Transcripts For CNBC Squawk On The Street 20240714

With a trade war truce near . President trump saying his upcoming meeting with president xi will work out for both countries. Stocks set to rally at the open new records within striking distance the s p closing out its best first half since 1998. And playing down the trade risks, nike delivering strong revenues in the Fourth Quarter, customers buying more sneakers and sports gear and china sales surging. First up, the markets. Stocks getting ready to wrap up a strong month the s p 500 on track for its best june since 1955 for the dow, best june since 1938 heading into the final session of the first half, all three major indices are up double digits year to date, led by the nasdaq with a 20 gain europe is higher this morning, hopes are building for g20. You hear superlatives like that, best june in decades, is that a bullish thing . I think it is net bullish the duration, the strength of the recovery, im looking at this on a ninemonth scale, okay the Fourth Quarter was one of the worst Fourth Quarters in memory in decades. December was down 10 the first time in 80 years or Something Like that. So given that context, i think that you can say, a return to those highs is bullish and the way we have done it is interesting with very low yields, somewhat defensive and very high quality stocks tech is still at the core of almost every market environment right now. So when people want to be aggressive, tech works, defensive, tech seems to work. It is good if youre betting on this market a lot of people say, look at 1938, look at 1955, what happened look at some of the sharpest moves higher like this and you often see them in the middle of bear markets and rebounds and that sort of thing there is this debate out there. I think that in terms of the first half, it is all about a rebound from a deep correction from where we go on from here, i find it interesting, the market is acting like there is twoway risk nobody wants to be too negative going into the g20, nobody wants to get too aggressive and assume it will be a great market outcome. First half is not just a rebound. It is also a reaction to pivot from the fed you look at the tenyear, year to date, clearly yields have been sliding throughout that period also you look at that for june, same is true, we have seen a significant move in yields for the one month and for the six months and markets have responded accordingly. Around the rest of the world responded accordingly. Last year more of a theme of the u. S. Is the only aoutperformer, everybody else is struggling europe and asia, similar to what we have seen the u. S. , resounding gains without a doubt again, i point out that it is not just Government Bond yields being very low Corporate Bond yields have followed them down that means stock equity valuations are supported that sounds fine the question is, getting into Second Quarter earnings season, it is probably going to be choppy and sloppy. Are we going to look through that because of the macro, because were anticipating a fed rate cut. To flip it on its head for the week we have seen so far, were down 0. 8 . It has been almost like a start of the rotation we might now see when we get through month end i ing. Financials the second best performer. Back to the yield picture, thats going against the slide in yields we have seen like a little rebalancing of the underperformers. It is but it does track with a decline in the dollar and thats sort of a pivot towards cyclical stocks. Well see if it continues beyond that month end quarter end squaring up a portfolio. One key will be what happens at this highly anticipated meeting tomorrow between trump and xi President Trump is in japan, still no deal in place at this moment and there is a potential of a new round of tariffs on the table. President trump set to meet xi on saturday, just about 12 hours from now he did in osaka express optimism about the meeting earlier today. Listen look forward to it. I think it will be presumptive and who knows, but i think it will be a minimum, it will be productive well see what happens and what comes out of it. Do you think president xi is going to put an offer on the table tomorrow well see what happens. It will be a very exciting day, im sure ultimately it will work out. President sounds hopeful, mike and after going through a bunch of Research Notes this morning and overnight, it seems like the consensus on wall street is the president will hold off from that next round of 300 billion of chinese imports getting tariffed or taxed. That is out there. Truce is, i think, the working phrase but thats what were talking about in december, by the way. The previous time they met, that was a truce and it was supposed to kind of free up the market to look past the trade issue. It was caught up in other drama in december. It wasnt really about trade specifically, but, yes, i think thats now where the consensus has fallen and, again, i dont think that the Market Investors have ever given up the idea that the rational outcome here is some kind of a deal that forced all further aggression. I think with the fed pivot, the market needs there to be no escalation and well talk well talk more about apple and nike later but both the messaging from both companies of late has been we can kind of handle things where they are you hear that from other industrials like cat that as long as we can be nimble and flexible because we know where the ground lays at the moment. It is a question of just make sure it doesnt go into sort of free type rhetoric. That makes a lot of sense ive been saying best time for a trade deal is soon, perpetually soon however, i do wonder then how were going to absorb the slowdown story thats a real story. It is not just about tariffs we just dont know how much damage is done, how much of a psychological lift you get. The other thing out of the g20 is how united other western democracies, rhetoric has been against trump for the trade war. Im not sure that will perturb him too much it is interesting how much other countries want to see this ease and, of course, the global data has been suffering. I would mention it has been a week of weak data for the u. S. This mornings data was not all that bad we got a spending number the preferred measure of inflation, looking soft lately, perked up a little bit,. 2 , 1. 6 from a year earlier it is still not hitting the feds target but actually came in better than expected spending which we know is a big part of the economy rose. 4 , slightly below expectations. Still last month was revised higher consumers are still spending, incomes are rising personal income up half a percent for second month in a row. Thats good. Not a deterioration. Much worse in terms of the data on the manufacturing side of the economy. Also japanese manufacturing, better than expected this morning, still not fantastic eurozone cpi, 1. 2 , nothing to write home about shares of apple falling in the premarket, the tech giants chief design officer is leaving the company to start his own independent design firm. Hes been with apple since 1992 and helped design such key products as the iphone, the ipod and the apple watch. Lots of discussion about this as to why hes stepping down now, how much it means. I think i hope he takes it as a pat on the back hes worth 9 billion in market cap, whether thats temporary or not, a nice statistic he can retire on one thing im interested in, whether this is gives us a chance to talk about it, this is less a Hardware Company now, more a software and Services Company and whether this is we dont know if hes decided to pull back, theyre not giving enough priority and enough investment to the type of work that hes done for decades compared to what Apple Studios might less design centric business right now. I think it is an eye of the beholder type move if you thought all along that apple was lagging, in innovation and no next grade thing in hardware, this would confirm that idea. Not enough for him to do if you also thought that, you know, the business really hinged on this one genius who remained there from the steve jobs era and hes gone, thats a new reason to be negative. I think it is more evolution of the company, guy has been there a quarter of a century or something. And, you know, i think it is one of those deals where it is time to assess where apple sits as a company, but mostly in the direction we have already known it is going. He helped turn around the company, right, with steve jobs, those candy color eed imacs in h 90s if youre wondering what is the next big hit, the next big thing, i think an announcement like this makes you nervous. It is telling you every analyst on the stock published this morning on this news nobody took down forecasts or numbers or anything like that. Not that kind of story, but just examining what the bench looks like at apple and what it says about where the priorities are, ai, services, health care and those sort of businesses one other point, in the fts write up of this, he mentioned his father has been unwell, back in the uk, that led him to miss the big launch party around the new headquarters which raised a few eyebrows at the time that might be a factor on the point that hes british, hes probably one of the Great British business exports of the last couple of decades you would say that. I would we dont have many, so shares of nike lower after missing on earnings estimates, beating on revenues, boosted by Strong Demand in the u. S. And china. Cfo andy campian downplayed the trade risk on the call last night. He got a question if they were seeing a decline in chinese spending listen we have not seen any impact on our business to date. And we see strong momentum as we enter fiscal year 20 joining us is bob derbel at guggenheim securities. This is one of the biggest question marks going into the Earnings Report what would china look like. 22 growth and no impact from a trade war. How surprising is that for a company like nike . I think they have proven over the years their ability to be quite agile and flexible in terms of any global environment. I think it was a concern and i think they did more than really address what those concerns were in terms of outlook and performance. Did they address what would happen if things dont go well at g20 in the next batch of tariffs go through i didnt get any really quantity fiction or exposure type numbers. I think what they you think about their supply chain, first thing i would say is part of the miss was investment in supply chain and continuing to look longer term versus near term when you think about their ability to navigate Global Sourcing and ability to source in china and shift to china and maybe source from vietnam and ship to the u. S. , i think they can manage through it pretty well over the near term and even over the longer term i think they have proven that over the last 20 years that we have been covering this name. The shares are down, i think the big eps miss was chalked up to the fact that costs rose 10 , spending on direct to consumer, spending on digital, athletes and celebrities and world cups and that sort of thing what has got investors concerned . I think thats a piece of it. This is the first miss in many years on an eps basis. But i think when you look at the other metrics and look at the global Revenue Growth, double digit, constant currency, sustainability of the u. S. Plus 7 , the 22 in china, inventory in a great position, i just think this is a company that if there say company to ever give a pass on three cents this is it the other point i would add is Foreign Exchange for the whole fiscal year was 15 cent hit. You think about how they plan their business over the longer term, they move forward and keep their head down and keep pressing and not going to let the strength of the dollar impact how they view the longer term positioning of the company. Were you surprised the extent to which they played down the trade war risk this is the company with exposure on the demand side, on the supply side and plenty of those trade representatives who make sneakers come on and say this is the worst thing that they have ever faced. I think it is a good example of a company where every macro risk in the book is being thrown at them. Global slowdown, Foreign Exchange costing them a billion dollars, china trade risks if you make products Consumers Want and charge more for them, like the vapor max, all the air max iterations now, jordan for women has been revamped, people will just pay. And i think there is a strong statement at the top of the call for mark parker, the ceo, saying we are a brand for china that was a clear signal they will double, triple down on the Chinese Market and they are working their sources there to make sure that this kind of growth continues. Thanks for joining us nike just down in the premarket. Now, still to come here on squawk on the street, round two of the democratic president ial debates, candidates turn up the heat last night in a big way. Highlights and live report from miami next you should be mad that this is your daily commute. You should be mad at people who forget theyre in public. And you should be mad at simple things that are unnecessarily complicated. But youre not mad, because youre trading with e trade, which isnt complicated. Their app makes trading quick and simple so you can strike when the time is right. Dont get mad, get e trade and start trading today. Welcome back it was an intense second night of debates between Democratic Candidates for the 2020 president ial election. And ylan mui has all the highlights reporter the glaoves came of in round two they clashed over policy issues Like Health Care and personal ones like race but they also took direct aim at President Trump. Joe biden said that trump is ripping the soul out of the nation Bernie Sanders said trump is a fraud. For his part, the president appeared to be at least keeping track of what was happening last night. At one point, every single candidate raised their hand in support of providing undocumented immigrants free health care. After it happened, President Trump tweeted this, how about taking care of american citizens first, thats the end of that race democrats also slammed the trump tax cuts and promised to unwind them, and Kamala Harris said the trump economy isnt working for everyone asked how are you measuring the greatness of this economy of yours, he talks about the stock market well, thats fine if you own stocks so many families in america do not. You ask them how are you murg the greatness of this economy of yours and they point to the jobless numbers and the unemployment numbers well, yeah, people in america are working, theyre working two and three jobs reporter President Trump tweeted this morning that stocks went up massively after his election because of enthusiasm for his presidency he wrote, that Big Stock Market increase must be credited to me. Sara, democrats know that the economy is President Trumps biggest selling point, theyre working hard to reframe that discussion back over to you. Thank you coming up, a company that says it is revolutionizing resale is going public today were talking about online luxury consignment retailer the realreal the first trade and well talk to the ceo coming up. Looking at futures pointing higher on this final day of the month of june. And of the quarter dow is up 99 points with 10 minutes until the open when it comes to your customers expectations, 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. Cool. And everyone ive ever opioloved away from me. Thing everything. I blew my ankle out and i got prescribed pain pills by my doctor. If making my detox public is gonna help somebody im all for it. I just wish i wouldve had a warning. Do you focus on in ttodays headwinds . Es, or plan for tomorrow . At kpmg, we believe success requires both. With our broad range of services and industry expertise, kpmg can help you anticipate tomorrow and deliver today. Kpmg just under eight minutes before the opening bell. The final trading session of the first half of the year, will this upward momentum for stocks continue into the second half . Lets bring in kenney pocari, cnbc contributor good morning so the market is up s p is up 17 in the first half of the year how does that set us up for the second half . Listen, i think it is a great move, certainly in the s p, i would agree with what mike santoli said, some of that was the bounce off of what happened at the end of the year last year i feel good about the market i feel good about where it is. The little bit pricey, but if we get lower rates like theyre talking about, thats going to further support the market so therefore the market will do better going into the second half of the year if we get no move on rates, say we get a deal with china, and then the fed decides not to lower rates, you may get volatility of the market may back off a little bit because up until now, it is priced in that perfection it is priced in the deal, priced in lower rates, so you dont get that, you can see the market kind of waffle a little bit, maybe back off but i think it is actually setting itself up for a good second half as well. What is needed this weekend, kenny, for it to be a win for equity markets so heres the deal. I think a lot of it is priced in what it really needs is it needs to hear that were moving forward. It is not going to get a deal. No one expects theyre coming out with a deal. What the market what investors want to hear is they have come to an agreement to have the next conversation Steven Mnuchin told us wednesday that were 90 there so it is a 10 move that we need and so the Market Investors want to see were just moving if he walks away without shaking hands and kissing babies, theyll view that as a negative and will back off. I dont think that is going to happen were talking for good reasons a lot about trade, a lot about the fed. It all operates in the context of the discussion of how much longer does this economic and profit cycle have to go. Because those things influence it and here we are, next week, it is the longest expansion ever, but not the strongest. How is the market, do you think, at this point reading exactly how much more we have left because cyclical stocks have been depressed, but start to perk up lately. So, here, listen, i think there is a couple of things happening. We start with earnings in a week and a half theyre expected to be weaker, a lot of it will depend on what we hear from cfos and ceos about the trade deal, how long it dragged on what it feels like, whether or not we get movement this weekend and what it is going to mean for them and their projections Going Forward. All of that is going to come into play with how investors and how the market sets itself up for the second half of the year. I think it can continue. I think the u. S. Economy is strong maybe softening a bit, but i dont think were going into a recession right now. I think with the fed standing ready, certainly, already indicated it, the other Central Banks around the world, the ecb, bank of england, bank of japan, the peoples bank of china, to prevent this global slowdown i think this has room to grow. Kenny, good to see you. Thank you. We have up der finder five until the open futures pointing to a higher start. Curiouser and curiouser, said alice. The rabbithole went straight on like a tunnel for some way. Ive seen a cat without a gri, but a grin without a cat. Hey, mercedes, end audio. Change lighting to soft blue. The completely reimagined 2020 gle. With Intelligent Voice control and available third row. Your adventure awaits. Visit your local mercedesbenz dealer for exceptional lease and financing offers. Mercedesbenz. The best or nothing. You are watching cnbcs squawk on the street live from the Financial Capital of the world. The opening bell is set to ring in just about 1 1 2 minutes time what is the key sector for the trading today . I would keep an eye on semiconductors no news, they had two day win streak, nice bounce, kind of they crystallize a lot of the issues going on now, both cyclical, beaten down and of course china so keep an eye on them it has been semis and transports that have perked up. The banks in focus again today. Signs of life in both of them still, i think, in correction mode 10 off the high. Off the high. It is an early shift if it is one. Keep an eye on the banks as well the median all in cashback yield for the sector, 11. 6 , 8. 3 is buybacks dividend yield for the median set 3. 3 the same as utilities now, half, 20 times or so for banks keep an eye on the banks at the open higher yields yeah. Treasury yields, ten year back above 2 , under there recently another key sector big board, youre watching the opening bell and the s p 500, real Time Exchange amcor, packaging for food, beverage and medical and personal Care Products over at the nasdaq, celebrating the ipo today, the realreal, Online Market place for authenticated consigned luxury goods. Well hit the realreal latest unicorn to go public in a few moments. Straight out of the gate, it looks like every sector is higher i was going to mention Information Technology thats the best performing sector at the halfway mark here. Best performing sector so far year to date i wonder a lot of that is the semis, also secular growth, Technology Companies whether it can continue that kind of cross streak. Software within technology the strong point apple will have a lot to say about generally how the tech sector does. Huge weight. Only down at the open, you know, one fifth of a percent, not even that it seems as if taking the news of jony ive, the departure bank of america up 2. 7 jpmorgan up 2 Goldman Sachs up 2 . They surprised to the upside in terms of how much they were able to return relative to sxeexpect tan ations bank of america in the premarket, we said for a while, will yesterday and these capital returns sort of remind people how cheap the stocks are for one day move the question is whether the momentum continues it is the question. An interesting dynamic such aggressive buy babacks mea theyre reducing their footprint in the market. In the absence of stock prices going up, they have a reduced representation in the Overall Index and sure goi gtheyre cone to pull in public flow it is an interesting effect in the sense of they become slightly on the margin less important. Perhaps they become better values there is the picture, a lot of gains at the open at the top of the dow, it is Goldman Sachs and jpmorgan, no surprise third one, png they got an upgrade from Goldman Sachs. To me, this upgrade read like a capitulation, we missed the move this is a stock that is up 40 over the last 12 months. The number one performer in the Dow Jones Industrial average over that period goldman says this past year has marked a turn in pngs market share and organic sales growth we expect next year to mark a turn in the margin profile and Profit Growth relative to organic. We missed the move but we still think there is room to run they were on hold. Clearly some room with png doing really well on a combination of factors including, you know, safe and defensive, pays a dividend, but showing some growth that it has not shown in years. The market caught on to that story. The target was the Earnings Growth already projected and the yield gets you to 10 . To your point, kind of a you can own it, even though nothing is josh brown called that kind of thing a clown grade. Clown grade not a downgrade, it is an upgrade. I bet josh has another word for that only upgrade to neutral. It is a capitulation in that sense. Tesla faced another downgrade today, not really moving to the downside the downgrade. Price target to 160. It is only trading down. 3 . Apple improving almost flat apple now, just 0. 3 maybe jony ive not worth the 9 billion we gave him earlier. I was going to mention constellation brands, earnings up a little more than 5 at first blush. Adjusted earnings came in somewhat better than expected. They do have this mark to market loss, which will be an issue for them, their issue of Canopy Growth that gets overlooked it is about the operating performance and affirmed fiscal 2019, 2020 earnings. I think essentially a stock under pressure, down 20 from the highs. Sentiment got bad. Especially after the threat of the mexican a lot of noise around it. It seems like this is a relief trade. It is not back toward its highs but has recovered a little. The consumer takeaway on constellation is beer is still good, wine sales, though, not so much the Company Expects the beer sales and corona as a big driver here to rise 7 to 9 for the year wine and spirit sales expected to fall 20 to 25 . Theyre also selling off a portion of the wine and spirits business, which is slated to complete by the Second Quarter. Boeings difficult week continues. That stock is down 0. 6 . Nike, for all the doom and gloom as the numbers hit late last night or closing bell last night is up, close to a percent now. You didnt hear doom and gloom for me their innovations, the company of this scale, is much better than expected. This is 10 currency neutral Revenue Growth theyre facing a strong dollar and then global slowdown and they slowed growth in all of the geographic regions, driven by the two keys, north america, biggest portion of sales and china, the biggest growth driver with 22 growth there. They just continue to show very strong growth and it is helped by innovation and products like the air max. It is also helped by the digital. The reason they spent so much, which is why they got dinged and why they missed earnings is because theyre investing so much to shift to the direct to consumer business, the sneakers app, which is only really been around for two years, has just exploded in growth and now it is starting to pay off. It is about 15 digital of total sales, they want that number to double in the next few years and they give solid guidance on that front as well i looked at i look at nike, and disney as these companies that had periods of people doubting where they were in their strategic model and now they kind of have proven it or on a track that investors believe in and you can overlook a little bit of the noise expensive stocks, but expensive for a reason i dont know as well whether the president is going to focus in on a couple of the sound bites from the Conference Call whether he can do the same for some of what tip cook said recently about the trade war and it gives him a little more ammunition to say, look, take a step back, dont overreact, the u. S. Economy, the big corporates linked to china are doing fine. I think the trend has been Companies Like nike and apple have incredibly deep roots in china. They have been there a long time they got there early and it seems like they have more confidence in the resilience of their business there and they also have other options. So it seems not necessarily representative of, you know, shoe company x that uses Contract Manufacturing there and has no easy solution somewhere else. I agree they have got factories all over the region they face tough times. They start to diversify to vietnam. The point the executives made when asked about this on the call yesterday, were pretty nimble and we got options and we can take the macro concerns as they come and were not too worried about it it seems like investors are to your point giving them the benefit of the doubt consumer stocks in general are having a good day, consumer discretionary, after we have pretty decent data better income, up. 5 . A lot of it is interesting comp wage income lagged within the personaling in number, which is fine but on the whole, i agree, reassuring number on inflation and personal spending. S p 500 overall just up a third of 1 . A decent end to a slightly negative week. Flatted by the banks financials up 1. 5 bank of america, jpmorgan up 3 . Outside of that, we wouldnt have such a positive tilt to the tone of markets. Who is the winner is it goldman . The winner overall if there is a theme, it is the money centers, the fed, the bigger guys fared better than the regionals. They were able to return more relative to what analysts have forecast than the regionals were across the board, nobody really lost out and of the big six, the one that surprised most of all was Goldman Sachs and it is up nearly 3 . I think youre just seeing the focus on all of these names. Nobody of the big caps is up less than 2 the regionals is up but not quite that much. Jpmorgan, talked about that yesterday, had to use their mulligan, you would be worried about that if the capital return underwhelmed relative to expectations, still above expectations so thats really a sign that jpmorgan pushed the boundaries, feeling so confident as opposed to the other way around. Financials and energy, the leading Groups Health care and utilities turned red. Bob pisani on the floor with more were looking for direction everyone is trying to gain what will happen to the g20 meeting. Look at the sectors here banks having a great day the capital situation really improving dividends, buybacks better semis, china play. Metals and mining, this is also the classic china play on the upside energy also doing fairly well this week. It is a big difficult situation to figure out here in theory, the risk is to the downside the markets are at new highs but everyone is positioned for a global slowdown. Light on equities and really, really long on the bond yields here bank of america, i think he had it right he had a note out, trade truce, nothing going to happen. Limited upside thats what the market is anticipa anticipating maybe we go up to 3100, 5, 6, 7, 8 if there are more tariffs over the weekend, we go down 5 to 10 . I think this is a fair assessment, where the market is now. The global trade talks are very closely aligned with the perception of slowing global momentum slowing Global Economy if you look at the fund flows, first half of the year is over, look at etf fund flows, money is flowing in the bond funds. Were talking about taxable bonds had 11 inflows. The money going to the taxable bonds increased 11 in the first half of the year municipal bonds, theyre up 9 equities, very little inflows, most of this is low momentum etfs, nobody bought these things before those are defensive plays. The market is positioned defensively. Thats why the pain trade is actually if the market goes up everyone is positioned so defensively right now here maybe well get some competition out there. See the bank ports, hope you were listening to wilf bank of america, there is a lot of regional banks 3 , 3. 5 the s p is only 2 and you start going to 3. 5 range, now you look at utility type of returns. This is interesting. This may make banks more attractive here. What we have seen in the first half of the year, in terms of ipos the consensus is wrong beginning of the year, nobody wants 200 ipos, too many, theyll price them too high, market will fall apart only thing anybody wants is uber and lyft. 62 ipos raised 25. The Second Quarter, the most active quarter in five years look at this return. 30 . Thats twice as much as is typical. Everyone was wrong people loved ipos. Uber and lyft to the downside. We got the big names that are out there. Waiting in the second half of the year, we have names that are like wework, peloton, postmates, airbnb, casper, poshmark the russell will reconstitute at the close. Happens once a year. What will happen, it is interesting, all of these ipos we saw, theyre going to be going into the russell 1,000 keep an eye on this. Youll see some volume at the end of the day on those particular stocks. A great first half of the year, look forward to the second half. Mike, back to you. Bob, thanks stay on ipos here, really big day for the realreal the online seller of used luxury goods, going public, priced the deal last night. Leslie picker is at the nasdaq as we await the companys first trade. Getting some real investor demand, pricing shares above the range it had been marketing at 20 a piece. The company says it is the Largest Online luxury consignment retailer where people can sell their used gucci, louis vuitton, for others to buy at a discount th they pay the consigner a commission between 40 and 85 of the value when the item is sold investors i spoke with have been attracted to the realreals topline growth up 55 last year. And there is also a bit of fomo going on those who missed out on the deal for another online retailer revolve where shares doubled in the first day of trading earlier this month are hoping for the same kind of surge with realreal but the biggest question mark from investors and analysts centers around pathway to profitability. The realreals model is unique and the company is on track to lose 100 million this year with more competition coming into this online consignment space. Margins could become more squeezed investors seem willing to give realreal a 1. 7 billion valuation today. Bernstein says compared with the basket of luxury stocks, the realreal is debuting with double the multiple on a price to sales basis. I feel that im a bit of an expert on this, leslie, i have both consigned and consumed at the realreal here is my question, so they take a big cut about 35 or so percent of what you are selling, right, when they make it, which is okay because theyre authenticating it and finding good buyers how do they authenticate it and as a shopper, how can you be so sure that the items are real because theyre very expensive still even as secondhand items. I think thats the most important question and reputationally thats the most important question for this company, especially as it is a public company, especially as it does expand. They say they have 100 experts that operate and their sole job is it look at bags and watches and jewelry and other items to make sure that they are authentic. And, of course, as this company grows, theyll have to spend more to pay more people to do this that said, it seems like the Quality Control is the most important thing here, the trust factor is the most important thing here and you have to wonder whether anything slips through the cracks and gets sold that isnt actually authentic leslie, is this a similar Business Model to poshmark or very different and which one sees higher market capitalization if the current estimated values go ahead. Poshmark operates not in a luxury category per se they have more of the anthropology, people are selling from j. Crew, lululemon, they operate more of a mainstream, i think they recently raised about 115 million in their latest round of fundraising. It is difficult it say without knowing their exact financials how they would compare from a valuation standpoint to the realreal the realreal says theyre the largest in the luxury space. One might assume posh mark is in the largest of the middle tier of goods that arent quite luxury but not cheap by any means. So i think the two of them ultimately could see, you know, trading at similar multiples in terms of just a Growth Profile and competition in that space. Leslie, thank you well await that opening trade andnd vi and interview with the founder and ceo. Contraction territory, 49. 7, economists looking for a number of 52. 3. This is just the latest in a slew of very weak Regional Manufacturing surveys. I think, mike, that below 50 number gets your attention because anything 50 and above is expansion. And anything 50 and below is contraction. It is just the chicago area, but add it with new york and philadelphia and richmond and dallas, yeah all pretty much led the way down if you looked at the way it relates to the Overall National pmi number that eventually comes out, you have had these drops below 50 on the regionals that do mean that maybe the national will be skirting the 50 line, tends to be more of an exaggerated number but the trend has been negative. Mike, as we discussed yesterday, as well in closing bell, if they if the fed continues to focus just on its two mandated areas, then were still not really due a cut. Not so much due a cut certainly more data like this gives them ammunition. Yeah. Inflation shhas fallen short you spend the pmis as leading indicators of the employment situation. All right ten year yield still above 2 . Not much of a move there coming up, on ipo watch, the realreals first trade and an interview with the ceo when it happens. As we head to break, a look at the movement in bonds right now. Just after that release of the weaker chicago pmi data, take a look at the action june was the best month for treasuries of 2019 you saw a sharp drop in yields, big price appreciation, ten year yields sitting just above the 2 level. Well be right back. Through the at t network, edgetoedge intelligence gives you the power to see every corner of your growing business. From finding out whats selling best. To managing your fleet. To collaborating remotely with your teams. Giving you a nice big edge over your competition. Thats the power of edgetoedge intelligence. 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. Taking a look at this mornings top gainers on the s p 500, which is higher overall, consolation brands, corona beer is the biggest leader. Banks definitely in that mix leadingrg oup in the markets san joaquin will squawk on the street on the tweet will be right back slime in my motorcycle. No. Thats motorcycle insurance. Slime everywhere . Ughhh nooo, theres no insurance for that. Do they help when i have bills Health Insurance doesnt cover . Yeah thats it aflac gross guys. Get help with expenses Health Insurance doesnt cover. Get to know us at aflac. Com squawk on the street. Checking in on Deutsche Bank shares higher by 2. 5 . Va havent really moved in 10 to 20 minutes. They didnt get dinged on the c core result yesterday. Headlines from dow jones saying they are considering cutting 15 to 20 jobs or 20 of the total work force as part of their ongoing cost cutting and turnaround plans they are expecting the announcement to be made in july. Still not finalized, the exact size much the drop cuts of the its a theme we have discussed for a while. Those cuts expected to be focused within the investment bank, and in particular with an equity trading and also rates, but not fx it supports more of the Treasury Services and Transactions Services banking business. Tesla pushing to meet its sales targets. Lets get more from phil lebeau in chicago good morning. Sar arcs most people are expecting tesla to hit the estimate between 90 and 100,000 vehicles to be delivered for the Second Quarter and that will certainly give reassurance to investors. But this is what people are going to be focused on model 3 deliveries the bulk of the deliveries are going to be model 3s the estimate is 74,100 that would be a record quarter for model 3 deliveries if they go above, dont be surprised if the stock moves higher next week ubs out with a note saying im cutting my price target down to 160. Why . He says we expect losses in the second half to increase as deliveries likely soften and the impact of pricing actions continues to weigh on margins. Thats why they have cut their price target down to 160 they are not alone others have cut their price targets as well. Guys, this theme, if you will, were hearing if from a number of analysts, which is, okay, tesla may achieve q2 product delivery that they were saying they were going to make, 90,000. The second half of the year with lower ev tax credit, et cetera, is going to be tougher not such a good first half the year for tesla thank you. Coming up, the latest from the g20 summit in japan. We will take you to osaka. Also ahead, the realreals first trade as it goes public today. We will talk to the ceo. Squawk on the street will be right back dow struggling to stay positive here ju u18ois. Stp pnt your it infe requires deep thought. So quit staring out the window, and give cdw a call. Theyll assess your infrastructure needs, then design and implement a modernization solution using fast hpe gen10 servers, with security features built into the hardware. And provide Hewlett Packard enterprise proactive care services, 24 7 monitoring and support, to keep your infrastructure agile, healthy and reliable. For modernized it infrastructure, you need Hewlett Packard enterprise and it orchestration by cdw. But were also a company that controls hiv, fights cancer, repairs shattered bones, and keeps you healthy your whole life. From the day youre born we never stop taking care of you. Good morning welcome back to squawk on the street. Im sara eisen here with wilfred frost and mike santelli. Taking a look at the market, we have lost some of those early gains, though s p is still positive, up a little more than 0. 2 of 1 . The dow is flat up 24 health care and technology weaker yields stay higher after that weaker chicago pmi data. The roadmap for the hour is going to start in osaka, japan president s trump and xi prepare to meet. We are live at the g20 summit. Plus, ipo watch. The realreal getting ready to go public we will speak with the ceo. And jony ive is departing apple after more than 20 years on the job. But we begin in osaka at the g20 with the latest as the president prepares forwhat could be a pivotal meeting with president xi kayla. Reporter good morning, wilf. White house officials cant say what will transpire between President Trump and president xi in that meeting 12 hours from now. A sore Administration Official says the working assumption is the result we will get is an agreement to deescalate tensions and resume negotiations Going Forward unless president xi refuses to revisit the enforcement terms that the chinese walked away from in early may. That is the contingency point that it hinges on. The markets is an important metric for President Trump going into his reelection as evidenced by this tweet that you are looking at that he sent out earlier today while his g20 counterparts were already at dinner one other news point that might be of interest to President Trump who would like to say that businesses are moving out of china in response to his trade actions is this news that apple is now going to be moving the assembly of its mac book pro to china from texas we will see if the president has anything to say about that the meetings outcome could be an item that would remove uncertainty from the Global Trading system or it could just add to ongoing trade tensions. We will see what it does for leaders at the g20, there are a whole host of other financial and geopolitical issues that are on the agenda. Here are just a few. European leaders want to make sure that auto tariffs are not still on the table they want to make hesure this delay is a permanent one and they want to discuss with President Trump. Japan was on defense as President Trump slammed its postwar defense treaty. Russia and the u. S. Will discuss an arms control framework. And new sanctions could be in the works for turkey after that country purchased Russian Military equipment that last item could come up in a bilateral tomorrow between trump and turkeys president erdogan, which happens just 90 minutes after that meeting with president xi begins. Guys kayla in osaka, thank you. The latest Economic Data crossing the tape at this Hour University of Michigan Consumer Sentiment Index a little bit above forecast which is a good sign on the consumer 98. 2 the consensus estimate was 97. 9. Especially reassuring after we got weaker Consumer Confidence data earlier in the week taking a look at stocks, some of the early gains on the last trading day in june with the s p still on pace for the best first half since 1998. The dow set for the best june since 1938 despite stocks trading at record highs. Billionaire investor paul singer is warning that the market euphoria might not be here to stay listen. The Global Financial system is very much towards the risky end of the spectrum in terms of debt global debt at an alltime high. Derivatives at an alltime high. Im expecting or i have been expecting, its not todays epiphany, but the possibility of a significant market downturn. Hedge fund manager paul singer at the aspen ideas festival joining us to discuss the Market Impact from the summit, alex dryden, Global Markets strategist alex, are you willing to take a binary bet on g20 and put a call on a sector or a stock index around the world given what is about to play out this weekend i think all eyes are on the g20 of the time nervous we will see some handshake agreement and the market will take that as a sign that the trade tensions are called off i think if you get some agreement between the u. S. And china, all that happens is the tension shifts on to u. S. And european trade negotiations. If there is a region that really doesnt need trade tensions and tariffs its europe. You think the markets is underestimating that it could heat up between the u. S. And europe i think the rally is built more on sand than stone. Its built on fed support in the form of rate cuts and some easing of trade tensions thats not the most reliable thing to be building a sustainable market rally upon. Despite different aims, you think President Trump and president xi could find an agreement this weekend i think they can. I think they i sort of agree with the previous set of comments i do think the europe story is the most interesting one over the long one i think this gets drawn out. Behind the scenes i think the chinese and the u. S. Want to see rate cuts before a trade deal. So they have that going for both sides. Remember china imports its Monetary Policy interest the United States through the peg. So if they were to sign a deal which was kind of negative for their economy and slightly better for the u. S. Economy, which is largely what the current offering is, the last thing the chinese want is tighter Monetary Policy to come along with that. I think there is incentives on both sides to play it out, be a little bit tough, make a few i dont know, make a stink a little bit and get the market a little agitated and lets get some rate cuts over the summer and fall and come up with an agreement later in the year. David, i guess the question is, lets say that scenario plays out. What kind of economy are we looking at a u. S. Economy more or less 2 trend in 2 treasury yields. This is the kind of relatively low growth high liquidity environment we got used to for a while, or a kickstart for something quicker, or something worse . I think its really i really think its actually more importantly a low inflation economy and we are kind of coming to grips with the fact that even at a 3. 6 unemployment rate, 50year low, we cant generate inflation here, europe, japan, scandinavia, most developed markets and they are throwing out the phillips curve and resetting our thoughts on what the right level of monetary accommodation is in a world where inflation keeps undershooting its target and that, you know, to follow on to your question, that could provide the fed, when it changes its framework next year after the chicago conference that they just had, and i do expect they will change the framework, some reason to actually not just edge near a soft landing and kind of get us this modest growth with lowinflation, but to stimulate inflation above the target which could next year lead to some pretty, i wouldnt say overheated, but might lead to upside projections on growth that people arent thinking about here they are more focused on recession. Alex, you are more cautious on the equity market where do you want to be . Defensi defensive sectors . I think i am waiting for clarity on this fiscal policy. In that sort of environment now is not the time to be taking punchy bets away from benchmarks and being out of consensus yl i ha i want to be in the defensive sectors, areas like financials, industrial as well. Alex and david, thanks for joining us. Thank you i want to mention nike here shares dropped more than 4 after the Earnings Report after hours and have rebounded nike earned 62 cents a share in the Fourth Quarter that was a four cent miss revenue was slightly above forecast on the call nikes cfo said the china trade war hasnt affected trade war and they continue to see strong momentum in consumer demand he said u. S. Tariffs on china was relatively modest. China has been nikes Fastest Growing market totaling 17 of brand sales so far this year china wasnt the only growth spot for this company. Importantly, north america, too, very, very strong. The home market. Digital continues to fuel the bottom line and the top line and i think its important when you see foot locker, for instance, have lousy quarters, sell off 15, 20 department stores. These are places that sell nike. Nike is spending so much on overhead in transitioning its business to direct to consumer so it doesnt have to go to the third parties. Its becoming a Winning Strategy you are seeing that in the growth numbers. Nikes gain is anybody elses pain in particular, or everyone is benefiting from strong u. S. Consumer usually nike is an outside gainer i think its a good tell on the u. S. Consumer they are willing to pay 200 bucks for a pair of vapor max sneakers it doesnt necessarily mean that retail is all right. Its decent news for under armour and adidas and leisure is not going away, its not a fad, people are shelling out for the latest innovation. Nike isnt a place where its back on taking market share in the home market. As a stock, it had underperformed a little bit so far this year under concerns about i think its sort of its gotten this place in these global secular growth branded bellwether portfolio its like the, you know, the College Portfolio when the kid is born. Its disney, mcdonalds, nike, starbucks. Whether thats going to be right or not for a long period of time, its the sort of obvious Global Brands that are sturdy at this point that, for now, are in favor. As part defense and part offense. Its interesting that the large cap, and you saw this in the dows performance relative to the russell 2,000, the dow has been the safe spot during the trade war. Those are the multinationals that are often exposed heavily to trade they are able to be nimble and have factories in other places and sort of absorb the pain a little bit better its not huge capital goods orders coming from china its a smaller consumer sale. Nike up 0. 3 today. The s p up 0. 2 . When we come back, shar101 also, luxury koods reseller, the realreal going public on the nasdaq the ceo will join us next. And later Economic Issues taking center stage at the democratic debate candidates looking to cut out the noise and get to the issues apt hand well discuss. T hand well discuss. They want to know how were going to put food on their table. [ chrsndppusee a alae 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. Your daily dashboard from fidelity. A visual snapshot of your investments. Key portfolio events. All in one place. Because when its decision time. You need decision tech. Only from fidelity. Welcome back online consignment retailer realreal set to make a public debut any moment joining us is the ceo Julie Wainwright and leslie picker. Thanks so much. Julie, thank you for joining us today. So online luxury consignment retail the most important word is authentication and trustworthiness of your customers. How do you go about ensuring each item sold on your website is, in fact, the item that they say it is . So as you may know, we actually have also a service component. So we go to peoples homes and remove items every single item on the site has already been inspected, authenticated before it gets to the site and we do it, we have multiple ways i think were we employ over 100 experts. Perhaps the second largest employer of gemologists in the u. S. Our brand authenticators also train people it happens every single day on a regular basis. We put it through a rigorous multipoint inspection process. Is there 100 guarantee that everything is authenticated . Have you ever seen an instance where a counterfeit good is stoon your site . We have 99. 9 , which is pretty darn good we are not an easy place for a counterfeiter to do business if you are on theselfposting world, you can go up and down and you could have a fake name no one really knows. But because we take possession, the people that and we have had counterfeiters try to use us we confiscate their goods. We have a zerotolerance policy and were very proud of that and we work with the police. And then we let the brands know that this is a counterfeiter so i would say you dont want to mess with us. Your rate is about 35 , which is a pretty comfy take rate at this stage but itas more competition comes into the space, a lot of websites are dropping up that are getting involved in this online consignment whether its luxury or otherwise. Do you see that take rate going down over time good question its a high take rate. We are a high service model. So were the only business that actually does all the work for the consigner, focuses on the luxury segment, auth ent indicates everything, and consequently we can justify that take rate. I think its also important to know thats a blended take rate. In some cases, like a rolex, we pay the consigner 85 points. So our take rate is 15 so it really, it sounds big, but on average we are really competitive in the high end. Our goal is to pay consigners more on the high end and on the lower end take more so we dont lose money. From an investor standpoint, investors looking at potentially buying into your shares this morning when they begin trading, is profitability viable in the next five years . Do you see a pathway to profitability with regard to the take rate or other avenues of growth for the company look we, did 711 million last year the total opportunity in the u. S. Is 200 billion. So were going to continue to focus on growth. But not growth at any cost we are hyper conscious about Unit Economics we have a path to profitability. And we are going to execute against the path. I think my colleagues sara eisen has a question. Hi, julie thanks for joining us. My question is why wouldnt i just sell my handbag on ebay, which gives me which actually only takes 20 so i can earn more and also claims to authenticate it . Well, we dont even compete with people who post on ebay certainly, if there wasnt an ebay, there wouldnt be a realreal our competition is brick and mortar stores. If you want to figure out how to post, go back and forth on price, and then if they dont want to take returns and you want to do all that yourself, god bless you, all right thats not our model and i think you are pretty busy. You are there on the floor our consigners are busy. They appreciate we do all the work we sell at optimal price we have sold nine million items right now. So were always going to price at the highest price possible within a 90day window i cant say that for anything sold on ebay and also your bag would be one of many that have there is a lot of fraud in selfposting sites. I am not calling out ebay specifically so in general, prices are lower there because you have a lot of fraudulent products. Julie, my other question, and i have used the service. I agree. You do a good job. You are picky. You send back everything really nicely that you reject, which i appreciate but my other question is who your core demographic is that a buying from you and what you think is driving this trend, which seems to be very hot right now. Growing up, nothing like this existed. Why is this making such inroads with the consumer right now . So our Biggest Group of customers and now consigners are millennials, and i would say there is multiple reasons. One is they are hyper conscious about sustainability and the impact on the environment, buying new when we look at where were taking share from and share of wallet, it tends to be the fast fashion market, which were really excited about so i really do think we have secular trends we have got environmental concerns, we are a positive Environmental Impact we offer Amazing Products at a good value to be honest, its cool because every product is unique. So, you know, you can differentiate the way you look or the way your house looks because of our because of shopping resale. How do you ensure ample supply of preowned Luxury Products on your site without massively upping your advertising and Marketing Budget over time . We have a triedandtrue method for getting consigners. We do it all day long. Last year we had 180 people in the field. Those people are generating referrals, but they are also doing the work and removing products from peoples homes we also have a store we have two stores in europe, one in l. A. , generates a tremendous amount of supply. And then we have 11 luxury consignment offices. Those are actually awesome for fine jewelry and watches where well give free valuations to anyone who wants to know the value of those goods we will do it in front of you. Those also are really good source of product for us but at the end of the day there is, there is about 198 billion of trapped assets. So when you think our goal is just to generate awareness because when people start selling on our platform, they are amazed how much value they had around their house that wasnt being used. Now, you were the ceo of pets. Com when it went public in the dotcom era. Im curious, now that you are taking the realreal public, how you kpier those two periods. Because a lot of people look at whats going on with the ipos right now as being akin to what we saw during the dotcom era. Do you see any comparisons, anything people should be worried about . That was 20 years ago, before the iphone lets just put that in your head at that time there were about 200 Million People on the internet worldwide so if you just look at timing is everything, so if you look at where we are in our cycle, i would say at least for the realreal seg, i cant speak for all ipos, we hit the timing right. We have secular trends behind us i feel great about where we are. And if you look at chewy going public, that really is pets. Com 2. 0. And theyve had a really good outcome. You know, timing is everything and the realreal has the wind at its back. Speaking of timing, we will be awaiting your first trade yu julie wainright, the ceo of the realreal, thank you for joining us. Back you have had projects rejected no, they are picky. It has to be in tiptop shape. No nicks or showing of wear. It speaks to their quality and why they have high prices. Also, it has to be the very best designer the highest of the high. All right when we come back, can a deal get done President Trump and xi preparing to meet at the g20 summit in osaka. Trumps former trade negotiator is with us what he has to say about the possibility of getting a deal done squawk on the street back after this goin down the only road ive ever known like a drifter i was born to walk alone youre a drifter . I thought you were kevins dad. Little bit of both. If you ride, you get it. Geico motorcycle. 15 minutes could save you 15 or more. Welcome back for our etf spotlight. Getting a check on energy and oil with the xlexop and oih etfs trading higher by 0. 5 opec leaders preparing to meet in vienna. Brian sullivan on set with more on that. And also to answer a big question on oil prices. They have been dogs down 15 year to date. More on opec in a minute that question that you referred to, given opecs cut reduction last year, venezuelas rolling disaster and slashed output and increased iran tensions, blowing up of tankers, downed drones, many people wonder why arent oil prices even higher heres why its not one thing that has kept oil prices relatively stable, but a few. First and foremost, record american oil russiproduction the u. S. Could could be headed to 13 or 14 Million Barrels a day. This oil largely considered risk free, maeeaning its not subjec to the whims of geopolitics. Its not just us russian production remains elevated as well russian output is down from a few months ago, still above 11 Million Barrels a day. Thats frustrating opec, who was hoping last years 1. 2 million barrel a day cut would firm prices speaking of opec, not everybody believes that deal to cut production is going to hold up some traders are worried should the opec deal break, another Million Barrels plus day will hit on oversupplied market finally, oil has been held down by agreeing fears of an economic slow down. If economies taper off, demand for oil will fall leaving more excess oil on the market four reasons the oil bulls have been put out to pasture, at least for now. There was a day i would imagine, guys, yif you had tankers being mined and drones being downed and this rhetoric. Oil would have jumped 10 or 12 in a day there is so much oil in the United States, two new pipelines coming online in the next year, thats going to enable us maybe to go to 13 or 14 Million Barrels of oil a day the wuerorld, as they say isnt what it used to be. What about the spread with the geopolitics. Are we seeing significant movers in that . No. There has been a spread between types of oil light sweet, the delicious kind. Venezuela that sort of heavy stuff. The heavier stuff we have seen a movement there in that spread. Brent, wti not as much the type of oil, yes all right was that some smart stuff, sara i noticed you put in the prompter brian says smart stuff. That is fake stuff. It says sullivan said some smart stuff. It was perfect alliteration, as well. It was beautifully crafted brian, thank you. Another hour to do so. We now have time for a cnbc news update. Do you know i was trying to take a picture of that i was like, im going to take this im going to post it its going to be awesome i just missed my opportunity sullivan usually says some smart stuff. President trump is meeting with russian president Vladimir Putin on the sidelines of the g20 summit in japan. Trump plans to discuss trade and disarmament issues its their first meeting since the Mueller Report was released detailing russian meddling in the 2016 president ial election and trump was asked about it did you hear that . Dont meddle the u. S. Special envoy from north korea met his south korean counterpart in sole and reaffirmed washingtons commitment there is speculation that Stephen Biegun may meet north korean officials at a korean border village demolition officials have blown up a bridge in genoa a year after it collapsed residents living below the bridge were evacuated ahead of the implosion of those two remaining towers thats the cnbc news update for this hour. Back to you, sara. All right thank you. When we come back, we speak with President Trumps former lead trade negotiator. Why he is saying we are, quote, far from a done deal on trade. Squawk on the street will be right back dows up 18. 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. Ive done all sorts of research, read Earnings Reports, looked at chart patterns. Ive even built my own historic trading model. And youre still not sure if you want to make the trade . Exactly. Sounds like a case of analysis paralysis. Is there a cure . Td ameritrades trade desk. They can help gut check your strategies and answer all your toughest questions. Sounds perfect. See, your stress level was here and i got you down to here, ive done my job. Call for a strategy gut check with td ameritrade. Welcome back investors closely watching the g20 over the weekend in 12 hours President Trump will hold what could be a pivotal meeting with chinese president xi no trade deal in place and a potential new round of tariffs on the table, President Trump expressed optimism earlier today. We look forward to it i think it will be productive. Who knows . I think it will be productive. At a minimum, it will be productive we will see what happens and what comes out of it president xi is going to put on offer on the table tomorrow we will see what happens. You will know maybe before most. We will see what happens tomorrow it will be a very exciting day im sure its going to come out hopefully well for both countries and ultimately it will work out. Joining us from washington, former assistant commerce secretary for manufacturing and services in the International Trade administration during the Obama Administration nicole lam hail and former Economic Council Deputy Director in the Trump Administration cleat williams. He left the administration in the spring thank you both for joining us. Cleat, if i start with you, what was it a month or two ago that led to the softening in tone, the worsening in tone in these trade negotiations and has anything changed on that since then so what happened about a month and a half ago was that the u. S. And china thought they were close to a deal and part of that deal was that china needed to change its laws to implement changes that would stop forced Technology Transfer from happening, better protect intellectual Property Rights after chinas team consulted with their president , china suddenly signaled to the United States it didnt have the flexibility to make those commitments and those are critical part of the deal for the United States and thats why you sue thinaw things break down since that time what i have been hearing is that positions have remained pretty hard, that, you know, the hardliners in china are still resisting some of this stuff, but hopefully tomorrow president xi and President Trump can unlock this and get things back on the right footing. How important is huawei as a bargaining chip for both sides well, president xi has signaled in the conditions that the Chinese Government is signaling, he signaled thats an important one and that the United States needs to, as they put it, get rid of the ban on huawei now, i do think that there may be some flexibility for the u. S. On this issue. President trump has signaled that but if president xi comes in and he is unequivocal and says the u. S. Cant take any action against huawei, i dont think thats going to be very productive because the u. S. Has identified this as a National Security threat. Nicole, im wondering how watching this trade war, g20 play out is for you having come from the Obama Administration where it was very different. It was cooperation it was multilateralism it was getting partners on board and confronting china, but in a very, very different way certainly not bringing them to the table like this. What do you make of it all thank you, sara our clients have been very concerned about the market uncertainty that this trade war has created, and i think that at the end of the day its really, as cleat mentioned, one of the sticking points is changing the domestic laws both at the federal level in china and at provincial and local levels. I think thats hard pill for the chinese to swallow, and i think that what the Obama Administration attempted to do and i think for a longterm resolution of the structural issues that we see with china, i think we need to return to this strategy, is multilateralism efforts like the tpp, which would have created an environment where china would have felt more compelled to make some of the changes that were seeking from a structural standpoint so i think at the end of the day its just really important that market certainty is restored and that these tariffs are delayed and hopefully negotiations are resumed very shortly cleat, nicole brought up the market certainty given your experience with the president on these issues, how much pain do you think he is willing to tolerate for the market, but more importantly from the economy, which is starting to show some cracks ahead of an election in terms of making a trade deal . I think the u. S. Economy is still strong and certainly the u. S. Economy is strong as compared with china. I think our relative economic strength is the reason why the president has some leeway to take this on i think the u. S. Is willing to accept a little bit of shortterm pain for longterm gain so year over year see that being an immediate factor. I would like to touch on this question of multilateralism that you raised i think its an important issue. It is in the u. S. s interest to work with allies there is no question about that. We have tried that in the Trump Administration continuing some of the efforts of the Obama Administration the problem has been that a lot of our allies havent shown sufficient ambition, havent been really willing to have the tough conversations with china, havent been willing to apply leverage to china in the way that the u. S. Las. And so the u. S. Was forced to show leadership and take this on in a different way that said, i hope where we land here is that the u. S. Gets a bilateral deal with china that deals with some of these problems, and then ultimately brings it into a Multilateral Forum where everyone can Work Together and pressure china to make the changes again, multilateralism is good and will be necessary i think to make this deal sustainable over the long run, but i dont think they would have gotten a deal if they went that route first. What is your take that Peter Navarro has gone on the trip does that change the likely negotiating position the president has . Does the president have weeks of discussion planning for this sort of meeting, setting off on his flight with a set kind of plan, or does he change moments before he goes into the meeting . Peter has been a core part of the trade team in the white house throughout he was down in buenos aries where there was a very productive meeting which led to a period of time where we were making progress with china so i wouldnt read into that too much one way or another. I think the u. S. Team has been pretty constant throughout all of those advisors were consulted in the weeks leading up to the meeting. I think what may be more interesting is what is chinas delegation look like there had been some reports they were bringing in additional hardliners. I think its going to be critical here, i think President Trump needs to show in front of those hardliners to president xi that this isnt about keeping china down, but that this is just about making sure that china is treating u. S. Companies fairly i think if President Trump can signal that in front of xi and his hardliners, i think that will give the president of china some more flexibility to come back to the negotiating table in a way we need him to nicole, ceos look at this situation. What do we make of the fact that the president hthis week has ben critical of vietnam as a trading partner . It isnt necessarily getting to terms with china it seems like in general kind of contesting trade relationships around the world is the dominant mode. No, i think that its a serious issue. It appears that there is a little bit of a whackamole going on here. With vietnam it could very well be that there is a concern around trans shipment, exports from the u. S. To vietnam have increased recently there may be concerns around that to address a point that clete made earlier. The issue of who is bearing the pain of this the people who bear the pain of this are u. S. Manufacturers who rely upon Global Supply chains, who really a lot china is certainly a source of many of the inputs for u. S. Manufacturing, and thats going to drive up costs. So manufacturers are going to be faced with three options hunker down and weather the storm, pass the costs on to the consumers, or look for markets, other markets, third countries from which to import pin puts to their manufacturing process and thats expensive process so this isnt a game this is something we need to resolve very quickly and we need to really remember that at the end of the day u. S. Jobs are at stake here. Clete, final question why did you leave . And who should the Market Investors Pay Attention to Kudlow Mnuchin . Lighthizer i loved my job and i loved the opportunity to serve my country in the white house im really glad that i was part of this strategy on china, which i think was long overdue to try to solve these problems. But i had some family obligations. I have a wonderful new daughter and i wanted to spend more time with her, my son and wife. So it was just time to move on after two long hard years. In terms of your question of who to listen to, it is a team effort, and larry kudlow is a core part of that team along with secretary mnuchin, along with ambassador lighthizer, Peter Navarro, secretary ross. So, again, i think it is the u. S. Team working together and i think all of them are in direct communication with the president and can, you know, accurately convey when he is thinking and how he is approaching an issue at any given moment. Thank you very much for joining us. Good to be with you. Thank you meanwhile, hundreds of u. S. Companies testified before the u. S. Trade representative in washington this past week pleading against imposing new tariffs. We spoke with several Business Leaders here, and they are all saying the same thing. There will be price hikes. As for made in america, it just isnt an option anymore. Listen. There are many of us that have had to swallow a lot of the other increases. China already has been going through various forms of inflation themselves so there has already been built in three, four, five percent increases we have had to absorb the last five or six years. There isnt much choice but to increase price. So, you know, were going to see a drop in business for sure in the United States market fewer kids are going to get bicycles. We cant buy the Raw Materials here anymore i dont know where we can buy thread there is a reason that 95 of all our product comes from china. Its not because we love going to china its because they have invested over the last 20 years in all of the weaving and dyeing equipment that used to be in the United States. We are a little concerned about the predictability of the business so we have made an aggressive play from a supply chain standpoint in the last six months to move some of our Component Parts into areas of the world to help mitigate the cost to consumers if the tariffs go through just a sampling of the Small Businesses worried about that next leg and i think thats going to be the difficult question for the administration if they dont make any kind of truce, does the white house go through on the 300 billion worth of imports from china . So far consumer has been mostly spared thats when you get into apparel and footwear and equipment and a lot more, bikes, kids toys, you heard from some of those companies ceos. They raise prices or they take the hit consumers mostly spared and big corporations can take it, as we saw with nike smaller companies, if we get another leg of tariffs, we might start to see the pain. When we come back, democratic president ial candidates turning up the heat in last nights second round of debates. We are live in miami. And modest gains here. The p 0 s 50up not quite 0. 25 squawk on the street back after this its them, calling us. Its going to be a week before they can get through on these roads shhh, sorry, i didnt catch that. I said ask how soon they can be here right now . Whats now . He says theyre surveying our property now theyre probably at the wrong house i dont see any hovering his name is hovering . Look up . By automating claims with Machine Learning and analytics, cognizant is helping Insurance Companies advance how they serve even hard to reach customers. Cool retailers have gotten wrecked this year, but one chart watcher says two names look so bad, they coulbed good. Find out on trading nation. More squawk on the street after this 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. Democratic president ial hopefuls squaring off in miami last night one candidate, senator Kamala Harris taking on trump, mocking his use of quoting the stock market as a barometer for how americans are faring. How are you measure the greatness of your economy and he talks about the stock market thats fine if you own stocks. So many families in america do not. You ask him how are you measuring the greatness of this economy of yours they point to the jobless numbers and unemployment numbers. You have people in america working. They are working two and three jobs. John heart wood with us from miami. Can democrats really win the economy argument, john, with the economy in fairly good shape and peoples favorability towards the economy fairly high . What we have got do is segment out who they are talking about when they say the economy is not doing well. There are a large swath of americans who have not kept up over a long period of time with Economic Growth. The vast bulk, in fact, are ordinary americans have not been keeping up weve seen widening wealth and income inequality. So we have an economy thats very good at producing corporate profits. Thats good at fueling Economic Growth both here and around the world. Its had major positive impact but there are a lot of people who havent benefitted, and democrats are trying to talking to the people who havent. Peop. Its a challenging argument to make, because the headline numbers look good, but theyre also slowing down at this point, sarah. We believe that the 3 Economic Growth in the First Quarter is going to give away to 2 or less Going Forward. So there is an opening for democrats to press that argument on the score box earlier, frank lund said the big loser not just of last night or of both nights was joe biden. How damaging were these earlier debates when the field is very large to a frontrunners cha e chances or do they shake that off quite easily i think it was significant, wilf joe biden entered the race late. Hed become the instant frontrunner, but this is somebody whos run for president twice in the past one successfully he did, of course, get into the white house running with barack obama. But there are real questions as to whether in a party thats getting younger and more diverse whether he can keep up with the times. Hes 76 years old. He showed that last night. A lot of young talent on the stage with him so i wouldnt expect his poll numbers to fall off the cliff, but hes certainly going to have to perform better in the second debate to calm some of those fears about him. Electability is his calling card, but the shakier you look on a debate stage with your rivals, the less electable you look to a lot of americans and john, the policy setup is interesting here, too, where theres pressure from i guess the democratic core voter to, you know, have these candidates declare that they are interested in medicare for all and a lot of these progressive policies at the same time, you know, the Trump Campaign folks probably think thats great, we hope to run against that how does that all tack as we winnow this down towards a nominee. Well, there are a lot of things that republicans could look at in those two nights of democratic debates and say, yes, i like that, this will help us Elizabeth Warren saying she would get rid of the private Health Insurance industry. Thats something controversial and disruptive that was sure to be pressed by donald trump next november Kamala Harris last night appeared to endorse the same thing, raising her hand on a question from lester holt. Later she clarified and said, no, i just meant that i would give up my own Health Insurance, not everybody elses so thats another bit of potential vulnerability. And you also had democrats last night saying their Health Care Plans would cover Illegal Immigrants and Many Democrats there saying that theyre willing to switch illegal Border Crossing from a criminal to a civil violation. So donald trump thinks immigration is a very powerful issue for him. Of course the Business Community doesnt agree with President Trump on that. They need more workers, but, yes, as democrats compete for democratic votes, and its a party that has moved to the left, they credit some vulnerabilities for themselves in the general how those net out, nobody can predict, but certainly its a doubleedged sword john harwood, thank you, very much just want to get up to the nasdaq, where we are looking at the first trade for real real, the luxury consignment online retailer, up 44 a very nice pop here at the open it was, you know, well received, according to leslie pickers reporting, priced at the high end of the range you heard from the ceo just in the last hour. Very strong Revenue Growth, but also widening losses looks like thats been a theme 2. 5 billion valuation at the stock price. Squawk on the street is going to be right back dow is up 40 points. 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. But were also a cancer fighting, hiv controlling, joint replacing, and depression relieving company. From the day youre born we never stop taking care of you. We have got a big show for wilfried, mike, and i on closing bell, counting you down to the final hour of trading for the first half of the year, the month, quarter, and the russell rebalancing. Its all happening, right at the close. Well give you a playbook on how to reposition your portfolio for the rest of the year well also take a look at the redhot ipo market and the names to watch in the second half of the year t mnte, squawk alley is up next dows up 35. Been making headli. Smart tech is everywhere. Been making headli. 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. Wake up theres a lot that needs to get done today. Small things. Big things. Too hard to do alone things. Day after day, you need to get it all done. And here to listen and help you through it all is bank of america. With the expertise and knowhow you need to reach that blissful state of doneness. So lets get after it. Everything is all right what would you like the power to do . ® all right good morning it is 8 00 a. M. At apple headquarters in cupertino, california it is 11 00 a. M. Here on wall street and squawk alley is live happy summer friday and welcome to squawk alley. Im Morgan Brennan here with Brian Sullivan at post nine, live from the floor of the new york stock exchange. Carl and john both have the morning off. Well begin with the markets, though i dont know about you, i cant believe