Transcripts For CNBC Squawk On The Street 20240714

Vietnam coverage lets look at futures now as we get set up 30 minutes from now for the opening trading for the week were looking for a higher open at this point after a strong week last week road map, it does start with geopolitical risks for stocks. Iran and trade remain, of course, key focus. Stocks set to open higher as you saw. The dow now on pace for its best june in 80 years. Plus, President Trumps rate rant the president calling out the fed saying it is acting like a stubborn child. In deal moves, eldorado i cs entertainment, 8. 5 billion equity val ue deal, well dig into it. We enter the final week of june, the upcoming g20 meeting, tengs between the u. S. And iran and President Trump once again criticizing the fed. This morning, a little while ago, he tweeted, despite a Federal Reserve that doesnt know what it is doing, raised rates far too fast, and did large scale tightening, 50 billion a month, were on course to have one of the best months of june in u. S. History. Think of what it could have been if the fed had gotten it right, thousands of points higher on the dow. Gdp and the floors are even fives, well now they stick like a stubborn child when we need rates cut and easing to make up for what other countries are doing against us blew it. Theyre fun to read. Got to give him that those tweets are fun to read. I will say this at least right now the market appears to agree with him. Youre talking about the june gains. What we are looking at, best june in half a century for the stock market another week, all three major averages gained more than 2. 2 why . On hopes of fed stimulus and rate cuts. Not any fundamental reason, right . Thats largely the reason, i dont think the market agrees we would be in the 4s or 5s of gdp. By the way, carrying the applause for the general down here at the new york stock exchange, general jeanne levitt, an absolute hero walking the floor this morning there is a great article on Business Insider how the air forces first woman Fighter Pilot helped inspire captain marvel, she was a central character in this movie, based on her real life all sorts of firsts. And a real hero. There she is with the actress. Yeah. Happy to have her here as a guest of honor at the exchange what do we make of sort of these tweets and where we are . The idea that we would get to 4 to 5 gdp growth. Anybody can create their own counterfactual it is in tune with what the markets are thinking the president will keep pressing this point, just because of course you want to suggest there is one identifiable individual who is responsible for the economy not being Even Stronger than it is i think thats thats where we are and will be the idea that trying to propagate this idea that 50 billion a month of runoff, which by the way is the maximum number per month is somehow this very real world tangible reason that the economy is not stronger is questionable. Look, yes, the fed has hiked seven times since donald trump was president. What else has happened the economy got off of its growth slump and took a very strong year. Th thanks in part to a tax cut. He gets some credit for it we got the Unemployment Rate to levels we havent seen in decades. It would have been crazy for the fed not to be cut hiking in that kind of environment i do think though the presiden brings up a question which is what now and jay powell has firmly signaled that the next move is likely going to be a cut, could come as soon as july the market is pricing in 50 basis points, like a double cut. And three hikes. Three cuts for this year is that too aggressive i dont know powell gave the market a lot of fuel for this rally after it had already rallied. The market is going to the market is going to push to the extent that it can to try and get the fed to be more aggressive, maybe than it is comfortable with, at this stage, when you get to an inflexion point. The fed delivers once it starts easing doesnt really the cycles tend to begin with 50 basis point cuts, which is why the market is hasnt been that many cycles. We have to caution, there havent been tremendously many cycles hard to generalize. How do we geopolitical tensions, of course, are a key this weekend a lot of people im sure read a lot of the reporting on iran and the u. S. , the president s decision to halt an attack, ten minutes prior to it occurring. How typically do those get viewed in terms of the threat to the market or my sense is it is rare when those kinds of concerns really seem to impact for a long period of time the market action. Certainly oil we have seen some movement. The market has to really be in search of an excuse to sell off, to actually react to something that is not yet a conflict, that is not driving oil prices up to a worrisome level, coming off relative lows in terms of crude oil. Were really not talking about supply constraints in a global way in terms of oil. I dont think the market will over anticipate what is happening with iran and say, this is a reason for us to cut back the other thing, i think to keep in mind, yes, another new all time high. It is the fourth all time high, fourth push to an all time high with the s p 500 in the year and a half we havent held any of the other ones for more than a few weeks before slipping back so i think it remains to be seen, stretching the upside of a long trading range now not like the market has been exuberant and off to the races conservative in how it has gotten. How about the bond market stocks hit record highs, record lows joining us now to figure out what to do next here at post nine, Jonathan Gallup and david lefkovitz. Good morning jonathan, i talked to you last week i know you as pretty bullish over the last, i dont know, year or so on the s p. Youre sending more cautious what is your feeling now i am for a whole bunch of reasons. If for last decade ultra easy rates did not ultimately get europe out of the problems, it hasnt encouraged spending and the gdp that we had last year was a good year, but all basically taxes or the incremental. Were just simply rolling off of that as the big story. So i just think there is belief that the fed will magically bail us out is wrong. And the Economic Data broadly speaking is weakening. Were not going it recession it is weakening and pretty substantial. The ism, Global Industrial data, Inflation Expectations are all pointing to a pretty, you know, pretty severe deceleration in the near term. Not recession. But something which is much slower. Meaning what. Meaning what for the s p, what for the viewpoint overall in terms of what we have remaining for the next half of the year. It gets to the point that mike was making. Our last all time high, at the end of april, you can say, the market is ripping now. Up 1 to 2 in two months. I think thats what were going to see our call now is two, maybe 3 up between now and the end of the year until we absorb this deceleration and i think the market is going to continue to move further but really hard when the data is coming in weak as it is for the market to rip ahead. David, how does the picture look to you from here for the market, for the rest of the year, with so much now baked in in terms of fed easing our view is not too different than jonathans. I think there is a fair amount of good news priced in were back at all time highs as we were talking about. Also more importantly, were near the high end of the valuation range as well. So i think from here you have to see earnings come through and drive the market higher and we think it will. But it is going to be a moderate Earnings Growth picture and as we were just talking about, the Global Economy is still decelerating a bit and until it starts to inflect higher, we have to wait for that to see the real upside. The other variable is on the trade front. If there is some sort of resolution between u. S. And china, that could be a significant positive catalyst, not what were expecting at this point, though. David, you mentioned trade and earnings it seems as if analysts are procrastinating in really radically revising earnings expectations to see what happens on trade at least for a lot of sectors. You had the 2019 Consensus Forecast for the s p 500 basically go flat. Which is still anticipating a bit of a bounce in the second half are there risks to that idea were going to just actually have a little bit of a renaissance in the back half i think the biggest risk would be if the u. S. Moved to tariff the full basket of chinese imports. Most of the tariffs that have been announced so far are largely reflected in the estimates. We have seen that, we have seen it impact industrials and some of the semiconductor companies, especially, but if we do tariff the full basket of chinese imports, i think you could see 3 to 5 downside in terms of earnings estimates and thats in the baked in at this point. This is going to be a key week we have the g20 we have been waiting for coming at the end of the week. Jay powell also speaks tomorrow. And so do another few other fed members including jim bullard, the one to center. In the near term, how would you advise investors to position around all of these event risks . Like i said, for a guy bullish now, for five years, i wouldnt be buying into this in the near term mostly because it is not about what happened were not going to get this magical all clear sign on china. This is more likely to be a they dont go through on the next 300 billion. We have seen that story for a year now and then we, you know, we back off a little bit, we go forward a little bit, so i think the more likely path is that this is going to be a slog on trade, rather than a we have been talking about quick resolutions on this for over a year. And the president has done a really good job of putting pressure on and then not letting the market get too upset and fighting the battle more later i think the most important thing is a week from now, next monday, the ism, the it has been declining now since last august. Lets see what that looks like my guess is it will be to the weak side. And then you have the employment report, we had a weak employment report and if the market sees that we have a second in a row, we have about three or four weak employment reports in the last couple of years, but every single time you bounce back and got something stronger afterward, it was a head fake. If this proves to be more than a head fake, the market will take it a bit more seriously. Jonathan and david, thank you very much. When we return, caesars is one of this mornings big movers after it agreed to be bought by Eldorado Resorts well take a closer look at the multibillion dollar deal of the morning. Also ahead, home depot ceo craig menear, the impacts of tariffs on his Company Production of all of the Home Products is being made take another look at futures here as we set up for another positive open. Coming off a week where the s p had a record high in all three of the major averages gained more than 2 dow futures up about 30 points were like 70 points away from a record on the dow. More squawk on the street live from post nine when we return. See thats funny, i thought you traded options. Im not really a wall street guy. Whats the hesitation . Eh, it just feels too complicated, you know . Well sure, at first, but jj can help you with that. Jj, will you break it down for this gentleman . Hey, ian. You know, at Td Ameritrade, we can walk you through your options trades step by step until youre comfortable. I could be up for that. Thats taking options trading from wall st. To main st. Hey guys, wanna play some pool . Eh, im not really a pool guy. Whats the hesitation . Its just complicated. Stepbystep options trading support from Td Ameritrade rather than worry about how to pay for longterm care. Brighthouse smartcare℠ is a hybrid Life Insurance and longterm care product. It protects your family while providing longterm care coverage, should you need it. So you can explore all the Amazing Things ahead. Talk to your advisor about brighthouse smartcare. Brighthouse financial. Build for whats ahead℠ brighthouse financial. 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. Large deal in gaming. Perhaps that not big a surprise. Eldorado signed the deal to acquire caesars. Far smaller, the deal is cash and stock. And at end of it, caesars holders will still own 49 of the combination. Lets give you the actual details on it at this point. 12. 75 a share, thats where it begins it is down that will impact the overal vl value of the deal. It is going to be about 77 million shares of eldorado and about 7. 2 billion in cash total. Just to give you a sense there calling it a far larger deal because theyre throwing in all the debt that caesars has. On an equity basis, it is where we told you, around 8. 5 billion or so. 500 million in expected synergies. They do see it being immediately accretive to Free Cash Flow. As i said, as well, 51. 49 because they did have to come up with a lot of cash to try at least to make sure their Shareholder Base ended up as the majority holders here. Important part of this transaction as well, theyll offload three properties from caesars into Real Estate Investment trust it will acquire three harris properties, the old name for caesars, for 1. 8 billion. That between will be positive for eldorado in terms of helping to finance the deal. But theyre going to be paying 154 million in annual rent for the three sale leaseback really of those properties. So win here for carl icahn the stock started clamoring for potential sale owns what 120 million shares, 9. 21, average cost, best we can tell from his various filings. And so pretty big win for him. He does come out in a statement and say some very nice things about how this is what boards are supposed to be doing, in this day and age, and how so few do them. Im paraphrasing in terms of what hes talking about. But overall people pleased with the price, i think, somewhat surprised how high it was. You are going to see a fairly large arm spread here. A lot of state approvals eldorado stock is down you have that vicci deal as well im not sure it was fully expected. Few steps in the process obviously. I was wondering what the read through is in terms of the valuation at the deal price in terms of the enterprise value to cash is there any way to say, okay, this is how it compares to the other casino names or are they just so different in terms of their mix. It is different mix you know so many of them are macaubased. This will be the largest Domestic Company but im not sure what is saying these days given how important it is for the likes of wynn and las vegas. I did realize how big caesars was in terms of its geographic footprint. 50 casinos, 13 states, 5 countries. Not just a play on vegas i was wondering what happened to tilman fertitta, last time we had him on closing bell, he said my early reporting on this was about tilman and his desire to try to figure out a way to get them to take his paper essentially. Would have been in the sense similar even more of a im not sure he was able to get the full financing together the way you would have needed to here in order to get a transaction of this size done so they were there for a bit they tried but they have not been lately. It is all eldorado from my understanding in terms of where they are, where they were. And a bit of back and forth, but, again, a positive outcome it would seem for seicaesars. This was a huge lbo at harris. Gary ludman, he did that deal, 90 bucks and promptly went bankrupt pretty close to the cycle. Took a long time for them to work out of their position including apollo, which helped engineer that deal it has been a winner on deal speculation. And even bigger one this morning. When we return, art cashin is here on what to expect from the trading session as we count you down to the opening bell taking another look at futures, going strong here this monday morning. Building on three weeks of gains, dow futures up 32 s p up about 1 point more squawk on the street live from post nine straight ahead. osamah cancer is. The ugliest disease mankind has ever faced. henry i thought it was unfair. 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. Welcome back lets bring in art cashin, director of floor operations with ubs period of consolidation coming for us, art . The chart would tell you, as mike pointed out earlier, the s p has gone to new highs, time and time again each of the indices are at either record high or multimonth high there were only fractional changes in asian trading seems the same thing is going on i think you might want to consolidate a little bit here. See if things clean up a little bit in the middle east, well be watching oil to see if that looks like it is tampering down also you have a lot of surprises. The president and president xi will be meeting theoretically at the end of the week. But as early as tomorrow the rumors are that the negotiators will get together and they might be working towards something but this is going to be a big leap to get there. Both sides need a deal and the president needs to get one to get started on his election. But they had a deal. They had a deal, 95 in hand and it blew up and that tells me it is going to be tougher to get back to that level. So i look for both sides to say somewhat optimistic things, look for the market to react to that. But i dont know that a deal will really be forth coming. You have bond yields slipping back again this morning, treasury yields, so we havent had that moment where the bond market relaxes and gives a bit of a more of a green light for some of the riskier cyclical stocks just yet. Yeah, no, i think tomorrows going to be very important you get powell, you get bullard, the only dissenter and fed speakers tomorrow and that could give us some guidance. Were waiting on the one side to see if anything new pops up in the middle east. And on the other side to see im leaning in the area that sara was speaking, that a july cut could probably be a 50 basis point cut. And we go from there. What is the bond market telling you with the ten year yield at 2 and negative rates going even further negative in places in europe is that a recessionary indicator despite the stock market at a record high. It is a contractry i rioncon indicator. One thing i look at carefully, sara, is the freight movement. Freight movement slowed down a great deal, shipments into u. S. Ports has slowed down. So youre not going to see it in things like payroll numbers and things of that type. First place you see it is in freight shipments and where theyre going. Any shathoughts on gold, higs level we have seen in many quite a few years now . It is breaking out of a support foundation looks like it wants to go further. I think it is interesting that with so much tension and turmoil around the globe, bitcoin is moving like crazy. Gold is going up and oil for Different Reasons is also moving up so you can see people looking to different kinds of safe havens art, thank you. My pleasure. Art cashin. Opening bell after this. Driverless cars. All ground personnel. 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. Rather than worry about how to pay for longterm care. Brighthouse smartcare℠ is a hybrid Life Insurance and longterm care product. It protects your family while providing longterm care coverage, should you need it. So you can explore all the Amazing Things ahead. Talk to your advisor about brighthouse smartcare. Brighthouse financial. Build for whats ahead℠ youre watching squawk on the street. Were live from the Financial Capital of the world we are still the opening bell will ring about a little over a minute from now. Sara, you know, the u. S. Dollar has gotten a little weaker against the euro and against the british pound. Very weak weak last week yeah. Thats three weeks. Yes, were looking at march levels now on the euro in terms of the weakness of the dollar and the strength of the euro thats a good thing for corporate america. Will make earnings better. It is a reflection of how much change last week in terms of fed expectations, fed cuts, lower dollar that is the correlation there. It is the other way for the last few months as other economies like europe and japan and china have all done worse than ours. And their central bankers have been out front Something Else that the president has tweeted about in the past, the unfair advantage in his words yet, the fight back, the strong dollar, got a dow within an ear shot of a closing high and intraday high. Level to watch today, 26,951, that would be a dow intraday record high. Here is the opening bell. Here at the big board, home depot celebrating the 40th anniversary. First store opening, well speak to the companys ceo next hour nasdaq, target hospitality, Hospitality Services very enthusiastic. Giving us a cheer. The Founding Fathers here yes look at that. Theyre all here did they start their cheer before i dont know i dont know who did their cheer first . Depot has been around for 40 years. A little longer yeah give me a squiggly that was my favorite part of walmarts well have the ceo in the next hour, craig menear. Speaking of the consumer and record high stocks, and what got us here, you know, some of the bears will say this recent leg up into record territory has been very defensive. The utilities have taken us there. Theyre trading near record highs. The reits, the bond proxies where they typically signal economic weakness, and youve seen a lot of the more cyclical groups like semiconductors, often a lead on the economy, transports, and parts of the Consumer Discretionary world, just not getting there in terms of the exuberant price action to record highs and what does that mean . Does it mean they play catchup or that it is a worry signal it means that obvious lit market got the parts of the market that price most sensitively to low yields and low Corporate Bond yields, the Corporate Bond market is strng through a strong through all this, it is like 2016, really low yields, defensively. Also, secular Growth Stocks have also been there participating. Big tech seems to perform almost whatever the macro and ipos. You have a lot of distance here you have untested companies coming public. Stocks going gold hitting multiyear highs. Bond yields very low and yet the stock index can benefit from it. Goldman has work on this valuation spread between the most expensive one fifth of the stock market and the cheapest and most expensive one fifth it is a relatively wide gulf it does tell you the market is picking its spot, being selective. To your point, doesnt mean if the numbers come okay or the fed cuts, because the fed cut pl playbook is you buy cyclical stocks and banks and take the baton from there thats the question. The bond market is getting even beyond pricing in three quarter point rate cuts it seems trying to press its bets on that front. Well see if the fed goes along. A lot of movers to talk about. One that stood out was kalyn upgrade of unitedppears to be a. They like the proposed raytheon merge and they have seen the selloff since the announcement. It is now one of the biggest winners in the s p on the dow on that call. Not well received at the outset i think it is fair to say at least based on what im hearing we have yet to hear the end of it in terms of some shareholders opposed to the transaction who feel it is going to increase the company, that it is not the high growth asset they hoped the Company Might move into once it completes the spins of otis and carrier. United technologies becoming quite smaller. With the raytheon deal, well maintain much of its current size with that well see. It has been very rare that shareholder opposition has been able to actually mount enough of an opposition to a deal to defeat a shareholder vote. But you heard ackman day one my guess is you may hear more from dan lobe at third point on this and perhaps some long onlies as well there may be a battle to come on utx and this deal with raytheon. Doesnt mean they wont get it through. I misspoke, 5 selloff versus the s p not 15 still according to kalyn, analysts suggesting investors dont understand it or dont appreciate it. I was going to mention fedex, down 1. 3 this morning with the s p up just a touch. And more kind of friction about missed deliveries or intentionally blocked deliveries of chinese goods, maybe added to this unreliable entities list in china. There is a story that they are cutting prices to try and promote greater volumes in ecommerce it is sort of a reminder that u. P. S. And fedex have been caught in this choke point of the whole system in terms of getting goods from ecommerce from eretailers to homes and i has been really counting the stocks fedex down 30 something percent on one year basis but struggling to bottom. Looks like it is trying to think of the catalyst it has been from bad to worse news you got this chinese investigation into the company, whether thats part of the trade war, they sayblocks dealed an operational error prevented a huawei package from being delivered to the United States and then you also have the problems in the business, and this air shipping contract that is going to expire with amazon later this month the question is fedex still a tell on the broader transports and economy as it traditionally has been as it has been such an underperformer. U. P. S. Outperformed more recently and fedex, again, one of those very cyclical global multinationals that looks cheap based on its history and we do have earnings coming this week well see if they can tilt the story one way or the other. Wanted to hit back in risk, celgene and bristolmyers, shares of celgene down 3 , 4 at this point thats because it is going to take longer for bristolmyers to complete this deal the ftc is basically telling it there is a drug that celgene has, it is the leader in treating sotreat ing psoriatic arthritis. You have to find a sale find a buyer for that drug, prior to us actually letting you close this deal. Good news . The ftc seems to say theyre going to be okay with the deal bad news is it is going to add another three or four months before they can close it they had been targeting fall now looking more towards the end of the year or perhaps even early next year for the close of this transaction now, bristolmyers does have in its pipeline a new treatment potentially in the similar way or for psoriasis that could be a major drug of its own. It is in phase three right now the phase two studies in september of 18 showed significant skin clearance in patients with moderate to Severe Plaque Psoriasis they have an ongoing phase three trial for this drug. But they are going to have to divest a drug that brings in about 1. 8 billion in sales, 1. 6 billion, excuse me, right now, for celgene, and find a buyer for that prior to closing the transaction. And why celgene is down, you see bristolmyers under significant pressure just to remind people, that was one share of bristolmyers and 50 bucks a share in cash for each celgene share when that deal was announced back at the beginning of this year january 3rd of this year sara, i dont know if you saw this research this morning on kraft heinz. Caught my eye. Guggenheim comes out with a large long report that i have here here it is negative . It is neutral to be kind. But theyre talking about patricio is going to take over they say he faces a monumental challenge, on a path to success as a stand alone company the analyst writing that as well, given years of underinvestment in its brands and highly burdened Balance Sheet at 4. 5 times net debt to ebitda, company landed in a dangerous circle whereby the need to reinvest in its brands is constraining the Free Cash Flow needed to deleverage and p pay the dividend we have been focused on this for Different Reasons. I since the failure of the unilever deal and the company has never been able to recover. Or find a partner. And now the market cap is so much smaller i also would point out, there is significant tension and ive heard this from many people between Warren Buffett and 3g. They are not on good terms any longer and part as a result of the number of missteps unilever, accounting problems, any number of things, but i can tell you that they are not getting along these days mr. Buffett and 3g, based on numerous people telling me theyre aware of that, have not spoken directly to mr. Buffett about that but it is interesting and will be interesting to watch. I felt from a consumer perspective this is one food company that cannot figure it out in terms of top line growth. They cut, cut, cut, cut, and now it is becoming a problem if they dont partner up and have a deal if you look at the mondelez, a part of kraft, they went Different Directions it is in snacks, more international, but that stock is trading near record high that shows the contrast, kraft heinz down 27 this year i thought you were going to say negative because they took down its view a notch last week saying our view of the companys business is diminished and their governance deficiencies around internal controls. Never a good thing to hear from a ratings agency. Never that lost more than half of its value over the last year bob pisani has more on what is moving this morning. Over to bob well, sort of an indeterminate day. Were waiting for the g20 meeting to occur on friday right now you can see semiconductors up, thats a good sign overall, given some of the concern that we had. And bond proxies, reits and utilities, flattish on the day some of the other ones that are out there, banks generally flat to down as well here so not a lot of strong action. I want to highlight what is going on with some of the Semiconductor Stocks right now we see most of them slightly to the upside, i think it is important the Commerce Department on friday hit five Chinese Companies, they wouldnt be allowed to buy ubs tethz anymo technologies anymore you see it is not really affecting them as all right now. If you look at the markets right now, art cashin famously said two months ago, we were one tweet away from a new high and one tweet away from a 10 correction he was right thats exactly what happened here is the 10 correction here on the concerns. May on the concerns about the trade deal falling apart thats about a 7 move to the downside and then here is the rally back. Thats about an 8 move to the upside on fed backing, European Central bank backing and optimism on the trade deal so up and down a v shape recovery essentially and qod ku to art for getting the tone right on that one. New highs on stocks, advance decline. This is the most important thing. This is what i watch, when you have an ad line at a new high, that means more stocks are advancing than declining thats the most important thing to keep the rally going overall. Single most important indicator i watch. New highs, advancing modestly, not aggressively a lot of super cap names strong and thats keeping the markets up overall as for calls of the day, the most important one was Morgan Stanley made a big call on energy you got the geopolitical concerns Morgan Stanley reduced estimates on price targets on a lot of big names here, Oil Exploration production, integrated ill reduroil reduced at 2 . Deflationary pressures will be having an influence on Energy Stocks for a long, long time here is some of the big names in the exploration of production space, theyre down, i want to point out, energy has gone nowhere for a decade now if you look at the xle, the big etf for energy, this is 2007 were essentially back over here, were back to where we were in 2007 gone nowhere for the last 12 years. Everybody already knows how small the energy space is. It is about 4 or 5 of the s p 500. Just want to note quickly, nine ipos this week, the lollapalooza continues with the ipo space here big luxury retailer, theyre coming, retailers have done very well chewy has done well recently we have seen other ones like revolve which came a couple of weeks ago, they did really well. And Big Health Care etf on friday over at the nasdaq. That will be 750 million deal thats changed health care so that whole ipo business continues to do really well. Sara, back to you. Bob pisani, thank you ten year treasury yield at 2 . But moving south this morning. To the bond pits, Rick Santelli at the cme group in chicago. Good morning. Whether you look at barons or read any of many publications since the fed meeting last week, this is as if investors just discovered we have a lot of problems with low Interest Rates and Foreign Central Bank policy impacting our markets. But it is ongoing and i dont see any way to relieve ourselves some of the pressures. If we look at the curve now, 2s, 3s, 5s, 7s, 30, theyre down two basis points, parallel shift it usually means there is some sort of equilibrium. But it hasnt been an equilibrium since wednesdays fed meeting. Youll see why all the following charts start wednesday of last week look at two year notes the distortion to the downside, how much yields fell flattening the curve in a downdraft of buying well, it was fed related you can see the righthand side still hasnt recouped what it lost as you manufacture domove down r 30 year, it is higher and higher on the right side. That gives me some optimism. The long end probably is distorted and in the giving us a message of weakness with the u. S. Economy more about whats coming from overseas the strength in the Euro Currency after our fed meeting, look at it, just skyrocketing from 112 to basically one tick shy of 114 this morning. If you open the chart up, best levels since march on the euro versus the dollar. The dollar continues to get pummeled with respect to all these forces in europe mike santoli, back to you. All right, rick thank you very much. For more on todays movers, lets go to Bertha Coombs at the Nasdaq Market site. Good morning. We have the nasdaq 1. 5 away from its recent all time highs this morning were watching tech pretty much move higher with chips stronger, also large cap tech names, were seeing a little weakness today in Health Care Overall including in biotech. But in Health Care Overall, as the Trump Administration is now unveiling new requirements through an executive order for hospitals and insurers to provide patients with essentially net prices on what they would pay for a number of services that said, the large cap techs continue to roll forward apple up 14 this month. Still down 14 from its all time high and take a look at what we have seen this month and what we have seen in terms of the recovery from those may losses. The large cap tech overall have done well, the s p 500 large cap tech sector hitting an all time high communication names which got hit hard on regulatory issues are flat but the chips, despite their huge runup, are still down about 8 from the beginning of may. Though up 22 year to date back over to you bertha, thank you. Tomorrow, here on cnbc, carl joins us with special coverage from vietnam the lunch time at tng, a giant tech style Manufacturing Company in vietnam where supply chains are moving out of china, into countries like this one. All day tomorrow on cnbc, well take a look at the changing face of global manufacturing. Well see you then corey is living with metastatic Breast Cancer, which is Breast Cancer that has spread to other parts of her body. Shes also taking ibrance with an aromatase inhibitor, which is for postmenopausal women or for men with hr her2 metastatic Breast Cancer as the first hormonal based therapy. Ibrance plus letrozole was significantly more effective at delaying disease progression versus letrozole. Patients taking ibrance can develop low white blood cell counts, which may cause serious infections that can lead to death. Before taking ibrance, tell your doctor if you have fever, chills, or other signs of infection, liver or kidney problems, are pregnant, breastfeeding, or plan to become pregnant. Common side effects include low red blood cell and low platelet counts, infections, tiredness, nausea, sore mouth, abnormalities in liver blood tests, diarrhea, hair thinning or loss, vomiting, rash, and loss of appetite. Corey calls it her new normal because a lot has changed, but a lot hasnt. Ask your doctor about ibrance. The 1 prescribed fdaapproved oral Combination Treatment for hr her2 mbc. Oral Combination Treatment you should be mad at airports. Excuse me, where is gate 87 . You should be mad at nonseasoned travelers. And they took my toothpaste away. And you should be mad at people who take unnecessary risks. How dare you, hes my emotional support snake. But youre not mad, because you have e trade, whose tech helps you understand the risk and reward potential on an options trade its a paste. Its not liquid or a gel. And even explore whatif scenarios. Wheres gate 87 . Dont get mad. Get e trade and start trading today. I felt completely helpless. Trashed online. My entire career and business were in jeopardy. I called reputation defender. They were able to restore my good name. If you are under attack, i recommend calling reputation defender. Vo theres more negativity online than ever. Reputation defender ensures that when people check you out, theyll find more of the truth, not trash. If you have search results that are wrong or unfair, visit reputationdefender. Com or call 18778668555. The fire is out at a refinery in philadelphia most agree the accident spared the city, the citizens and the east coast gasoline market from the worst. There are plenty of questions that market from the worst. Brian sullivan is outside the refinery with a look at what the fallout from the fire could mean for overall gasoline prices. Thank you by the way, this is a story that goes into your wheelhouse. There is a financial angle there is good news and bad news. The good news, to your point, the hydrofluor i can aset was not released Pretty Amazing giving the size of that fireball seen from space, felt by homes as far as 30 miles away. 4 00 in the morning on friday the fire was put out ultimately on saturday afternoon. From a business angle here is the bad news in the last hour or so i have learned from a number of sources the alkylation unit has been completely blown to bits in other words, it is completely decimated. What that means is, is that the gerard point part of this factory, by the way two refineries in one, one point breeze, one gerard over that white tank you can see the blackened out hole thats what exploded this is the bigger of the two refineries, about 200,000 barrels a day. The other about 130. With that alkylation unit gone it is unclear when or if this refinery is going to be able to reopen now, the company itself has said that the facility is operating at a reduced capacity. I have tried extensively to get more information from them lets just say they have been less than helpful. Its clear they have a lot on their plate. What you may not know is that the other side of the refinery, point breeze, has been shut down for two weeks because they had a separate fire two weeks ago. Two fires, one more serious, in two weeks time, guys. We are trying to get more information when that will come back here is the point, david that alkylation unit would cost over 100 million to rebuild this is a facility that filed for bankruptcy last year, and according to Tudor Pickering and holt has about 86 million in cash on the books. Its the oldest operating refinery in america, and the biggest on the east coast. With this happening, it is unclear when or perhaps if this plant will reopen. Wow we will look at the creditors. It would seem, brian, in terms of trying to figure out the future for this asset. Reporter yeah. And the reason we mentioned the creditors, unlike most refineries which are owned by chevron or ex on, this facility is owned by wall street. The majority owners are the creditors, barden hill investment management, a manhattanbased firm we have a call into them Credit Suisse Asset Management Carlisle Group owned it when it went in bankruptcy the smallest owner is somebody in the business, enterprise transfer partners. By the way, 5 of demand for gasoline from maine to miami comes out of this facility doesnt sound like a lot i get it, but 5 offline for a long time, guys, could add up. The big winners pbf, phillips, valero trying to make up the loss from this facility. Brian, thank you for that reporting. We will get more as we go ang long here. Brian sullivan out in philadelphia for us. Still to come on the hoe, hoda kotb home depots ceo crai men ear. The dow is up 64 points. Smart t. But is that enough . I need tech that understands my business. I need tech that works at scale. Dear tech, dear tech, dear tech, were using ibm blockchain to help make sure food stays fresh. Were exploring quantum to develop next generation energy. Were using ai to help create more Accessible Health care. Were using iot to create new kinds of digital wallets. Lets see some more headlines about that. Lets expect more from technology. Lets put smart to work. Shares of home depot under pressure this morning, but they have been a big winner this year up 21 helping the dow, which by the way we are on record high watch. We are about 40 points away from a record closing high. We will speak with the home depots ceo craig menear san joaquin san joaquin wi good morning welcome back to squawk on the street. Live from post nine at the new york stock exchange. Carl is on assignment in hanoi, vietnam, where tomorrow he will be reporting live all day on the countrys manufacturing role in the u. S. china trade war and much more. We are looking forward to that coverage meantime, lets get a check on the major averages, where they stand at this hour things have turned red, at least slightly for the s p and the nasdaq we are on record high watch for the s p and the dow. Today its financials and Consumer Staples kind of a mix there leading the charge weaker dollar, lower treasury yields our roadmap for the hour, risks for the markets. The president addressing tensions with iran and going after the fed again. Plus, news this morning Eldorado Resorts buying caesars entertainment, an 8. 5 billion equity value deal. A rare and exclusive interview with the ceo with home depot on the impact of the trade war, the state of the consumer first up though the markets. Cautious start for the stock market today s p is on pace for the best first half since 1997. That isnt stopping the president from criticizing the fed, jay powell, fed chair in a tweet this morning and also in an interview with nbas meet the press over the weekend here is what the president is saying. What he has done is 50 billion a month in quantitative tightening thats ridiculous. What he has done is he raised Interest Rates too fast. You are worried he is going to hurt your reelection i think the economy is so strong, we will bowl through it. I am not happy with his actions. I dont think he has done a good job. I think this if he didnt raise rates, obama had low rates. Obama was playing with funny money. I wasnt i am playing with the real stuff. Joining us chief investment strategist jim paulson and mike santoli. Jim, on this criticism from the fed, i mean, its obviously a big deal how is the market taking it . Do they agree with the president . Do they worry about it are they ignoring it well, i think there is concern about it because the markets is wondering if the fed is going to come through with a cut, sara, and whether it will be as much as 50 basis points or not. Lets face it. Chairman powell is a big boy the whole fed gets a lot of criticism all the time and always has whether thats in the past from the media or twittersphere or even the president , whether its direct in your face or subtle and i really think at the end of the day i would, i certainly dont believe its going to affect him that much i really dont think it will i think they will do what they think is right thats their job and at the end of day i think there is more political theater than anything else. We have seen this great rally. I know we are not at, you know, necessarily new highs, but we are getting there . Right at the top of this range, its been there for a while. It seems like, i think the fed in powells comments last week, gave investors permission to stop worrying so intensely why treasury yields are so low if the fed ignores that and said they dont care if its inverted, then Equity Investors have to be concerned if the fed is going to lower rates on the short end and essentially say its an inflation issue here, that allows stocks to get a little bit of a lift. As you mentioned earlier, defense stocks have led the way. A lot of the tactical dateindics look good. And i think investors have been defensively positioned thats sort of unwinding right now. I think you have a little bit of an impetus for a continuation of this process of people saying, okay fine, maybe i was a little bit underinvested. Tobias said his clients are giving him push back base husband clients are saying they are too negative jim, stocks have run up to record highs how have the fundamentals looked i think what matters is not the fundamentals in the Rearview Mirror we have slowed down. There is no doubt about that thats probably why the stock market collapsed last year, a reflection of the slowdown in the first half of this year. The fundamentals are out the windshield what im impressed by is the combination of relatively average valuations, the trailing p is about average since 1990. The ford p is no different today than the end of 2014 and certainly below where it was in 16, 17, and 18 combine that with fear, which mike just brought up i think its widespread. There is a lot of reasons to be worried, which i think is a good thing. Then you bring the policy that we brought to this party since 1970, its very rare to have real money growth accelerate in the last six months, which we have had. Have fiscal juice accelerate we are at a 4. 7 deficit to gdp ratio, and bond lower yields i think thats going to pick up fundamentals in the second half. To me the day that, the adage everyone is looking at is dont fight the fed. I think if you are an equity investor, dont fight the fed, dont fight the treasury maybe dont look a gift horse in the mouth. I would stay bullish with the amount of stimulus, the amount of fear and reasonable valuation in place does that mean buy cyclical stocks in your bullish attitude . I would tilt that way its not like i wouldnt own some defensives. You always want to be diversified on some bonds. I would be overweight equities and cyclicals. Emerging markets make good sense. Weak dollar plays make some sense here, which would include energy i think eventually rates go back up, maybe this year on long end and financials probably have a place to play in that. I might even tilt a little towards small caps, which are back to the same relative standing they were five years ago. So all of those things i think i would tilt against where people are going right now based on their fears. You know, the push back and sort of wildcard, mike, what happens in the second half to earnings expectations . We dont know if the next leg of tariffs is going through we dont exactly know whether the sort of weakening economic fundamentals are going to lead to something worse. Exactly i think that the question of is this cycle, this profit cycle and this economic expansion going to end soon is not a question we are going to escape. That question will be there whether the answer is not very soon or, yes, right away so we are not going to look for a world where we dont have to worry about that i think the question is, is the fed cutting and in flush financial conditions enough of an offset to flattening out earnings i think it is if the out quarters look like they will pick up. We had two consecutive quarter of declining earnings in 2016. We are looking at it again potentially this quarter the slight difference is back then you were in the midst of a nasty correction now we have lifted out of one probably thanks to the fed. Jim, i like one of your other themes we have seen that over the last, you know, week or two. What makes you so convinced this is going to be a trend and where do you go to capitalize . I think there is two things and i havent been really right on the dollar, sara, for a while. Nobody has. I think its going to weaken in the balance i think Inflation Expectations has helped the dollar. If they come back up, that will hurt the dollar as well as the growth spread widens out when the world slows relative our growth spread to the rest of the world. I think that narrows again a bit if Economic Conditions improve dont have to boom just if they pick up again a little bit so i think the dollar gets sold over the balance and there is a lot of things. Basic materials, industrials, energy, small cap stocks, emerging markets, all those things would be dbig dollar beneficiaries, not to mention commodities outright. Thank you for joining us this morning. Thank you. We have been anticipating this eldorado announcing it is acquiring caesars, creating the largest owner and operator of gamings sets. 60 different properties, Casino Resorts across 16 states in the u. S. As you might expect, shares of caesars erupt. 1275 deal at the out set that is being impacted bit decline in eldorado shares this morning. They are looking for 500 million of synergies. There is a look at the stocks as well lets give you the basics on it overall. 840 in cash. 0. 0899 in eri for each caesars share. So it wont be quite 1275. You a countrytive to cash flow and the much smaller eldorados Shareholder Base will own 51 of the combination versus the 49 , the current owners of caesars will hold in the two companies when they get together that could be some time. A lot of state approval is needed in these kinds of deals when it comes to gaming. An important component is the sale of three harrahs property for 1. 8 billion to vichy those will be rented back at 154 million to the combination c carl icon started pushing for a sale owns roughly 120 million shares. Average cost about 9. 21 so he is certainly happy, as you might expect, with an outcome helping him in terms of his overall funds. Hes had some winners, but plenty of losers, too, for carl. But this is certainly one in the win category, sara. They are going to keep caesars name to capitalize on the value of an iconic global brand. Share price reaction going in opposite direction anything notable i think people are a bit surprised in the price in terms of how high it was for eldorado, shares perhaps are selling. You have pressures. All right up next, rare and exclusive interview with the chairman and ceo of home depot. Hear what he has to say about the state of the consumer, china trade war, impact of tariffs on his company and more and a sneak peek of what carl will be bringing us tomorrow from hanoi, vietnam. Well be right back. Its g20 week with the threat of new tariffs American Brands are shipping chains out of china and into countries like vietnam tomorrow we are live in hanoi with a look at who is moving and whether this country can handle the new sissbune all day tuesday on cnbc. The flexible class schedules allowed me to go to work full time, run my catering business and be a mom and parent. When i reached this accomplishment, it was like, its here, its happening, its now. We at Southern New Hampshire university are the ones who succeed. We are the ones who break through. We like drip coffee, layovers and waiting on hold. What we dont like is relying on fancy technology for help. Snail mail we were invited to a y2k party. Uh, didnt that happen, like, 20 years ago . Oh, look, karolyn, weve got a mathematician on our hands check it out now you can schedule a callback or reschedule an appointment, even on nights and weekends. Todays xfinity service. Simple. Easy. Awesome. Id rather not. Welcome back to squawk on the street. Home depot celebrating its 40th anniversary of what was the First Store Opening for the company, which of course is now the largest Home Improvement retailer in the world. It went public in 1981 joining us now exclusively is home depots chairman and ceo craig menear and our own Courtney Reagan who covers retail closely congrats. Thank you. 40 years. Nice to see a number of your founders joined you as well. A great morning thank you. Right back to business, of course we heard from you about a month or so ago when you reported earnings at that point lumber prices obviously had been down, some concerns about potential tariffs. The weather was an issue in the First Quarter of this year do you have any updates for us in terms of your continued 5 comp guidance and whether its been impacted enough by those things that you need to revise it well, well take a look at that as we enter our second quarter. Obviously, the lumber situation hasnt changed lumber has continued to be pressured in the marketplace for sure weather is improving slightly as it moves forward we see great demand when the weather is normalized. So were looking forward to great finish of the year. Whats going on with lumber prices can you explain to the viewers what is behind the significant decline . Last year it was the opposite. It was. It completely flipped. What happened is you had a wet early part of the year logs backed up the mills needed to process the logs they had some challenges doing that and then of course with the wet weather, there is not much demand on the building side. Its really the building part of the business, the new construction that drives the lumber prices. Its not our part of the business thats really whats come together to kind of create the perfect storm, if you will, that haslam better prices down about 40 year over year. And that continues. And thats a problem because lumber is a project starter for other things thats an issue that home depot has to grapple with. I think a 200 million hit in the First Quarter. Your cfo said it could be up to 800 million for the year. Thats correct. So that could be a really big deflationary pressure as you are looking at Something Like tariffs, which is inflationary you said a billion dollar hit in 2018, potentially another billion dollars if we go forward. Do they balance each other out, or are they two totally different silos. Its two Different Things deflation it in lumber is there. But the unit demand is solid, which is great to see. Just cant offset 40 deflation. Of course, the good news for home depot is about 70 of our goods are domestic the balance then comes from offshore wevesized it at about 3. 5 of u. S. Purchases with the current tariffs that are in place. Even with 30 , you are still the Third Largest inboarder by containers in the country. We sell a lot of bulky big things it takes a lot of containers to move product. You are 18 months through a threeyear transformation. Lowes has a new ceo, marvin ellison. Comps at home depot almost always outperform lowes except for two times. One was last quarter lowes is signing more pros, up 60 quarteroverquarter is lowes more of a competitor thats the thing that makes you better, is you drive to continue to dlir value for your customer you understand how you are operating in the marketplace so, no, they have been a good competitor for a number of years and they will continue to be so. Whats going on with the Housing Market you mentioned the signal from lumber prices. Manhattan prices have gotten crushed lately whats happening for us, the things we look at in the Housing Market, the indicators are positive for us we are not in new construction so we play more in remodel and maintenance, if you will when you look at home values, they continue to increase. Part of that is due to the fact that there is a shortage of new homes on the market. Then you look at housing turnover running 3. 8 historical norms 4 and change a little bit lower than normal but doing okay and then the new household formations are estimated to be about 1. 6 million. Then if you think about 52 of the Housing Stock in the u. S. Is 40 years or older, more maintenance with the age of the housing. Typical customer with a 40yearold home spends 3 x on maintenance. Have you seen any impact in the last few weeks as weve seen tresh i didnt yields collapse, mortgage you rates have come down substantially we saw that speck spike up in applications does that translate into more business for you not necessarily in the beginning. Housing turnover has some play as customers do projects but its not an immediate correlation for us. How do you approach the potential increase in tariffs . The 25 , recognizing as you just said that its relatively, on a relative basis small, but an absolute basis still very large. How do you go about your decisionmaking in when its uncertain what you are going to do and how you are going to respond to we are in the project business, first of all the first step is to try to protect the customer in the project. We will do everything we can to try to take other costs out of the business, working with our suppliers, whether thats opportunities in supply chain, other elements of the business and then well try to protect the customer on the project. Some of it at that at 25 you have yes, some of it has to. We will try to minimize that impact on the customer. Do you have any sense where that might end up . Its too early at this point to know. In terms of just planning, does it impact your ability to plan given you just dont know no, not really. I mean, we constantly get thrown curveballs in the Retail Business all the time. This is just another one that happens. We have tried to build our business in a way that is nimble and flexible, whether that be in the supply chain or how we deal with those type of things that get thrown at us. Is there that much room amongst your suppliers to give up margin or find efficiencies, or is it going to be really difficult . It will be hard work, but we will Work Together to try to figure out how to do that. There is always ways when you look at the entire value chain from the supplier through our operations to find ways to be able to take out, to try to offset the costs. In the most recent quarter you talked about how the pros had this big backlog of business because of the weather about 90 days. Are they working through that or not . Its been wet and terrible weather in the midwest, in the northeast. There are a are they making progress it depends where you are at in the country in terms of whether the weather has helped them or not. Where the weather has improved, we are definitely seeing them the business demand is there neva backlog and when you talk to them anecdotally every week, they will tell you that they are busy and they are booked. So its business they can make up. It just takes time to get there . Its extending projects the length of time is extending on the projects. There was about 1 billion in projects that disappeared during the recession and there after. Have you been awble to find that billion dollars . We lost 13 billion in Top Line Sales during the recession. We have been able to get that and then some back there are still a couple of categories that havent matched the peak of 06, and were still working on those. I mean, generally, retail has been a tale of winners and losers home depot has been a relative winner how did you think about some of the challenges that a lot of the other retailers are facing, the amazon threat, you know, moving into ecommerce, lower traffic, and how have you fought that so we look at the Retail Business with a couple of factors. Number one, consumers are shopping fewer retailers today than five years ago. Number two, we believe that the interconnected environment is the way the Retail Business is going in the long term part of our doubling down in investment in the business, we put 11 billion in the business in the next few years, is to create that interconnected experience that allows the customer to blend the physical and Digital Worlds together. Thats whats happening. The front door of our store is no longer at the front door of our store. Its in the customers pocket, on the job site, on their couch. They start in the Digital World even if they finish in the physical world. And this the 40th anniversary of your First Store Opening, obviously your employees are a key part of that more difficult these days to find the qualified kinds of people that you need in general, we just hired over 80,000 people for spring. That went really well. There are pockets of the country its more pressured than others. But in general id say we have been table to sell home depot and get associates on board. Well, not too bad 40 years and a 230 billion market value congratulations. Thank you very much. Craig menear, the ceo and chairman of home depot. When we come back, tensions ramping up between the u. S. And iran as the president takes to twitter. Are oil markets underestimating the impact of another flare up in the middle east. And where the major averages stand, we have turned higher but fractional moves three straight weeks of gains. Squawk on the street will be right back today. But its coming off the best Weekly Performance since april with the ongoing trade tensions with the u. S. And iran tensions there boosting oil prices President Trump taking his thoughts to twitter this morning adding, quote, china gets 91 of its oil from the strait. Japan 62 . Many other countries likewise. So why are we protecting the shipping lanes for other countries . Many years for zero compensation all of these countries should be protecting their ownerships on what has been dangerous journey. We dont need to be there and the u. S. Has become by far the largest producer of energy anywhere in the world. Its simple. No Nuclear Weapons in further sponsoring of terror. Joining us john ki a lot to unpack in that tweet. Is the market getting immune to the tweets or still having a reaction i think were obviously on tenterhooks, closely monitoring it partly because of what President Trump does correctly reference there, which is the u. S. Position as the Worlds Largest producer i have likened it to us being a firewall gen firewall to geopolitical risks what he is mistaken about is oil is very fungible the analogy is its like pouring water into a tub doesnt matter which end you pour the water in. Its all part of one collective body so the oil that comes out through the strait of hormuz, whether it goes to china and some comes here, its very important to the market. The loss of the strait is the high stakes maneuver, even with our position as the Number One Oil producer. Why is he suggesting other countries should pays for that is that a legit complaint . I have heard that questioned raised over the years. We have had the fifth fleet station out there for decades to protect the oil. Until recently with again our assent to the number one spot it was a vital security interest to us we were reliant on saudi and kuwaiti and iraqi oil. So again its a huge important link and source of economic stability for us when we get the oil price shocks, theyve almost always uniformly kicked us into recession. Its four for four, okay the other killer, you get high gasoline prices, some argue because of our bigger and bigger energy footprint, maybe not so bad for us, its a killer for the consumer the consumer is 70 of the economy as you guys spend so much time prorreporting on here observing and monitoring its tremendously important. The stakes are real high i think he realized that, which is requewhy i think he took that offramp i know a lot of people are criticizing him that we back ed or he equivocated. I think it was a serious decision and hedid the right thing about it. I want to get back to that. Factchecking him. The numbers are not right. No, the 92 , i dont know why he where he got that it would be around 45. The real number for china is around 33. What happens if we do go to war with iran . It will be severe it will be a severe situation for the oil market there is a lot of implications beyond just us against iran. Obviously, it will be a regional conflict of the first order. Big problem, too, is for qatar iran is kind of their lifeline in this fight they are having with the saudis. Ed saudis want to dig a moat between the mainland and Qatar Peninsula as an ramp iraqs oil would be cut off. They would be severely damaged this would be triple digit oil i think this would be calamitous for the regional there are so many interests that intersect there. India has sent warships now to the persian gulf some of their naval assets this thing is escalating thats why i think its wrong to criticize the president for pulling back from what is really the abyss, if you ask me. You really feel that way. Yes. Obviously, there are quite a few hawks in the administration who would differ with that viewpoint. I think we all pretty much know that iran is not iraq, and that, you know, they can do a lot of Different Things. As we know, even if our military can roll over a country like we do did with iran, it becomes a nettle some thing. The oil again, the oil production, even though its not coming here anymore, critical to market stability and prices. The oil market is a global one if prices shoot to 100 or plus, we will be paying that here, too, no matter how much we are producing. People are wondering why hasnt oil jumped further. So far, so good, too. Thank you. Lets sent to to bill. He has an update for us. Heres whats happening this hour speaking of iran, secretary of state mike pompeo has been meeting with Saudi King Salman to discuss the crisis in the persian gulf he also met with crown prince mohammad bin salman. He said the u. S. Is prepared to negotiate with iran despite new u. S. Sanctions against tehran. And iran is calling the u. S. Cyberattacks against the iranian compute system a big mistake and contrary to international law. The Iran Foreign Ministry says they will dispute it legally those Computer Systems control its rocket and missile launchers. A baby formula sold exclusively at walmart is under recall its voluntarily recalling more than 23,000 containers of Parents Choice advantage infant formula because it could potentially contain foreign matter made of metal. And former president obama was given a ride on his friend George Clooneys motorboat over the weekend. They dressed in suit jackets, sat in the back of the boat as it sped away from clooneys villa on lake como in italy. It was closely followed by a police escort. I hear, david, you have been on George Clooneys boat as well . We are not supposed to share that though. I did not wear a sport jacket. I wouldnt expect you to. No. Have a lovely day. Thank you i will try. Wait, are you serious have you been on clooneys boat . No, i havent im kidding. Yeah. You never know. You never know. I look forward to it one day im happy to take the invitation if he is listening. Investors remain cautious. Trade breakthrough hopes facing the ultimate test. G20 summit in japan. Jim stewart will discuss the possibilities of that meeting. Companies looking to move manufacturing from china setting their sights on vietnam. Is the country ready to take on the task we are going to have a lot of special programming starting tomorrow morning Carl Quintanilla live in hanoi, vietnam for us is where people first gathered to form the stock exchangeee, which brought people together to invest in all the things that move us forward. Every day, invesco combines ideas with technology, data with inspiration, investors with solutions. Because the possibilities of life and investing are greater when we come together. 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. Just wanted to bring you fresh Economic Data this hour. T the Manufacturing Survey was minus 12 worse than expected. And it follows a trend weve seep from a lot of the regional Manufacturing Surveys. Last week it was philadelphia and new york the empire index big disappointing numbers. Thats why the ism number next week for the country will be critical to see whether manufacturing in this country is still expanding or shrinking clearly, the trade war hurts this part of the economy more than the rest of the economy i mean, its about 12 for our economy, which is why the u. S. Has held up to places like japan or germany that depend more on it its considered a leading barometer for the country. Speaking of the trade war, top focus for investors this week first we have the highly anticipated meeting between President Trump and chinas president xi at the g20 summit in japan and second, growing tensions with iran. We just talked to john about that the president threatening to impose major new sanctions today. Here is what he told nbcs meet the press yesterday. Im not looking for war, and if there is it will be obliteration like you have never seen before, but im not looking to do that but you cant have a Nuclear Weapon you want to talk good. Otherwise you can have a no further conditions not as far as i am concerned. You will talk anywhere . Here it is. Look, you cant have Nuclear Weapons. If you want to talk about it, good otherwise, you can live in a shattered economy for a long time to come with us at post nine to break everything down, New York Times columnist jim stewart lets start with the g20, actually. Right. Do you have expectations there . What are you focused on in terms of trying to figure out if there is going to be progress. I would like to know what are they going to be talking about people are euphoric they are going to be talking, this he must be close to a deal, the heads of state are going to get together i dont think we know much about that whats the point of the tariff war . Number one, one goal of it is are you protecting the u. S. Jobs you are protecting u. S. Industries it seems like steel has been the poster child going to exactly what the latest Economic Data has shown, i was looking at u. S. Steel stock. Last august i think it was almost 40. Its 14 today. Now, that was one of the prime companies that was supposed to benefit from the steel tariffs why hasnt it . Its because the threat of trade wars has so depressed the Global Economy, which in turn has h depressed demand for commodities. Its hurting the u. S. More than its helping what are we going to declare victory here this one isnt working is that kind of on the agenda . Okay number two, we are using tariffs as a broader weapon to try to get china to lower various barriers to competition there. You know, like they have the technology transfers, coown ship well, is that on the table how much progress has been made there . Are we going to get a victory . That is using tariffs to try to advance a free trade agenda. And trump said he believes in free trade its hard to say given all these contradictory actions. Finally, we are using tariffs as part of the cyber war, i guess. And National Security overall. And National Security and that to me really ought to be in the hands of defense experts. I am the first to say this is extremely complicated. Do we have to keep all Chinese Companies out of the 5g supply chain in order to secure our future i dont know id like to know more about that is that on the agenda . If all of this is on the agenda, then they need a lot more than a kind of driveby greeting at a g20 meeting. It seems like its sort of just about establishing goodwill so that their deputies can do the details. But to your point, jim, it was never going to be easy and it was never going to be quick. President trump is facing election if im an investor with betting odds, wouldnt i bet that the president is going to have to get a trade deal done before the election to shore up the stock market, the economy, and also say, look, i have this monumental deal that i made with china and no other president has done that . I totally agree with that i mean, he launches a socalled war, a tariff war. Elections are coming up. You cant go into the election without declaring some kind of victory, in my view. I look around the landscape. What he has going for him definitely is the stock market and i think investors have in fact shrugged off a lot of the potential downside here because they agree with you. He has to pull a rabbit out of the hat here hes got to come up with something to show for this the strongest thing he has going for him is a healthy economy and very strong stock market the healthy economy, some of these later numbers are looking, you know, pretty shaky and the bond market is looking like things dont look good out there. He can always blame fed chair powell. He does that every day. You know, pointing the fingers, if something has gone wrong, i would much rather run on the stock market hitting new highs and the Strong Economy and low unemployment and saying, we have done this, keep it going. Thats what i would want to run on i dont want to have a disaster that i have to start blaming on somebody, who by the way i appointed. Thats not going to work. We are going to watch it closely, jim thank you. Sure. Always appreciate it. Jim stewart. We discuss all of this, of course, it will be front and center of carls coverage in vietnam. Looking at where a lot of or at least some of that manufacturing capacity is being moved to avoid those potential tariffs. Not going to want to miss that. When we come back here on this show today, salt in the wound. New tax rules hitting housing prices hard. We will tell you where and bring you new shocking numbers squawk t see wl onhetrtilbe right back the dow is up 46 dont go away. Stocks surging to record highs and one top market watcher says the party is just getting start the. Find out why on trading nation. Cnbc. Com. E the. Find out why on trading nation. Cnbc. Com. D the. Find out why on trading nation. Cnbc. Com. Find out why on trading nation. Cnbc. Com. Welcome back to schwartzman. Rick santelli live on the cme floor in chicago i would like to welcome my first guest of the week, michael curb ma, north georgMorgan Stanley you, like many, believe that we are looking at 50 built in, whether its all at once or not, and that the fed hasnt really challenged that notion therefore, its meant to be. Do you agree with that summation . I think that is correct there is enough uncertainty about the Economic Outlook with or without the trade issues with china and the rest of the world that the fed would like to take out a little bit of insurance and not upset markets too much in the short term. Now, i completely understand, especially based on the history of how accurate nearby fed fund contracts have been. What do you think the reason is, what is the fed going to accomplish by this quoteunquote insurance ease in your opinion i think they are saying we are on the case. We are not going to be obtuse or ignorant of whats going on in the world both in the United States and the rest of the world with regard to europe or china or asia, and that there are a lot of uncertainties and issues in the world today that are impacting the u. S. Economy and the u. S. Economy is tdeceleratig right now. There is not a lot of risk of taking out an insurance cut now in terms of not achieving their inflation growth objectives over the next 12 to 24 months. Well, we just had the release of june dallas fed minus 21 so i understand. I guess my biggest question is, if our slowing is making a difference to the fed, i understand that. But if the capitalist to all of these issues is global, do you really think that the reach of 2550, even 100 basis points is going to change the tsunami of weakness being exported from many economies around the globe into the u. S. . Thats probably not true a 50 basis points cut is probably not enough, especially if the chinese tariff situation with the u. S. Escalates and we puttives on all of chinese imports to the United States then we are probably talking about 100 basis points of rate cuts Going Forward the markets is pushing in that direction as well. We need a global monetary ease the chinese are doing it a little bit and they are in a bigger tougher situation than the u. S. In terms of adjusting Monetary Policy easier given where they are at the moment. So were really in a conundrum then everything you described seems to me, ive seen japan do it, i have seen europe do it, and year over year necessarily see that it does anything but inflate the balloon in the present, but it really doesnt change for any optimism down the road your final thought its certainly possible that Business Confidence is being negatively impacted by all these other issues around the world and not so much by the level of Interest Rates i think its confidence building, the fact that the fed is on the case its not going to make things worse by raising rates or not make things worse by being ebailiffious to whats going on in the world we are aware of whats going on. We are going to do our best to ameliorate it. Whether or not they can solve it, i am not sure they know that. Excellent michael, thank you for your time maybe there is a third pilar, the psychoanalysis side of the central bank back to you. Now time to send it to jon fortt for a look at whats coming up on squawk alley. Well, exactly how much is your data worth to facebook . Or to google is it possible to quantify that and to put it in an annual report well, there are a couple of senators, a democrat and a republican, who want to do that. We will look at the implications for big tech coming up on squawk alley. Welcome back to the squawk on the street. Im seema mody stocks trading just above the flat line ahead of the g20 summit this week about half of the sectors are trading in positive territory. And lets drill down on one key outperforming sector, and that is Consumer Staples, hitting a 52week high this morning. Among the names lead as sectors to the upside, tyson, colgate, kimberly clark, and altria now, ill send it back downtown to you guys. David . Thank you, seema. Well, new tax rules on state and location deduction, of course, affected 11 million Americans Last year. And now hitting housing prices robert frank joins us. Hes got more on the salt wars you and i have talked a lot about this, robert, but its starting to hit home you and i among those 11 million now. Manhattan home prices are falling for the First Time Since the financial crisis and the decline actually started with that new tax law a chart from Deutsche Bank shows that real estate price growth in manhattan started slowing after 2014 and 2015. That was the peak. But prices actually started falling in early to mid2018, that was after the socalled salt changes that limited Tax Deductions to 10,000. Those salt caps costing new yorkers an estimated 14 billion last year. Housing experts predicted the manhattan real estate prices would fall about 10 over two years, so far, they are down about 5 and manhattan Real Estate Sales have now declined for six straight quarters. Florida has been the biggest beneficiary. About 64,000 new yorkers have moved to florida between mid2017 and 2018. The town of doral launching a, quote, unhappy new yorkers website and campaign, telling new yorkers high taxes, rotten weather, outrageous cost of living, whats not to like now, the website even has a savings calculator, so someone making 1 million a year in manhattan saves 235,000 a year by moving to florida also, a house panel tomorrow will hold hearings from firefighters, police, and teachers, talking about how the salt changes could force cuts and reductions in those Critical Services in these hightax states guys, back to you. Robert, im sure our political leaders are well aware of the potential loss of tax revenues and income taxes, of course and im sure theyre going to right size the 93 billion new york city budget, arent they . Thats the problem. They could complain about it, but theres really not much you can do, because politically, what youre saying is, we need sort of to help the wealthiest of the wealthy in these seven or eight states, to pay less in taxes. And theres a billion by new jersey senator to basically raise the top tax rate in order to change the salt deduction no ones going to foot that bill but the bigger problem from new york City Real Estate is that youve got 20,000 units coming on the market this year and a population decline of 40,000 so thats just going to be a tough mismatch over time i was wondering, robert, what the prognosis was. If anyone expects the manhattan price trend to turn around i dont know, we have superlow Mortgage Rates i dont know what else is working in our favor and june was really strong. We had these two big deals jeff bezoss 80 million plus purchase in the flatiron, and we have the bob guccione house selling for over 70 million so theres been a lot of strength in the market a great may and a great june the question is, is that all driven by the new mansion tax, that takes effect in july. People racing to get a deal p before that. Or will it continue . Its possible we will see some strengthening, but unlikely given the supply thats about to come on the market with all these new condo towers zp well be watching it closely. Thank you, robert frank. What else will we be watching closely on the closing bell. I could mention all the other great guest we have, but no one can compete with the fact that you will be joining me final hour of trade. Anything can happen. Will the s p 500 set another record close we did last thursday will the dow set a record close . Also, during our show in washington, the president is expected to sign an executive order on Health Care Cost transparency at 3 00 p. M could move a lot of the stocks, insurers and hospitals Grover Norquist will be with us to discuss Bernie Sanders plan to tax wall street to pay off student debt maybe we can ask him about salt, as well. Sqwkll eantime, ua aey is up here next. Dows up 33. Dont go away. Through the at t network, edgetoedge intelligence gives you the power to see every corner of your growing business. From using feedback to innovate. To introducing products faster. To managing website inventory. And network bandwidth. Giving you a nice big edge over your competition. Thats the power of edgetoedge intelligence. Man stand up if you are a First Generation College student. Stand up if youre a mother. If you are actively deployed, a veteran, or youre in a military family, please stand. The world in which we live equally distributes talent. But it doesnt equally distribute opportunity, and paths are not always the same. Im so proud of you, dad man i will tell you this, Southern New Hampshire university can change the whole trajectory of your life. Good orning. Its 8 00 a. M. At pixar headquarters in emeryville, california 11 00 a. M. Here on wall street and squawk alley is live you got a friend in me you got a friend in me when the road looks rough ahead and youre miles and miles from your nice, warm bed you just remember what your old pal said oh, youve got a friend in me