Transcripts For CNBC Squawk On The Street 20240714

Earlier losses closed at a record high. Thats kind of where our road map starts as it often does investors shrugging off Global Growth concerns. Stocks set to rally at the open. And records still within striking distance. Plus, broadcom eyeing symantec, my reporting added to bloomberg yesterday which broke the story. And mine. And jims give you more details. And pot shakeup, bruce linton out, telling cnbc he was fired from the Worlds Largest publicly traded cannabis company. Somewhat extraordinary. No. Wait. Having him on talking about being fired. Want him back all right lets talk about stocks. Looking to set a new milestone this morning s p 500 on track to open at an all time high. That would be the second time this week. Yesterday the index posted its seventh record close of the year take that, Global Growth concerns, take that, what did we get from edp this morning . Adp, 38,000 jobs less than expected created so what . So what i think melissa had some great commentary in last show. What constitutes goldilocks. This is the answer this is goldilocks. It is goldilocks. All i want is for fed chief powell to say i got your back. Ill go back to Janet Yellen Yellen would not have done that hike in december. No. She wouldnt have. She is data dependent. You talked about it for months i was shameless and you were right. Thats what is helpful that is always helpful but back to now. It would seem to me, were very much dependent once again on earnings and the fortune of particular companies will rise and fall in their ability to deliver ill take it. Because most of the earnings were good. Only the retail earnings away from costco, walmart, target, home depot, were subpar. Thats because costco, target, home depot, walmart have scale and it is just like in a lot of things you taught me without scale, like whether it be in cable, telco, you cannot win. Scale is incredibly important. It is one of the key reasons why you continue to see merger an acquisition activity. Always the number one reason. Youre always going to be im not sure about that the rest of us are bots youre relevant. You think well all be replaced by bots it is possible lite a lot of the ceos want. They can work longer hours. They dont complain at all. No. Like henry ford said, never complain, never explain. They do need power sources. Yes thats some expense associated with robots we have judy shelton on friday, shes reminiscent of remember the times when gold was ascendant. Gold has been good recommendation of the new barrack. Barrack is good. Just the specifics of the adp report and well get the friday jobs number. Job growth started to show signs of a slowdown. Large businesses continue to do well Small Businesses are struggling as they compete with the ongoing tight labor market well, okay. Lets just i like to tell things straight. Im i got the thing about being correct. It is bothersome people dont like it i had marty on, the ceo, 600,000 small and medium size businesses with paychecks combination of minimum wage being so high, people dont want to start Small Businesses. And so high, really so high . Thats why i said, david, i want this im not im trying to be apolitical here. Got it, okay. He says thats a factor he says it is hard to find people one thing i would emphasize, thats state by state, right minimum wage is higher small, medium size. The federal minimum wage is not gone up. Were not getting what i would say is the typical job formation business formation from an economic expansion were getting a contraction. And thats, again, why i think we have got our friend miss goldilocks got it. Lets talk symantec and broadcom yesterday, bloomberg reporting the two companies in talks, we can confirm that this morning. People familiar with the situation say they started talking a few weeks ago. Few weeks ago. And the hope is that if they were to complete a deal it would be done or originally and many times you sort of at least have some sort of sense as to your timing when you Start Talking in terms of where you would like to be middle of july is what they had been targeting potentially for a deal it does appear there is still work to be done including getting to a final price and so theyre not there yet, jim, when it comes to that dont expect it from everything ive heard and read to start with the free. Maybe you get above 25, 26, maybe into the upper 20s i dont know it wouldnt appear necessarily that the company has begun any sort of formal process this does appear to be talks specifically between broadcom and symantec i recall last year, there was a lot of chatter about a potential private equity bid, a large equity check youre talking at least 7 billion. That stretches private equity, have to do it as a club deal, makes it difficult, fairly high degree of difficulty, from hawk tan, aggressive ceo of broadcom, who we know well, perspective, apparently enterprises half the business or half the revenues, but underperforming in terms of margins and who sees real opportunity there. A lot of big transactions life lock, when the previous ceo was fired, rick hill came in, stock dropped to 18. Stock dropped to 18 actually on a really bad Morgan Stanley downgrade. June 11th. Early may. Right downgrade. But potential acquirer started circle i circling. I want to reveal that rick hill is a family friend. Thats important because i dont want tv. Remind people of his history. Rick hill used to be the ceo of knnovellus, he sold to lamb research, he had been on my so me times and we developed a good friendship my eldest calls rick uncle rick. We got it i say that because on june 8th, i gave a Corporate Governance conference and rick hill told you to buy symantec, right here go buy symantec. There is many good things happening. It was had to let go of a lot of people. Life lock turned out it be a gem and was killing it and but the previous ceo was a mess left under uncertain circumstances. There is still a bit of a we havent had the full investigation of what happened most important thing is symantec was not destroyed. No, the consumer business is strong. It is straight. And feld and hill worked together, they were going to bring out a lot of value and then, boom, hill put in his own cfo, came from a really terrific guy. Came from the gaming business, from small okay. All that being said, can we fastforward 28 thats 28, really ten points above when rick came in. You just pull on that out of thin air or rick doesnt lick to seke tor low. Hes a tough chicago guy. If thats the ask, ill be curious to see you know what, heres the thing, jim, it wouldnt appear you could have any other domestic buyers or doesnt appear to be any that would be interested what do you think about hocks strategy . Even with all the security concerns, it is a u. S. Company the new broadcom, it just gets less and less semi. Well, the ca deal and it is more and more software. Main strframe. Cybersecurity is still growing. I like this. You do . Yeah. Cox, stock going down. Broadcom, stock had a big run. I like this. Well see is there a possibility of a sponsor bid . Could they really compete with what were talking about here . Unlikely. Unlikely. Unlikely. We have a medal of honor recipient. We do. Who is coming thats what our cheering is for. The applause, David Belavia of new york, outside rochester first living iraq war veteran to receive the medal of honor there he is. He led a squad in support of operation phantom fury in fallujah, november 2004. And hes coming on to the floor. Wow what it takes to receive that. He was an infantryman, served also in kosovo, obviously Operation Iraqi freedom, one and two. List enlisted in june of 99. Well be right back. You should be mad they gave this guy a promotion. You should be mad at forced camaraderie. And you should be mad at tech that makes things worse. But youre not mad, because you have e trade, whos tech makes life easier by automatically adding technical patterns on charts and helping you understand what they mean. Dont get mad. Get e trades simplified technical analysis. I think the board had decided they wanted a different chair and a different coceo, so im out effective immediately. And there is a search to replace the transitioning coceo. Just to be clear, have you been terminated or did you step down on your own i was terminated. Okay. So you were fired there are a lot of words for it all right time for a mad dash. He was terminated. Right obviously built the company, entrepreneur. Right. Leaves with 18 million shares. Worked in the water business before this and new Bridge Networks telco, water guy. Stock looked down more. Shouldnt be down at all. Should be up. Rare we get a ceo who has been fired to come on and talk effusively about it. Bruce and john ledger, same kind of guys june 28th last week, bill newellens, the ceo of constellation, canned linton on the call bill said, we were not pleased with canopys recent results now, if he did any calls, you would realize he felt he was spending money like it was going out of style remember, bruce did get 4 billion from constellation bruce was everywhere in pharma, doing drinks. Drink was off loaded to constellation. Bruce was having a great time and did raise all this money you got to hand it to him. The fact is, bill was a button down guy rob sands was the guy who worked with we should point out, a little over 36 they had an opportunity to go to the question is will kevin murphy, the ceo of acreage, just bought, will he take over . Irwin simon, irwin simons name, aphria, i had green growth on, we talked about the canopy mess. I think the canopy mess will be straightened out and you should buy it look, i like bruce i had a great teaching with bruce and bill newellens they were not made for each other. A mad dash. Early as you might notice, of course we are still going to have some stocks to watch. A lot more news to get to. And then an opening bell stay with us on squawk on the street. It all started under this buttonwood tree. Twentyfour people came together to sign an agreement that created the stock exchange. Just the right elements coming together. It started when scores more people came together, just down the street and traded bonds that helped pay for the revolution, and the nation it created. It started in an office on the corner where the right people witnessed the telegraph and brought information and humanity together forever. It started with the markets, bringing together steel and buildings and silicon and medicine and rockets. We believe the possibilities of life and investing are greater when we come together. Its why for eighty years weve connected ideas with technology, data with inspiration, investors with solutions. So that every day together, it all starts again. Tesla is on track to open at a twomonth high that is the stock price. The automaker says it delivered more than 95,000 cars in the Second Quarter of the year thats a record for a threemonth period and it was above analyst expectations and as you can see, stockalmos 7 well see how it performs once we get started with trading, about 12 minutes from now. Jim, 400,000 for the year was the target, would seem to help in terms of trying to meet it, still some questions, though, key questions whether they can be Free Cash Flow positive. Ive never seen a positive number greeted with more negativity no analyst pushing it. Analysts all raising questions one of my absolute favorites, talk about five takeaways, and believing that, you know, we believe i thought this was great, tesla has a shot at being profitable nongap basis thats the worst fear of the bears. Profitable quarter but people the average id say takeaway of this research is stocks are going to go up, already ran up, faded. Fade the gain. Thats just throughout all the research and, you know, i think that there is a change here. I think that you got a very focused elon musk who is not tweeting all the time. And people think we know hes not tweeting all the time he shares some internal speaking of autos, to phil lebeau yesterday we heard from gm and Fiat Chrysler and now ford out lets get to phil on the Second Quarter numbers. Ford sales for the Second Quarter, remember, ford no longer doing them on a monthly basis for a Second Quarter that deliveries, sales fell 4. 1 . That was a little weaker than some of the analysts were expecting. Certainly not a huge drop compared to expectations the overall pace of sales, you take this along with all of the other automakers reported yesterday, for the month of june, the pace of sales will come in 17. 28 million. That was stronger than most were expecting. The retail component of that, what you and i go out and buy at a dealership, thats lower but when you look at the overall sales in the industry right now, it is holding up better than i think some people expected jim, sorry, jim and i doct were talking about tesla. I would like to get your take as well movers, thats the main one. Right i think the biggest question people have is give us some details. You talk about the order backlog growing in the Second Quarter. So that should put the demand question, eliminate that question altogether. Well, you know, this is one of these things where theyre selective about when they want to talk about orders increasing and other times when you ask about orders, they say, we dont take reservations. So selectively they said we have a growing backlog from the Second Quarter into the third quarter, therefore it should eliminate the demand question. You read all the analyst notes, there is not a whole lot of conviction here. We want to see some details and analysts want to see some details and we wont get a lot of those until q2 financials and even then, i have to wonder if theyll tell us how many vehicles were shipped to china, how many to europe you got to break this down more than just the model 3. Lets parse what you said, we take the demand side off the table. Does this subsidy really impact peoples purchases doesnt seem that big. I think by now, the impact has faded. It is going from, what, 3500 down to 1875 if youre spending 51,000 for a model three or 75,000 for a model x, or an s, 1875 is not going to make you walk out or stop purchasing that vehicle youre not going to sit there and say, no, im not going to buy that i think that story line if you will has faded away. And now the question becomes, jim, when the competition comes, if it comes, we have been waiting for it, thats a nice little bonus for you to throw at a potential buyer, relative to tesla, hey, 7,000, 7500 federal ev tax credit. We havent seen that yet we get porsche later this year that will be the challenge to the model s. I dont want to bury the lead what you said at the beginning, actual car vehicle sales are stronger it has been i drive cars, everything you say, this is rather surprising. We havent had good numbers. Is something changing . No. I think that it is sustained growth people were going into june thinking that we might have to see some Production Cuts when it comes to especially to suvs and crossovers and everybody is looking around, like, a gunfight at the ok corral, saying, who is going to be the first one to cut production im not cutting production and so far, the sales have held up relatively strong look, 17. 28 is not far from where we were a couple of years ago at 17. 6 million in terms of the pace of sales. I think a lot of people look at consume are confidence, low unemployment, strength of the economy, low Interest Rates. That has people continuing to buy. Seems to. Phil, thank you. Phil lebeau from chicago on the ford numbers and a lot more to talk to phil about. I know. Isnt it great i always feel like it is a conversation where i learn something. Hes so good. Thats what we like what we want what we get in phil. We got an opening bell a few minutes away on squawk on the street. Stay with us i dont know whats going on. Ive done all sorts of research, read earnings reports, looked at chart patterns. Ive even built my own historic trading model. And youre still not sure if you want to make the trade . Exactly. Sounds like a case of analysis paralysis. Is there a cure . Td ameritrades trade desk. They can help gut check your strategies and answer all your toughest questions. Sounds perfect. See, your stress level was here and i got you down to here, ive done my job. Call for a strategy gut check with td ameritrade. Im off to college. Im worried about my parents retirement. Dont worry. Voya helps them to and through retirement. Dealing with todays expenses. While helping plan, invest and protect for the future. So theyll be okay . I think theyll be fine. Voya. Helping you to and through retirement. Youre watching cnbcs squawk on the street, live from the financial cap cal ital the world. Opening bell less than three minutes from now dont like to forget the bond market given it is gigantic. And we have a ten year note that is below 2 . Staggering. On the yield. Lowest levels we have seen in some time, jim what is that saying . And what does that mean for stocks i think it still comes down to you got to look at europe, what their bonds are doing how that money has to come somewhere, how the dollar is strong, if youre a any sort of fiduciary, it does not have in your charter that you cant invest in the United States you have to buy here im surprised the chinese arent buying here. Certainly not liquidating. But, david, it is the only game in town. And that i dont know how you buy anything up, anything but our treasuries this is when we should be doing a a 500 billion infrastructure bond. Steve mnuchin should do that they regard these things as being too creative, very interesting. Lowest level since november of 2016. And thats when things were not so high. No. People should be refinancing, but many people already refinanced they have although i also think some of the banks are at capacity now. Good point. Sometimes they only have so much deal actually refinancing myself right now. I know. Market rates have been cut there was a there was a pretty good three and a quarter cd not that long ago you had to move. What a piece of paper that was. Great piece of paper. I will keep these things. After the sicar, the bank stocks became higher yielders goldman increased the dividend. 50 increase. Jpmorgans dividend is very good versus the ten year. Rather than the stocks going down, if you think there will be a rate cut, theyre going up dividends are steady and the buybacks are terrific. Jamie dimon, you buy that stock, you any whknow what you get . A fortress balance sheet. Looking at goldman sachs, David Solomon has his work cut out for him. Hes done a lot of good things in the last few months. We dont talk much about the billion dollar whale, a book, not anything as good as bad blood. There is the opening bell at the New York Stock Exchange. Here at big board, congressional medal of honor recipient, Army Staff Sergeant David Belavia at the nasdaq, winners of rice universitys Business Plan competition. Sensational rice university, very strong school. We got breaking news. There it is the bull the s p yes, all time high. Look at that 2977, right there. Incredible. Obama. A lot of it was a lot of it was. I said that to irritate people obama did it. Dont tell the there we are, up 18 year to date though many would say we have been coasting for a while now, most of the gains were earlier in the year. Yeah, yeah, yeah, yeah. Yeah david, there are some stocks that have ignited and it is because of the ten year. Mondelez that guy is doing a terrific job. That stock is up gigantic. Vand put. Hes hes done a remarkable job remember, stacking is in they like oreos you put anything in an oreo. If you go to europe they havent put cannabis in a oreo yet. I asked about that. I ask about cannabis so much. I know you do people on the street too. I ask everybody youre mr. Cannabis. I did not ask new core about cannabis mondelez, 38 , up on nothing it is like a like seinfeld. It is a stock about nothing. It is doing a good job. They have done a good job they have done the right listen, by the way, could be kraft heinz. Could be coniagra. That was a very tough one it was execution it was execution that wasnt that good. I thought that they they got a millennial millennials like frozen food. I have millennials down, man. They dont like had these guys are selling it is pantry. Thats pantry. A lot of people bought haines, they dont like to spend a lot of money that was irwin simons company. He moved on freeia, a cannabis company. A lot of talk about green growth, more consolidation why shouldnt canopy be the consolidator many thought murphy was doing a terrific job the pastiche of regulation about cannabis is very hard to deal with for every executive. Green growth, theyre all, like, from victorias secret and American Eagle who yeah. It is a store. It is a kiosk of cannabis. People who were involved with the what . Thats theyre doing victorias secret cannabis . What are you talking about the chief marketer is from victorias secret, bath and body their numbers, per square foot, are the highest of any retailer in the world. Higher than the apple store yes, thats the second. Why . Why why come on, jeopardy is so back in. Come on. Has to be in the form of a question. Why what . What is thc most people buy cbd because thats legal in nevada you can buy thc now. For the uninitiates, thc the high. Bill newlands at constellation has been struggling with what proof, so to speak, they can make the beer that has thc in it and they dont know because the proof is different per person. The proof is not in the pudding. Just watch out for the edibles. Just do them slow. Thats my advice how would you know . Dont take too many at once how would you know that everybody knows, jim. Everybody knows. But ill remind you my mother always said if you eat chocolate, it gives you pimples, so dont eat too many gummies. Takes a long time to work through your system. Lets move on from cannabis. We talk Canopy Growth earlier. Bruce linton fired from that company. Have you gone on facebook yet . We havent. Facebook is down this morning. Not much, jim. And up almost 50 for the year. It is now a fin tech stock, right . Because of this people dont understand libra is that is a dodge. That allows them to once they get them on the hill, thats going to be about that about empowering the july 17th, they have scheduled a hearing for libra on the house, july 17th, thats maxine waters. Once they get into it theyll realize it is about empowerment. People being unbanked. 2. 3 billion people who are not regulated by the house and senate i can point out. You were very enthusiastic about it i read the white paper. You have to read the white paper, really boring we have got nelson peltz up there with david taylor. That combination. Yes a lot of talk that goes through, delivering alpha. I heard that talk i heard that talk with an excellent interviewer from what i understand. Im still on the hook so anybody who wants to do an appearance there, let me know. Give me a call do you see the dollar stores, they have gone up. They have been the ones that have been most hurt by tariffs they have sourced elsewhere. I did a lot of work on this yesterday. After you talked about how vietnam cant be they have moved. Dollar tree. He moved so aggressively out of china. It is extraordinary. Now, a lot of the stuff i have five pairs of sunglasses that were made in china, i got for five bucks yes. I dont know how they get those made in vietnam. Make the same high quality may not be able to. They have polar bear, not polarized. Sunglasses are fabulous. I wear them around town. What else . Amazon we should look at symantec. We both say it is going to go higher we have that in common peter feld. You never talked about starboard. I wish you had. They share a board member, ken howard is on the board of both symantec and on the board of broadcom, worth noting. That stock is up bloomberg breaking that story yesterday about talks. We confirmed the two companies are in talks they began a few weeks ago they were hoping and still are hoping to potentially reach some sort of transaction or announcement of a deal by the middle of this month so a couple of weeks away perhaps. But you never know when there is a leak they had work to do including nailing down a price and that can often be the Sticking Point rick is interim i wouldnt be surprised if he doesnt work something out. You said 28 earlier i dont think rick will take less than rick is only interim. I think rick feels the company is dramatically undervalued. They have 20,000 engineers that they have unbelievable brain power. And life lock turned out to be such a home run. I didnt think it would be but the consumer wants to be protected from identity and rick believes in the product. Did you see something about conagra. I still believe in Shawn Connolly im not walking away from conagra. I love james bond too Shawn Connolly bond holds up the earliest ones. They hold up well they really do danie hes good hes filming one now he still looks good. Hes good hes not that tall no. Thats why one of the reasons i like him. One of the reasons i like him too. You can be a short bond. You know what, jim, you and i spoke yesterday i have nothing to update necessarily, but i think it is still worth coming back to sprint and tmobile and dish. Got a lot of calls after my report yesterday about the d. J a doj and what it wants and the negotiating. If they get to the finish like as is hoped for by next week, in terms of a deal that the doj can sign off on, if the germans which controls tmobile agree in terms of caps on the capacity use for the sharing agreement that well above 12. 5 . And allowing them to have a strategic investor well above 5 if they get there, dish, thats going to be really interesting to see what that company is capable and whether it can execute on what will be an open field for it to really pursue 5g nationwide wireless, but it is going to be all about the execution. People are skeptical. They are. They are skeptical theyll be able to do it. I know. Even with they get the blessing of the doj, even with the push, the real push. Yeah. I was actually quite surprised because i believe in charlie ergen, they can raise the capital. This guy cant be bet against. More about execution is what i ran into people wondering whether or not they really people, like, listen, he was the first out with sling with streaming and now look at it not doing well it is not doing well so they wonder can you find another john ledger the way deutsche tell did, to run your nationwide 5g wireless strategy i dont know. You need maybe do you think the previous ceo was sprint no. Hes masa. Would you want dan to do it hes the opposite of daniel craig. Very tall. Hes very tall. But im not sure you want him to do that. Need to find a operator john turned out to be a great operator talk to any rank and file. Burlington store, i like in brooklyn, there they are selling, i say what do you think of john ledger think maybe catch him, talk about music. When john comes by to see us, it is so enlightening john is remarkable hes one of a kind he is you think all he does is talk to you about dumb and dumber. No. Have you noticed that at t has quietly been going up . I have. What do you make of that . Im not sure. Im still processing it. All right do you think more entertainment oriented than we thought Randall Stephenson turned out to be their ability to successfully execute on the strategy in terms of warner and streaming and hbo is something that has to be watched. Their ability to actually generate ebitda growth is extremely important from the debt holder perspective, the dividend paying perspective and performance of the stock well see. Im watching closely final thought here, though, before we get to seema mody on sprint and tmo is the towers. Thats going to go crazy American Tower is so great. There were many short reports of this man, he came on over and over again, he came on the show, to argue with the shorts i love a ceo and ive got to tell you, there are very, very few, david, who take come on mad money and say the shorts are wrong ca faro and they came on and said the shorts were wrong most high. Most high. I know. I know what is that . If you believe, come on. James mcnerney, they felt they couldnt build the dreamliner, he came on boeing, i said, are you confident . He said, yes i said, when next as soon as a 92 billion market. Why not why not . Worldwide. It is not american should be American International tower. We have to move on im getting lite of hea inting well move over to seema mody on the floor more on whats moving this morning. We quietly hit another record high for the s p 500, 2981 about 20 points away from breaking 3,000 a weaker dollar has been a big part of the story today and yesterday. Today on the back of the lower private hiring data which did miss estimates ten year yield continues to trick lower. Lowest since november of 2016. And while we have seen the shift into dividend paying sectors, consumer staples, utilities, real estate it worth noting the number of companies raising their dividends has declined in the Second Quarter 492 compared to the 573 we saw in the same quarter last year, down about 14 according to s p global it comes as buybacks are also on the decline. Some of the biggest dividend payers on the s p 500, we have macys, century link and altria, all with yields of 6 or higher. Look at century link, 8. 6 pivot to energy, energy stocks, trying to find their footing it has been a choppy week. Crude oil prices rebounding after a steep tuesday decline. Thats not helping some of the Energy Producers in early trade. Pivot to technology, that did play a role in helping the s p 500 hit that record high yesterday. Were green across the screen for all the major large cap tech names. All this in the runup to the nonfarm payrolls out, expecting 165,000 jobs to be added before we get there, we have factory orders, durable goods and i is sm servism services. Interesting time to go to the bond pits, check in with Rick Santelli at the cme group in chicago with the ten year yields. Levels we havent seen in almost three years. Yeah. Absolutely correct, david. Youre spot on global sovereigns are plummeting right off the waterfall. Many of course continue to find exactly what is the biggest impea tuesdai impetus behind the drops it is never usually a big positive to see global sovereign rate dropping. It is usually much of a barometer regarding Economic Growth and whatever country sovereign is represented however, i know it is a horrible thing to say, but this time it is largely different global sovereigns, especially in europe and japan, have not only been depressed, they may be pressed further, of course, miss lagarde, former head of the imf, the announced candidate that will succeed mr. Draghi on october 31st many believe that she will continue if not enhance some of the stimulative policies that have been put in place which begs the question if you keep going negative, especially on the positive rate at minus 40, where do you end up . How do you reverse that . Look at a twoday of 10s, david was referencing it it is comping back to 2016 for a while. Yesterday, 197 close was a fresh low close going back to november of 16 as you see on the next chart. Doesnt end there. 30 year bonds at 249, 250 yesterday. That was a fresh low yield close going back to october of 2016. And look at twoday of bunds notice, came within a whisker of minus 40 basis points. Currently sold off all the way to minus 38 basis points of course, these are historic lows and if you look at the effects, not only on the fact that lagarde is taking over, but also considering the rates in europe, twoday of euro versus the dollar doesnt look so disruptive if you open the chart up to april of this year, the euro versus the dollar is coming off of two double bottoms there. The reason i mentioned that is it seems quite counterintuitive with rates dropping through the basement floor in europe that youre going to seat currency so stable it is one of the nominees to be a fed governor is dr. Judy shelton. Guess what, were going to have her with me after the jobs report on friday david and jim, back to you. Yeah, rick, a frequent guest on the Santelli Exchange look forward to that judy shelton, there she is Rick Santelli, thank you the bond report. The Business World this morning is mourning the loss of an Auto Industry legend, lee iacocca passed away at the age of 94 he rose to become president of ford motor and widely credited as the father of the mustang he became the ceo of chrysler and enk neerdgineered a turn ar the automaker, avoiding bankruptcy mary barra tweeted, paying tribute to lee iacocca, he loved america, the Auto Industry and the people who make it run from the shop floor to the showroom he will be missed. My mom was reading his book you dont hear much about certain Business Books that were great. Go back and read it. Yeah. As i said, iacocca did reach a level of celebrity that was unmatched by others in the industry famous for his tv ads, the tag line, if you can find a better car, buy it. Take a look. A lot of people believe american cars arent built as well as japanese or european cars id like to take it from this factory to show you the spirit of our workers the level of our technology, the quality of our cars. No one can say our cars dont stack up we can give you 50 to test drive and compare our cars to qualifying competitive cars and pay you no matter whose car you buy. Were not foolish, were confident. They worked it just brings you back, doesnt it yeah. A real moment because, of course, the 70s, the period where the japanese were challenging the u. S. Auto industry in a way it hadnt been Auto Industry fell on hard times. Quality of the cars at gm, chrysler and he came along and sort of said, hey, you know what, we can make it here we can make it better. I liked him i remember selling some of the paper there. He was terrific. Lee iacocca at 94 squawk on the street will be right back as your life grows, so do your needs. And with bank of america and merrill, the benefits you get can grow, too. As a preferred rewards member, you can enjoy Priority Service and exclusive discounts. So your growing life can be more rewarding, too. What would you like the power to do . You mighyour joints. Nge for your heart. . Or your digestion. So why wouldnt you take something for the most important part of you. Your brain. With an ingredient originally discovered in jellyfish, prevagen has been shown in Clinical Trials to improve shortterm memory. Prevagen. Healthier brain. Better life. Dear tech, lets talk. We have a pretty good relationship. Youve done a lot of good for the world. But i feel like you have the potential to do so much more. Can we build ai without bias . How do we bake security into everything we do . We need tech that helps people understand each other. That understands my business. Weve got some work to do. And we need your help. We need your support. Lets expect more from technology. Lets put smart to work. 20 years ago i was sitting across a desk from joe kernen in the midst of the dotcom boom. We had have this guest named jim cramer little did we know 20 years later we would be sitting here with a record on the s p up next we have stock trades all right. One final stock to talk about this morning on stock trading. One of my favorite is g scalar they are basically the Security Company from when you are on the web. They are web built i would not want to be jay shaudry today if sem an tech goes to broadcom he has been doing great. Do you want to compete could we get him back on . Sure. Lets make it happen all right. What do you got tonight we are dark tonight. Oh, yeah, thats right. Its the holiday. I am doing a show anyway. I am going to do it in my bedroom with the dogs. The dogs are going to watch. So you will put on the show there . Nvidia is struggling right here. Yeah, i know. Jim, have a great holiday. You, too. Happy Independence Day i hear this happy further. Are we in london or something . Thats when we became independent of the british we were slaves of the british. Okay. We have got a lot more squawk t see f y sait ahead. And in life. 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. So. How are you feeling on a scale of one to five . Wait. When it comes to feelings, its more like five million. Theres everything from happy to extremely happy. Theres also angry. Im really angry, clive actually, really angry. Thank you. And seat 36b angry. Youre clive owen. And youre barefoot. Yeah. Theres also apprehension. Regret. Relief. Oh and theres empathy. Ah, i got this in zurich actually, whats the opposite of empathy . But what if your business could understand what your customers are feeling. And then do something about it. You can turn disappointment into gratitude. Clive, you got to try this. I cant im working. Turn problems into opportunities. Thanks drone. Change the future of your business change the whole experience. Alright who wants to go again . I do i do i have a really good feeling about this. Good morning welcome to squawk on the street. Im david that faber we are live from post nine at the New York Stock Exchange. Carl quintanilla and sara eisen off this morning we have Economic Data. Lets get to Rick Santelli for the numbers. Rick. Yes, david. If we look at may factory orders, minus. 7 that is about as expected. It follows sequentially minus 1. 2, which was revised from 0. 8. There is improvement up 0. 1. That follows up 0. 2. Durable goods orders, these are may finals we take the mid may reads and toss them out. This is minus 1. 3. Thats what the mid month read was. Minus 1. 3 is the weakest month over month change since octobers 4. 4. If we look at extransportation up 0. 4 here is some important information. Capital goods orders, nondefense exaircraft, a proxy for future business spending, up 0. 5. Ism nonmanufacturing, and this is a june number, and this number comes in at 55. 1. 55. 1 that is the weakest going back a ways 55. 5 had been the low for the year you have to go all the way back to tie it in july of 2017 when it was 55. 1. You have to go back to october of 2016 to find a number thats less at 54. 4 so even though its just a few tenths below expectations, it does a surprising historical kickback david, back to you. Okay. Rick, thank you. Rick santelli with those numbers. Our roadmap starts with the fed and whats going on there. President trump announcing plans to nominate two. One a friend of mr. Santellis and our show. Canopy growth ceo bruce linton is out, telling cnbc he was fired from the Worlds Largest company. Lee iacocca is dead at the age of 94. We are remembering his legacy. We begin this morning with President Trump announcing his latest nominees to fill two vacancies on the board of the Federal Reserve. David, those nomies are Christopher Waller and julie shelton. The first is a traditional pick. Shelton will be more controversial. Waller is the Research Director of the st. Louis fed he has been at the bank for a decade alongside jim bullard, who is calling for a rate cut. The white house reached tout him last month he met with President Trump yesterday. He hasnt given a lot of speeches he wrote a white paper in 2011 that defended Central Bank Independence and warned that it needs to be held accountle he wrote if a Central Banks policies are not credible, then the bank will eventually lose the support of the nations policymakers and maybe its independence now, of course, judy shelton is someone familiar to our viewers. A vocal advocate for sound money including a potential return to the Gold Standard and arguing for an immediate rate cut. After her nomination was announced she tweeted she will strive to support the pro growth economic agenda with the appropriate monetary policy. Now, President Trump has struck out so far in his fed nominees this year. He is 0 for 4. But bundling these two together as a package deal could make it easier to get confirmed. It is worth pointing out shelton had to be confirmed by the senate for her current position as head of a European Development bank that improves her chances of making it on the fed board back to you. Thank you. And its trn interview you wont want to miss judy shelton joins our Rick Santelli this friday at 11 00 a. M. Eastern on squawk on the street. Stay tuned for that. The s p hitting a record high, aiming for the eighth record close at 2019 this as Central Banks and the world are getting new leadership judy shelton and christopher wa waller Christine Lagarde to succeed mario draghi as the next president of the ecb joining us to discuss the changes is tony, Portfolio Manager at pemco and tracey mcmillian head of global Asset Allocation strategy at wells fargo. Good morning to you both tony, what do you make of the changes, especially with the tenyear yield below 2 today and debt in europe increasingly negative. The nominations in europe and the United States show the dependency that National Governments have on Central Banks. They dont have a solution of their own for slow Economic Growth and they dont seem to have a political will or the ability to make much change in terms of National Standard of living or productivity the appointment of Christine Lagarde, its a whatever else it takes moment, you could say, to draw on the comments of mario draghi wh draghi what he said he would do. Clearly, the decision has a lot to do with the political navigation that the European Central Bank President must go through to do the things he or she wants to do, and it shows the dependency that these National Governments have on Central Banks to promote Economic Growth to support the purchases of bonds these governments will be issuing for a very long time. Tracey, do you agree with that what do you think of these proposed leadership changes . Yes, certainly the proposed changes to the Federal Reserve would instill a couple of more dovish governors into the Federal Reserve. And thats exactly what the president is looking for, is more dovish stance from the Federal Reserve because he believes that rates should be lower. And certainly with some of the broadly negative Economic News that were getting recently markets are also starting to believe that the Federal Reserve will cut rates in july is that enough . The confidence that the markets have, that we will get a fed rate cut you mentioned that markets across the Asset Classes are sort of braced for some kind of a slowdown, but there is a sense out there that stocks can do okay because this will be somehow a preemptive easing move sure. So we believe that markets have, by and large, priced in this good news around the potential for a fed rate cut, and we caution that with the adp numbers coming in lower today and the potential for another weak number on friday that investors may start pricing in a 50 basis point cut at the end of july, and we think that that would probably be a little too much, that the Federal Reserve is unlikely to cut by 50, but may cut by 25 basis points so markets are probably pricing in more good news than we anticipate. Tony, when this year started many would have thought it wont be a good year for bonds its going to finally happen, and here we are again. Another great year. Its been a fabulous year for the bond market. It shows the wisdom of trying to avoid market timing the diversification benefits of bonds. The Fourth Quarter last year they took a hit on the equities and credit here at these yields investors would say isnt risky now . As low as we have seen since 2016 on the yield on the tenyear. The 220s would erase the yields in a year small price losses would erase all of that. But there is this socalled positive convexity in bonds. Yields could collapse in a recession. The Federal Reserve more than likely will commit to keeping the policy rate low until the jobs rate falls back again that could take up to five years. In other words, the feds policy rate will be around zero up to five years after a recession hits so this will mean the bond market with pin most jeelds out to five years near zero and other yields close it. There is room for u. S. Treasury yields to decline. Its very risky considering the other components in an investment portfolio. Meantime, its been a strong start to the year for equity markets here in the u. S. As well do you think were hitting a peak with the s p trading at a record and investors still seeming to declito climb this wo worry . Across the classes this year we are seeing positive returns and significantly positive returns. So we do think that markets are likely at their high point for the year and we would suggest reducing exposure back to target allocations. So remaining diversified across he can teegs, mixed income, real assets, alternatives, and rebalancing back to those longerterm strategic allocations. Tony, the way you described the potential for yields to continue down from here, you skug that parts of the bond market are looking towards the potential for a recession but through that recession is that a prescient message that the market now holds or is it an explanation for why we have this twoway risk in the bond market . In july we have reached an 11th year of economic expansion, the longest dating back to 1854. So investors will constantly be looking around the corner thinking recession is coming, recession is coming. So there is some pricing in of a recession because the market thinks the odds are higher when you look at what the rate cut odds are in the bond market, pricing at 100 basis points in cuts for the next year, some of that reflects not necessarily the idea the fed will cut by 100 basis points in the next year, but the chance there could be a recession and the fed move back to zero at some point. Call it 30 odds that probability has to be assigned to yields, to the way the market is pricing in these rates. Its going to be with us for a long time unless the market thinks we are like australia, the u. S. Is australia, which has had an economic expansion since 1991. Do you agree with those who say the fed cant do too much because it needs to leave some reserve in case we actually do hit a recession . Most likely well see insurance type cuts, probably one to three the rest of the resuscitation type cuts that are aimed at recession probably wont happen. And it does have other tools it could, for example, decide to engage in some sort of yield curve control, try to control Interest Rates out to a few years, lets say, couple year sector of the bond market, keep yields near zero the u. S. Twoyear was around 1 three years after the fed put the policy the commitment to keeping rates low are not going to guarantee you but the higher likelihood the twoyear would not be at 1 , it would be near zero almost immediate limb thats a tool because the fed can cause a compression in yields more quickly. Thats something it can do communications are a very good part of monetary policy. How much do you think the trade talks and these broader trade dynamics are priced into the market so the market got what it wanted from the g20 meeting over the weekend, and now the markets seem to be focusing more on policy and more on global Central Banks. So trade though is more likely to come back into the picture as we have heard that the eurozone is another potential target for trade negotiations and even other emerging economies. So even if we get a deal with china this year, and we think if we do it it will only be a highlevel deal, there are other trade negotiations that are likely coming into scope so its going to be an ongoing concern for investors, an on going concern for businesses and businesses are lacking clarity in terms of how much they will invest in not only workers, but also in capex and how they are going to locate their supply chains so it is causing some of this Ripple Effect through the Economic Data that were seeing globally tony, tracie, thanks for joining us today happy fourth of july. Thank you. When we come back Auto Industry legend lee iacocca has died at the age of 94. We are going to remember his legacy with a man who worked with him he is another auto legend. Bob lutz up next. Our Chrysler Lebarron series, nobody has anything like them, not ford, not gm, not the imports. I challenge you to compare their quality and technology to anything out of germany or japan. You wont go into sticker stock. A fourdoor sedan that offers sixpassenger room this handsome town and country, this dazzling convertible puts a little fun back into driving no cars are perfect but these come pretty close. Drive them see for yourself how quiet and smooth they are. If you dont agree they are the best chryslers ever made, the best america has to offer at a sensible price, then im in the wrong business oh, one morehi y can find a better car, buy it some sad news to report this morning. Legendary auto executive lee iacocca has died after a long battle with parkinsons disease. In his 30year career at ford and chrysler he launched some of the detroits most recognizable cars, including the mustang and the minivan. He also helped persuade the u. S. Government to save chrysler. That was in the late 1970s joining us former gm vicechair, cnbc contributor bob lutz who worked with iacocca, head of Product Development at chrysler. We watched a couple this morning. I mean, he was a great executive in many ways man, he could sell as well, couldnt he . Absolutely. That was one of his strongest traits he was a master salesman, brilliant communicator, and extremely convincing sometimes it was dangerous to listen to him because he could make the illogical seem logical, and you believed it until you walked out of the office again so he was brilliant when it came to communications. Yeah. You know, i think it might be helpful for the younger viewers to frame what the world was like in the late 70s, even early 80s, for the u. S. Auto industry from the consumer viewpoint of the quality of auto automobiles and how he changed that equation. We were in the process of giving it away to the imports, and the federal had passed fuel economy legislation mandating an average of 27 miles per gallon for passenger cars which greatly benefitted the imports because the imports made nothing but small cars so they didnt have to do anything to meet the average, whereas the u. S. Industry had to be keel hauled, i mean literally nothing we made complied because we were doing all these great big cars that the American Public wanted. And he kind of bet the farm on a new series of frontwheel drive cars called the kcars, which were just discussed thin that o television ad. Of course, the Capital Expenditures basically drove the company into near insolvency, which is why he then had to go to the federal government and get loan guarantees. But whether it was devising a plan, executing the plan, eliminating the obstacles or selling that was difficult to sell, he was a master at all those things bob, when i hear you talk about that time period, you know, it almost reminds me of what we have seen in the past decade this idea that the Auto Industry has gone through cycles of massive transformation given the fact that you worked with him for nearly two decades very closely, what were some of the key lessons you learned both in business and in life . Well, i learned that administering a large company, especially an automobile company, and delegating everything to our subordinates simply does not work Large Organizations respond to leadership not administrative heads and not managers, but leaders. And iacocca was a brilliant leader he wasnt always right, like all leaders. He made some mistakes, like all leaders. When he propounded his ideas, they were sometimes good, sometimes they were bad. He had faithful accolades who said yes to everything he suggested. But you know what . It made him feel good, but he didnt value these people. He valued people who would stand up to him and explain when he wasnt right i think all strong leaders will do that because they like to get the job done, but they also like to stay out of trouble having said that go ahead. I was going to say we have been showing these old footage, including of iacocca doing commercials. So being essentially the product spokesperson in addition to running the company and really at the Second Company that in detroit that he was at is there any executive in any industry right now that would remind you of somebody of that profile in terms of public recognition and steering the entire business . Yeah, i would say elon musk probably comes closest to it el elon musk of tesla he personifies tesla, the good and the bad. And i think lee iacocca was a more effective leader of a large corporation. Again, lee iacocca was like all brilliant leaders. Like all people who actually changed the world, he was flawed he had extremely positive sides and he also had some sides that you sat there and wondered, how did this guy ever get to this position what he is talking about doesnt make any sense he could be cruel and vindictive if you did something that he felt was not in his immediate best interest. Sometimes he was very shy in public when he was with a crowd that he didnt know very well. So i wrote a whole chapter about him in my book quiet icoicons d idiots. I describe him as a very, very complex but highly intelligent and overall highly effective executive. Well, he is the man who brought us or helped bring us the minivan, which i guess you could argue sort of saved the Automobile Industry at the time, right, bob well, yeah. That and a lot of other things you know, the economy came back. I am amazed that people look at his biggest accomplishments and say ford mustang and minivan no his biggest accomplishment was in 1987 when, against all advice from wall street or even internally, and i admit i was against it, the purchase of american motors. I mean, we barely had the cash to do it but what came with american motors the jeep brand and the jeep brand today is the goose that laid the golden egg for fac. Yeah. Bob, always appreciate your insights on all topics, and certainly on this one. Giving us sort of a broad sense of mr. Iacocca as well thank you. Thank you. Lee iacocca is survived by his sister, two daughters, eight grandchildren as well. He was 94 years old. Well be right back. To a single defining moment. When a plan stops being a plan and gets set into motion. Todays merrill can help you get there with the people, tools, and personalized advice to help turn your ambitions into action. What would you like the power to do . [what about him . Lets do it. [ sniffing ] come on. This summer, add a new member to the family. Hurry into the mercedesbenz summer event today for exceptional offers. Lease the glc 300 suv for just 419 a month at the mercedesbenz summer event. Going on now. The president weighing in, said something about a record on the s p now coming back to one of his favorite topics, currency, Interest Rates, china and europe playing big currency manipulation game pumping money into their system in order to compete with usa we should match or continue being the dummies who sit back and politely watch as other countries continue to play their games as they have for many years, exclamation point. Pstronger dollar, mike. The spotlight on oil all slightly lower after tuesdays menear 5 drop in oil prices recoup ago bit this morning. Whats the crude reality for oil in the second half with us editor of the shoreic report and the former White House Energy advisor to president obama and founding director of Columbia Center on global emergency policy welcome to you beth. Jason, so bring us up to date. Following the opec meeting we had the formalization of this alliance with russia, affirmation of a ninemonth Production Cut and oil drops 5 on the news. What does that tell you in terms of the supply demand. The fundamentals are overwhelming the market. The supply tsunami is overwhelming the market. This is not to what opec was hoping for they announced a Production Cut preordained by the g20 they go out of their way to say its nine months, not six months the Saudi Oil Minister in his press conference said they want to use tighter inventory numbers. They are trying to bring the market down more than people think. There is too much supply coming next year. This supply that you talk about coming next year, is it simply just not really responsive to prices or are these levels sufficient . These levels are more than sufficient that was another interesting thing. It was most interesting because the outcome was preordained about the opec meeting was the messaging around it. One thing about the inventory levels the other thing is owe fall a said very clearly we are recognizing that our strategy is going to allow shale to continue to grow for many years to come we are going to balance the market and support the price so this is just a huge challenge for opec they are having trouble dealing with it given that venezuela and iran have more than done their part to offset some of this. There may not be other supply disruptions that large coming. They will have to do additional cuts potentially. Steefrp, aven, any other wri . Interesting set up for wti you had this pretty sharp break down towards 50 and then recouped about half of that loss before rolling over a bit here what do you see . Well, certainly i think the bigge Biggest Issue is the demand side of the equation. The last five months of 2018 and the first five months of 2019 were looking at the opec 11 that is the opec countries that were bound by the original agreement to take 1. 2 off of the market we have had about a 90 compliance rate there. So the opec 11 in the first five months again relative to the past five months have take a Million Barrels a day off of the market to jasons point, iran and venezuela have done their part they have taken an additional eight to 900,000 off of the market the u. S. , meanwhile, has only put an additional 300,000 on to the market and yet prices today are still about 20 a barrel lower than where they were in september. So clearly this is a demand narrative at this point. So with regard to price, we are fairly comfortable in saying that the price for a u. S. Producer on average is about 48 a barrel so earlier this month we did get down to the low 50s from an oil economic standpoint in the u. S. The market is at the bottom thats not to say we cant go lower, but certainly if oil prices are to rally, they better rally now. It is fourth of july it is the start of the peak demand season for gasoline if oil prices cant rally now, you have to ask yourself, when are they going to rally . So clearly from an upside potential there are a lot of hurdles to overcome. Jason, you mentioned irans done its part in terms of how this is playing out globalry with production. Irans president warnins they wl increase the enrichment program. How big of a risk is that . When we say iran has done its part, the United States has done irans part for it much more successfully than many people anticipated the u. S. Could do unilaterally. When you take iran not to zero, but this close to zero, the economic pressure within reveiri so great that they have to find a way to get trump out of his comfort zone and change this status quo they will continue to do pin rick strikes, raise the level of enriched uranium find some way to get some relief if europe cant do that, they will escalate on the enrich side and potential for drone strike sore something to get out of hand in the gulf i think is real and more than the market appreciates because there is not a viable pathway to negotiation now. This president wants to have a maximum Pressure Campaign on iran but doesnt want military conflict those two cant be true unless there is a pathway to negotiation. The fact that we have not gotten a price response reinforces the point that demand is not there to soak up whats on the market . Yeah, the two provocations by iran, the mine in the gulf of oman and the taking down of the drone, the market did not react to the first event the market slightly reacted to the second event trump is not taking the iranian bait the iranians are clearly in a corner they are striking out trying to cause a rift to juice prices but the market is really giving it to jasons point a minimum of maximum to minimum concern right now. And certain when were looking at that whats interesting, when we look at wall street speculators, the value adjusted or volatility to adjusted risk ratio bulls to bears, the bulls are on the sideline right now. It will take an event. Wall street will come charging out. Part of the reason why, oil prices are mired in this middling range right now, is the speculators out of the market. Speculators taking a wait and see attitude at this juncture. Finally, jason, you were, i guess, senior director for energy and Climate Change. That doesnt exist anymore, that job . It does. It does yeah, there is a energy advisor. And Climate Change as well . I dont know if that is in the title anymore. We dont talk about natural gas very often but there has been a sur fit of natural gas in the country. There is a goal to get coal back on its feet. Is that going to work . What does that mean for Natural Gas Prices Natural Gas Prices have been soft especially globally when i was in the administration 28 btu. We approved the export of natural gas terminals. They are coming online we thought that would go to asia its getting crowded out in the United States the headwinds Market Driven, not policy driven, not democratic Obama Policies but Market Driven headwinds are too great for coal to overcome. Coal is in decline exports as well. But domestically thats driven by cheap natural gas and increasingly by cheaper renewables. Thank you very much. Thank you. Lets send it over to sue herera she has a cnbc news update at this hour. Indeed, i do, david heres whats happening at this hour everyone. As weve been discussing iranian president rouhani is warning europe that tehran will take the next step in increasing its enrich rain uranium enrich. An airstrike has hit a Detention Center in tripoli killing 40 and wounding 80 more. The media as allowed into Hong Kongs Legislative Council building today to see the damage done by protesters who ransacked the building on monday during the violence protesters sprayed slogans in the main chamber, tore down portraits of legislative leaders and damaged an elevator. Firefighters in kentucky are trying to extinguish a burning jim beam warehouse filled with h 45,000 barrels of bourbon. Officials say that fire may have been caused by a lighthizer strike luckily, no injuries have been reported lots of fuel left to burn. That is the news update this hour morgan, back downtown to you wow, that video sue herera, thank you. As we head to a quick break, shares of tesla, they are up 6 right now. The company reporting record delivery and production numbers. And a programming note she is the new nominee for the Federal Reserve board. Do not miss Rick Santellis interview with judy shelton friday squawk on the street 11 00 a. M. Eastern time. K t see ibats ck after this 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. When i see obstacles, i create opportunities. soft music when i see adversity, i find a way. When i hear never, i say now. [announcer] Southern New Hampshire university is education made to fit your goals with over 200 degree programs, flexible class schedules, and some of the lowest online tuition rates in the nation. cheering so when i face barriers, i can break through. [announcer] breakthrough at snhu. Edu. Welcome back to squawk on the street. The s p continuing to trade higher, inching closer to the 3,000 benchmark. Currently 2985 that as trade talks continue the market remain confident. President trump will be able to reform china u. S. Trade relations. But what are the risks for investors . Joining us now to discuss former assistant secretary of commerce for International Economic policy thomas deucerberg and terry haines, head of political analysis at pangaea policy advisory good morning terry, we just recently a few moments ago got a tweet from President Trump in which he said china and europe are playing big currency manipulation game and pumpi pumping into their system to compete with the usa we should match or continue being the dummies who sit back and plightly watch as countries continue to play their game as they have for many years your reaction . Very simply that negotiating adversaries, and im not having bad intent here, adversaries in negotiations will use whatever advantages they have to try to even the Playing Field chinas record is pretty clear on this. Europe does what it does of course, their economies are not in great shape either. But the bottom line is the president calling that out i think is a negotiating tactic on his own. The bottom lin here e is that we remain in negotiation with china, weve remained in negotiation with europe since about this time last year, and thats going to continue overall, even though there is more market uncertainty about the outcomes, that engagement is a positive thomas, i put the same question to you. Especially in the midst of all of these trade talks, is the dollar too strong . The dollar remains strong because the u. S. Economy is strong there are limits to what china can do to keep its currency value low partly because a lot of money is coming out of china. They let the currency get too undervalued, then more and more would pour out, which would have negative effects on their economy. Thomas, i want to get into some of the nittygritty around these renewed talks with china for trade because in your notes you break this down into three parts. What are they and what will it take for those to play out well, the current state of play is that they are going back to the table we dont know when they are going back to the table, but theyve committed to that. China has given a few concessions in terms of buying more Agricultural Products they see it as a concession of going back to the table. The u. S. , on its side, relented a little bit on the huawei sanctions. And deferred from imposing new tariffs. The next steps are talking, and the president has said this may take a while im afraid it will because there isnt a strong incentive yet for the chinese to make further concessions, which would have to be to get a good deal to have a serious structural reform on the way they treat intellectual property, the way they subsidize their industry so my view is that the existing tariffs on china as well as the Technology Limitations that have been put into place are going to have to take a while to have more impact on the chinese economy. We can already see that the chinese economy is weakening the manufacture reports yesterday showed that chinas Manufacturing Sector is actually contracting. So slowing down the economy of china will put some pressure on the leaders there to take the trade negotiations more seriously. Terry, if this is a long process, if its basically kind of the uneasy status quo, are markets set up for that . I mean, what would you be telling clients here in terms of filtering the trade situation into their Investment Outlook . What i would vn saying essentially is going into 2020, clearly they are not going to be finished in 2019, firstly. Secondly, this goes into 2020, but it does in suspended animation. But i think both sides are signaling they are not willing to ramp up anymore, but they are also not willing to come down. The linchpin of this, in my view, is enforceability. The United States insists on an enforceable deal china balks at that. As long as china continues to balk at that, there is not going to be a deal my point to folks has been essentially you are going to have a quiet summer. Once we get past labor day we will have a lot of things play into an overall uncertain washington, d. C. Market negative you are going to have trade. You are going to have other geopolitical issues. Iran was just discussed on your air within the last hour you are going to have another partial government shutdown, which i think is very likely you are going to have a variety of different sorts of events drug pricing legislation moving through the congress all of that will contribute to a sense that there is greater market uncertainty and on top of all that the democratic president ial nomination process gets a lot of mind share, and the big question there is going to be is there going to be an insurgent challenge to trump from the left or will there be an establishment challenge . All of that plays into market nervousness. Thomas and terry, thanks for joining us today. Thank you. They are falling after coceo bruce linton says he was fired from the company and symantec and broadcom, up over 14 , this on news we have confirmed, talks between the two companies designed to acquire symantec by broadcom, although they are not yet at a deal they hope to perhaps be able to announce one within the next couple of weeks. Price continues to be a key question mark. Ghafr is bk he streetac rit teth vo the hamsters, run hopelessly in their cage. Content on their endless quest, to nowhere. But perhaps this year, a more exhilarating endeavor awaits. Defy the laws of human nature,at the summer of audi sales event. Get exceptional offers now. Lets go out to chicago. Rick santelli has the Santelli Exchange good morning, rick. Good morning, mike. I would like to welcome my guess before the Independence Day holiday. Ira, we are at 194 in a tenyear, lowest yield since the fall of 2016, and italian tenyear yields are 30 basis points below us. So many who believe our rates are telling us our economy is weak need to rethink that. It may be on slim factor involved yeah, well, but everything is being made in europe now we go back to the draghi speech of the day before powell when he painted powell into a terrible corner and had to have President Trump respond with that speech from manipulating currencies well, draghi made it clear they are going to be easier for longer than people now that we have Christine Lagarde, there is only one person thats actually like a federal employee in the eurozone, and thats the head of the ecb. They represent everything. Now we have a quasi politician, not a banker in charge what do you think . Worst pick i could imagine. Its not a done deal . No, because the interesting part is Angela Merkel recused herself from the vote because there was some sense of disdain about this pick from her political party. The germans in many ways, its a dual speed. You know, they benefit because the deutsch mark will be more expensive than the euro but they are financing it. Lets be honest, they are financing it play this out. We have talked about euro bonds. They think that Christine Lagarde is going to have the political heft to create create a euro bond . Right whatever is on that balance sheet, as we talked about, of the ecb, they will meld it into a euro bond. They will create a harmonized fiscal situation this has been drawn out by none other whether it works, it is the only avenue to get is the only avenue to get out of the swamp with regard to negative rates but then theres a real problem with the ecb. Theyre on the hook. For everything now. Germanys on the hook, and thats the problem, and the political but george soros et al have been behind this, and now they found a way to do it, and its only through what they perceive to be the strength of Christine Lagarde that theyre going to get this done it has to be its the exact opposite dynamics of the politics of each country. Theyre moving away from the globalist economy, on a political level but now on the banking side that is almost a globalists dream with respect to having somebody like lagarde bring it all together and create a euro bond. Go and read the papers real quickly, when you think of dr. Judy shelton with regard to being nominated potential governor. I think its a great pick only because it changes the discourse at the fed its not all the same, and it is all the same male, female, black, white, it doesnt matter she changes the discord. You know, she raises you can say a lot about trump and what he says about different people hes picked but at the end of the day hes picked some good people that arent yes people and maybe he disagrees with them, but i dont see him pulling Legal Recourse to remove them. What shes been out there discussing even with you hard money. And the interest on excess reserves. Reserves. This is a discussion that needs to take place. Needs to be had. Have a happy independent day, happy belated birthday thank you, rick. Happy birthday to you, rick back to you all right, rick, thank you. Rick santelli. Tune in friday 11 00 a. M. Eastern, ricks going to be speaking with the Federal Reserve board of governors nominee judy shelton she is a frequent guest on the Santelli Exchange and now a nominee as well. Squawk on the street back right after this in crossing harsh terrain. Or breaking new ground . This is the time to get an exceptional offer on the mercedes of your midsummer dreams at the mercedesbenz summer event, going on now. Lease the gla 250 suv for just 329 a month at the mercedesbenz summer event. Mercedesbenz. The best or nothing. Hey i live on my own now ive got xfinity, because i like to live life in the fast lane. Unlike my parents. You rambling about xfinity again . Youre so cute when you get excited. Anyways. Ive got their app right here, i can troubleshoot. I can schedule a time for them to call me back, its great you have our number programmed in . Ya i dont even know your phone anymore. Excuse me . what . I dont know your phone number. Aw well. He doesnt know our phone number you have our fax number, obviously. Todays xfinity service. Simple. Easy. Awesome. Ill pass. As weve closed out the first half of the year, cnbc is taking a look at the market in the second half. Heres our meg tirrell on her beat, pharma heres what to watch in the second half for bio tech and pharma political pressure on drug prices, with almost a quarter of people who take prescription drugs saying theyre hard to afford, this is a Campaign Issue embraced by both sides of the aisle. The drug stocks have largely shrugged off Trump Administration proposals so far. Investors will watch closely what the 2020 president ial election season brings. More buyouts, abbvies purchase of allergan followed by bristolmyers deal investors expect and hope more deals will follow with potential targets such as bio against. And an opioid reckoning, painkillers responsible for the epidemic come to a head in the second half with Companies Like Purdue Pharma and Johnson Johnson in the cross hairs so just 16 months of political noise around pharma, is that all we have to look forward to stocks already trading. Whats another four years. Not to mention, as jim points out, u and h you can see in terms of the fortunes for the left part of the democratic primary a lot of left in terms of how unh moves. Exactly. We talk a lot about the ipo pipeline, bio tech and pharma have been the other big part of that this year. That would be a good risk appetite. When we come back, teslas surging. The companys shattering its previous production and delivery records during the Second Quarter. That and a lot more next on squawk alley. Dont go anywhere. Ity. A visual snapshot of your investments. Key portfolio events. All in one place. Because when its decision time. You need decision tech. Only from fidelity. Quadrupled their money by 2012 . And even now many experts predict the next gold rush is just beginning. So dont wait another day. Physical coins are easy to buy and sell and one of the best ways to protect your life savings from the next financial meltdown. [narrator] today, the u. S. 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Gold is now on sale at prices unseen in years and this year could be one of the greatest goldbuying opportunities of all time call now while vault inventory remains. As one of the largest u. S. Gold coin distributors in the country, the u. S. Money reserve has proudly served hundreds of thousands of clients worldwide. Dont wait another minute, call now to purchase your American Eagle coins at cost for the amazing price on your screen. Good morning, it is 8 00 a. M. At tesla headquarters in palo alto it is 11 00 a. M. Here on wall street and squawk alley is live i know youre never going to wake up, i got to give up every time you touch me, you love me, i get a little bet breathless good wednesday morning and welcome to squawk alley. Im Morgan Brennan live from post nine here at the New York Stock Exchange carl and john are off this morning. Were going to begin with tesla, shares are up big after setting new delivery and production records. Phil lebeau is in chicago with more on those numbers. Phil. And morgan, weve talked about this over the last 24 hours how these numbers are record numbers, and they have exceeded expectations. Lets put this into perspective in terms of where tesla is in terms of deliveries through the first half of this year. That red line on that last bar there, theyve delivered about 158,000 vehicles so far this year theyve said they plan to deliver 360. Theyve got to come up with 200,000, a little over 200,000 deliveries in the second half of this year. This report left something for both the bulls and the bears to jump on. Lets start with the bulls they s