. Meaning, i can do what i need to do. Then i can focus on what i want to do. Visit your Online Broker today, to learn more. Were back to squawk box. They expect slowing revenue. It came ahead of the direct listing which is expected next week for more lets turn to the analyst. Senior re. Analyst at davidson. Thanks for joining us. Awidening bottom line lost that doesnt bode well, does it . Thank you so much for having me great to be here look as i talked to investors yesterday after the numbers came out, i think they ooh is the concern is the deceleration on the top line, especially if you look at guidance when youre talking 80 growth last year to 67 growth. Ill caveat that the m. O. For these Software Companies is to guide very conservatively the actual numbers may prove to be very, very different from the ones theyre talking about right now. You know, in terms of the bottom line, i will say that was probably one of the Silver Linings from my perspective. Caps came in above my expectations you know, once you strip out the onetime charges related to the direct listing, and i do think, you know, especially if you think about the back half of the year and into next year we can start to see some real levers and see them start to approach theyll break even. A lot of people point to the fact that they get such a huge proportion of their revenue from a very small percentage of clients. Is that something you see as a risk or opportunity, shoring space to grow into in. I look at the stat around the 100 k customers and the 40 contribution as a really positive thing in my mind. I think there was a narrative of the slack being the startup tool, but really the fact that you have the large Startup Companies that are a big part of the revenue base tells us that you have a lot of businesses that are using slack they have wall the wall deploim thats something that not just the i. T. Teams or Software Developers are using its something that markets and finance and legal and everyone is using i look at that as a good thing i think to your point its important to future grouk and thats where the biggest opportunity is to take that longer company outside of the larger ones and help them graduate up. Really i think thats where the biggest opportunity today is with them. Direct listing so the employees, the early investors, the likes of them, they can sell on day one as opposed to typical post sites her at lockup here. Does that concern you . Its one of those things difficult to predict and the only analog we have to look at for a company of that was spotify last year. If you look at day one trading, it was swinging wildly all over the place. I would not be surprised to see the same thing with slack. I think theres a lot of appetite from institutional investors. But at the same time, you have people working there for a long time that are going to use the opportunity to take advantage of the liquidity, so i think its definitely one of the risks that anyone looking at the name has to be aware of you dont have that rockup or locking up. Whats your recommendation . Im neutral rated on the stock. Its one of the valued names in software, but i think the valuation for slack is clearly there. As i do my customer checks, i think i talk to 30 or more slack customers. Not only is it ubiquitous, but its something that people who use it really, really like using, and there very much is that viral nature out of it. Im very, very positive on the company and the potential for slack to be the multibilliondollar slack company. My Sticking Point now and why im neutral rated on the name. Rishi jaluria, thank you for joining us. Thank you. Well talk about what washingtons inquiries could mean for Companies Like google and facebook as we head to break heres a check on the european numbers and we have positive numbers there, green, germy inandog the best well be right there all right. Welcome back, everybody. Tech under fire in washington. Today the House Judiciary Committee will begin a probe into the market dominance of some of the industrys largest industries, including facebook, google, and amazon joining us now is the business ed tr for axios, also gene munster whos the founder and managing partner and, dan, i want to start with you. Kind of lay this out with you, whats at play at this point, how is this shaping up, what will happen today. Theres a lot of stuff in flux you have two pieces here, the legislative piece, and i dont even think its for show there seems to be a bipartisan consensus. You need antitrust rules, 21st century antitrust rules that would come from congress that will happen behind closed doors. In terms of needing this to be kind of resolved, theres a few different ways legislature could take, congress could take. What are those scenarios and what is most likely . The think they could do, they could take the old kind of sherman antitrust and clayton antitrust and rewrite them in a way that data privacy is specifically included. When you look at the way its interpreted right now, i its all in terms of price. If something costed more, therefore, its potentially bad for consumer welfare you could rewrite the rules to include it. Dan, there is a little bit of a consensusout there that this is going to take years were not going the see anything that really comes through for several years. You think thats the case, too, right . I think right . Yes and from a pure political calculation, you know, break up big tech is a great thing to be able to say on the campaign trail. Sure. You dont have an election for another 18 months. Sure. Gene, moffettnathanson upgraded facebook this morning, despite concerns about whats going to happen with global regulatory. And you also think that the headlines here are going to be worse than what actually happens in the end, right . Yeah, exactly i would also caution that everything were talking about, like you said, is going to take years to work out. These headlines will likely weigh on some of these stocks, and in particular google and facebook, which is going to be at the center of todays House Judiciary Committee, really helping legislators understand but the more rhetoric that we hear out there thats typically not good for the multiple. I do have some concerns about facebook longer term i do think that google is well positioned longer term, but nonetheless, google is probably at the greatest risk over the next two years related to different practices in terms of specifically how they display search results why do you think googles most at risk well, if you look at 90 of their business is search, and search is impacted by the ranking that they show the results. And google historically has put their own rankings ahead of other competitors. I think a perfect example would be to search for a restaurant. Typically, google maps shows up as the primary result. So, things like that are easy for regulators to wrap their heads around, and i think, ultimately, how this could play out is some sort of shift in the algorithm of google that could better and more fairly, if you will, rank some of these results, which could obviously impact monetization. Again, i want to stress, i dont think that this will have a Material Impact on the business, but i do think the headlines will have a measurable impact on googles multiple over the next year. Which means you do what if the stock is under pressure, would you buy it at those times . So, i think this separates the investors from traders i think traders, theres really nothing to do with google. I would just stay away for the next year or so because i think that these are material questions that investors are going to ask i think if you have the better perspective of owning things for the next three to five years, google continues to be the oxygen of the internet i think this company will prevail, whether its around search or other bets, autonomy, all the great things that theyre working on the side. So, it depends on what your time horizon is, but very different action steps based on those time horizons. Dan, if competition and antitrust law is rewritten in order to address this broader issue for the tech stocks and the way in which these businesses have changed, are there any other sectors that will be impacted that as a Second Derivative effect and which sectors do you think could be most affected well, obviously, it depends on how theyre rewritten, because theres really two choices here, right . You either write something very specific for tech and tech platforms for example, you see what Elizabeth Warrens proposed in terms of marketplaces thats really techspecific. But more broadly, if you look at the u. S. Economy and u. S. Corporate economy, consolidation, big consolidat n consolidation, kind of duopolies or monopolies, you see that in health care, in big agriculture, you see it across the board. So i think ultimately, if Congress Really wants to take this on, the question is are they going to be real narrow with tech . And i think they could be. They could just go with tech or do something much broader, which honestly makes more sense if youre trying to rewrite antitrust law. Dan, the privacy issue i was wondering what you were going to say, because if we i think of antitrust, i think of consumers. I dont want to go the european route where every new competitor needs to have, oh, my gosh, you know, youre hurting a competitor you know, youre an entrenched company that has a mote and youre really good, and thats not our problem, you know . The competitor cant so, you said it would have to be rewritten in terms of privacy. Why would it have to be antitrust . Couldnt you address the way that were not compensated for all the information . Couldnt you do that some way around, that didnt involve antitrust . Stick with antitrust the way it is you could you could. You could leave it, as i said. And to be honest, joe, i think the way you do that, and an answer to wills question is, are you going to write something techspecific or look at antitrust broader . Because again, joe, there is this broader question you look at health care, big agriculture the consolidation and the pricing pressure is real going specifically at tech, absolutely, you could write a privacy law. Because i dont feel violated ive talked about it with privacy, thats one thing. Im not on facebook, so theyre not stealing all my data but everythings free. I just you know, i dont want to change antitrust i dont it depends how you define free thats the question, right are you paying dollars or are you giving them Something Else in exchange . I just look at the whole inflation picture and just the world were living in, with amazon and transparent pricing everywhere, and its just such a you know, we really do look at all the stuff and dont even appreciate how much its changed our lives and held down inflation and been a positive. And to be looking at it and say, yeah, weve got to do something about this theres, well, lets see, theres you know, youve got to search to find something thats really thats why i think Elizabeth Warren is, you know i think that whole approach is misguided. Joe, can i just say one thing, joe yeah. The question theres two sides of pricing, right . So, right, facebook and google are free for me and you to use, right . Yeah. But ultimately, theyre getting paid by companieswhich are advertising on them. Are we ultimately, and this is a question for regulators, paying on the back end to get that product to facebook and google, are we paying more because no, because amazon has driven down prices. So the whole ecosystem is an advantage for consumers. Now, for competitors, then were headed down what i think is an illadvised system that they use over where wilfreds from, you know, among a lot of illadvised things they do over there, right, dan yeah, my fault. Ill let you go with that, joe. I knew you would. I knew you would. Gene, you think that apple and amazon, though, are relatively safe. How is that . Well, it really is the tale two of cities. Its easy to wrap all these companies together because theyre large tech, but undoubt undoubtedly, apple has been more progressive with their view that it really is about the device and privacy has been an essential theme for the company for the last four years. I think that that narrative will play well with regulators. And amazon is, even though they have a larger percentage of ecommerce, call it 20 , it still is far from a monopoly so i think that, really when you think about this debate about regulation and large tech, you need to break it into two camps, and apple and amazon are in the safer camp apple by far is the safest. Gene, dan, thank you both good to see you this morning thank you. Thank you still to come, the squawk newsmaker of the morning commerce secretary wilbur ross will join us from the select usa Investment Summit in washington. Plus, well welcome our guest host for the next hour, former defense secretary ash carter youre watching squawk box on cnbc i know how difficult it can be to find the right fathers day gift. But you cant go wrong at dicks sporting goods. We have gifts for every dad. If hes into boats, bikes, or camping theres plenty to choose from, including yeti. And if he likes golf hell love the latest drivers from callaway and taylormade. Plus weve got a great new selection of footwear to fit any runner and every athlete. So make it a day hell remember with the perfect fathers day gift from dicks sporting goods. If you cant get to a store, shop us online is china ready to strike a deal based on a lot of facts and a lot of knowledge, chinas going to make a deal because theyre going to have to make a deal. Commerce secretary wilbur ross joins us to discuss the latest developments, the president s comments on trade, and much more. Big tech heads to the hill well preview todays hearing and talk privacy, regulation, and much more with our guest host, former defense secretary ash carter plus, the market rally is looking to make it six days in a row. Well find out whats driving the latest move higher and discuss what you should be doing with your money, as the second hour of squawk box begins right now. Announcer live from the beating heart of business, new york, this is squawk box. Good morning, and welcome back to squawk box here on cnbc im joe kernen along with becky quick and wilfred frost. Andrew is out today. In studio for the hour, former secretary of defense ash carter. Great to have you, mr. Secretary, and were going to thank for having me back. Thats a great shot of you on this book. Great shot of a soldier, too. Yes, you have a great shot of a soldier, but you look determined lessons from a lifetime of leadership in the pentagon. And ive talked to enough people that i had a long interview with another secretary of defense, gates. Yes. And hes still a good friend of mine he still is affected by that. I think his entire life has to do with being in having soldiers that youre really in charge of, because you feel particularly particularly now since were at war continuously. Serious business, not a game. And i think you did the same thing. I mean, you wrote an vidleindivl letter you felt responsible. Trips to the hospital, to dover. Its hard to believe now, but in 09, 10, there were a dozen kids a week showing up at walter reed. Young kids that are willing to now, thats not going on anymore, but that was tough. My wife and id go out there every weekend that we were in town, and theres always a fresh batch of kids, and dovers a very different experience. And im sure you touch on a lot of that in the book. I do. Its not about me. Its a different kind of book. Its not a memoir or an autobiography. Its about the pentagon and running the largest institution in the world, but also theres things, the serious gravity of the responsibility and just try to convey that. Well, theres bureaucracy, too. And i remember secretary gates, there was a way that those ieds could have been minimized by a hull that would disperse the blasts, and he couldnt get funding. It couldnt yeah, yeah. Its so frustrating i came in, he put me in charge of that when i was his weapons buyer and technology guy, and the first thing he said to me when i took the job was, he said, the troops are at war, the pentagon is not. I want you to change that. Ill never forget that and he always backed me up when i did something that was that, you know, made people jump, because you know, people in washington and the pentagon, theyre preoccupied with the next budget and sort of the ten years from now were going to be fighting a different war and weve got guys on the ground right now. So whats the point of buying something for todays war because were focused on tomorrows war well, youve got kids who are losing limbs there because they dont have a vehicle that will protect them so, that was my major preoccupation. You might think the jet Strike Fighter and tanker and so forth were, but really, job one for me was always i had to do the other stuff as well, all the big Program People think, oh, yeah, hes a cabinet member, he wants to be in the administration. Well, when you serve as the secretary of defense, youre doing it for something a lot bigger reasons than that anyway, thank you for your service, too, mr. Secretary. Thank you. Futures this hour indicated up triple digits weve had i dont know how many Straight Days this is. This will be seven, if we end up today. Seven. President trump calling into squawk box yesterday he commented on many topics, including striking a trade deal with china the china deals going to work out you know why because of tariffs because right now, china is getting absolutely decimated by companies that are leaving china, going to other countries, including our own, because they dont want to pay the tariffs. And china will, in my opinion, based on a lot of facts and a lot of knowledge, chinas going to make a deal because theyre going to have to make a deal. Joining us now to talk tariffs, trade, and much more is u. S. Commerce Department Secretary wilbur ross. He is coming to us live from the select usa Investment Summit and secretary ross, thank you for being here today its good to see you well, thank you, becky. Good to see you. I know that trade and tariffs have been an issue or the tariffs have been an issue that you have long been a proponent of we heard from the president yesterday, but what do you thinks going to happen with china . Well, i think the president is exactly right either we will collect more and more tariffs on more and more products, or we will make an arrangement with them that deals with both the Current Situation soybeans, lng, planes, things like that and more importantly, the future intellectual property rights, getting rid of forced technology transfers, all of the abuses that weve been talking about, and finally, codifying all of that in a way that at the end of the day, if there are violations, we can take unilateral action to cure them unless we have all that in a package, it doesnt make sense to go ahead. Thats a very tall order and probably not something that were going to see get resolved later this month at the g20 how long do you think this process actually takes well, the g20 is not a place where anyone makes a definitive deal the trade deal is going to be thousands of pages at the g20, at most, it will be a 40,000foot level, some sort of agreement on a path forward its certainly not going to be a definitive agreement. The markets have been anticipating that a deal will eventually get done, although i will say that theres been more depth thats kind of seeped into things in the last month or so whats your thought . Do you think there ultimately is a deal between the United States and china . Well, i think there eventually will be even shooting wars end in negotiation. So, i think eventually this will end in negotiation but you know, the markets get a little too jumpy and a little too trigger happy. When we were having this with mexico, people were getting hysterical oh, my god, tariffs on mexico, sky is falling. It only took a few weeks, and now we have a resolution that appears likely to help solve the border crisis and also did not involve big tariffs. So, i think what people have to learn to do, judge this administration by results. Dont judge it by interim sound bites. Although interim sound bites are not how you make big things happen. You did bring up the idea of comparing these trade wars to actual fighting wars ash carter is here, the former secretary of defense, and he just said, weve been at war kind of nonstop. Thats the way things work today. Do you anticipate with the president s admiration of tariffs and how effective he thinks they are as a tool, do you anticipate that this is kind of going to be a constant trade war that were dealing with from here on out, too well, no. Think about what has actually happened despite all the moaning about trade wars, the fact is we have, first of all, the usmca deal with mexico and canada, which i think is a very good deal for all three countries, but especially for us. We have a new deal with korea called korus now we have the deal with mexico and others that actually helps the border and doesnt hurt trade. Those are incredible accomplishments in less than a threeyear time period so, if people had a more balanced view of life, people would say, gee whiz, thats a lot, especially on top of a very strong domestic economic environment. So, i think that people its easy to get mired down in this little worry, that little worry. Look at the big chorus look at whats really happening. Look at the results. Dont get too obsessed with the inbetween details those are just a road stop along the highway to success mr. Secretary, good to see you again. This is ash carter how are you . Hi, ash how are you . Good. Can i take you back to china and we dont have to call it a war sure. If you dont want to, but it is not a cold war, either, because we had an ideological competition with a communist dictatorship before, which was the soviet union, but we never traded with it and so, we are in a more complicated situation. And you were talking earlier, it seemed to me, about the entire playbook for protecting our companies and our friends from what is a country that can bring to bear on competition military, economic, and political tools altogether, which a country like ours obviously cant do. And so, we do look to our government to protect our companies from that. And tariffs are obviously a piece of that. But can you go back to your very first remarks . You were talking about, if you like, what was the entire table of contents of our new playbook for protecting ourselves and competing fairly, or at least on some even kind of Playing Field with china right the content is a very simple one. Its america first, but its not america alone. We actually have gotten more cooperation from our allies, particularly visavis china, since weve been using tariffs, than we ever had before. On multiple occasions now, both the eu and japan have been cosignatories with us on letters attacking various practices used by china. That never happened before i think what it proves is that when you put things in stark reality, people have to focus. And at some point, they have to figure out whats in their enlightened selfinterest. We are carrying the cudgel for lots of people around the world, but we also are requiring they must do their part they must do their part in supporting nato. They must do their part in securing their borders they must do their part in cooperating against evil practices, wherever they come from thats the difference. People before were assuming that world leadership meant being the worlds easy mark. We dont view it that way. We view world leadership as taking risks, taking strong positions, reasoned positions, and really pursuing them thats the philosophical difference. Im glad to hear you say that about other countries, because it does seem to me part and what youre saying is that part of the bigpicture playbook, in addition to tariffs with respect to china, is sticking up for our friends as well and them sticking up for us, because you know, chinas just one country and so, to the extent that everybody else is pushing them the same way were pushing them in terms of leveling the Playing Field, that strengthens our hand as well. Exactly secretary ross, youre exactly look at go ahead, sir. Look at europe. We had this global steel forum, which was basically a talking society. Every quarter they would meet. Every quarter they would babble about this and that and Nothing Happened we put on the steel and aluminum tariffs, and all of a sudden, europe started protecting its border, japan introduced a system for the first time of policing their border and having trade enforcement. Those are things that are not visible. They dont necessarily make the headlines, but they do change the Playing Field. But mr. Secretary, in taking on china, you could have brought the eu, mexico, canada, and japan alongside you much more effectively than you have done i totally disagree with that. First of all, if you have three people on your side against one guy on the other side, youre going to waste half your time trying to get a consensus among three people in the room its too hard. We believe more in bilateral arrangements, because thats a oneonone kind of a mano a mano arrangement. When you have multiple parties involved, everything gets diluted down to the lowest common denominator thats one of the historical problems with these deals i like that with multiple, multiple countries. I like that stated as fact, though, instead of could you have done better if you had brought in that wasnt the question i was asking. You could have well, well never know, but were doing very well. Were doing very well. Theres a contempt vote now, tomorrow, apparently, on the census issue Elijah Cummings has scheduled a Committee Vote for wednesday the Trump Administration is basically not honoring any subpoenas. Is this just getting caught up in that . Why are you not well, wait a minute, lets not say were not honoring this and that what we are respecting is longstanding practice. Were not accepting the unredaction of documents that three lower courts, two appellate courts, and the Supreme Court have gone along with lets make sure we define exactly whats going on. We have produced to the House Oversight committee 14,000 pages of material. I testified before for almost seven hours. Were producing three more witnesses, the only three that theyve requested, including one today. So please dont tell me were not cooperating. Okay. What we are doing is cooperating in a rational way thats consistent with the rules, the regulations, the laws, and prior practice secretary ross, your Commerce Department is responsible for the ban on American Companies providing technology to huawei weve heard from President Trump, and he has mentioned in the past that that could be a situation that gets wrapped up into the trade talks you also led the way on bringing the charge against zte, and that was later negotiated down. Would you be upset if the ban on huawei ends as part of the trade talks with china well, first of all, what we actually did with huawei is a different situation from what we did with zte ztes situation was the result of their violating an agreedupon a courtagreedupon settlement of a litigation, so the frame of reference was different. So, they were put on a denial basis. Huawei we have put on a basis where they are on a list, and that list requires americans who are going to sell them things to get a specific license for those actions. So, its not quite the same situation. It is the same in some ways in that both are doing practices that we think are potentially injurious to our National Security and whatever is the outcome, were going to make sure that our National Security is protected. Hey, mr. Secretary, im just reading this Elijah Cummings statement. He mentions the word bipartisan like three or four times in terms of the subpoenas how many republicans are they talking about . Is this like the justin amash impeachment bipartisan subpoena . I mean, how many republicans is Elijah Cummings referring to here on the contempt or the subpoena well, i have no idea, but it really doesnt matter. The fact is, we believe were on solid legal grounds for the position that we have taken you expect that theres going to be we are cooperating will you be held in contempt tomorrow, mr. Secretary . I have no idea. The committee will have to vote. And then next, it will potentially go to the full house. Okay. But the important thing is not that the important thing is the Supreme Court sometime between now and the end of this month will make the definitive decision about whether we put the Citizenship Question on. Theyre the ones that are important. And this is just a side show designed to disrupt the Supreme Court process. Im a littlnfuseds to whether you say youre bringing certain allies along with you or not. Now that the issues with mexico are settled, can the eu expect to face more tariffs well, theyre Different Things we dont have a migration problem with the eu. We had a border problem with mexico this recent goaround was meant to deal with that. I think its dealt with that in a very effective fashion with the eu, our issues are much more purely trade issues and you saw with mexico, we resolved very complicated trade issues with a very innovative, and i think, very effective agreement that will be very good for American Workers and American Farmers so, theyre different situations secretary ross,thank you fo joining us today we do appreciate your time well, thank you very much for having me on i enjoyed chatting with you. Thank you by the way, dont miss other newsmakers from the select usa Investment Summit on cnbc today and tomorrow, including Energy Secretary rick perry, larry kudlow and agriculture secretary sonny perdue coming up, a check on the markets, plus raytheon and United Technologies plan on creating an aerospace giant. Well talk defense and much more with our guest host, ash carter. Stay tuned youre watching squawk box on cnbc you should be mad they gave this guy a promotion. You should be mad at forced camaraderie. And you should be mad at tech that makes things worse. But youre not mad, because you have e trade, whos tech makes life easier by automatically adding technical patterns on charts and helping you understand what they mean. Dont get mad. Get e trades simplified technical analysis. Mno kidding. Rd. But moving your internet and tv . Thats easy. Easy . easy . Easy. Because now xfinity lets you transfer your Service Online in just about a minute with a few simple steps. Really . Really. That was easy. Yup. Plus, with twohour appointment windows, its all on your schedule. Awesome. Now all you have to do is move. That thing. [ sigh ] introducing an easier way to move with xfinity. Its just another way were working to make your life simple, easy, awesome. Go to xfinity. Com moving to get started. All right, still to come, ash carter on the Defense Sector and later, big tech versus Big Government were going to preview todays hearing on the hill and find out what Congress Wants to hear from executives about privacy, regulation, and more ash carters here to talk to us about that, too. Squawk box will be right back. President trump weighing in on the mega deal between United Technologies and raytheon right here on squawk box. Its a great company, but what i hear united and i bought a lot of carrier, too, by the way when i hear unitend i hear raytheon, which is another Incredible Company the Missile Systems they make are incredible when i hear theyre 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 its so already very its already noncompetitive. Joining us now, our guest host for the hour, ash carter, former u. S. Defense secretary during the Obama Administration. Hes now with harvards Belfer Center and is author of and we already referenced it inside the fivesided box lessons from a lifetime of leadership in the pentagon. Secretary carter, thats all thats not the only job you had. We already talked about all of the things that you did as secretary of defense, but procurement is a big deal. You probably know theins and outs of whats happening with this merger. And ill bet you could do a pros and cons of these two Companies Getting together, couldnt you and if i were still the top weapons buyer, i would and the policy the president s referencing is right we need to have leverage as the government the taxpayer and the war fighter need to have leverage in the business deal with the industry that serves us we dont make anything in the pentagon we buy everything in private industry, so we need a healthy Defense Industry nobody wants to at the same time, we need a good deal with them. And im afraid i cannot because i wrote the policy and i formerly occupied the position, talk about that and rate the deal i will say this, though i think that acting secretary shanahan and his staff will do a kind of beforeandafter comparison what is the governments situation with respect to the strength of the industry and a dealmaking with them before and after . And it has the right to deny, if it feels that net leverage has been lost, but there are ways that net leverage can be gained as well, and theyll need to look at all of that. What does the rules say that you wrote . It said that we were going to look very carefully and with a presumption against large, very Similar Companies continuing to consolidate in the Defense Sector. With presumption against, thats important. Yes, thinking mostly about the big platformmakers at that time and this is a very different situation. But if you Want Companies to take advantage of synergies and cost savings and rationalizing operations and driving down costs, if you can trust them not to if they get some type of increased monopolistic, i guess, power, you wouldnt want that, but you would hope that they would be able to rationalize and make them cheaper. Dont want competition we need a successful, financially successful, technologically vibrant Defense Sector, so youve got to weigh that in the pan as well. You know, when you dont have headtohead competition, which is many times and by the way, you know, apple, when it buys the components for its phones, some of those components are only made by one supplier. So, everybody at some point runs into this one supplier game. Now, what do you do in that case it gets down to the contract you negotiate. You make them compete with themselves so, for example, to take the joint Strike Fighter the contract we wrote and this was controversial at the time because they didnt want to do it said for the early airplanes, heres the price. If you underrun, you get to save 50 cents on every dollar if you overrun, you have to pay 50 cents on every dollar and if you overrun too much, youve got to pay the whole thing. We wrote that contract because we didnt have another supplier for the joint Strike Fighter. That was the only one. So then theyre competing with themselves for profit, so youre not completely helpless, even in a situation where you face a monopoly, which sometimes we do in the Defense Sector, but kind of everybody does also. To what extent has chinas innovation in the Defense Sector caught up with the u. S. Over the last i dont think its caught up with us, but i worry about that. And one of my big priorities and i believe this is continuing in the Department Today it certainly should, and i think it is was to sort of swing us from counterterrorism and counterinsurgence and we talked about that. Joe was saying just the importance of that i was all in for afghanistan iraq you cant be otherwise when you have troops there. On the other hand, does that take your eye a little bit off the big guys, russia and china and the highend conflict . It did we have to admit that. And the decade before that, in the 1990s, we all hoped things were going to turn out better. So, for a long time, we kind of took our eye off that ball now we need to get back to that ball and be competitive with china, not just in the trade sense, which we were discussing with secretary ross, but in the overall geostrategic and military sense as well that means continuing to be the firstest with the mostest with technology and theres another point for the health of the Defense Industry, is leaking it to the tech industry. And when i started out and i say this in the book as a physicist getting into defense everything that was done that mattered in technology the internet all that came out of defense it all was american and it came out of defense those days are one we still do a lot of important stuff. We do more r d than apple and microsoft and google combined. Some people dont know that in the Defense Department so, were a big dog still, but were not the only dog anymore and what that means is that the links between us and the tech sector is very important to the health of our industry and our ability to compete with china. And i did a lot to build those links, try to get past the snowden business and so do you get frustrated when you hear leaders in Silicon Valley going to china, trying to work with china very closely, almost trying to pretend that theyre global citizens and not u. S. Companies that does bother me, because i think to myself, look, if i were reasoning with those folks, id say youre an American Company. Youre protected by american law. Thats what guarantees your Business Environment and your profits. You come to work you drive on american roads. Where do you think they come from you hire employees who can read and write. Where do you think that comes from its an Education System and so, you cant escape being an american citizen, and you can be a global business, but you also have to recognize that with the privileges you get of being an American Company come some responsibilities to the country as well. Very quick, raytheon united, do you think it goes ahead i really cant i mustnt comment on that because it was my policy and my responsibility. Its a particular regulatory matter let them work it through according to the principles that ive described. If it looks likely, raise your right eyebrow. I cant i cant. I cant do that either, actually itd be totally confusing. I still wouldnt know. Okay we will have much more from secretary carter in just a bit, including his thoughts on todays hearing on Technology Regulation right now, though, as we head to a break, lets take a look at the u. S. Equity futures. Been in the green all morning long, and right now it looks like the dow futures are indicated up by about 122 points if we end higher today, that would be the seventh day in a row. Already yesterday with six days in a row, thats the longest winning streak weve seen in 16 months squawk box will be right back. A company that controls hiv, fights cancer, repairs shattered bones, relieves depression, restores heart rhythms, helps you back from strokes, and keeps you healthy your whole life. From the day youre born we never stop taking care of you. Hey i live on my own now from the day youre born ive got xfinity, because i like to live life in the fast lane. Unlike my parents. You rambling about xfinity again . Youre so cute when you get excited. Anyways. Ive got their app right here, i can troubleshoot. I can schedule a time for them to call me back, its great you have our number programmed in . Ya i dont even know your phone anymore. Excuse me . what . I dont know your phone number. Aw well. He doesnt know our phone number you have our fax number, obviously. Todays xfinity service. Simple. Easy. Awesome. Ill pass. All right, welcome back to squawk box. Im dominic chu. Weve got some morning movers for you. We start with shares of beyond meat beyond expectations, beyond wildest dreams, whatever your pun is, shares are down now by about 12 premarket on about 2,000 shares of volume that recently ipoed meat alternative producer is downgraded to overweight, going from 121 to 120 target price its a valuation call shocking after the massive run from the ipo price, saying at some point, the extraordinary revenue and profit potential embedded in beyond will be priced in, and that day has arrived meanwhile, youve got shares of facebook up over a percent or so right now, roughly 60,000 shares premarket. The social media giant gets upgraded from buy to neutral by moffettnathanson while keeping the 210 price target. They think underlying fundamentals offsets the scrutiny and cited potential Growth Drivers in commerce and messaging. Shares up 1. 5 and well end on shares of lyft. The Ride Hailing Company is now up nearly 4 in the premarket, roughly 16,000 shares of premarket volume helping things along, an upgrade by analysts at susquehanna to positive from neutral. The target goes to 80 bucks from 57, citing among other things lyft being more levered to americas more rational promotional pricing and improving multiples and better industry trends. So, wilfred, one red, two greens well send things back over to you. 21, well take it, dom thanks very much. Some technical indicators are pointing to a possible rally in the back half of the year here to explain, christopher roan, partner of strategic securities thank you for being here. Good to be here. First, this is based on 52week highs and positive signs from that. Yeah, i think one of the important characteristics of adorable advance is participation broadening out this is probably the third or fourth time over the last 18 months weve been in this 2,8502,900 range. But i think the 52week high data is starting to expand here, so more stocks are participating in this rally. And secondly, very quietly, money growth is starting to reaccelerate so i think liquidity here is getting a little bit better. Listen, i know seasonality is not great here over the next number of weeks, but i think ultimately you dont want to get too bearish or too defensive here. Looking at the yield picture, whats that telling you . Well, i find it curious that despite a pmi miss and payroll miss last week, you already have yields back above where they were at the start of last week, that 2. 10 , 2. 15 range i think is important i think yields will stabilize. The tenyear yield is two standard deviations below trend right now, very oversold i would expect at least some type of a bounce here. We saw that playing out yesterday and financials did well on it emerging markets, what are you looking at there i find it curious, you know, all the attention is on u. S. And china, but brazils at a new high, india at a new high, russia at a new high, aussie stocks so when you move away from just the china story, theres actually some really good things playing out in em, and i think specifically emerging market credit has held up really well here typically, we think of, you know, big problems in equities typically led lower by debt. That really hasnt been the case here the last four, five, six weeks. We think thats a positive for the em space going forward. And s p closed yesterday at 2,886. Everyones talking about the 2,900 level again. What are the key levels for you . Listen, i think when you look at the old highs, the 2,925 neighborhood is important. I dont think well break out any time soon, but towards the back half of the year, it would not surprise us to see new s p highs. I think its important, unlike 2018, theres a lot of the world actually Getting Better here economic surprises bottomed. We have yields we think starting to bottom. Semiconductors look oversold enough to rally. I think those are the cyclical components we want leading this market into the back half of the year. Chris verrone, thank you for joining us good seeing you. Still to come, the dow on its longest win streak in a year well find out whats driving your money higher. And then, big tech heads to the hill well preview todays hearing and talk regulation, coming up and at the top of the hour, how many rate cuts are on the cards . Well talk fed, the economy, and much more with Stephen Moore squawk box will be rightac bk. 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Its not just easy. Its havingawalrusingoal easy roooaaaar its a walrus ridiculous yes nice save, big guy good job duncan way to go [chanting] its not just easy. Its geico easy. Oh, duncan. Stay up. No sleepies. Hey i live on my own now its geico easy. Ive got xfinity, because i like to live life in the fast lane. Unlike my parents. You rambling about xfinity again . Youre so cute when you get excited. Anyways. Ive got their app right here, i can troubleshoot. I can schedule a time for them to call me back, its great you have our number programmed in . Ya i dont even know your phone anymore. Excuse me . what . I dont know your phone number. Aw well. He doesnt know our phone number you have our fax number, obviously. Todays xfinity service. Simple. Easy. Awesome. Ill pass. Lawmakers on capitol hill are starting their investigative hearings into the dominance of big tech ylan mui joins us now with more. Good morning good morning, joe this is the first step in the judiciary committees wideranging antitrust investigation. Lawmakers have already put amazon, facebook, google and apple on alert, and they say that this probe will include hearings, roundtables, and discussions with top executives. The chairman of the antitrust subcommittee, democratic congressman david cicillinie, has said that he plans to issue a final report once the investigation is complete. He also said that he expects the companies to be active participants in this process and that he is prepared to issue subpoenas if not however, republicans say that they didnt agree to all of that, and theyre trying to walk back some of this rhetoric im told that republicans have not signed off on forcing tech executives to testify. Still, this effort today is being billed as a bipartisan move, and todays hearing will stick to Common Ground the impact of big tech on the local news media but industry groups, though, theyre already on the defense netchoice, which represents ecommerce giants like alibaba, google, and travelocity, they put out a statement calling the hearing an attack on social media by Big Media Companies who are upset that they no longer control our news and views guys, it is still unclear how many hearings we will get out of this effort, but cicilline said he wants to wrap this up with the current class of lawmakers becky, back to you. Thank you very much. President trump shared his concerns about big tech and antitrust issues yesterday on squawk box. Every week you see them going after facebook and apple and all of these companies that are, you know, theyre great companies, but theres something going on but i will say, the European Union is suing them all the time were going to maybe look at it differently. We have a great attorney general. Were going to look at it differently. Theyre actually attacking our companies, but we should be doing what theyre doing they think theres a monopoly, but im not sure that they think that they just figured this is easy money. Well sue apple for 7 billion and well make a settlement or well win the case so, i think its a bad situation, but obviously, there is something going on in terms of monopoly. For more, lets welcome back our guest host for the hour, ash carter, who is the former u. S. Defense secretary during the Obama Administration he is now with harvards Belfer Center and the author of inside the fivesided box lessons from a lifetime of leadership in the pentagon. Secretary carter, thank you very much what we just heard from the president almost sounded like hes of two minds himself. He thinks that the eu is coming after our companies and just taking it for easy money, but he also thinks that there could be some monopolistic issues here. What do you think . Well, i think there are a couple dimensions to this. If you back up from this, what were trying to do is eliminate some of the darkness that comes with social media, while keeping the good that comes, so community and commerce theres hate, theres intimidation, theres falsity, and so forth, in social media. Now, i think that in the big picture, becky, what we need is a mixture of selfregulation by the companies weve left it since the 1990s to these companies and they havent done a great job. And they havent done a great job. That doesnt mean it should all be done by government regulation either and government regulation needs to be intelligent regulation so were looking for a mix here of selfregulation and regulation, trying to find out the method for each one. What needs to be attacked there are so many ways you could come at this, if youre looking at government regulation. Its whats going to guarantee content that you and i would regard as acceptable for ourselves and our children to watch. Its that simple you know, when i was a kid this is a long time ago to give you a sort of exaggerated example and a couple went to bed on tv, they had two single beds separated by a table with a lamp on it and we think thats kind of silly now, but it was viewed as necessary to protect public morals and children. Something like well, now we have things like the christchurch killings being broadcast live on facebook. Yeah, yeah. And to get to the governmentside regulation now, i think what your correspondent said was right, this is, thank god, not something thats gotten partisan i think people are mostly sort of bewildered by it, and they know its a problem and they need to do something about it. Antitrust is one tool. Its not the only tool and an antitrust breakup is the only thing you do. Everybody talks about antitrust breakup. For example, anybody who remembers at t, at t was not broken up, but antitrust was applied to it. And so, for example, it was told you have to string a wire to the end of a street to a little old lady on a farm because thats a public good. And the rate base people in cities who cost less to serve sort of paid for that. And that was thought to be good for the country and the development of the country, but it wasnt breakup. Ultimately, at t was broken up when the technology changed. But when the technology didnt permit that, wasnt very upset so it didnt have to be breakup. It has to be some rules that the government applies, but that doesnt get the companies off the hook also policing themselves so, theres some mix there whether its 20 80 or 80 20 is what the architectures about, but we need to do both of those. Away from antitrust and back to National Security when it comes to the big Tech Companies, which fall into that sphere and cross into that sphere of operating around a National Security issue, and which would you like to see do more to work more closely with the Defense Department as opposed to just think about their bottom line . Yeah, well, they all do but its the big Tech Companies, but theres a whole tech sector thats driven by Venture Capital that is small companies. I want them to consider the defense market in their future they dont they wont necessarily serve the defense market, but i want them to serve thats why i put an outpost in Silicon Valley when i was secretary of defense, why i put one in boston, when i put one in austin, so they can kind of get to know the Defense Department, because theres a whole generation of people who, unlike me, didnt come up in technology where working with the government was part of their culture. Well, what about google now saying its not going to renew its defense contract in 2019 because its employees put up an outrage over the fact that they were working with the defense . Yeah, thats the question im asked most, becky, what about google and i think youre referring to project maven. Right. Which was an example in which some a small number, actually, relatively small number of employees objected to a socalled Artificial Intelligence project that googles doing for the government and google withdrew now, subsequently, theyve said that they will work for the government and theyre an American Company and all the right things but if i were going to talk to somebody there, with those people who objected, id say, look, if you dont want the Defense Department to do first of all, congratulations, youre thinking ethically. So, i share that with you. You ought to think ethically about everything that google does number two, if youre worried that were not going to carry American Values into the battlefield, which by the way, we do, then get in the game. Whos better than you to participate and steer us in the right direction . And by the way, how comfortable are you with working with china . And so, youve got to make them think about these things they take a stance, and youve got to reason with them and try to get them to a better place. Were running out of time did you have anything to do with the united tech honeywell, not letting that go through . Is that your no. What i did way back then, that wasnt an issue. It was, i created the policy or annunciated the policy so because that didnt go through. Do you think this one im trying to get back to the united tech oh, youre not going youre not in a position again, you can say something. But i was the Acquisition Executive who wrote the so thats why you cant yeah, so i ought not do that. Let me ask you about boeing do you feel the relationship between boeing and the faa was too close . Well, i dont know if it was a close relationship, but the faa has weakened its own internal technical capacity to make certifications. And, so, it has ceded to the companies a lot of responsibility for doing that. Now, when you do that, inevitably, some of the incentives of the company, rather than the incentives of the faa, kind of enter that process, and theres no question thats what we saw going on here so, i worry about the Technical Health in the long run of the faa is that an ethical or leadership issue its partly a funding issue, but its really, its one of those agencies that needs to kind of renew itself technologically. Theyve had a new air space system on the logs as long as i can remember, and its never been completed so, it struggles its an essential function, but is it functioning the way wed like now no and it didnt in this case as well so, i think thats the boeing story. Thank you for being here today. Thanks. Thanks for having me. Former defense secretary ash carter youre going on faux joe morning joe. You know why he calls himself joe . Because his name is charles and Chuck Scarborough is taken, so he took my name morning joe. And ive been on longer than him. He is a faux morning joe. Ill remind him of that. Say that tomorrow call him charles okay. Coming up, Heritage Foundation chief economist Stephen Moore joins us with reaction to yesterdays teiewi psintrump and much more. Squawk box coming right back across my business. Starting here, in procurement, helping us find the right suppliers. Then here in logistic, to avoid disruptions here in sales. Even here im talking about ai we can build to work. Here, predicting trends. And here, wherever our data lives and here, working with all our other ai i think were done here. Expect more from ai. Ibm watson. But were also a company that controls hiv, fights cancer, repairs shattered bones, relieves depression, restores heart rhythms, helps you back from strokes, and keeps you healthy your whole life. From the day youre born we never stop taking care of you. Market muscle. The dow has a sixday winning streak going, the longest in a year and futures are pointing to a positive opening this morning. D. C. Lawmakers get set for hearings on big tech what do they mean for stocks in the sector ann win blood, longtime investor, will join us with answers. And does anyone know what the fed is going to do next . Stephen moore might. Hell join us on set for the final hour of squawk box, which starts right now oh, yeah announcer live from the most powerful city in the world, new york, this is squawk box. Good morning and welcome back to squawk box here on cnbc live from the Nasdaq Market site in times square im joe kernen along with becky quick and wilfred frost. Andrew is off today. Futures indicated up 130 points, where theyve been for much of the earlymorning session. We gained 5. 5 last week, back from that sixweek slump that we saw in the averages where they were averaging about a point, one percentage point loss a week, and then we got most of it back last week were not far from new highs. 2 on the s p off the highs. Unbelievable, isnt it . And heres treasurys, which have also kind of normalized. I guess we were down at 2. 05 on the tenyear, back to 2. 17 . Here are the stories investorses will be talking about today. Its big techs turn in the spotlight on capitol hill. The House Judiciary Committee is beginning investigative hearings on the dominance of the biggest companies. Todays hearing will look at the impact of Online Platforms on a free and Diverse Press lawmakers say that the probe will eventually include roundtables and discussions with talk tech executives short sellers have lost more than 400 million betting against beyond meats stock since it went public very recently thats according to Research Firm s3 partners the stock of the plantbased burger maker is up about 500 from its 25ashare ipo price last trade 152. 95 however, you see it is trading down about 9 today. Thats because separately, Jpmorgan Securities downgraded the stock to neutral from overweight, saying that its above the street estimates now appeared to be priced into the stock. And a key economic reading is about 30 minutes away weve got the government going to be issuing Producer Prices for may. Thats coming up at 8 30 eastern time the fed has mentioned that the failure to reach its 2 inflation target is one of the keys to its Interest Rate policy President Trump calling into squawk box yesterday, touched on many topics from trade to the merger deal that was announced over the weekend between utx, or utc, and raytheon. We also talked about the fed, and the president says that the Central Bank Still isnt listening to him no, they havent listened to me and you know, we have people its more than just jay powell we have people on the fed that really werent, you know, theyre not my people. But they certainly didnt listen to me because they made a big mistake. They raised Interest Rates far too fast thats number one. Number two, they did quantitative tightening. They were taking in 50 billion a month, 50 billion a month and theyve now eased that, but its still 25 billion a month, which is ridiculous. Now, chinas doing just the opposite theyre pumping money in so, im not im winning, but im not winning on a level table. Joining us now, our guest host for the hour, the Heritage Foundations Stephen Moore and whenever you say, you know, you people, my people, whatever hes saying there, i think hes saying theyre not my appointees or he could have meant more subliminally, theyre not people that share the same mindset that i but whatever he meant, lets talk about the fed and whether, stephen, trumps critical wall street journal trumps critical drumbeat complicates the feds next move. And i see what the journal is saying. Right. Its that, you know, when someone wants me to do something, i really do everything i can to resist because i dont want someone telling me what to do. What to do. Were not puppets but powell could always fall back on the fed funds, right, say this is not me, this is just getting where this is just getting where were supposed to be he could fall back on where european rates are, or he could fall back, if he sees ppi today or whatever he sees that looks like inflation is really low, he could say were missing our inflation target and fall back on that. Can he do it, or in the back of his mind is he saying, this god, darn it, i dont want what do you think . Do you think its complicated . I think theres a little bit of cognitive dissidence for Jerome Powell right now, because i think youre right i do think hes resistant to being seen as kind of caving in to what donald trump is saying. On the other hand, donald trump happens to be right here i mean, the fed is too tight you mentioned inflation, joe i dont think the problem is inflation. I think that the problem is deflation. I mean, you look at Commodity Prices theyve been falling very significantly. Thats one of the reasons that the farmers are suffering so much because prices are so low i think the fed has to cut rates not to stimulate the economy but to get level prices. And by the way, if you do that, i think you will see a nice boom in the economy so one of the things that always annoyed me was people said, back in september and december, when the fed raised rates, especially in december, a lot of people think that the fed did that in response to what trump had said, because remember trump was saying, you have to cut rates, so the fed then went out to prove its independence by raising rates. Well, you remember what happened in december. It was a catastrophe the stock market fell by 1,500 points and so on so, my only point is the fed should do the right thing. No, the president shouldnt dictate fed policy, but i do think that the president has the right to weigh in on these things and to express his opinion. Is he taking the right approach, do you think, if he were a psychologist who President Trump trump or powell no, yesterday President Trump could have said, you know what, i was really early on this, and the fed didnt listen. They did that in december. But you thats not trumps style. But then he could have said, you know what, now theyre talking about theyre listening to me theyre finally seeing the light. And i think that i started them on the right track and now thats how maybe i would but he doesnt he just is relentless. You may be exactly right. I mean, i do think the fed is going to cut at least once, maybe twice. Im certainly in favor of reversing the december rate increase, which was a disaster but look, trump youre not going to get this guy to close his mouth. You know youve talked to him many times. Right. He wants to weigh in on this, and its appropriate he took a lot of flack for mouthing out about what the fed is doing, and i dont look, hes the ceo of our economy. He has the right to weigh in on this, and the fed has the right to but do you think it makes the job more complicated for jay powell and Company Maybe maybe a little bit and so, you know, hes made his point. At this point i think he should sit back and let the fed make its choice but the president , i believe i dont know if he said this on your show yesterday hes been on record for a 100 basis point decline in Interest Rates. Thats a lot even i wouldnt be in favor of that id be in favor of one or two. How necessary are the cuts . How weak is the economy . Or is it just inflation youre concerned about . Im so glad you asked me this, because look, i read the wall street journal this morning, i read bloomberg, all these other and theyre all saying, oh, my gosh, the fed has to cut rates because the economys slowing down i want to be very clear on this thats not the reason the fed has to cut rates the fed has to cut rates because prices have been falling and once those prices stabilize, you just stop cutting rates. And so, there is this mythology out there in the Investment Community that, somehow, printing money is going to improve the economy. That doesnt work very well i mean, if that worked well, zimbabwe and venezuela would have the strongest economy so, ive always believed the feds central role should be to keep prices stable you guys mentioned, what is it, the last four months the fed has been below its inflation target of 2 . The alarm bells should be going off that theyre too tight once those, you know, once the inflation rate by the way, did you say were going to get the ppi numbers . Yeah, 8 30. Well, lets see what that shows us i mean, if thats below their target, its more indication that they have to cut rates. Is deflation on the cards globally again is that a genuine fear or no yeah, but deflation is all a function of Monetary Policy. I mean, all you have to do to reduce you know, to get rid of deflation is reflate. Its not i thought we were. I thought we were, too. But were not were not doing it enough. Look, the proof in the pudding is meeting, right . People say they are pumping money into the economy well, where is it . If they are, why do you see the price of soybeans and oil and all these other things falling President Trump talked yesterday about quantitative tightening. Yes. Just kind of letting the Balance Sheet wind down and doing some of these things i thought all economists were pretty much in agreement that that needed to happen, that were no longer in emergency measures, and if anything, we wanted to get that back in shape before we even raised rates. What do you think . Look, i think theres two sides to that equation you know, eventually, yes, we do want to reduce that Balance Sheet. On the other hand, it is true when youre, you know, taking money out of the economy by reducing the Balance Sheet, that actually contributes to a deflationary effect. So, i think the fed is i mean, i think there are two sides to that equation by the way, there are some economists, like my friend, david, who is now the head of the world bank, who actually thinks and i think there is something to this that actually when the fed reduces its Balance Sheet, that actually has the opposite effect that some people think it would in terms of so you can tell me that i was hoping you could say, steve moores been vindicated, because ive been saying for four or five months ill say that, but thats at this point in time i mean, theres a lot of indications that, i guess you forgot the cover of time that had greenspan, Larry Summers and bob rubin as the three guys that saved the economy right before the financial crisis, okay right. So, i mean, its hard to you dont know how long your victory lap lasts, and thats what im worried about and i want you to tell me i dont need to worry, because i want to be told that the next time a recession comes, we will be able to manage it recession i want to know that with rates this low, theres something in the tank that allows because i think that theres a law of diminishing returns and that these guys are going to be pushing on us heres where i disagree with you on this, joe no, no, im just depositing it i dont say the rationale people say, oh, the fed has to keep rates high so that they have ammunition to deal with the next recession, that they themselves are causing by keeping rates too high so, thats why i dont like that so theres not bubbles built up by easy money staying no, we have two problems with the economy right now. One is the fed is too tight, and the second is this trade war with china. Theres not a bubble, stephen . Theres not a debt bubble built up globally . Sure, rates is it because we cant raise rates because we cant handle it if you think theres a debt bubble out there, why do you think Interest Rates are so low . Come on. That doesnt make sense, right. So, i mean, the fact is, if there was this massive explosion of debt that was going to blow up in peoples pockets, people wouldnt be lending money to i know all the usual suspects you know the guys im talking about. You get one or two rate cuts, and if you get a trade deal with china this year, 2020 is going to be one of the great years for the economy. Do you think thats likely . Because i think were fundamentally sound on the economy, except, joe, youre right, for the debt situation. We had secretary of commerce ross today and his point was this is going to be a complicated 20,000 pages or longer trade deal thats needed. Do you think we actually get a trade deal this year or this is something that will play out over years this isnt going away any time soon. This is the issue for the next decade, right, this dispute between china and the u. S. What ive told the president is, look, get the best deal you can with china now, get this thing resolved for now then you go into 2020 with a really Strong Economy. I mean, i think do you do a deal just in order to have a Strong Economy just to win an election . Well, get something, you know, get some concessions from china now because you think hes going to do a soft deal no matter what i want to get President Trump reelected because i think its incredibly important for the American Economy the way you do that is you get what you can now and i think youd agree, if they get some agreement, the economy and investors will be very the market would and that means youre doing a once in a generation trade deal with the second biggest economy in the world to juice the economy for 12 months to win an election thats not sensible strategy if president xis watching this, hell be rubbing his hands. No, what i am saying is that if trump gets look, we all know trump is a very hardliner when it comes to china nobody believes that hes going to cave in to china, and im not suggesting that. Im just saying try to get some good, decent deal, and then you continue these negotiations in 2021 and in fact, trump can spend a second term really beating up on china, really going after some of these abuses so, first one wouldnt be a deal it would be a temporary agreement because the deem deals still to come this is complicated stuff theres so many things on the table, intellectual property, currency manipulations, opening their markets, tariffs its hard to get that all resolved in one deal. Im sure. So well see how this progresses i just dont want to go into the president ial election without some resolution to the china situation, as a trump fan, and i think three minutes ago, the president tweeted i was just going to say the same thing. The United States has very low inflation, a very beautiful thing. Does he see the ppi number . Thats a good question. Hes not supposed to put that i thought that a different way. I thought uhoh, hes watching again and heard Stephen Moore say that the fed he just tweeted that out . Maybe he is watching. He was watching yesterday. You have low inflation, low Interest Rates, youve got the tax cut, the deregulation, a probusiness president whats not to like about this picture . Because hes tweeting about that, too. All right, Stephen Moore, if you were on the fed, you might have said, i have some people, some of my people on the fed, right hes got two open seats. Hes got two open seats. By the way, he gets two people in there that think like i do and herman cain and he does, then i think you will have a potential change in the way the fed operates. All right, welcome, youre with us for the rest of the hour im glad to say it and im going to be monitoring realdonald a trump. Much to come with Stephen Moore. Also coming up, a new report on bookseller barnes noble days after agreeing to be acquired and well go live to arizona where names in tech are gathering to attack the use of Digital Privacy to policing inflammatory online content and more stay tuned were back in a couple minutes welcome back to squawk box. The conference is under way in arizona, bringing together some of the biggest names in business and tech jon fortt has some of the early highlights jon . Reporter hey, wilf last night, this conference kicked off and really controversy pretty much immediately. We had youtubes ceo and Amazon Web Services Ceo Andy Jassy, among others big themes here were privacy, regulation, and content standards. One particular controversy stood out, when it regards youtube last week, box journalist carlos maza said that creator Steven Crowder had been harassing him with homophobic slurs, but youtube judged that crowders videos did not violate its community standards. And wojcicki was asked, did she agree with that decision take a listen. I agree that that was the right decision, and let me explain to you why i agreed that was the right decision, okay so, when we get first of all, like when we look at harassment and we think about harassment, there are a number of things that we look at. First of all, we look at the context of was this video dedicated to harassment or was it a onehour political video that had, say a racial slur in it those are very different kinds of videos. Reporter wojcicki clearly under a lot of pressure, got lots of critical questions during that interview. Later on, aws Ceo Andy Jassy also addressed the privacy question and to what degree we need to trust companies who are putting sensors, cameras all over that are feeding data into the cloud. Listen to that the promise and the capabilities you provide customers is really amazing, but youre going to want to make sure, whoever you use, that you understand their rules on privacy and how they manage their data, and you have to believe theyre going to keep the data secure. And if you dont trust that company, then you shouldnt use them reporter well, its tough to know sometimes who to trust these days guys, back to you. All right, jon. Appreciate it. I was looking at Something Else, another tweet that i think is worth mentioning the president basically talking about, you know, tourists not coming here from europe and saying its because the euro has been devalued. Like a lot of currencies around the world. Because the fed is way too high and way too much quantitative tightening has made the dollar too strong, which is actually, we have it here. Because the euro and other currencies are devaluing against the dollar, putting the u. S. At a big disadvantage the fed Interest Rate way too high, added what is it added to ridiculous no, sic after the to. Added to the ridiculous quantitative tightening. They dont have a clue. Whats so interesting about that is who is the president s chief economist . Um larry kudlow. Do i know him can you give me a hint king dollar, right . You know, so, its interesting that larry kudlow and President Trump might have some, you know, differences of opinion about the dollar look, i like a strong and stable dollar one of the things people dont probably understand, because i didnt realize this until i started looking into it when tourists come to the United States and spend money here, did you know that reduces our trade deficit . Yes we actually had this conversation last week. Yeah, so when you get tourists coming so, trump is very obsessed with the trade deficit numbers, so he wants tourists to come here, spend their money here, you know if a Chinese Nationalist comes into the United States and spends money, that reduces the deficit not to mention hes a real estate guy who likes low Interest Rates to begin with. He likes low Interest Rates, no doubt about that. Stephen, we can park emerging markets to one side. You dont believe that the ecb is doing this on purpose purely to get a trade advantage they have a strugglingeconomy for all sorts of reasons they dont want to have negative Interest Rates deutsche banks being crippled by this. Youre right. You dont believe that is their primary no, the ecb needs to reflate just like the fed has to but my view is, look, the dollar is the world currency. And every other in other words, when we dont have our Monetary Policy right, it affects the whole world. And one of the reasons the ecb is too tight is because u. S. Fed is too tight you need i mean, youre right what do negative real Interest Rates mean . Thats a sure sign of deflation, isnt it i mean, so, how do you get rid of deflation you reflate. You get more euros into the economy. So, the point being then, for the content of the president s tweet, that, in fact, that this is a bigger byproduct of the fact that the u. S. Economys in a better position, and thats something to be celebrated. I think theres a lot of truth to that. I mean, ive always believed that, that our trade deficit always goes up when the American Economy is strong and our trade deficit always goes down when our economy goes into recession or is weak i used to jokingly tell the president because look, i agree with him on 90 . I think hes overly obsessed about the rate deficit number, and a good recession will get rid of the trade deficit. You heard the thing about big tech do you think we should be going after them i hate it i hate it. I love the fact that five or six of the greatest companies in the world, the most Profitable Companies are American Companies. We dont want them to be Chinese Companies the goose and the golden egg. I dont always agree i dont even have a facebook account im sure they hate you. Youd be shadow banned on twitter. Facebook, google, amazon, apple, microsoft, netflix are American Companies i love that we shouldnt be going after our own companies. My goodness. All were doing is benefiting our preaching to the choir here i know. Are you with me on that, joe . Of course whats your favorite Big Tech Company that started in europe in the last 30 years this is oh, thats right, there arent any there isnt one. Wilf has named it, s. A. P. Yeah, great. And one thing about this, joe, these companies that are the giants youre out no can. Weve got to go well return to this, stephen. Mi uwi hse moats p thou still to come, we have breaking Economic Data it is just minutes away. The latest Producer Price data will hit after a quick break well be watching the numbers and Market Reaction along with guest stteen mreho sphoo, and based on his tweets, the president , too well be right back. For your heart. Your joints. Or your digestion. So why wouldnt you take something for the most important part of you. Your brain. With an ingredient originally discovered in jellyfish, prevagen has been shown in Clinical Trials to improve shortterm memory. Prevagen. Healthier brain. Better life. Thats amazing welcome back to squawk box on cnbc live from the Nasdaq Market site in times square were just seconds away from the latest Producer Price data futures right now are strong seven days in a row, if we close like this. Rick santellis standing by. I wish he was here, but hes at the cme in chicago the numbers, please the may read on Producer Price index, up 0. 1 , as expected remove the allimportant food and energy, up 0. 2 , as expected if you look at trade, month over month, up 0. 4 , double whats expected final demand year over year, 1. 8 , a little light of expectations and year over year food and energy up 2. 3 , perfectly as expected all of these numbers pretty much in line, outside of the trade number and if we look at the revision side, there are none sequentially, a couple things stand out. On that final demand year over year at 1. 8 , thats 0. 4 lighter than our last look the yearoveryear data coming in a little bit light just on a comp, but generally as expected. You know, we dont have any robust inflation out there and Interest Rates are coming in a bit hotter, depending on which maturity usually the last couple of sessions of last month is the last time we were at these levels and when you look at whats happening with regard to foreign exchange, the dollar index is definitely idling at lower levels than expected maybe thats the general outlook that were not going to see a lot of Interest Rate hikes and that seems to be the key point. Its interesting, joe, every major publication, a lot of research this rally is just about the notion that the feds going to lower rates. I doubt if the National Federation of independent Business Optimism was totally affected by that and when the fed meeting comes and goes with no Interest Rate cut, i doubt if the markets are going to give anything back. Back to you. I noticed that nfib thing, too, rick. Theres so many i mean, its like theres two kinds of people in the world, people that think were on the cusp of a recession and people that think things are great. I dont know someones going to be wrong, i think. Well, thats life, though theres always people that know and people that dont know. Yeah, they dont know what they dont know. Yeah well know within a few months, but then well be worried about what happens after that. Right, because if youre going to worry, youre going to worry constantly people talk about rising uncertainty is the best were always uncertain nobody knows whats going to happen. Do you remember a period of certainty . You can have a certainty where you think you know whats coming you dont. Theres always something that surprises you. Rick, thank you. Stay with us lets get more reaction to the numbers with Steve Liesman our guest host for the hour is Stephen Moore from the Heritage Foundation steve, what do you think this is good. Inflation under control. Theres been a bit of a separation from the Producer Prices and, say, consumer prices, or the pce core. Producer prices held up relatively well. Theres a weird number i want to put an asterisk around we have to look at this later. Trade services its like the profit that is made by middlemen or middlepeople, i guess, whatever you want to call it is that number down its down half a point. One thing we do is we look at the number exfood, exenergy, and extrade services because of the weirdness and the volatility of this number i would guess they get squeezed first dealing with tariffs coming in or higher prices in different places the trouble is its a new entry into the ppi, when they redid the ppi a couple years ago. Nobody knows what to do with it, so we kind of get rid of it to look at outside we get rid of all that and prices are up a little bit more. You have 0. 4 , rather than the 0. 2 reported as the core. So im not saying theres inflation. Im just saying lets just footnote that and come back and look at it a little later to see what happens you have a pretty firm on the Producer Prices. And i went back and i look at cpi over the long haul, say back to 2012. Its between 1. 5 and 2 on the pce core, the number the fed looks at and comes a question as to how much tweaking the fed ought to do 20 trillion of goods and services are produced, right and in that time frame for the last six years, weve had price rises between 1. 5 and 2 . How far off of its mission is the fed really now, i will tell you, the Federal Reserve has two schools of thought on this one is the kind of, ill call it the close enough for rock n roll school, and the other is were persistently below, we ought to do something about it and i get both sides of it and to me, i think theres a middle ground of just sort of watching it and watch persistent deflation to the down side but not get too concerned about a halfpoint miss, even if its consistent all right stephen, your thoughts so, yeah, i generally agree with that. Look, the fed is not far off from where they should be. I think theyre a little too tight, but you know, i mean, and thats why i would favor a quarter percentage point, you know, rate reduction, and lets see what happens you know, lets see if you know wheres the inflation out there . I mean, you dont see stephen, theres a lot of research on this problem of what happens when the fed moves and i guess you call it the signal value. Yep. How much concern do you think there would be if the fed moved any amount, a quarter point, even an eighth of a point . People say, oh, my god, what does the fed know that i dont know and all of a sudden, it signals greater weakness than the fed ever, ever intended to signal. Except right now, i think that it would be really bad if they i mean, its already kind of, you know, built into the market that this rate cut is going to happen. Right, right. So, i think not cutting the rates at this point would be detrimental. The other thing i wanted to point out you know, theres a big debate going on about these tariffs and whos bearing the burden of the tariffs, especially with respect to china. Is the burden being borne by American Consumers in higher prices, or are the chinese eating the costs and its interesting if you look over the last year, import prices have not been rising in fact, i think they fell slightly stephen, dont go there. What . Dont go there. Ive been looking into this for weeks now. Some of the costs hold it just what about the undervalue just wait okay. Because whats wrong about that argument okay. Import prices as recorded by the government do not include are pretariff. That is true. That is true. So, here is the story ive looked at 52 series of import prices from china theyre mostly stable, up, down a little bit so, heres the math, okay . Theyre down on average 1 if tariffs went up by 10 and the pretariff price is only down 1 , the only place that could have been paid is on the u. S. Side okay. Tariffs would have to fall im sorry, import prices would have to fall by 10 . So, by the governments own data, the president doesnt necessarily have this right. Except people do shift out of buying stuff from china and they buy stuff what do you want to talk about, rick . I know youre still there. Its tough to get a word in. What do you want to talk about you know, im just always so shocked, whether its steve or the other steve. The markets would be upset if we dont get a quarterpoint, its built in. I didnt say that. It is not built in. It is not built in the next meeting does not have anything built in, and the meetings beyond that if anybody trades based on whats built in there, that would be like trading a stock price that you say today has to be there three months from now. Well, its not going to be the market moves if you look at four weeks ago, it was built in, and then four months before that, what was built into those deferred contracts, its like a yoyo detrimental. Detrimental. Rick were a couple percent away from alltime highs. Why would a quarterpoint make any difference hold onto the insurance rick, i want to make sure i understand you youre saying lets say the fed Jerome Powell made an announcement this morning, were not cutting Interest Rates you dont think that would have a negative effect on the market . First of all, that would be a dumb thing for the fed to do why would they say that . Of course they wouldnt because theres people that dont understand they think when the fed says Something Like that, they know the future they dont know the future nobody knows the future. We all spend too much time good thing freud wasnt alive or the fed wasnt alive when freud was there. He would have created a whole chapter that had nothing to do with our mothers it would have been all about the fed rick, whats your estimate hold on, steve. Stephen moore, why does the market move matter you said earlier that the december rate the december rate hike was a disaster because the market collapsed. Yeah, and the real economy. Is there too much focus on the market versus on the actual economy . I misspoke. Im not just looking at the market im looking at the real economy, too. Lets face it but it hasnt collapsed like the economy, like the market did no, the markets been strong, but it has look, the gdp number were looking at now for Second Quarter is 2 or slightly lower, so growth has fallen a bit from the 3. 25 that we had, so im concerned about that. And i think the fed bears some of the responsibility for that. You guys rick, how can you i just dont see how you can say that both steves are wrong when theyre complete opposites. Im so confused. Were not complete opposites. Theyre so different first of all, i didnt mean to say theyre wrong i disagree with their opinions nobodys wrong but theyre the yin and yang nobody knows the future. Thats means youre in like you can have more than two opinions. Can there be . There can be. What maybe separates Stephen Moore and i is a quarter point everything. Were a quarterpoint difference a quarterpoint difference here. In life im not just talking we talk a lot about a lot of things we both agree hes with the Heritage Foundation, not media matters. The Heritage Foundation believes in free trade and no tariffs. I dont like tariffs. Dont they . I dont like tariffs. Doesnt like tariffs. He doesnt like tariffs in new york, nobody complains about that what . I said, you know, alls i hear about is tariffs or taxes i get it, they are taxes and everybody goes nuts over it does be in go nuts when california raises taxes, when new york raises detriment detrimental open your eyes all taxes are bad low taxes, dont like social change ticker boy, when we get this show going republicans didnt like any taxes until they were tariffs. Steve, we were talking earlier about quantitative tightening, how that has an impact on less money being around, that could impact the economy. Would you be okay with the fed ending quantitative tightening, doing it that way, rather than lowering rates you know what the most important thing to me is we dont talk about this enough. Actually, the fed funds rate is not the issue here you know what it is, steve, to me its the Interest Rate that the fed is paying on Bank Reserves and you lower that rate, youll get more of a money a lot of banks are sitting on money because theyre just taking the Interest Rate. And what i would do is just gradually lower that rate a bit over time where does it stand now what is that rate now the ioer i believe im going to get this wrong is just a little bit above the fed funds rate its designed to allow the fed in a world of excess reserves to control the funds rate so it keeps that money locked up and not sloshing around in the fed funds rate but talking about capex being down, if that if banks were incentivized a little bit more i need to search this banks are not lending money at the rate they normally would because they can hold onto the money and just get a low Interest Rate loan growth remains positive. Were late in the cycle and there are pockets of quite extreme amounts of loan growth because of leverage loans and direct lending but i feel like bankers would say i want to see more. I feel like bankers would say were loaning out to anybody who wants to come in and ask for it, that companies arent asking for so much because they have so much. I think banks would say theyre doing a riskreward assessment and theyre lending out where its warranted. Thats true, they do a riskreward assessment, but they do take into account, if i dont lend them money, what do i get for not lending it and that figures into their equation. Just as a flip side, i know this is not an appleandoranges comparison at all, but its not like the tltros in europe where you have a negative rate has led to a big boost in lending. Thats true, thank goodness. But im saying you dont artificially boost the economy by forcing banks to lend. No, no, no look, we didnt until when did we put in place the interest on the reserves in the first place . That came in, what early 07 or 08. Bernanke 09, i think. And the congress didnt even have interest on reserves and thats a policy that came i thought it came after i think the ioer below the funds rate its about ten below. Five below, rick, plus or minus. Right in that neighborhood. Interest rate on excess reserves to me is a horrible idea that its going to get harder and harder to extricate themselves from because its becoming instrumental to control, you know, the way the overnight funds trade. I think dr. Judy shelton is really good at this topic. And steve moore, i completely agree with you here. Something needs to be done it doesnt make any sense, all that money sitting there and i know its an ongoing debate, but in the end, you know, once again, these crisisera leftovers need to be taken out of the fridge and put in the garbage disposal. But ill just end this by saying, you look at the economy, these fundamentals of the economy, i mean, youre going to tell your grandchildren there was a time you could get a mortgage for less than 4 . I mean, this is a beautiful a pretty beautiful situation weve gotten in not only that, steve, but all of the haranguing around the table and all of the anger, okay i think if we get through this month, its the longest expansion in postwar history june 2009 is when it was. June 2009. Yep. Wouldnt it be awful to be complaining and awfulizing and handringing through the best of times . Not the best, but take my job away now . Wouldnt that be a waste, not to enjoy it . I just want to make sure this goes on for another five years, thats all. It can get better and we can talk and tweak about the end of it, but almost the longest expansion in u. S. History. What did judge Judy Scheindlin say about that . Dr. Judy shelton oh, judy shelton, not judge judy, okay did she weigh in on ill tell you, if the president s watching, ill tell you what, theres a pick i love judy shelton from top to bottom didnt she support the Gold Standard judge judy for the Supreme Court and dr. Judy for okay well, shes for making our money worth more than the price of a piece of paper. I kind of agree with that. All right she wants to support the dollar isnt that what the president doesnt want all right, liesman, thank you. Santelli, thank you. Stephen moores going to be with us for the rest of the hour. Now you go. All right, coming up, despite mishap after pr mishap, the biggest tech stocks can still be reliable moneymakers check out the sector since last tuesday, up nearly 9 . When we come back, noted tech investor ann winblad will talk to us about what to do next and whether the threat of a government crackdown is real or not real stay tuned youre watching squawk box on cnbc 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. Thats why were working on ways to improve it. So plants. Can be a little more. Like plants. Theres one thing you can be sure of. Theyre changing by the nanosecond. Thats why cognizant created a unique engineering approach to design and build new digital products. Learn how cognizant softvision designs experiences and engineers outcomes. Cool. Later today, house lawmakers will begin their hearings into the dominance of big tech. The sectors already under scrutiny from federal regulators lets find out how this could play out for tech investors. Joining us now is ann winblad, Hummer Winblad ventures cofounder and managing partner. Do you have a high degree of confidence, ann, that the goose will continue to be able to lay these what i see are golden eggs for america and, really, the world, or could we really mess this up bureaucracywise . Well, theres always a way to mess things up buicksywireaucra, but its going to take years before anything is cracked down upon in the tech industry, and were going to see the Competitive Landscape change many times during those years. Take advertising, for example. Whos going to dominate . Amazons growing in that sector. New entrants are entering. How will that affect the revenue of Companies Like google and facebook i guess someone finally connected the dots, that if theres only a few companies controlling who does the advertising that the companies doing the advertising would have to pay more, and therefore, consumers are somehow eventually harmed by advertised, you know, companies having to pay too much for advertising. What is the real issue is it privacy is it horrific content that makes its way onto these platforms . Or is it that these companies have monopoly power and are too big . I dont understand what we really need to fix well, i dont think its the cost of advertising dollars. Certainly, it is the massive shift weve had in media the Digital Media platform is dramatically different than old media. I think, first of all, old media is unhappy and getting unhappier. Were not going to dial back that history and history. It is challenging to manage these digital platforms as churchill says it takes half a second for lies to go around the world and takes a long time for truth s to put on its pants. Facebook has thousands of monitors trying to manage the contents on these sites. Other platforms are looking at different ways to manage the quality and even what is the content. I think eventuallyinto a new world what is media and how is media managed and not just who owns the media it is not as monolith, i guess, is it would you say whos the most vulnerable and who should not be under the cross hairs and who should well, we are going to continue to dominate in tech globally unless we do something really stupid here. Tech is the backbone of the economy, the economy we have been talking about for the last hour of how strong it is if you look at the most valuable companies that we have they are primarily Tech Companies. I dont want to destroy that on the other hand we really do have very competitive environment out here i dont think if you ask google, theyll say they dominate anything you can see how their advertising dollars have been under pressure theyre competing ing in the cld amaz amazon is competing with walmart everyday theyre competing for new advertisement dollar on google and facebook so the Competitive Dynamics are not one that would indicate monopolies, it does indicate we have strong growth in the tech area that every enterprise in the world modernizing their software staff and buying these products for these Companies Digital advertisers are going through these companies to reach the consumers that they sell goods to thats not going to change and does not indicate a monopoly when you hear Elizabeth Warren talking about some of the things they like to do, what would you tell them or what would you say to them if you let yourself go . Does this look insane to you of some of the things we are considering . It looks like we have a president ial campaign in process. Polarizing rhetoric is the statement of the day polarizing rhetoric. I think the Elizabeth Warren billboard at our train station finally went down yesterday. I think well see a lot of these candidates get on the tech bandwagon. Our young voters are digital nativ nativ natives, everybody lives in a tech world now i think canada thinks that the way you bring voters in is to put out these polarizing statements which claims that tech is bad. I dont know how young voters view this. It would be interesting to survey them. I work for a conservative organization washington, i am pretty conservative myself i talk to conservatives everyday you talk about the risk of the hightech sector, the antitrust, potential violations are a problem. Conservatives are not happy with itech and theyre not happy with facebook and google and some of these companies. They feel they are discriminated against and theyre not happy with the way these companies sometimes conservative, the question i have for you is how attentive do you think these Tech Companies are to a potential revolt you are there in Silicon Valley where it is a liberal place. It is not america. I wonder do you think these companies are doing anything to reach out to conservatives and more pro in a way that would keep their customers i dont think these companies are playing political games with their content. Th i think they are very challenged on 2 billion users putting on content everyday we never had platforms like this where contents are being created by billions of users every single day it is very, very challenging for any of these companies to manage sensor and control everything ranging from a suicide being committed online to other acts that companies are trying to build a basically a structure for management i think theyre actually asking the u. S. Government for help on this i really dont think political gains are being played with content. Ann, thank you. I would testify because i still think california does represent america. Ann, thank you. Jim cramer joins us right now. Jim, you were ahead of what we were watching on beyond meat today. You have been telling people before to be careful of this jp morgan had a note and jumping on it. You have been telling people for a while including yesterday. 500 . It is a chemical based product, there is a shortage. Impossible got a shortage. Theyre strong demand. 10 million upside, they gained 3 billion in market cap this one gotten silly. I dont want people to get hurt. I think when you get hurt and when i go anywhere, this is all people talk about. I am afraid for people take your profit already you won. What do you need do . You won. Congratulations. You won with a bad taste of burger congratulations. Joe, in the new york times, incredible as said on cnbc, i could not win if must to kill. Andrew is not here to stop it that was what it was. Thank you, jim when when you hear those words that you get diagnosed with cancer. osamah successfully treating it still remains one of the most enormous challenges facing us today. We realized that, if we developed the technology that could take 2dimensional patient imaging and convert it into 3dimensional holographic renderings, we could enable surgeons to dissect around the cancer so we can precisely remove it. When we first started, we felt like this might just not be possible because Computing Power just wasnt there, but verizon 5g ultra wideband will give us the ability to do this. We wont rest until we see this technology being able to change lives. Or trips to mars. 4. 95. Delivery drones or the latest phones. 4. 95. No matter what you trade, at fidelity its just 4. 95 per online u. S. Equity trade. Steven moore, thank you for being here economy strong. Wilfred frost thank you. I will be watching you on the opening bell you are wonderful. Make sure you join us tomorrow, squawk on the street is next good morning, welcome to squawk on the street. I am scott walker with jim cramer at the new york stock exchange, Carl Quintanilla is at the conference bringing us great news and david faber is off. The s p 500 would open higher by 19 points. Dow jones and industrial average good for about 160 at this