Transcripts For CNBC Squawk Box 20240714

All coming after the markets are coming off a very strong month of june. For the dow, it was the best june performance in over 80 years. You have to go back to 1938 for the month. The dow was up by 7. 2 s p was up by 6. 9 for the month that is its best performance since 1955 and the nasdaq was up by 6. 9 and thats its best performance since the year 2000. Taking a look at what happened overnight in asia, hong kong was closed for a Public Holiday but those markets that were open also up very sharply on again, this idea that trade talks are back on. The nikkei was up by 2. 1 . Shanghai composite up by 2. 25 europe this morning where early trading is taking place, youre going to see green arrows across the board there as well. Biggest gainer looks like the dx ax up by 1. 25 finally check out u. S. Treasury yields on friday we actually fell below 2 for the tenyear briefly. I think we closed right at 2. 0 . Ten year is yielding 2. 01 . Getting to all the weekend news President Trump returning home from that eventful three days in asia easing some political tensions, making history, little bit of controversy, and giving the bull run of bull market, another leg at least it looks that way kayla joins us this morning. She is in washington, back from the trip itself. Good morning. Good morning, andrew. It was a day taunt on two fronts a lastminute meeting with kim jongun lasting one hour and resulting in an agreement to restart negotiations that abruptly ended in hanoi in february after a handshake, mr. Trump became the first sitting president to set foot in north korea. The relationship that we developed has meant so much to so many people its an honor to be with you i was proud to step over the line i thought you might do that. I wasnt sure, but i was ready to do it i want to thank you. Its been great. Its been great. Very good start. Reporter chinas president xi jinping visited chairman kim earlier in the week before sitting down with trump at the g20, a meeting itself that produced its own temporary cease fire on trade. We will be continuing to negotiate and i promised that for at least the time being were not going to be lifting tariffs on china were going to work with china on where we left off to see if we can make a deal. As part of this truce, china will buy more Farm Products from the u. S. And washington will grant huawei licenses to do business in the u. S. No new tariffs will come on but all tariffs that are currently in place will stay commerce secretary wilbur ross told me the huawei licenses will be approved very soon and that the truce will last for as long as talks are going well. President trump, andrew, says he is not rushed on china and also says that north korea negotiations could restart in the next two to three weeks. Kayla, lets talk about the huawei situation because it affects so many different u. S. Suppliers to huawei, big tech companies, of course, micron, qualcomms and chip makers of the world and the googles of the world providing android operating system to it obviously for many, many months now the president said it is a National Security threat, appears to no longer be a security threat. Did that change . Is there Something Else to this . Larry kidlow said all the specifics hadnt been disclosed or worked snout is there Something Else well learn the administration is trying to talk ability in a temporary way, andrew. Were not going to deal with huawei until the very end of these negotiations and seems these licenses are a way to sort of have their cake and eat it too. They can allow huawei to do business and offer that to china as a sign of good faith in these negotiations while still reserving the right to keep these restrictions on huawei long term. It will stay on the blacklist. They are running into opposition from capitol hill. Senator marco rubio tweeted yesterday that congress would put new restrictions on Companies Like huawei and zte if the the administration is going to roll them back. He says the senate has a veto proof majority on this and will see whether any of those efforts come to fruition in the meantime i think part of it also has to do with the different branchs of huawei, is there a way to kind of split the difference and say, okay, you can continue to do things when its for consumers, when its for hand sets for mobile phones. Right. But it may be a different situation when youre talking about more of the Sophisticated Telecom equipment thats used to put together 5g networks and thing. Even on that front, becky, there has been some concern within the administration some Rural Networks in wyoming and the Pacific Northwest have already made purchases of these huawei parts for their Broadband Networks and want to make sure that Rural America can get access to this internet using the affordable parts they have already bought so i know that theres some hand ringing over that as well and maybe theres a way to solve this where you say any business thats been done in the past can still go forward, anything from here on out cannot but again, a lot of those details were still waiting to here. Something worth paying attention to in the markets today because the different chip makers manufacture for different parts of this. Qualcomm is a big chip maker for the consumer hand sets you have other companies that make some of these other parts it will be something to watch in the markets as it plays out today, too. Walk us through a little bit of callender now how these negotiations can play out, how does this work what are the permutations . Well, the president says hes in no rush and we dont know exactly when this next round of negotiations will take place we know this truce is open ended. That was something that his top trade official Robert Lighthizer had been pushing for he didnt want to be ham strung by artificial deadlines here the expectation when talks broke down before was that the u. S. Delegation would be traveling to beijing next china places a lot of significance on these talks being equitable, the same number of negotiations on either side so, the ball is in the u. S. s court to go to beijing to hold the next round of negotiations we dont know exactly when that would take place, but thats the next thing were watching for. Kayla, welcome back. Thank you. Great reporting thank you. Opec ministers meanwhile are in vienna gathering again. For everybody, pretty good gig, you know what i mean nice place. Not meeting in siberia or something. Crude oil prices have been ticking higher on expectations that production cuts will be extended todays meeting will be followed tomorrow by a meeting with nonopec states and Brian Sullivan, he loves it there, will always have vienna, brian and i. He will join us later this hour. We met up there. I was going to say thats where you had drinks didnt you meet in london with him, too no. That was Ross Westgate we met with i remember a picture of you and brian. That was in vienna. Yes will has been my social coordinator for london this time around were going soon my daughter is there any way. She went to stonehenge. Did she really . Yeah. Said it was very metaphysical and she went to be an anthropologie major there. Andrew, its interesting listen talk to me socially lets go, come on, gid were a team were a morning team. Elsewhere, violent clashes erupted in hong con on the 22nd anniversary of the former colonies handover from britain to china we have to actually tell eunice about this since shes not being able to see it on one side of town, young protesters surrounded the Legislative Council fighting with riot police using a metal card and a rod as a battering ram to smash a glass window. Elsewhere, peaceful demonstrators marched against the controversial china extradition bill calling for greater democracy. Thats weeks in the making we have continued to watch these protests. Did you check boeing . I havent checked to see whats take a look this morning, dow is indicated up by 271 points. Obviously trade deal would be good for boeing, too but at the same time, there are more problems for the company. The Justice Department was already probing the development and certification of the 737 max. Now reports say federal prosecutors have subpoenae records related to the companys 787 dreamliner well talk much more about the extended probe a little later this hour with phil lebeau also with the boeing analyst and can see boeing shares are up about. 5 . Trade stuff and facebook is going to start banning ads that discourage people from voting. This ahead of the 2020 president ial election. This was announced as part of facebooks Second Annual civil rights Audit Company says the new dont vote policy will only likely apply in the u. S. And wont include policing users posts. Last year facebook expanded its policies against Voter Suppression and banned posts that spread misinformation on election dates, times and polling places i find this one kind of weird. I think the ones that say dont vote someone is saying i dont know i want everybody to vote if possible, right . You would want to encourage voting the idea if i put up a post that says, you know what, i dont like any of the candidates im not voting and neither should you. Its just ads, right in theyre not going to accept money from advertisements saying this is out there. I dont think theyre going to silence people from expressing their opinions. What if you were you have a First Amendment right technically. They dont have to accept your ad if they say, hey, you have one candidate on one side i dont like and dont like the other candidate, im not voting and neither should you. I think youre okay saying that its just a question of running it as an ad and target very specific individuals to maybe target areas and types of voters that you would like to keep from voting thats my understanding, at least. Thats interesting. Okay coming up when we return, the first half of the year it is officially in the books and it was a strong one thanks to a big june of course for the bulls well get you ready for the second half. We have a play book right here for you as we head to a break. Here is a look at the biggest premarket winners and losers in the dow. 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. First half of the year is officially now in the books and the bulls are off to a strong start. The s p has now gained more than 17 so far in 2019, best first half in more than 20 years the dow logging 7 rise in june. That is its best june gain since 1938 intto talk more about the potential Market Drivers in the second of the year for our play book joining us right now is gene goldman chief Investment Officer and also Steven Whiting is here. The china trade talks are now back on. I assume thats going to give us a little bit of a leg, at least it looks like this morning its going to how does that change the dynamic for you . Well, look, resisting export bans was the incremental news beyond restarting the talks with china. I assume that were going to have friction again probably with the european union, which will bring this stuff all back again. But i think most importantly this was set up to be a good year, a doover year because we have the very sharp valuation contraction last year. And the Federal Reserve is in a completely different track than it was last year the economy is unfolding almost identical to their forecast last year, but instead of continuous tightening it looks like were set at least for a modest easing. I want to get to the fed in one second on china, the one thing i cant understand about all this is i imagine we will have a nice little bounce today, if not longer than that but at some point if you think that these talks are back on, that means that were going to have to talk again and were going to have to negotiate again and do you remember when we used to talk about the fed kicking the can. We just kicked the can and we have to deal with the can at some point, i would think. No, gene i totally agree with you. I think if you if you look at our market our new Market Outlook talks about three things, calling it mixed signals. The markets and the economy are giving us a lot of mixed signals, whether its china, domestic economy number one, Economic Data is starting to cool but at the same time were still very expansion nar. Number two, Earnings Growth could weaken within the earnings recession this quarter and potentially next quarter and, three, youre seeing the bond market, im surprised it was a lack of follow through on bond yields today the bond market we have an inverted yield curve suggesting weaker growth down the road yet high yield markets are widening a little bit but pricing in really good news all of this is going to create a lot of market volatility especially to your question, andrew, especially with china, we get news out, china the devil is in the details. We told you many times on the show, we truly believe the u. S. Will win this trade war with china. Gene, here is the question i have, you think theres overconfidence about the fed and the potential for rate cuts this year definitely. Especially for july. Right now theres 100 chance the fed is going to cut rates on july 31st. Think of how many data points we have between now and then, payroll, ism, we have Second Quarter gdp on july 26th lots of data coming. We think a better Case Scenario is maybe september, 25 basis points then. Its all very, very data dependent and if the trade war does get resolved sooner rather than later, it could be a boost to the overall economy. By the way, if we get a true truce from china, the fed may not want to move as quickly. And therefore you have this sort of perverse is good news bad news, is bad news good news . Sure. In the event the economy finds some strengthening here and our trade issues are put behind us and the Federal Reserve then does not cut, i would certainly take that. And i think that we will see corporate earnings in the United States in the quarter just past and the rest of the year rise some we could derail that if we had a serious worsening of trade issues around the world. If we dont, then i would take that as a positive, right . So you know look, i think the market was in a much better position to buy earlier in the year than it was at this level, grant you that very much. But you think the fed is moving this next month it is very hard, i think, for the Federal Reserve to have this much of an expectation of easing in the market for powell to have encouraged that so much at the last meeting and not follow through. It will damage financial markets. How much has to do with the jobs market on friday . If the jobs is 300,000, some number that tells you 75 was absurd and you put all the other signs of a modest slow down behind you, then its possible that markets will price in nothing and the fed does nothing, but thats its improbable okay. We have to leave. We get a strong friday jobs report, the market may actually come down . I think if the number is very strong and you price out the fed, youll have a very different competition of the market youll see intersensitive stocks defensives really hit hard in that event. Okay. Just so were clear, youre calling for the rest of the year you think were as high as we are going to be . I think that well make modest progress from here in shares. Gene . My number one prediction my only guarantee for this year is volatility will increase lot of head winds in the market. Lot of tail winds in the market. As investors grapple with, well see a lot of volatility. What pricing in the market after the dovish fed, after the trade war resolution as you mentioned earlier, best june since 1938. Markets are looking for something Going Forward and whats coming up next . Were watching expect a big increase in volatility volatility will be big. Gene, thanks for waking up early on the west coast. Stephen, thank you for coming in this morning. My pleasure. When we return, a new read on how americans are spending their money. We have the results from our exclusive survey right after this break right now, though, take a look at the price of bitcoin climbing back near 11,000. Prices plum meted last week after hitting a 17 month high above 13,000 this is hal. This is his family, the world hes built, for 72 years. This is hals heart. Its been torn. Broken. And put back together. This is also hals heart. This is the cardiologist his brother recommended. And this is hals relief, knowing hes covered. This is hal. His heart and memory keeper, and its beating better than ever. This is what medicare from Blue Cross Blue Shield does for hal. And with easy access to quality healthcare, imagine what we can do for you. This is medicare that cares back. This is the benefit of blue. Lower carbs. Lower calories. Higher expectations. The light beer youve been waiting for has arrived. Corona premier. Cnbc and acorns are out with a new invest in you Spending Survey in partnership with survey monkey. So how americans spending . Kate rogers is here to tell us more good morning. Our invest in you survey finds that one third of americans say theyve cut their monthly spending in the past year while 45 say theyve kept spending about the same and one fifth say they have increased their monthly spend in the past 12 months why are so americans cutting back take a look at this one. Of the third who are spending less, 23 say they lost some form of alternative household income, 17 told us its because they taken on new debt 16 say its because they fear a recession or economic slow down and 15 say its because theyve lost their job now, there is an interesting split here between Political Parties when it comes to cutting back on spending just over 20 of democrats say theyre cutting spending because they fear that economic slow down or recession. Thats compared to 10 of republicans and 13 of independents here. Bonus question for you, becky, who do you think is most likely to impulse buy when it comes to men or women. Whats impulse buy, buying something you hadnt planned until the moment you spend the money . Thats right a splurge buy, something you werent necessarily planning for, men or women . These are people who admit those impulse buys thats right. Since youre asking me im going to say guys. So its interesting its actually tied just about 80 of both men and women say they were likely to make those impulse buys but men were more likely to spend 100 or more the last time they made that splurge which is interesting. Fewer women were more likely to say this and younger people more likely to splurge than older people in our survey. I get that. Youre stuck to a budget and know if you have a tight budget you have to stick to it. Thats right. Kate, thank you. Thank you we appreciate it. See all of the survey results right now on cnbc. Com slash investinyou. Good news if youre planning a fourth of july barbecue, wholesale pork prices are at the lowest level for this time of year in a decade we actually talked about this a little bit last week when we had the ribs. Montgomery. Since were not exporting necessarily as much to china, that theres more supply here. Surplus of u. S. Hogs supplies at its highest mark since 1943 thats almost as long ago when we had a june in the stock market. Thats your idea of nirvana. Yeah, it is depends on what kind of pork bacon pork end trails i dont really pigs feet. You eat pork rinds. I tried for a while looking for a noncarb snack have you tried the dried bacon bits well, i cant imagine i wouldnt like those. Theyre not really snacks, though no, they now have snackable things, yeah i dont know if i can snack youre not into that kind of stuff . Snack on pork. You can or jerky jerky is a big deal now, supposed to be very good for you or good for you relative to potato chips im doing okay. Im doing okay i mean, if eggs give you high cholesterol, im in trouble. Eggs are good for you. They are. Theyre zero. Zero on Weight Watchers just be clear what zero means. From the diabetic thing. I have in recent months my family can attest to that, i have perfected the perfect hard boiled egg, if any of you have it, can you do it . I can, yeah. Oh, you can no green around the yellow and when you crack it, its one thing, one peel. I mean, this was after i didnt do it as well and i would spend like i would be almost late for work. Because you have to start with it in the water before it boils. Nope. You get it boiling in a low boil and you lower them in cold and then 13 minutes later you take them out and put them into an ice bath. You can come over and instruct my chef. I do like a whole dozen of them i splurge and then theyre there. Any way, the u. S. Were back to this the u. S. china trade wars kept a lot of that meat here at home and not only are there more pigs but theyre fatter you fat pig. Thanks to relatively cheap feed. What that came out of nowhere. If you see one you go, god, youre a fat pig the average hog weight this year is about 4 pounds above the tenyear average i wonder what that means that theyre eating more. No. I wonder whats the number how many pounds yeah. Thats a big animal those things are big all that meat, all that means that the price of pork at the grocery is lower pork chops are about 16 cheaper than five years ago and wholesale ribs are at their lowest price in years, but get in quick while it lasts. An african swine fever outbreak in china is expected to cut output there by 30 . Thats expected actually to drive prices higher. So maybe you buy some futures here if you have a commodities broker. Coming up, 300,000 music deal that has two pop superstars openly feuding. This is amazing i dont know if you have been following this story you have to see this. Taylor is really upset. We have the details straight ahead. Later, well take you live to vienna, for the latest headlines from todays opec meeting, one of the alltime great cities in europe i can tell you that. Crude prices this morning take a quick look voted most livable city. Prices. 150 pounds per pig finished hanging weight you need to find out what the average hog weighs. 150 pounds. That cant be right. After its hanging weight, after theyve done everything to it. So probably strips out a lot. As we head to break, here is a look at fridays s p winners and losers were carvana, the company who invented car vending machines and buying a car 100 online. Now weve created a brand new way for you to sell your car. Whether its a year old or a few years old, we want to buy your car. So go to carvana and enter your license plate, answer a few questions, and our technowizardry calculates your cars value and gives you a real offer in seconds. When youre ready, well come to you, pay you on the spot, and pick up your car. Thats it. So ditch the old way of selling your car, and say hello to the new way at carvana. Thats what happens in golf nothiand in life. Ily. Im very fortunate i can lean on people, and that for me is what teamwork is all about. You cant do everything yourself. You need someone to guide you and help you make those tough decisions, thats Morgan Stanley. Theyre industry leaders, but the most important thing is they want to do it the right way. Im really excited to be part of the Morgan Stanley team. Im justin rose. We are Morgan Stanley. Announcer welcome back, youre watching squawk box. Live from the Nasdaq Market site in times square. Good morning we are in even better shape we were futures wise last time were heading towards 300, up 280 on the dow right now, s p indicated up 33. Will that be above not quite. Were almost to 3,000. Were about 2970 if we were to open, 2975 on the s p. And nasdaq sharply higher, up 133 points this morning. Its time for the executive edge and talk taylor swift right now because a very big music deal happened over the weekend celebrity Talent Manager Scooter Braun reached a deal to acquire Big Machine Label group thats the independent nashville base label home to artists including sheryl crow, rascal flats and florida, is that how we do it . Florida. We say florida georgia line. Were talking im thinking of florida sorry. Separately Scooter Braun is longtime manager to Justin Bieber now, heres where it gets complicated or gets interesting. Big machine also owns the rights to taylor swift six studio albums taylor said she was sad and grossed out by the transaction she accused braun of manipulative bullying, Justin Bieber responded to defending his manager and said swifts comments deface brauns character and crossed a line part of this is theres a long history and i didnt appreciate the history between Scooter Braun and taylor swift and apparently shes has been upset for a very long time about the fact that, a, she sold the rights to her early on in her career and the owner, because she made a deal a couple years ago where she effectively left those behind knew how much she disliked and had this beef with Scooter Braun. So its all kind of sad actually. She says she found out, woke up in the general news cycle and found it out Scooter Braun said he texted her the night before or something, but i think her biggest point is she was not given the opportunity to buy those. I think she wanted to buy it herself. It was that but also the fact that it went to Scooter Braun himself. I think Scooter Braun personally she had such an upset relationship with. Gave her some kind of option for every new album that she recorded she would get one of her old ones back. It was a weird if she had stayed if she had stayed goes all the way up through the reputation album, which saw the at the reputation tour. Ive been to three, i think. Yes, i have. And i admit it i like her, but i dont go for me i go for somebody else but i dont dread going. I like her shes good. Good music. I think its so sad you get sad about no, i dont i wish you werent sad. At least youre not anxious. Im sad for her because this is her doing its her work. And now its owned by somebody who she hates. Its like a stick in the eye. Right like a stick in the eye right yeah. Right and theres a lot of things, as you know, that are better than a sharp stick in the eye, a million things do you use that expression it is. Youre saying this is this is a stick in the eye. True thing. Worst Case Scenario. Worst thing that could happen this would be like your nemesis getting the rights to the thing that is what you created. Whats her beef with scooter . They didnt date or anything. No, no no. She didnt like the deal she cut with him. I never heard of the guy before. No, no, no. She believes scooter was then encouraging all the stuff that happened with Justin Bieber with kim kardashian, with kanye west, you remember they made those videos of those videos that sort of were trying to slam her or be sarcastic act her. Its just terrible. Kanye that was have i got that right he said you shouldnt have won at the gramnies, remember that, he came out to taylor. Not really. You dont remember that, sorkin he tried to give it to somebody else. Wasnt he is the one who was saying shouldnt have won. I think so. I forget who he was trying to say was. It was kind of funny watching us, too. Beyonce. Its bad. I was trying to stay out of it completely. Hes a biebs guy a bleeber. There was also the beef with the kardashians. Beef is used a lot, right in musical theres a lot of beeves. Twitter beeves, now instagram beeves did justin ever fight tom cruise with that beef . No, did not materialize he took it back. Keep me updated okay. We should start a segment called squawk beeves. I was watching the senior golf championship. I had no idea about this. Coming up when we return, crude prices on the rise opecs meeting in vienna begins. Brian sullivan is there on the ground hell join us right after the break to give us a tllhe behind the scenes details 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. Opec ministers gathering once again in vienna our own Brian Sullivan is there. He joins us now with an update well talk at the end, bri, because we will always have vienna, remember so lets talk about that at the end. Yeah, we certainly will always have it what a wonderful memory, skroe thank you very much. Listen, this meeting is very different than the ones we had the last couple years because every time we come here, twice a year, its always about the number what are they going to cut what are they going to increase the output the market hinging on the final decision well, theres still some intrigue around that, guys, but its widely expected that 1. 2 million barrel a day cut will be extended they made last year the intrigue here is far more broad ranging, far more political, if you will first and foremost you heard over the weekend that russia and saudi arabia effectively made the opec decision for the group. Remember, russia is not a member of opec and it wasnt even their energy minister, it was nonother than vladimir putin, basically coming out and saying, yeah, we extended the agreement lets see if the other opec members like the fact that russia is stepping in. A lot of frustration here with the United States. U. S. Output has doubled, guys, in the last five years opec is trying to keep price stability. Theyre trying to do what they used to do which is try to control the market but here is the u. S. Just pumping and pumping and pumping and the shale growing and growing and growing and it makes the decisions that they make in this building here a little br difficult. Also the overarching one, iran, obviously accused of tanker attacks a acues of drone attacks. The iranian minister, who by the way, is the longestserving opec minister, this is his 48th meeting, very frustrated in fact, there is some talk that maybe iran will either quit or threaten to quit opec. Remember, theyre one of the founding five who created opec in 1960. The meeting begins at 8 00 a. M. Eastern time, 2 00 p. M. Here in vienna, joe. Ill tell you what, i know you like this city we had a great time. Its about 98 degrees here im not wearing a tie because i dont feel like suffocating myself when you cant breathe already. I want you to go down to the danue and theres a beach there a bar called tel aviv beach. Have you been down there yet theres graffiti but beach chairs and cool drinks and a great staff down on the banks of the danue. Go down there. Im serious. But let me ask you a serious question, President Trump is always calling out opec, but is close to the saudis now. How much is the u. S. Saudi relationship playing out this meeting . Yeah. Thats going to be a great question we had the Saudi Energy Minister came in a short while ago. I mean, really they are theyre the big one of opec. Saudi arabia is still a major deal, but here is the thing, there are many members of opec, joe, that want to increase production, namely nigeria, maybe a few others iraq basically said were out of the market for 15 years. They want to pump more, but opec overall needs to cut, which means somebody has to take the pain and that somebody has been saudi arabia saudi production is below 10 Million Barrels at about 9. 65 Million Barrels. Russia is over 11. Were 12. 5, probably going to 13 it remains to be seen how much more pain saudi arabia, joe, may be willing to take they have been taking the brunt of those cuts. Remember, all these countries, they would like higher prices to meet their budgetary needs as far as the banks of the danube, sounds like an austrian country song well probably be on air until about 10 if the heat and tension continues and i keep tripping over wires i might jump in the danube any way, joe. Will yo go to our spot for drinks no. No time no because its not the same without you. Well, thats true thats true. I cant make it there. Ill be close, though, tomorrow, but not quite. Actually by wednesday. But when are you coming back its a mystery. Where are you going . London and paris. Zurich . London and paris. Thats tmi so we wont be quite where you are. I can maybe take a train and stop by if you really need me to go there yeah maybe ill meet you in paris. Thank you, brian. Keep up the good work. Keep us updated. When we come back, more trouble ahead for boeing the d. O. J. Reportedly opening an investigation into another of the companys flagship planes. We have the detail and reaction next. Right now a quick check of whats been happening in the european markets this morning, up across the board, dax up by 1. 25 and so is the ftse squawk box will be right back. Key portfolio events. All in one place. Because when its decision time. You need decision tech. Only from fidelity. 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. You might or joints. Hing for your heart. But do you take something for your brain. With an ingredient originally discovered in jellyfish, prevagen has been shown in Clinical Trials to improve shortterm memory. Prevagen. Healthier brain. Better life. Welcome back some more bad news part boeing federal prosecutors subpoenaed records related to the 787 dream liner expanding their initial probe. We have the detail this is morning. What can you tell us this story broke on friday night. Its unclear if its an extension of the probe or a completely different one, but when the story first came out and we reached out to boeing they have declined to comment. Heres what we understand according to a report in the Seattle Times on friday. The doj is subpoenaing or has subpoenaed documents relating to the 878 dream liner production in particular whats been happening with production and if theres shotty techniques being employed at the plant b where the dream liner is built now this is separate from the 737 issues for some time, there has been a doj investigation regarding the 737. As that has gone on and has been for several months that we have reported that. Others have reported that. Theres a grand jury in washington looking into this the focus now has become 737 monthly production were show iing this to you because its been a 42 per month for several months now the question becomes youre not going to see this certified and deliveries begin until at least the end of the year. Do they have to cut production further . That will be a focus of the second half of this year sharing of boeing, this is a a stock thats been trade iing ine 367 area. A few times its dipped down to the 350, high 348 areas. Most believe its going to stay in this area unless boeing at some point has to say were going to cut production further because building 42 per month, we can park them in different places in the Pacific Northwest, but the question arises, how many are you going to build youre going to deliver you will deliver at some point, but is it wiser to build them at a lower rate joining us to talk about whats at stake for boeing is sethcap lance. Seth, you say were geting to the point there are some unexpected situations, things that are a bit more surprise as this has developed yeah, early on people that were optimistic this was only a week long problem. But most of us thought by late summer we would be getting close to the planes back in service. And here were at this point where who knows boeing has put itself in this situation where all kinds of things are being unearthed. Nobody probably would have found in the first place hard to see the bottom at this point. Everybody obviously, beoeing sh and all the Airline Customers were rooting for a quick and safe return to service as a share hoholder, has your confidence been shaken center certainly not our confidence in if longterm, but it did seem like it was going to be a week or monthlong problem ask now it seems intermable. If they begin to look at cutting production, thats going to put a pal over the numbers people will have to start rethinking how long an investor are they would you sell at that point if it looked like they were going to cut production . We have been in it for the long haul and expect to be beauing is a cash flow machine they have several other areas of revenue. They have a space business, defense business i dont think individual issues wouldshake us out. But it does shake your confidence a little bit. By the way, i think its also important to think not just in terms of volume, but how many units you cranked out, but in terms of pricing, a lot of these issues were related to the fact that boeing was trying to produce an airplane where pilots could transition without a lot of extense without having to take out of time on expensive stimlaters if it turns out you need more pie loath training and airlines assign less value because of the millions of dollars in extra training costs, that could put downward pressure on the plane forever. Were not there yet, but its also yield and thats Something Else you want to get some quick thought you hear people all the time say dont worry about boeing invest in the longterm. It will be back some time. Is is this dead money . If you were a money manager, are you better served saying to clients, look, you got a big chunk of change. Youre going to get it back but lord knows when youre better served putting it somewhere else i think you could consider is is close to dead money really unless theres other surprise that happens with boeing or happens quicker. Nothing has gone right for boeing i think what you start getting into is a concern that not only are they producing 42 planes a month, but thats a certified level of production. As you change levels, you have to get faa clearance to do so. So the road back becomes longer and longer every week this goes on thank you, gentlemen. Its good to see you all thank you coming up, kevin rudd, the former Prime Minister of australia, joins us next to break down the important moments from the g20 meeting. Later were going to take stock of a strong first half for ipos and what lessons investors can can learn for the rest of the year squawk box on cnbc as someone in witness protection, i cant tell you anything about myself. But believe me, im not your average consumer. Thats why i switched to Liberty Mutual. They customized my Car Insurance, so i only pay for what i need. And as a man, uh, or a woman with very specific needs that i cant tell you about say cheese. Mr. Landry . Oh no. Hi mr. Landry [ grunting ] Liberty Mutual customizes your Car Insurance so you only pay for what you need. Liberty. Liberty. Liberty. Liberty. U. S. And china agree not to impose more tariffs as both sides look to resume talks global rally, futures surging on the trade news adding to a record run. The s p notching its first best in years and last weeks wild ride as the second hour of squawk box begins right now. Good morning, everybody. Welcome to squawk box here on cn cnbc we have been watching the u. S. Equity fumps this morning and they are up sharply after it looks like the trade talks are back on between china and the United States. That ceasefire so to speak, has the dow up by 260 points s p would ep up by 30 points also been keeping an eye on whats been happening with the tenyear note. The yield is is back above 2. 0 . Also look at ail prices as opec meeting gets underway in vienna. And brent up 2. 25 the dow at this morning it look liex the dollar is up slightly if youre watching, probably going to get blacked out again violent clashes erupted in hong kong on the 22nd anniversary of the former handover from britain to china on one side of town, young protesters have surrounded the Legislative Council using a metal rod as a battering ram to smash a glass window tens of thousands of peaceful demonstrators march ed against the china extradition bill with a call at the same time for greater democracy. President trump and president xi hitting the reset button on trade talks. Good morning. That trade ceasefire just one of the items notched by President Trump he reopened talks on trade and with north korea on denuclearization. An agreement to restart negotiations there you remember they abruptly ended in february after a handshake President Trump became the first setting president to set foot in north korea. That we have developed has been so much to so many people and its just an honor to be with you and it was an honor that you asked me to step over that line and proud to step over the line i wasnt sure, but i was ready to do it its been great. Its been great. Chinas president visited the chairman earlier in the week before sitting down with trump at the g20. A meeting that produced its own temporary ceasefire on trade. We will be continuing to negotiate, andi promise that for at least the time being we are not going to be lifting tariffs on china were going to work with china on where we left off to see if we can make a deal as a truce, china will buy more Farm Products from the United States and all tariffs currently in place will stay wilbur ross said licenses will be approved soon and the truce will last for as long as talks are going well joe . Okay, thank you china expert here joining us, kevin rudd, former Prime Minister of australia. Now the president of the Asia Society Policy institute your thoughts on hearing the latest and you have also been on talking about where we have been in the past. Are we making progress is it possible to come to some settlement in the next year with china . On the trade deal, yes. As we have been discussing on this program for awhile, the underlying economic logic in xis mind and President Trumps mind this thing has to be put to bed or it wrecks markets completely the president has a reelect. Those fundamentals havent changed. Theres a lot of political theater in terms of who is seen to become down and not back down a bold prediction would be that between now and thanksgiving well have some firestorm form of deal. There will be a critique about how substantial it is and all the rest of it, but the underlying interests are there both President Trump and president xi have hard liners that they need to that are put iting pressure on them. The hard line is in both capitals they have the same attitude toward life. Its far easier. From a chinese perspective, and i came from china yesterday back to new york, they are pretty happy with the outcome they expected to be a reboot of the negotiations a tick that was done what what they didnt expect was the other two gifts that the president delivered. One was the announcement that there would be no new tariffs for the fwoerkss and that would be a big factor in chinese domestic market acceptabilitiment. It seems like thats more complicated. Explain this to me. The secretary of sate sat a month ago and said this is a National Security thereto. He went to australia he went to all different cou countries in europe and said two officials there, do not do business with washington whyway. This is a danger to all of our western ally ps. This is a danger to our security how, if thats true on one side, how can you use it as a pawn in the trade woar on the other side excellent question. My successor was a loyal of the United States. He said, okay, they said we shouldnt do business with huawei we wont if you were here this morning, you would be feel iing like a mg but go to the detail in explaining the bold language which was theres a reconsideration of the listing of huawei. Its byebye around other firms around the world the devil will lie in the detail but from a mac perspective, they see a crack of light here. So this morning were sitting around the table and they are saying, hey, high five did you believe we were going to put huawei out of business . It was going to be the nuances again and again. We then drived what they were. You saw what they were some components arent involved in g 5 and will be allowed to do that but its two countries that are in trench positions and there will be middle ground. Being in australia for so long shs this is exhausting its exhausting the u. S. Government told one thing. Theres no problem with huawei and it was your favorite company. Now it is a big threat my view is its either a big threat or its not it cant be both they were using us and lying on our set about it or it was Something Else the intelligence agencies have been doing their rounds of the allies the so the briefs that i havent seen because im not in office have been clear cut that in their views as the u. S. Intelligence agency ises that this requires action but this started a long time before the trade talks i remember hearing stup art this last year. Its been going on for quite awhile australia, as important as it is, it is important. Did australia ever have a problem with chinas trade practices and intellectual property theft or because it was so important and its the else tant in the room, you look the other way and us yo need them economically our view over a success of governments has been in line with President Trumps critique. There are fundamental elements of chinas trade practices and use of nontariff barriers and other questions of intellectual property that need to change the question is a smaller economy than ours. What do you do about it . We sought to do with friends and allies with the World Trade Organization is collectively with the chinese that doesnt work. The president is now trying a different tragedy. I hope it does deliver an outcome. Whats the probability . I think the chinese move only to the extent that it suits their domestic economic agenda whats really interesting is take some of the liberalizations recently by the chinese on capital marketsing issuing of new licenses to operate more freely within Chinese Capital markets. You might say thats a good m e move but you need to understand the background of that is china faces in the nec several years the possibility of a current account deficit. Net import, so they move to the the extent that it meshes with their case maybe that works for us where they have stuff to protect but in terms of what happened this weekend, you said two things the chinese didnt expect one was the huawei situation the other was to the not have additional tariffs while we continue these talks for now does that help or hinder things in the longterm in terms of what types of deal gets put in if i was being blunt about it, i think the chinese will see the United States as having blinked a a bit in these discussions. Even though we say tariffs are back on tomorrow given the president can do that and shown form on this, he can do it in the future. The chinese will take some comfort that the bottom line is that a deal can be had which wont undermine their interest the chinese have published three big red lines. They wont because its been front page of the the newspapers these are big ticket items but the message will be we can get this and the president President Trump really wants a deal. Talking about foe ops kim jongun, would you have have that meeting yourself and do you think that advances the cause or sets it back i have been to north korea twice and escaped on both occasions. Its a very strange country. Its a remarkable photo. But what i fear is, and those of us who watched the north Korean Nuclear negotiation oefrs decades, wheres the diplomatic strategy and again, this is a big concession kim jongun in his domestic media delivers a president ial visit thats enhancing his internal credibility in the regime so im not sure it actually helps deliver the outcome. I hope it does theres something bigger going on behind the scenes, but it strikes me as a gift all right former Prime Minister kevin rudd people here get to keep their titles were different its down to our convict origins. I could call you president now since youre president of the new asia society that make mess president of about 25 people. Its better than nothing. Thank you. Come iing up, the first halo 2019 officially in the books well talk markets in just a few minutes. Stay tuned youre watching squawk box on cn cnbc a lot more to come the dow up 245 points in the futures. Become in a moment moving is hard. No kidding. 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. I need your attention for a minute. What are you looking for . Is it inspiration . Because shes changing the world. Every post out there is like dream big but when it comes time to take action girl scouts are making a change. Were the risk takers. Athletes. Leaders. Im not saying you cant be part trendsetter, but i am saying you need to be all girl scout. Welcome back we have a developing story more problems for beoeing. The Justice Department was probing the certification of the 737 max. Now reports say a federal prosecutor have subpoenaed records related to the 787 dream liner. Back in april the New York Times reported that debris was left inside the aircraft including one instance where a ladder was left in a planes tail shares are down marginally on that news. Facebook will stop ads to discourage people from voting. This was announced as the civil rights audit the company says that the new dont vote policy will only likely apply in the United States and wont include policing users posts. Last year facebook expanded policies against Voter Suppression. It banned posts that spread misnifgs coming up, democrats attacking the trumps economy during the debate. So with the economy running strong, whats the republic game plan for 2020 . Well talk about that. 2re are the futures at this houp50 points. Coming right back. Dont worry. My dutch is ok. Just ok . in dutch tell him we need this merger. in dutch its happening. just ok is not ok. Especially when it comes to your network. At t is americas best Wireless Network according to americas biggest test. Now with 5g evolution. The first step to 5g. More for your thing. Thats our thing. A look at the mornings big market movers. Good morning. Many of the morning movers to the upside catching a tail wind because of the trade day talk between the skpus china. We have spoken about the semiconductor trade being a proxy for the china trade. You have shares of Skywork Solutions among those big in the buy around so far on very thin premarket volume the components are are used in smart phones to aviation controls to help monitoring devices. So watch those shares. Heavy machinery a big focus. Especially when it comes to asian demand cat pillar up. The Construction Equipment giant is one of those proxy stocks for the chinese and economy as well. And the Economic Data out of china and elsewhere in the world has been showing a slowdown. But that stock gaining around 15 in june alone as optimism has improved and a big miner of copper and gold if the chinese economy gets some positivity, basic companies could get a bit as well. Its more of the health. So freeport, skyworks and the morning movers today well send back things back over to you nice backdrop i like it joining us right now to talk about what to watch as we head into the first trading day of the the quarter is head of technical strategy at jpmorgan and mike, we made it through the first half a great june for the markets and the g20 gave them a lot of what they were look iing for. Now were getting a little headline cover for the move the market has made it was prime to just relax if we get an as expected result. To me its about which groups take over. Is this going to be the handoff to more areas of the market. And we talk about what a great first half it was. Im looking at a ninemonth basis. The market is basically flat at a nice marginal high for nine months we have been going back and fort. The question now is this going to be the signal that the market can just look through what still is is a slowdown story globally and with earnings coming in maybe sloppy in the Second Quarter you say that theres something wrong with this rally. Whats wrong it was up until early last week a lot of what has been said is defenses that led the utilities and it was largely because the very front end of the treasury market priced 60 basis points. So our point was that if the rally is going to continue, the s p is going it break out of the range and requires rotation to cyclical groups. You hadnt seen that until tuesday or wednesday of last week they start ed ed to go because theres individual news. Even things like copper started to rally a little bit. We need to see more of that to get to continue to rally does that lessen your concern . You can see this is a trade story. So we need to repeat what we saw. All those things point to improving pmi. We have to redo that story all over again to put a sol Ud Foundation underneath the rally. With trade off the front burner for now, we have the jobs report on friday, which tells us a little bit about the economy then were going to think about later this month as the fed. Its interesting because the fed did not take any opportunities to push back against the markets pricing of the cut for july so at this point, you have to see what the jobs number gives us, but right now, the market is very confident its going to get that at least the 25 basis points so that actually turns the question around to, wow, is is this market going to get everything it needs and want thes and what does that mean in terms of a sentiment reset i think people have been very cautious the numbers were showing a lot of caution because it didnt feel right and this goes back three years ago almost to the day. The story was stocks are at a new high the Global Economy is is not showing us were coming back 2016, the stock market was able to see through this industrial low. You had a worst downturn in terms of the economy than we have had now so maybe the market has to endure a little more of that static in terms of bad Growth Numbers lets talk more about the yields on the treasury market. For awhile on friday, the tenyear fell below 2 you say the technical level is 2. 1 thats kind of a hard thing to imagine that given where we are right now with the markets right now, that were looking at 2. 1 as being a breakthrough level. Its come a long way in a short period of time if we look at the technicals, youre seeing overbought conditions in sentiment and momentum that can persist if we really in this rapidly evolving policy condition here where the feds can can use a couple times and starting about recession and the fed going to seetzero those conditions can persist but you tend to get a meaner version. When you get the conditions you have now, you say the view can back up to 225 this could be a market great to see you. Thank you. Coming up, a rare look inside the Koch Brothers summit for elite political donors and talk trade and immigration and more and were watching bitcoin this morning its near 11,000 just under more on the move in just a bit squawk box is right back still to come on squawk box the first half of the quarter in the books plus President Trump agreeing with china to restart trade talks. More on what to expect in the future and will tel la hit production numbers well get a a preview of what it mean invests welcome back shares of real real up again after a big ipo pop on frud. Les lee picker has more. This was one to watch. The realreal making real money on friday with shares up 45 in their debut its a Second Chance for the ceo, which essentially flopped on day one she say this is time the market ipo environment is all different. I cant speak for all ipos. We hit the timing right. We have secular trends behind us and i feel great about where we are. If we look at going public, that really is pets. Com 2. 0 they have had a really good outcome. Timing is everything and the realreal has the wind in its back chewy up nearly 60 since its debut last month and wainright isnt the only one that thinks timing is right. They are hoarding the second half of the year as well pell ton, importaposhmark deals can incentivize more to go public, but one head wind might be one of the lockups that will expire in the second half. That could pressure shares of Companies Like uber, lyft and pinterest by flooding the market with more supply of stock. When there will that start . The first deal we saw of that scale a big unicorn was lyft in march. It takes 180 days from the deal. So were looking at october. Thats a scary months especially going into theened of the year. And we do tend to see once people see a negative reaction from one of these events, it could pretend negativity for the other deals. Thank you good interview on friday too. Let me ask you a question about this ipo success or potentially failure in that its a Small Company that left a lot of money on the table. I think its a success. They are riding a wave you can see a lot more of these companies coming to market so overall the market is set up perfectly. You have a perfect con influence of events. If you can show good Revenue Growth in an Addressable Market thats huge. So explain why investors love that deal and hate uber and lyft still. I want to take the other side of uber and lyft because i think for me i think these companies are teed up at starting line pretty much. Lyft came and did the ipo, that pulled it back but uber did the ipo with the market so i think at this point, uber is coming to the starting line lyft is around there but you always felt that was the right price for lift so overall these companies are right. Now they need to execute lyft did do a good job in terms of Revenue Growth. The losses are growing but they have a few years to prove that losses can be controlled but at this point its about Revenue Growth and market share. And these two companies have time to prove themselves we have a couple big ones still coming we worked as probably the big fest you think they are coming and there are people who have questions even about that. Airbnb after that. They have cash on the balance sheet. Do they do a direct list iing . Then you have the pell tons of the world. Airbnb is is a good company we like it they have a good shot at doing a direct listing because they dont need the money they raised a lot of money and not used most of it. So i think they are well positioned they are in a good market. They are expanding also. They are not just staying with the core market beyond that. Pell ton have some issueoton ha. They have good relationships. I think the Delivery Business is going to come down to relationships in the end with the restaurants and other businesses, so i think these companies right now the market is big enough to take all of them so i think they will do well so i think delivery companies, Payment Companies come to market and they will do very well whats the story of what would cause them to pull back . Theres the potential to be delayed. Theres real question in terms of when and if they go public. This was a company that had a 40 billion evaluation that today is being valued at least in the private markets at 23 billion. Think it they wait. Its going to get better if you go public at evaluation, thats half. What happens to soft banks and investments. Theres a view if youre going to have to do a public down round, maybe you do want to wait if you think you can afford to wait thats the other piece to say its in a complicated position because they are burning through cash it has a lot of risks around it they havent seen a bad market yet. Interest rates have been low companies are doing well leasing has been easy. So i think in that sense, they havent been tested. You can say that its a good time to get out while the market is still good, but on the other hand, theres risk down the road theres a huge lease on the books. You think well see them as a Public Company i think you will. I think its lower based on my calculations. Its too high. What calculation would you put it at . 20 or 30 billion. They have become a Global Player they have like the Global Dynamics play into them. Its not just about u. S. You can make a case, but its high risk. At that point, your priced for perfection and you execute that. This vintage if we have this conversation three or four years from now, youre going to look back at this and think great success, they are all doing well youll look back and think we were in 1999 what are you going to think . This time its different. The companies are good products. They are really changing lifestyl lifestyles they are changing our way of living so they are here to stay. Thank you coming up, with the economy still running strong as far as we know, whats the republican game plan b for 2020 were going to talk taxes and more with jared bernstein. And later can tesla deliver on the production promises were expecting numbers within the next couple days so. How are you feeling . On a scale of one to five . One to five . Its more like five million. Theres everything from happy to extremely happy. Theres also angry. Im really angry clive actually, really angry. Thank you. But what if your business could understand what your customers are feeling. And then do something about it. Turn problems into opportunities. Thanks drone. Customers into fanatics change the whole experience. Alright who wants to go again . I do i do i have a really good feeling about this. Time for a rare look inside the koch summit where the elite meet to discuss trade, technology and the upcoming election im at this exclusive summit for wealthy donors and business leaders, who are part of the Political Network led by charles koch 450 people are here. Security is really tight this is the first time they have allowed cameras to broadcast from a threeday strategy summit for change the koch network has been going through soul searching since President Trump was elected they didnt support him in 2016 they are staying out of the election cycle this time as well and charles told donors hes willing to work across the political spectrum to advance specific causes. Trade, immigration, the economy and free speech. Just imagine what the count b try would be like if we had many, many more people with this philosophy if we had millions more who were dedicated to ewe nighting with anybody to do right. Today the network is announcing a sixfigure campaign to end the Export Import Bank and lieliminate tax extenders. Pz they spend 10 million to combat the backlash not only against big tech and new technology, but also against innovation fcc chairman will be speaking here lets welcome in grover nr quest. And jared bernstein, policy adviser to Vice President biden. Hes with the center for budget and policy priorities. Grover, jared, thank you for joining us i bet you wish you hadnt decent nonnews these brothers do you want these hydrocarbon kings on your side here . Not really. I think one of the biggest problems we have in this country is that we have a collision of two problematic trends we have more wealth concentration in the kochs are exhibit a and we have more money in politics. So theres this barrier between wealth and money influencing politics much of it dark money. The kochs are at the heart of it i think thats a problem for democracy. Grover, do you think they are getting old and figure no atheists in the fox hole maybe they are decide figure they want to get through the pearly gates they Better Change their ways whats gotten into the cokoch brothe brothers they are touchy and feely to liberal causes no change there i have been working with the Koch Brothers for years now on criminal Justice Reform, which President Trump has signed a good first step on they have always been opportunities for the principled right and left to work together. So have the Koch Brothers. Good news is that we passed criminal Justice Reform across the country, it was in the republican states that came first. So wow the conservative support, there wouldnt have caught fire and it did it was actually later in the more blue states, but thats okay there are principled folks on the right and left who want to accomplish certain things opposed to bang heads. Criminal Justice Reform, transparency, term limits and the coKoch Brothers are tried to decide how to reduce the cost size of military expenditure jared doesnt like that trump tax plan because it wasnt tr k trickled down enough thats how they are iz krit sizing it. Thats the part that i like pz. I certainly wouldnt is have wasted all that revenue on tax cuts for high end folks already doing fine and by the way, the biggest problems with the tax cut is its completely failed to pay for itself i dont know if you or grover took that position perhaps you were smart enough not to, but many in the government supporting this argued that the tax cut would pay for itself if if you look at our fiscal accounts. You know thats complete nonsense and secondly, the idea was that the tax cut would stimulate longer term growth and in fact, if it you look at the investment numbers, theres a a mess theres nothing there in terms of that chanin of results. Just let grover in. Was it all not paid for and horrible total revenue is up total revenue is always up. Its the spend iing thats grown too hard we dont have democrats ruling on that. With us we need to reign in the runaway expenditures we have on entitlements but we have two things going all the pro tvsment efforts with the tax cut. As long as were having this with china and europe on trade, the concern is people wonder where to invest. Whats steel going to cost as that gets settled and youre seeing this in the stock markets reaction, lessened tensions with china and not increased tariffs that were going to see more growth there so bringing those trade wars to an end is a huge step forward. I think youll see stronger growth largely because of the tax cuts, but also less tariffs. Grover, ill ask both of you about this theres reporting inside the white house theres an effort to actually lower effectively Capital Gains, which is perhaps surprising given whats going on tieing it to inflation, which i understand the philosophical argument but would have the effect of lowering Capital Gains rates, which would have the effect of increasing whats left in the wallet effectively 85 of the benefit, if not more would go to the top wealthiest people in the country at a time where theres this conversation going on about inequality does that make sense it makes a great deal of sense. Its going to happen schumer of new york said it was wrong to tax inflation when you tax Capital Gains. This can be done by a definitional change. And this is all made possible by a Supreme Court decision in 2002 called verizon v. Fcc where the Supreme Court, the preconservative Supreme Court, said yes, you can do this. Before we go. It will cost the country 100 billion over ten years thats the cost when you talk about the debt that we have already on the books being too much and when you look at cap spending in this country, you would think wed be doing better, no two things. What you want is effective investment and the 100 billion number is completely static modelling. What youre mising and what some folks have not paid attention to is people who bought land or a house or stocks, 20, 30, 40 years ago often dont sell those, even when it makes sense. Corporations have 7 trillion in sticky capital and that tax on inflation and youdsay trillions of dollars of previously held assets move to higher and better use let me respond to this. First of all, i would strongly disagree with grovers assessment this is going to happen because its legal. Its much fuzzier than he presented. And us heard nonpartisan folk who is have looked at this said this is not something you can do by executive order or rule change you need congress. Congress wont do it but theres a long track record of nonpartisan, no thumb on the scale on the impact of Capital Gains tax cuts on investment the correlation and zero i couldnt disagree more that you tweak the Capital Gains cut and get a bump in invest mement once again it wasnt capital fwabs. It was other high end incomes. Thats exhibit a so its going to cost the treasury 200 billion. I dont know what youre talking about in terms of some supply side score there youre not going to get that from any reputable model and secondly, youre going to kpexacerbate this problem we ha been talking about 31 of net worth quite recent Fourth Quarter of 2018 held by the top 1 , i sound like bernie throwing out numbers and all youre going to do is exacerbate wealth inequality rob the treasury with no investment bump and probably illegal any way. Heres the good news for you. The spraem court says youre wrong. It is going to move forward. They get to decide so you have already lost this debate thats nonsense id like to come back here with you and youll either prove me wrong or you wrong its an open question. When we reduce the tax on inflation, its morally wrong for the government to cate inflation and then tax people on it on a bipartisan basis in 81, reagan and the democrats indexed Capital Gains for ordinary income schumer was on the floor of the senate we tweet out regularly his wonderful statement to eliminate the tax on inflation and Capital Gains. This has participate s s the math make it is hard. Suppose we were to implement what were talking about here, but make it revenue neutral by inkrooesing the rate you might get some folks to talk about it around the table. Were not going to raise the rate well end the inflation. Its wrong to tax inflation. We recently had an interesting debate in new zealand. Its one of the few countries with no Capital Gains tax at all. The left wing government couldnt support that. We have to end it its too confusing jared loves the Koch Brothers. Grover loves schumer somehow retch people need more money stop with that. Lets enjoy a good economy relax. Better than the last eight years. Things are finally turning around be happy thank you. Jared feel iing the bernstei. Well see you again. You asked to be back together. It will come iing up when we return, johnny raponzi will join us after the break. 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. 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. Stocks poised to start the second half of the the year with a big pop. Futures are way up this morning after a trade truce between the u. S. And china Big Questions on the trade front including huawei and what Chip Companies will be able to sell to it stepping up on taxes, the big loophole one democratic candidate is targeting and why the wealthy want it to stick around the final hour of squawk box begins right now live from the most powerful city in the world, new york, this is squawk box. Good morning, welcome back to squawk box here on cnbc the futures right now are up 250 points with hovering around this level for the premarket session. S p indicated up 31 and nasdaq indicated up 132 points so far treasuries are threatening that 2 level again but thats slightly above. We have a couple big stories talking about this morning returning to hong kong over laws that would allow extradition to china as the city marked 22 years from the return of rule. A small group of proitsers smashed out a window the legislator hit them with pepper spray thousands marched through the city demanding democracy defeat on the proposals has been susquehanna spe suspended indefinitely opec looks like its ready to extend they have joined the policy supported by russia that aims to Keep Oil Prices elevated he would support output cuts for an additional 6 to 9 months. Looking at crude at 60. 16 a potential new issue for boeing reports say federal prosecutors have subpoenaed Company Records not related to the 737 max, but this time related to the 787 dreamliner aircraft. And development of the 737 max which was involved in two fatal crashes just months apart. And here are are some other stories that we have been thinking about but im not sure were going to talk about those because they seem to be the same stories as before. We have new viewers we do it once an hour maybe we should do the headlines every five seconds a lot of people repeat things for emphasis any way well done thanks. Boeing, hong kong, which one do you like. U. S. And china trade truce taking place in japan. But plenty of stumbling blocks remain in the way of a final deal kayla joins us with more on this it seems like were finally back to just talking again, but you have that last mile and that could be the previous part that last 10 includes all of the thorniest issues the u. S. And china are reopening trade talks, but the expected next step will be a trip by Trump Administration officials with a trip to beijing were making a deal with china or were attempting. If we dont, well go back into a tremendous ripe field of money that would be coming into the country. But i have a feeling that over a period of time and im not rushed it. I want to get the deal right i wouldnt even say complicated, but intricate. Entry indicate indeed after the truce comes the hard part. Getting china to agree to enforce the deal and appeasing washingtons china hawks who are not happy the president is tiling back the ban. Congress will have to get the restrictions put back in place through legislation and suggesting doing so would see a vetoproof majority. The peoples bank of china telling reuters it will need no big stimulus unless the trade war picks up again the president has been eyeing a rate cut by the fed, but ironically, perhaps this truce may put it on hold or may decrease it. If the president were to say the ban comes off if the Commerce Department removed it from the blacklist, but if that were to happen and Congress Passed vetoproof legislation putting it back on the band list, what does that do in terms of the trade talks it depends on what exactly the legislation says and whether theres a veto proof majority. I smoke with the commerce secretary on my flight coming home from the g20 he said they are going to be granting these licenses to allow some business with huawei to go forward, but huawei will remain on the entity list,en opt the blacklist for the foreseeable future until negotiations reach the end point where the president feels comfortable removing it. Thats the big question. Whether the two sides can get to that point theres a lot to do before then. Thank you for more on the trade truce and what is next, lets bring in our guest. Former babs to the u. N. And nege he served as deputy secretary of state. Thank you for being here today thank you what do you think of where we stand right now in the china trade talks . Better off than we were a few days ago better to move forward on these talks and try to find solutions to the problems. One of the things i liked about the president s remarks is he did mention that were not in a hurry and i think hes acknowledging that some of these issues will take time to work through. They cant just be solved by spectacular moves and photo opportunities. Issues like protection of intellectual property, forced Technology Transfer ask so forth. Some of the kinds of issues that bother us with huawei. But they can be dealt with if they are talked through in a thorough manner. I think thats what the president is signaling more time to deal with the issues and i think that was for the good i was gratified hes concerned about getting the right deal then fund back to what we were talking about four or five months ago and that was the idea of china kind of riding out the clock on this saying they didnt want to see changes happen until 2025, which would be after President Trumps second term. And which is so far down the road you start to wonder if anything ever actually gets accomplished i dont think thats possible because this is not only a trump policy i think theres bipartisan support for taking a firmer line the chinese would be surprised if they think its trump and his administration, they have another thought coming i sense strong bipartisan support for some kind of action. Another point i would make, but its a complicating factor in which it make it is harder than it appears is that our economies have a certain level of integration. We have 600 billion worth of trade. Dekubling the two economies would be a difficult thing to do this is a significant difference from the cold war and the soviet union where our economies were never integrated they were decoupled. So were dealing with different situati situations and if we try to unscramble this egg, they are going to be economic complications for both sides adding to joes list. Toothpaste out of the tube. Unscramble an egg, its impossible it can never, ever be done ever can you . Thank you. Thank you were not done yet. Just writing that down. Lets talk about the Security Issues you have a unique perspective on this what about the huawei situation . Obviously, its pretty complex this administration has been going around for a long time telling other nations not to use some of this is there a fine line where we resume some sales of kpoenlts to huawei, but you still protect things on a National Security area they have been saying some of these things you can buy off the shelf in the United States and you can export them under general license. I think hes suggesting thats the kind of stuff wed allow to go to china but build protections for Higher Level Technology but again, this is the kind of stuff that has to be discussed ain considerable detail between the two. Lets not forget huawei is a big company and its actually got a fairly long history of using suppliers here in the United States but the complicated part is that some countries, some allies may feel like they were used in this larger trade negotiation in that what they were being told wasnt just dont sell certain components they were told dont do business with huawei at a ul. Because it creates a National Security issue not just with the United States but all of our western allies so the question becomes by making that case so forcefully, as the u. S. Has done, as he traveled the world over the past several months over this issue, ask then to change course, does that effect our ability to influence our allies in the future i dont know. I dont know how a significant a change in course this represe s represents well have to wait and see but it does suggest another point. Which is that his initial shot across the bow about using huawei might prejudice intelligence relationships frags it as an issue its something thats got to be discussed and hashed through not only with china, but between us and allies. The ideal would be for us to reach a common understanding with the allied countries. This does suggest a multilateral kind of approach of some kind. The recent overtures and relationship with north korea, i dont like i think it gets politicized at times i dont know if its fair. I guess its the town, washington, but a lot of the criticism comes from quarters and people that had no success at all dealing with north korea. I almost hear that if obama or clinton or someone wanted to go to north korea, they would have, but they didnt want to give the dictators of that country, whether its the current one or previous ones, they didnt want to give them the photo opt should we be heartened or insulted that were rubbing elbows with a murder how to you view it the receyeem is a fact of lie we dont like it, but they are there. They are the entity that has to be dealt with at this point in parttime. Unless up to advocate regime change and i dont know of anybody advocating that at this particular moment in time. So they have the controls and we have to work with that secondly, not much else has worked in the past we have gone one step forward and two steps back they always end up acquiring greater capabilities whether its Missile Technology or in the area of weaponry and so forth to the point b where they have a lot more weapons than they had before iran doesnt even have any weapons. So youre talking about the difference between those two countries. If that had been president obama, you think he would have gotten a second Nobel Peace Prize . Lets get a a deal we have to think about triangulating between iran and north korea too. What i think has to happen over time is we have to improve the iran agreement to the point where its something that could also serve as a model for dealing with north korea but persuading countries not go to nuclear is hard look at india and pakistan they are different. Yes, i would have hes the president if thats what he wants to do and in his judgment thinks is the best approach, yes, sir. Cant blame him. It was better than the missiles coming up he executed his own negotiator i dont think that happened coming up, can tesla deliver . Check out the shares q2 numbers are on the way. And a record is likely, says elon whats the case for tesla . Well preview kewe fa y ekor the auto maker when squawk box returns. Welcome back to squawk box. Take a look at the future ace head of the market open. Were a little over an hour away the dow looks like it would open up much higher about 260 points higher. S p 500 looking to open 32 points higher on the back of this trump u. S. china trade truce. Were expecting Second Quarter numbers from tesla this week analysts are watching closely to see what the data says about demand elon musk has indicated in Company Emails and in other comments that tesla is real close to hit iting the perhaps s for the Second Quarter the estimate on the street is for tesla just over 90,000 vehicles total but the number we are focused on is model 3 deliveries. If tesla comes close to that or exceeds that, it will be a record if you look at quarterly deliveries, that 50, 900 threw a lot of people for a loop tesla says there were a number of factors behind the fact they had slower deliveries in the First Quarter compared to Fourth Quarter. Looking at shares, we should point out if you listen to the analysts, all of them say the same thing they may dlifr deliver the vehicles, but the focus is on Profit Margins and how much those are going to be eaten away at further as they report q2 earnings later this month. Thats the expectation it might be early in august. But thats the number that people will be focused on. The delivery number most are saying they are probably going to come in close to 90,000 maybe a little above 90,000 in terms of total deliveries and on the model 3. Stick around, phil. We want to bring in the managing trerkt and Senior Analyst jeff ost born he has the lowest price target for tesla at this very moment. What is it were at 140. So based off of multiple earnings power and what do you think is going to have to happen wean now and then for that number to be realized in terms of the price target, i think its the prosperity of the cars phil touched on it in his hit there. But right now they are wrapping dollar bills on every car they are sending out and not investing in the brnd. Theres a whole host of problems i dont dispute the quarter will be solid in terms of the delivery estimates theres been a lot of leaks during the quarter so estimates have been raising throughout the quarter, which is nice to see, but its a mad scramble here to hit the estimates. Whats going to happen in the second half thats going to get you to the 140 number theres been a lot of people who have been bearish about this stock. Ask theres been a lot of volatility that you can look at that chart and so to get to the price youre talking about, i think it takes a real sort of sea change in the psychology of investors around elon musk exactly i think its going to be margin pressure, they have been discounting the car. People are going to see that now that the pent up demand period is gone for the model 3, we have had a twoyear waiting period. Q3 will be a litmus test for the true run rate of demand. Theres no long r a pent up backlog. Theres no new car to be sold. The tax credit in america gets cut in half. A whole host of issues you have a big debt payment due in november. And next year you have to pay off the loan for the chinese factory as well 37 a bunch of cash is going out the door margins continue to be under pressure people will see what the true longterm demand is. Its not a million vehicles a year like they claim its nowhere near the gross margin they also claim i think maybe ten years auto, but theres a host of legal issues, city planning issues, insurance issues, a lot of false promises in that sector. Its going take some time. Phil was in chicago jump in. I have a question regard iin the federal tax credit starting today its been cut to 1,870, 50 drop to the first half of the year how much does that weigh on demand and sales in the second half of this year . I think it certainly will hurt the higher end cars some of the fires were aggressive in trying to lock that in. You have seen subsidy cuts so i think it did pull in some demand in the q2, but i think its less of an impact to teslas naturalized demand, but more of a Marketing Tool that other oems can use as they launch their cars. Other than General Motors are exposed to the cuts. What manufacturer do you think is going to take over the role in the spaces somebody else that you think is going to do so much better than tesla . The bullish argument on tesla has been theres no genuine competitor yet certainly, the high end the competition is fiercely coming mainly from the european oems. As you look at the 30,000 market, the point is spot on volkswagen has been aggressive bmw pulled forward their launch by two years in terms of them hitting their stride so the competitive environment is intensifying now at the high end. Certainly the lower end will be more in the early 2020s. So youre a few years out. But volkswagen would be the one to keep my eyes on did you feel any pressure either from the company directly or just internally about making a call like this the reason i say a this is so many of the analysts, specifically around tesla are either bullish or flat very rarely are they negative. In part theres an anxiety in the Analyst Community if youre short, youre going to look access or a credibility issue with the company, et cetera. The access with tesla has been relative to my 20 other companies under coverage more on the limited side to begin with i dont think that has anything to do with the rating. I think its due to the analysts that cover it and the personality and his positioning there. But surgeonly no pressure internally as to whether the rating is neutral, positive or negative we tend to take a longterm view with our coverage and value things off what it can look like a few years out in the future. Is where things are dire. Thank you for that. Phil, appreciate it as well. Are you a jeffrey ost born fan . Just out of curiosity . I get asked to sing it all the time thats all we have. I wanted stay with me. So you are aware. Security line at the airport. It happens all the time. You wish. You wish let me see rock star or analyst i dont though he has to hand over his license. Thank you, sir thank you when we come back, targeting tax loopholes on the campaign trail. President ial hopefuls are laying out how theyd make the economy more efficient and tweaking the tax code is near the top of the list joe biden has had his sights on one rule in particular well tell you ha that is, why the wealthy love it and why biden and others want to wipe it out. When squawk box comes right back welcome back to squawk box. Futures are at the high end of the range we have seen today up 270 on the dow 140 on the nasdaq. S p up 33. Coming up in a moment, stepping up on taxes what is the step up in basis rule and why is joe biden so interested in it heres a hint. 11 figures worth potential tax reeves knew. Well explain the rule and speak with the former governor on what getting rid of it means for taxpayers and tax collections. Stay tedun youre watching squawk box. Welcome back to squawk box. Were live at the Nasdaq Market square a couple things investors are watching today wyoming being acquired for 112 per share. Facebook will start banning ads that discourage people from voting ahead of the 2020 president ial election. This was announced as part of facebooks Second Annual civil rights audit the new dont vote policy will only likely apply in the u. S. And wont include policing users posts so uk say it on your own page. And your feed. A big milestone in the gambling world. New jersey taking in more sports bet than nevada. They led in the Sports Gaming category new jersey saw about 319 million worth of bets. While nevada had a little more than 317 million. Democratic candidates for president are taking aim at income inequality and abuses they see in the tax code robert frank has a look at what could be one of the biggest targets. Good morning. It is one of the favorite tax breaks of the wealthy and democrats say its a costly give away to the rich that needs to be eliminated. Its stepped up basis. Basically allows taxpayers to inherit businesses without ever paying tax on the appreciation during the owners lifetime. Joe biden has made getting rid of it a center piece of his tax plan and maryland senator crist van holland is about to propose legislation killing it calling it a major loophole investors use. So heres how it works say an investor bought 2,000 of apple stock in 1999 if the investor sells it today they pay capital gain on that 198,000 so thats around a 40,000 Capital Gains tax. If that holds on to the stock until he dies and passes it to his family or anyone else, they never pay any tax on the gain. The tax basis for the stock would be 200,000. The same value at the time it was transferred. And the heirs would only pay gain above 200,000 if they ever sell it. So you have businesses, stock, real estate can all soar in value for decades without ever being taxed. If its given to charity, its never taxed at all experts say the step up basis cost the government between 30 and 60 billion a year and it also discourages the sale of stock of assets during their lifetime because theres no incentive to sell. People take loans against it. Thats the other piece of this so youre effectively using your money without being taxed on it. Exactly interestingly, not only do people do it in this instance. But we have talked about people from wall street or lots of businesses leave their classic private sector and go into the Public Sector work iing at the white house or wherever and they effectively dont pay taxes on that period. Because youre forced to sell the stokt. But youre supposed to pay the tax off those assets but what most people do, especially people who can afford to do it, they never sell the treasuries and they just take loans against that and pass them on to heirs and the tax is never paid so its just another example still a high cost if you think about it, theres discussions of gary cohen. Lets say you made half a billion in stock you sell the stock, which normally you lose 250 million you get to keep all 500 million and take loans against it and then dont pay any tax on it later. Were talking about 250 million payment. Thats not government work it was assumed the estate tax would be a double tax if you tax any gain during lifetime thats the first thing and that goes back to 1916 thats legit though the other reason is its hard to determine often times after someone dies what the cost was to them of an asset when they bought it. Finding the paperwork. Not anymore thats the argument that used to be enforced they tried to repeal this in 1976. It didnt work wauz they said finding documentation is too hard most of them are now Financial Assets that its easy to figure out your basis when you bought it s how much is exempt initially . Its 11 million per person now. 22 million per couple very few people 1900 people are pay iing the estate tax a lot of stepped up stuff thats never been taxed. Whats the rational . When there was a Real Estate Tax that made sense. But now theres no estate tax. Stay with us for more lets bring in evan bile is this something that makes sense to you it does, mbut with one cavea. I think we should tax appreciated assets on Capital Gains just as we go do tax people when they sell things when they are living i have been in favor of eliminating the estate tax but when you get north of 50 or right at 50 in the income taxes and tax peoples estates in addition to that once they have passed, you compound that out and it gets to be 70 . That is double taxation so youd get rid of estate tax and tax the stepped up stuff when people die . Yeah, i think thats the way they do it in some other countries. One of your colleagues mentioned. Really the estate tax these days is a tax on the unprepared people looking for accountants and lawyers and find ways around th this and so it doesnt apply to that many people. How about some of the other proposals that were seeing . Did you watch both nights of the debate strapped in a chair and your eyes were big. Did you see both of those . I watched a fair amount, but im going to wait until the field is whittled a little bit to watch the wall to wall coverage every Single Person said we should give Free Health Care to illegal immigrants, right . Yeah, and thats a particular position may come back to haunt them in the general election its nice to be able to promise some of these things, but they have to be realistic and remember the bis of the party, which tends to dominate the nominating process, may thot be the part that decides the general election outcome im afraid President Trump may have been filed that footage away what do you think would happen, and im not sure where senator harris stands, im so confused about whether we get rid of private insurance or not. I have no idea where she stands. But what would that do is that workable in any way . Probably not, but she did back up her position on that to make it clear she was for medicare for all plus private insurance as an add on, to be fair to her. People are allowed to refine their positions and thang their minds from time to time. My concern about that is if you look at the polling ata, most folks are happy with their insurance. They dont like the insurance companies. They think they pay too much they like their doctors and coverage they have if you have a proposal that just takes that away, plus if you reimburse hospitals at medicare rate, thats going to put a lot of hospitals out of business if we had a sound track, i would have hit the boo button three or four times on you already. Let me put it in a way that the base might appreciate and embrace. Barack obama did a good job expanding coverage and trying to get costs under control. We should build on that and extend on that rather than throwing everything out. The first election after obama care was passed republicans were swept in and that started an eightyear effort to repeal medicaid and all the things done to help less fortunate people. Theres a fabulous article. Viewers should read this from the last weekend about the fact that the center, centrists dont exist anymore. We have this idea of what we think of as the center do you marie that the center is gone i should also note there were a number of columns over the weekend on the liberal side of the world saying actually that things have gone too far a lot of people looking at what took place on wednesday and thursday of last week and saying this party has just moved to a place that is too far left they were moderate republicans saying democrats, i dont like President Trump dont drive me away. To your point, thats the karl rove theory of politics. Theres no moderates or center its about polarization and energize iing the base there are a couple problems with that i do think there are some moderates and undependents who may not decide primaries, but are pretty important in general elections. You can look at the house this last time. The seats we picked up were with people who served in the military and were more moderate in their views so therey are still out there en if they are not me tom nant in primaries. It makes it hard to govern he did go off steve had a line. Did you see that youre going to end up as a socialist or sociopath if you demonize the opposition, it makes it hard to work with them after the election and in a system of checks and balances working together is what you have to do so get things done thank you is she still trying to get her to run youre funny. Coming up, the biggest morning stock movers on the day when futures are up big. Well show you whats going on there was a big first half of the year gaining 15 since january 1st. We have a warning for you. When thats happened in the past, the undex kept only 50 of the time by the end of the year. Well talk thursday and Fourth Quarter markets when squawk box returns after the break air traffic control. Its gotta let new data integrate with data from our existing systems. Be able to pull from reservation platforms built 20 years ago. And also be able to use apps to book superpersonalized trips on shiny new phones from the future. Plus, i need freedom to move my workloads wherever, whenever but manage it all from right here. And thats the cloud i want. Simple, right . Expect more from your cloud. Ibm cloud. Welcome back top squawk box. We have been watching the futures this morning and they have been hanging right around this level all morning long. Dow futures up by 250 points after theres a truce when it comes to the trade talks with china. The talks back on again. The s p 500 indicated by 32 and the nasdaq up 136. This also follows some very sharp gains that we saw in asian market joefrs night as well with many of the the markets up by 2 . Under an hour, opening bell on wall street some of biggest stock movers 37. Whef a lot of movement. We highlighted in the last hour some of the trade talks. We talked about sky works and Construction Equipment like katter pillar. But they are not the only ones counting easing trade tensions lets take a look at apple shares a lot of business from the greater chi fra region shares of the iphone up 3 at this stage on 400,000 shares it will be a positive contributor to the dow jones average trading today. Shares with bigger exposure to the market get iting gains they arguably being driven more by the latest report on gaming revenues but easing trade tensions with china certainly are hurting matters there. So watch those shares. And fedex is up premarket as well the shipping company up by 2 at this stage over 10,000 shares premarket. You may recall just last week it reported earnings inside the trade tensions as a head wind for its results in the future. So some may be using fedex as a proxy for those trade talks. Those shares up 2. 5 as well thank you its the first day of the quarter. The second half of the year. Joining us to talk markets and what to expect it the next six months i think that the risk still remain on the upside i think well have a pretty decent second half there was a couple things that happened in the last few weeks that really force the issue on et ging to a trade one was the chinese added two weeks ago was weaker than expected but the composition was really disturbing for investment was o heavy industry stateowned enterprises. They cut individual tax rates, trying to spur credit to go to sme, small and medium enterprises, having no success with that whatsoever that pmi that came out over the weekend showed orders for small and medium businesses are close to 45, just showing no signs of bouncing so china needs the deal to provide the cover to reform the economy. I think that data strengthened the hands of the reformers so that was a big step and on our side of the ledger, last week, there were two sort of very disturbing developments first of all, Business Confidence measures are Capital Spending plan measures had held up quite well in may, which i was a bit shocked by, given that the trade negotiations fell apart in early may they fell really sharply in june additionally, the biggest dynamic that is important for the labor market is how much it turns over not just that net job creation which is kind of a statistical nothing. And the jobs jobs hard to get component of the conference board, Consumer Confidence survey was decidedly weak. It was off a two cycle high. But that would indicate that you could have really hit Business Confidence in investment and capital and labor in june. The pmi overnight confirmed that, terrible in asia so we needed to get this deal back on track. Provided im correct that the strength of the the hand of the reformers was strengthened in china and we do move towards some sort of a deal, then you get that rebound in Business Confidence and the mix of Growth Continues to be towards investment and software, research and development, which is Growth Without inflation. In which case, earningings earn market is is already six months ahead, just like it picked up on the deceleration a year ago, so with that in mind, i think as we get into the third and Fourth Quarter, unless the trade war really escalates again, i think well find ourselves considerably higher. A lot of it is writing on the trade talks at this point, just took absolutely. To me, that has been the clear and present danger through that Business Confidence channel for quite some time. And, you know, if we can continue on and get a deal wheat good some sort of a deal with china undoubtedly, i thought the former Prime Minister of australias comments were really interesting this morning. That was a good interview. We will get a deal the question is how soon President Trump then moves on to germany and the whole pushback on global Central Banks which hes correct about there was an oped in the journal this weekend about judy shelton and her criticism of the ecb and boj. No doubt that currency is what those policies are all about. Would you tell people to buy here or not . Were 1 off the highs on the dow . Yes, i would. I think were going to go through 3,000, i think earnings season is going to be pretty good, it is going to start out with financials and financials have moved to a new level of profitability. And i think those results will be quite good. And then i think we push on from there. There will undoubtedly be a few episodes where the trade talks run into snags those are your buying opportunities. Barry, thank you. Good to see you. All right down to the New York Stock Exchange, jim cramer joins us now. What are you telling me, that kiante classico is having a good year you read that very well, joe. Last year was weak this year we had perfect rain and now perfect sun. It looks like the year you have to put them away i think that while i like what barry said about stocks, i think the kiante represents a better buy. Did you you were just in tuscany, that i could go i could just go, period. I dont even mean go i would go and maybe not come back. It is very hard to come back because here is the shocker, they love us still, and ill go further, joe, guess what president they think is doing a great job . This is the north, speaking northern italian, i dont know about the south. The big cities, not so much, right . Well, not even look, there is a belief that the president wants a separate security that they believe that the president would prefer the lira and a lot of this is motivated that they believe the president is not in favor of merkel and merkels policies have hurt italy. Did you go anywhere near banfee castle . What part of tuscany just for me. 20, 30 minutes south of florence, more antinori. Youve been there before . Yes, yes. More rafino. And, look, i urge everybody, if you want a place where americans are loved, i mean, loved, go to milan and go to florence there is you are youre hugged by everybody. It is just say youre an american and they love you and monticcino, they have this city that you cant believe it exists, it is on a mountaintop, it cant even be real and people are just Walking Around they dont even look where they are, theyre just like, yeah, this is it is like so sick the one thing between 2 00 and 4 00, you couldnt even go to a drugstore in an emergency 2 00 and 4 00, the country is enforced a level of sleep that is outstanding so awesome. The gelato places, food, anyway. It is so great youre right i got to lose five pounds quickly. I put on five, ill take them off. You any whaknow what, jim, ia big week, well live without you, but when you need to do it five stars means in things to many people. Jim, thanks well see you in a couple of minutes. Dont miss marty mucci on mad money tonight could there be another around the corner . Or could it turn out differently . I wanted to help protect myself. My doctor recommended eliquis. Eliquis is proven to treat and help prevent another dvt or pe blood clot. Almost 98 percent of patients on eliquis didnt experience another. And eliquis has significantly less major bleeding than the standard treatment. Eliquis is fda approved and has both. Dont stop eliquis unless your doctor tells you to. Eliquis can cause serious and in rare cases fatal bleeding. Dont take eliquis if you have an artificial heart valve or abnormal bleeding. If you had a spinal injection while on eliquis call your doctor right away if you have tingling, numbness, or muscle weakness. While taking eliquis, you may bruise more easily. And it may take longer than usual for bleeding to stop. Seek immediate medical care for sudden signs of bleeding, like unusual bruising. Eliquis may increase your bleeding risk if you take certain medicines. Tell your doctor about all planned medical or dental procedures. Whats around the corner could be surprising. Ask your doctor about eliquis. Will transform not just the automobile, but mobility itself. An autonomousthinking vehicle protecting those inside and out. And its the mercedesbenz of today that will help us get there. The 2019 eclass, with innovations that will change the way we drive from this day forward. Visit your local mercedesbenz dealer for exceptional lease and financing offers. Mercedesbenz. The best or nothing. Month for stocks the Top Performing sectors, tech, Consumer Discretionary and quick final check on the markets. Half hour away from the open things are much higher on the back of the trade news over the weekend with china at least a truce is at hand for now. Dow jones looks like it would open up about 258 points higher. S p 500 looks like it would open up about 32 points higher. The nasdaq looking to open about 134 points higher. Also show you the oil boards, we had brian in vienna, crude at 60. 09 a big gain, close to 3 . It is a good gig. Anyway, joes getting closer to vacation. Make sure you join us tomorrow youll still be here, though. Ill be here tomorrow for three hours. Final day squawk on the street begins right now. Brooklyn, brooklyn take me in are you waraware the shape im in did you hear that brooklyn, brooklyn, that was my request im david faber with jim cramer who is a Brooklyn Nets fan live from the New York Stock Exchange Carl Quintanilla has the day off. Futures, half hour from now get started with trading a lot of news to digest over the weekend for investors. You can see we are looking for a sharply higher open, perhaps even some new records, well see. Lets get to our road